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Crown your wealth

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It’s unbelievably coincidental and even ironic that this blueprint for building wealth is being written in the Crown Hotel in Melbourne as the sounds of the pokies are tingling through the air up into the areas designated for corporate functions.

I’m delivering a speech on the economy and successful business practices for some of Australia’s best mortgage brokers, and below are everyday Australians and tourists chasing their wealth dreams in the Crown Casino. That is, you have to agree, ironic.

But let’s block that noise out and focus on how you can crown your wealth and manage your money. 

Two rules of thumb

A couple of clichés or rules of thumb are needed from the outset. First, you don’t get rich in a day, it happens daily! Second, if nothing changes, nothing changes.

Let’s take the second rule first because it’s the starting point, while the other rule is attitude that you have to sign up to, to ensure wealth happens.

So, you have to accept that what you’re doing is not working to create wealth and therefore you have to decide that it’s time to change. In a great Seinfeld episode, Jerry’s friend George laments how every decision he had made in his life was the wrong one. That encourages Jerry to pose the question: “If every decision you have made is wrong, then wouldn’t the opposite be right?”

As the episode goes, George did everything the opposite way and he won over an attractive woman and got a job with his beloved Yankees.

Sure, this is Hollywood, but I think too many have been living in La-La-land for too long and that’s why changes – big changes – are necessary.

And the changes have to result in daily changes that help build wealth and not destroy it.
Goals are key

Just as I will tell these brokers in today’s speech, the new you has to start with the key question: “What are your goals?” You have to visualise what it is you want and then put a figure on that dream.

Imagine you said you want to retire at age 55 with a house you own, an investment property that pays you rent and $1 million in super.

You then have to start doing the numbers. You might be able to ask your super fund what you are likely to retire on given your nine per cent contribution for, say, the 20 years you will have working.

You then can work out if you can buy a house in a suburb where you want to live and then if you were married, at what age you and your partner could use the tax system to help you acquire an investment property.

Research daily

Don’t get overwhelmed. You don’t need to know all the answers now. You can research these daily, one at a time, and I bet within a year you could have a plan in place to make it happen.

If you don’t feel you can do it, find a financial planner you can trust and ask him or her to look at your goals and how you can make it happen. It could cost you a few thousand to get the plan but as long as you stick with it, there’s a great chance your dream will come true. 

Savings tip

That’s the big picture, but what about the practical small picture stuff?

Write down all of your income and then all of your expenses each month, averaging bills you pay annually as a lump sum. So if you pay $1200 for insurance, that’s $100 a month and so on.

Look at your expenses. Say they add up to $40,000 a year and then you GST your life. See if you can save by cutting back, buying smarter and being committed to finding 10 per cent of $40,000, which is $4000.

That $4000 then could be used to bump up your super or help pay for a rental property.

If you put $4000 extra into super at eight per cent after tax, then that would double every nine years and so after 27 years it would be $32,000! If you do this every year until you retire, you would have a princely sum and it all would come out of a decision to change.

Imagine if you were married and your partner works and you get a raise or take up a second job or start your own business which doubles or triples your expected income of being an employee.

Shoot for the stars

I recommend big out-there goals and then do your best to live up to them. Shoot for the stars to grow your income and take control of your costs. A plan helps you do that.

Also don’t be afraid to pay for some expert advice from a good accountant to tap into the opportunities with the tax system. A financial planner can also be great. Some people need annual help and take up a tax deductible ongoing service, while others might only need a plan and a revisit whenever big decisions are to be made.

Remember, if nothing changes, nothing changes!

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Friday, July 15, 2011

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