Planning your personal finances CAN be fun

Today I’d like to agree with my esteemed fellow SmartCompany.com blogger Michael Yardney (although there will be some things concerning investment in residential property we will certainly disagree on), who summed it up perfectly in his article Four mistakes all property investors must avoid  when he said that “most Australians spend more time planning where they’re going on holiday than they do planning their financial future”.

I would suspect that part of this reason is that planning a holiday is far more fun than planning your finances. For most people it all sounds too boring/hard/technical/drab. Many would say, where the dickens do I start?

Here’s a tip – make it fun, people!

Step it out

First, visualise what you want out of it. I know it’s hard to do something like that for a long term project such financial planning as opposed to some short term, fun, cash depletive adventure such as a holiday, but visualise how much more fun you will have with the knowledge you funded your future holiday (or other fun lifestyle venture) from passive income and your pro-active approach.

Have some goals in mind for your financial future as well, and it doesn’t have to revolve around just having a superannuation strategy (yawn!). The idea is to have a plan outside of super as well and to pay yourself first, then everyone else. That means putting at least 10% of your earnings aside for your investment strategy, then pay all your bills. Picture yourself doing the fun things you would like to be doing in the future with you new found wealth once you’ve achieved your financial goal.

Also think about getting professional help, (sounds easy for me to say coming from a licensed financial adviser). Find a smart adviser – not only someone trustworthy, but someone who can listen to you and your needs. Ask your mortgage broker, estate agent or savvy, switched-on accountant if they can refer you to someone that can really listen to you and have your best interests at heart.
 
Switching (slowly) from active income (being tied to your business/income for turning a dollar to waste on holidays) to passive income (investment earnings, financial freedom) is a far more sustainable path.

Get serious!

There are many triggers that can occur to spur a “call to action” for people to start do something about planning their finances in part or whole, but for many that’s where the story ends. Some may say their business is their financial planning and their future funding sorted, but I’ve seen far too many instances where a key business individual has been sued by a disgruntled client or they have been struck down by a mysterious long-term illness (or worse, dies) without a back-up plan.

And for the majority of people having a couple of investment properties is NOT a long-term financial plan, nor, for most people, a good diversification strategy (unless you have a net worth excluding your own home of $4-5 million).

Follow the example set by the world’s leading billionaire investors on this one – make it a fun, and learn how to get more out of your business for yourself.

Nick Christian is a Financial Adviser and planner and authorised representative of Millennium3 Financial Services.

The views and opinions expressed within this letter are those of the author and do not necessarily reflect those of Millennium3 Financial Services Pty Ltd.