4 Simple Money Tips ebook

4 Simple Money Tips You and Your Partner Could Use Now To Improve Your Financial Future

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Money Management

Client Story 1 – The First Step

One client story that really made a difference to the lives of the people involved, both now and into the future, was when a couple met with us several years ago with a real need to get their money right. They were in their early thirties, both worked full time, were on good incomes and had two children in primary school. Their major financial goal was to be able to buy their first home but saving the deposit just seemed so far out of reach for them. They just couldn’t save and felt like they were going to be forced to rent for many years to come.

After sitting down with the couple in our first meeting, we soon discovered they didn’t have a proper system for managing their money. They would get paid every month and could pay their rent, pay their bills and have money for their children but then the rest would just seem to disappear. They would then have to wait until their next pay day to get more money and the sequence would repeat again month after month. They just couldn’t seem to save and didn’t know what to do.

As a first step, we went back to basics with them for their money. We re-structured and simplified the ‘flow’ of their money, making sure they had dedicated bills and spending accounts and most importantly a savings account. We advised them that not separating their money for spending and saving was causing them to just live month to month.

Within a few short weeks, we started to see money able to be put aside and left aside for savings and this pot was able to grow with each pay day. Much to their surprise, the clients could save, and consistently every month too!

After about 8 months into their savings strategy with us, as is often the case, they felt they weren’t moving forward fast enough and wondered whether they should just go and buy that boat that they always wanted. They’d take on a loan, use most of their savings and could look to get a house in a couple of years.

Rather than simply accept this frustration, we sat down with the clients and showed them just how well they had been doing so far with their savings. The goal was always an 18 month+ timeframe to get their deposit and they were tracking ahead of their original timeline. We also notified them that if they had a big debt on a boat, it would take away money for savings and also mean a bank would factor this debt into any approval to buy a home in the future. To make matters worse, waiting another couple of years would mean their dream home would be even more expensive, meaning they would need a bigger deposit and have to save for even longer to play catch up on their deposit.

The great news is this couple decided to stick with the savings program and forget about the boat for now (this will come later once they are more established financially). They achieved their required deposit before the planned timeframe, bought their first home, paid this down over 18 months and then bought their first investment property!

We are now talking about a second investment property and a dedicated savings plan into their super funds for their retirements. In just over three years this couple went from renting and not being confident about their prospects, to having a home, an investment property and being excited about their financial futures!

Financial Advice

Client Story 2 – Protect Your Most Important Asset

A client event that we will never forget happened a number of years ago when we were advising a couple on their super funds and personal insurances. The couple were in their late forties, had adult children, one partner was working and they had a small amount left to pay off on their home mortgage. Each year we would review their super funds for the performance and fees, and to ensure they were still tracking as projected for when both partners planned to be retired. Each year we would also review the couple’s personal insurances to make sure the cover was still matching what they needed to ensure they were fully protected.

During our latest review on their super funds and insurances, one member of the couple made it very clear that they wanted to make sure if anything ever happened to them, there would be enough life insurance to cover all of their debts and to also make sure there would be enough money left over to provide an income to their partner.

Only six weeks after our meeting, we received a call from one of the partners to say the other partner had been tragically killed in an accident. After the initial discussions and shock about such a tragic event, as their financial planners we had to take the next steps and see how we could help this family at this tragic time.

As soon as the call ended, we went to work in claiming the life insurance cover in place, getting the paperwork all together and making sure the surviving client knew that everything was going to be ok financially while they dealt with this terrible tragedy.

In a matter of weeks we had organised for the claims to be processed and all debts to be paid off. After the funeral and estate planning arrangements had been finalised, we sat down with our client and mapped out a long term financial plan to make sure the remaining funds would be invested so money would not be a problem for them ever again. There was enough money to pay an income every month, to allow our client to be able to buy what they needed, and over time the remaining assets would be able to grow to also help their family as well.

To this day, we will never forget the last conversation we had with our clients about them wanting to make sure they were both fully protected. We also know the financial outcome for our client after the passing of their partner would have been whole lot different had there not been the life insurance in place to cover off all debts and provide an income to them for the rest of their lives.

Planning future finances and wealth for the long term can usually take front seat when people talk to a financial planner. Making sure your wealth, your debts and yourselves are protected however can sometimes be the most important financial decision you will ever make.

Financial Planning

Client Story 3 – A Financial Planning Roadmap

A great example of putting together a financial plan that worked for the people involved was when a couple came to us with a real fear about their futures. The couple were in their mid-forties, had nearly paid off their own home, already had one investment property in place, were both working full time and didn’t have any dependants (although they considered their two dogs as their children!). On first appearances, it looked as if everything was going great for this couple. They were on good incomes, had stable cashflow and lived a very good life. They loved to travel and see the world and had grown accustomed to a lifestyle that they didn’t want to have to give up once they eventually retired.

The major concern the couple raised with us was that even though they felt they were doing well financially now and didn’t have any money worries, they didn’t have a long term plan in place. They felt they needed direction to make sure they made the right decisions with their money now to be able to keep living how they wanted in the future, with retirement predicted to be about 15 years away.

We started our discussions with this couple by looking at their current situation, getting an idea of their cashflow and where they spent their money, we considered how much they thought they could save on a regular basis, and we also gained a snapshot of their overall assets and debts at the time as well.

After gathering all of the information and spending a lot of time clarifying what a successful retirement would look like in money and income terms, we went away and researched a number of options. The couple didn’t have any pre-existing thoughts about the most appropriate direction they wanted to take for their retirement planning, they just wanted a plan that would suit and work for them.

We researched, projected and reviewed 3 different options that covered areas such as buying more investment properties, adding more to their super funds, looking at starting a share portfolio and a combination of each strategy. We looked at how each option would look as far as impact on their cashflow, the need to take on more debt and how it would match with their tolerance to risk and debt as well as the projected long term outcomes for each option.

Our presentation to the couple in reviewing the different options and the variations of each potential plan allowed us to discuss what they were most comfortable considering. We uncovered some money roadblocks they had needed to overcome early on in their careers before they had started investing and we were able to tweak the numbers used to put together a roadmap that they understood and felt comfortable moving forward to implement.

Once the most appropriate options were finalised and documented we began the steps to help the couple begin their long term financial plan. We started to accumulate the planned assets, we put their surplus cashflow to work each month and set clear timelines for when each short term goal would be achieved to reach the long term plan for retirement.

Each year we now review the financial plan together with the couple, track the progress made and work still to do and make adjustments where necessary. We are ahead of schedule with the planned roadmap and the couple are both comfortable and relieved knowing they go to work each day with a real reason to work hard. They know they can take time off and go on holidays as it is all part of their plan and most importantly, they know they will be able to retire on their terms, with the money they need to live the lives they deserve to live.