NO FINANCIAL PLAN? YOU MIGHT BE RISKING MORE THAN YOU THINK!

[stevo68]

G'day forumites,


Anyone who has been on here long enough know that I speak it as it is and wear my heart on my sleeve. I'm also pretty good at what I do as well . On the weekend I was doing a 250km round trip to pick up our new member of the family, a British short hair kitten, who now fills a void having lost “Chubbs” our 4 year old British short hair to a tick 4 months ago, I reflected on the $800 smackaroonies I (well we i.e. the better half) paid for this kitten.

Firstly, the smiles on my son’s face’s, it was well worth it. My older 2 had to do with pictures till they get to meet him. Secondly was I was able to allow for the purchase as I have a financial plan in place (nice Segway there). I say that because for most of my adult life, I haven’t had one, and I am not alone. As long as the money was coming in through the front door, as long as I could pay the bills, mortgage etc it was happy days. Sometimes we’d fall short but all ended up fine. As for the future, what future, retirement, she’ll be right. That was a life time away.

Then the proverbial happened. GFC came along, not so happy days. Income halved, house needed to be sold, pride and joy put on the market (my Discovery 3). Life was looking a lot different. It’s one thing to deal with these things on your own. When you have a family to support, then consider stress levels to increase 10 fold. One of the main issues I had was that I didn’t have a financial plan. I now know this in hindsight and I know that if I had, things would have been completely different.

When I look back now at that time, I thought how could I as an educated person, years of experience, not have something that really is crucial and that is some sort of financial plan. Now a cynic may say that I have a bias considering my profession now. My response would be that the reason that I chose this profession and try and educate people is because of what I have been through. Therefore if I can get through to people the importance of financial literacy through seminars and offer complimentary financial health check ups to put them on a path to a better financial future, then that is my happy days.

As the doctor says “prevention is better than the cure”.

This leads me to today’s education update.

NO FINANCIAL PLAN? YOU MIGHT BE RISKING MORE THAN YOU THINK!

Most people go through life without thinking at all about their financial plan. That is until they encounter a problem. The trouble is that by the time that happens, it may be difficult to get your financial situation back on track. Even if your life is progressing well now, if you don’t have a financial safety net, a few months or weeks could change all that quite drastically!

You might not like to think about your financial plan, but not paying it the attention it deserves could have disastrous consequences.

What Happens When You Live From One Pay Day To The Next?

Most people base their spending, saving and credit habits on their current financial situation. They budget for this month only, and as long as they have enough funds available to service debt, pay their bills, and survive, with maybe a small amount left over for savings then they believe they are doing okay.

The trouble occurs when something happens to interrupt or stop your salary.
If you’re only saving the bare minimum, if you don’t have contingency plans in place, and if you’re living from one pay day to the next, you could find yourself in very deep financial trouble in a matter of months, or even weeks. If you do not find another source of income within that time to fill the gap, you could be on a very slippery slope indeed.

The Hidden Effects of Financial Troubles

We all know that when you find yourself in the middle of an unforseen financial crisis, there are immediate, financial effects. However, there could be other non-financial problems that arise as a result of your financial woes:

• You may find that your marriage or relationship suffers. It’s a well-known fact that many marital disputes happen as a direct result of financial stress, and if you find yourself in this predicament, it may be more than your credit rating that’s at stake!

• Financial stress can have a mental and even physical impact on your health. You may find yourself losing sleep or experiencing a number of other health problems.
• Your credit report may suffer. If you have any type of credit and you cannot service it because you are not earning, your credit report will almost certainly suffer, and that can take years to rectify, if, indeed, it can be rectified at all.

What Do You Do?

If you suspect that you might fall into the same category as millions of people in Australia and around the world, who are living from one pay day to the next, then there are steps you can take, right now, to avoid all of these problems.

The first step is to start working on a personal financial plan. You might want to speak to a financial planner, who can help you work out a budget that allows you to save more, and who can recommend insurance that will cover you in the case of illness, loss of employment and other very real, very avoidable situations.

There’s an old saying: failing to plan is planning to fail, and that’s as true about your financial plan as it is about anything else. Don’t ignore the problem, and don’t get stuck in a comfort zone. You really will never know what could happen tomorrow, and if you are not prepared for any eventuality, the outcome could be disastrous for you and those you care about the most.

Unfortunately the consequences of poor financial planning are often severe, especially for women. Suddenly retirement looms and you face the rest of your lifetime in relative poverty. The best advice is to start early when it comes to financial planning so you don't end up a bag lady feeding pigeons in the park. Financial Planning is not just about retirement however, its about planning for the unexpected and expected life changes you will face. It is different for each of us, but a good financial plan is tailored to the things you want to experience in life, say children and time out of the workforce is on the cards in a few years, you may want to understand that time out of the workforce means less money in retirement so putting away extra now, it could also be about putting money aside for education, it should also involve making sure you have the correct insurances in place for your new family, wills and estate planning are an important component of an effective financial plan.

An effective financial plan is not a one off, it has to live and breathe with your goals and challenges, it allows and plans for cash flow should the unexpected happen with your health or the death of a partner. Money management, cash flow changes, health challenges and retirement are all things we each go through, setting a financial plan in place means that although it will still be emotionally challenging you will be able to focus on getting through it and dealing with the situation instead of the additional worry of losing your house, your cash flow and wondering how on earth you will make ends meet.

Food for thought? Want to take advantage of a complimentary health check or a seminar for your staff? I’m booking people in before I head off for Christmas. So if you want to start the New Year with a plan in place, PM me. Otherwise we can organise a time for the New Year. Make coming to see me as one of your new years resolutions ,

Regards

Stevo


The information contained in this newsletter/ update is of a general nature only and should not be taken as a specific recommendation to adopt any strategy, process or product.

[stevo68]

Umm,what pension.

Soon there is not gonna be too much left to hand out

The stats are by around 2020 there will be only 2.4 workers to every retiree compared to the 60's where there were 7-8 workers per retiree. I read in one article that only an optimist would rely on the pension in the future. However, if one does not want to rely on the pension there are other options if you have time up your sleeve,

Regards

Stevo