A few weeks ago, I had to visit clients at their new house in a lovely new suburb in the outer Northwest of Sydney. I knew the direction I had to go but when I arrived in the suburb there were no street sign posts identifying exactly where their homes was. I had to call my clients to get their help with the final directions.

This event illustrated and reminded me what financial planning is and the important role financial planning plays in helping people achieve their financial goals.

It’s not just having a clear direction but knowing how to effectively achieve those goals.

With our ever increasing busy lifestyles and demand on our time, do you find managing and investing your money becoming harder for you each year?

You’re not alone. Hundreds of thousands of Australians face the same dilemma every day.

Do you hear of what seems to be a great investment idea and wonder what it’s all about? Should I buy property? What about shares? Is the investment risky? How can I legitimately reduce tax? How much insurance do I need? When I die who gets my money? How do I reduce my mortgage debt ? I’ve heard debt described as either ‘good’ or ‘bad’. What’s the difference? Will changes in tax law as well as inflation eat away my investments?

The solution is making time to evaluate your personal situation and develop a financial plan. Not just any plan but one with effective strategies to help you achieve your personal and financial goals.

The best courses of action is to seek help from a qualified and competent financial planner, who you can trust. You’ll have to pay a fee but your ‘no plan’ may be costing you now.

Here’s a few ideas if you want to prepare a financial plan yourself :-

- Find a quiet area where you can just think ( for a couple of hours ) about who you are and what you want to achieve for yourself / family, the dreams, hopes, goals and when you want to achieve them.

- Formalise those ideas, write them down and set time frames – this document will form the basis of your plans.

- Determine how realistic your dreams, hopes and goals are. For example, if one of your dreams is to retire at age 50 years and you’re aged 40 now with 2 or 3 children in primary school, your dream to retire may not be realistic for obvious reasons.

- Evaluate your personal history, for example, how good have I been with the handling and investment of my money in the past? If it’s been poor, what habits to I need to change, what new habits do I need put in place and how much discipline needs to be applied?

- Do I have the expertise in every area to make my financial plan effective? Evaluate what information and skills you’ll need to learn and determine from where the knowledge and skills can be accessed.

So far we haven’t looked at the financial considerations because financial planning is not just saving and spending money more wisely but it is also requires a change in thinking, habits, in attitude toward lifestyle as well as a commitment to long term personal and financial discipline.

- List your future financial goals in sections such as , short term ( 1 to 3 years ), mid term ( 3 to 7 years ) and long term 7 years plus and how you intend to achieve each goal.

- List all your Assets and Liabilities.

- Once your goals have been established, you can prepare a Budget to establish your cash flow. Do you have “too much month left at the end of the money” and what do you need to change that situation.

- What is my true ‘economic’ value? Calculate the amount of risk insurance you will need to protect yourself, family and assets as you build your future wealth.

- What if I die or become incapacitated? Determine who you want to share in your wealth and the best possible way to administer, protect, preserve and distribute your wealth.

- Set times for regular review, monitoring and up-grading your plan to meet your changing needs, personal situation and economic conditions.

Planning takes discipline! Action takes courage! Success takes persistence!
Procrastination just takes!

Now is the right time for you to start planning the rest of your life.

This article was prepared by Kevin Davidson CFP®, Authorised Representative of Total Financial Solutions Australia Pty Ltd, Suite 3, 170 Forest Road, Hurstville NSW 2220 Phone (02) 9570 7744.