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Seven must-ask questions for financial security

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My Christmas gift to all my loyal readers is the suggestion of a New Year’s resolution that will change your wealth bottom line forever. Yes, that’s right, you can change your financial destiny, but it will start with something that most of us can’t handle – the truth!

A few good questions

There are seven questions you have to answer truthfully if you want to put yourself on the road to riches. Here they are: 

Question #1

Do you have a plan that determines how you spend, save and invest your money? If the answer is yes then I hope the plan is a good one – more on that later.

If the answer is no and you’ve confessed up to it, then it is time to knock up a financial plan. You could do it yourself if you have the time and resolve, but if you haven’t then think about a trustworthy adviser. 

Question #2

Have you done a budget and do you let that dictate how you use your money? This is really important to find out how much you are currently saving. It is the amount left over after deducting your spending from your income.

The budget is the starting point of changing you and your money attitude. Most people find it boring or confronting and some both. If you can’t or won’t do it, it is hard to expect that much will change in your moneymaking life.

The amount you save or should save will be crucial to your plan.

Question #3

Are you a regular saver? Based on an 18-year old who saves $5 a day until he or she is 65 and who averages a 10 per cent return, say in a super fund, would turn this next egg into approximately $2 million!

There are great rewards for saving regularly and it does not have to be an enormous amount. The actual saving and sticking to it represents a positive change that will have a snowball effect.

The famous book – The Richest Man in Babylon – was all about saving 10 per cent of every dollar you earn and investing these dollars into sound, low-risk activities. 

Question #4

Are you aware of what are good and bad investments and are you positioning yourself to benefit from them?

If the answer is yes then you’d have a plan – written or unwritten, but preferably the former – where you’re planning to buy a principal property to live in and pay it off as quickly as possible.

You should be planning to put extra into super and/or invest in an investment property. Alternatively, you could be determined to build up a portfolio of great shares that you’ll ride up over 20 to 30 years. You could even plan to borrow, sensibly, to secure tax deductions to help pay for your wealth accumulation.

And you would be determined never to fall into get rich quick plans – they are bulldust. Live by the idea that if anything sounds too good to be true, it probably is! 

Question #5

Have you found yourself a great tax adviser who has looked at your circumstances and made recommendations of how you can minimise your tax? If you answer to no to this, then you’re in a majority, but that’s no excuse for me to go soft on you.

It’s madness to pay more tax than you have to and if you don’t believe there’s any economy in going to a tax expert, at least go to the tax office website to see what you can legally claim.

Get on those search engines and look for websites that give you clues on how you can save tax money.

Question #6

Have you worked out what could go wrong with your life and your potential to get richer and have you taken out protection? Smart business owners do a SWOT analysis to see what their strengths, weaknesses, opportunities and threats are.

You must ask “what if?” And this will make you think about insurance for say your car, your home, your medical expenses and even your income. I’ve seen couples whose life plans were torn apart by an accident where there was no protection in place.

Question #7

Finally, ask yourself this very important question: “Do you have the skill to build up your own wealth, so that you’re rich in retirement?” If the answer is no, then it’s time to do something about it. The longer you delay the change the harder it will be to build more and more wealth.

Though there are exceptions, the smarties who wind up rich save regularly, invest wisely and they do it for as long as time as possible. You can catch up on lost time, but then you have to be smarter than most and you have to make some sacrifices.

But let me say, the sacrifices and the changes you make are worth it and success leads to success.

As good as it gets!

My last point is a simple one. You can make the change to build wealth, but if you don’t think you can, get someone to help you. Look at yourself truthfully and the results will be rewarding.

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, December 16, 2011

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