Financial planning. Thatโs for people with ๐ฅ๐จ๐ญ๐ฌ of money to invest, isnโt it? Not necessarily.
Sure, investment planning is an important part of financial planning, but underpinning the whole process of creating wealth in the first place is having a good financial strategy.
For many people that strategy is taking each day as it comes and letting the future look after itself; but in a complex and ever-changing world, isnโt a more active approach a good idea? All the research shows that it is.
We all have specific needs and desires, but there are a number of common challenges that we need to think about when developing our financial strategies.
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Baby boomers (born 1946-1964) are moving into retirement in droves, so Gen X (1965-1976) is taking on the mantle of being the great wealth accumulators. For the most part, this generation has their strategies in place: pay down the mortgage, contribute to super, maybe buy an investment property, and wait for the kids to leave home, so they have more cash flow.
Generationally, itโs millennials (1977-1995) who face the greatest challenges in developing a financial strategy. Younger millennials are just embarking on careers and the focus is, understandably, on having a good time.
Many feel priced out of the housing market, and while the โgigโ economy promises greater work flexibility, this comes with reduced job security and often no employer superannuation contributions. Then thereโs the challenge of balancing starting a family with establishing a career. All up thereโs a lot to plan for.
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The path to income equality is a slow and frustrating one. In general, over their working lives, women continue to earn significantly less than men. This is largely due to time out of the workforce to look after children. This is why women are retiring with almost half as much super as men.
However, progress is being made, and an increasing number of women are earning more than their partners. Having Dad take time off to look after the kids then becomes a viable financial strategy. On top of that, the gig economy, and technology in general, is opening up more opportunities for stay-at-home parents to earn a decent income.
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Sadly, many long-term relationships and marriages end and the emotional and financial costs can be high.
This isnโt an issue that anyone wants to think about, but is obviously a trigger for developing a new financial strategy. This is particularly important when children are involved, and expert help will likely be needed.
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More wealth is being transferred from older to younger generations than ever before, and thanks to superannuation and higher property prices, this trend can only grow.
Receiving an inheritance is often the event that leads many people to seek financial advice. While the focus may be on creating an investment plan, this is an ideal time to look at the broader financial strategy to make the most of any inheritance.
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Everyone can benefit from having a financial plan – itโs easier than you think to get started, and you donโt have to do it alone.
A qualified adviser can help you understand our complex financial environment and what you need to know to work out the likely outcomes of different strategies.
Ready to take control of your finances? Give me a call and letโs chat.