The other day I was talking with a new client of mine. He’s a young professional, who recently started in a well-paid job and his early career is on track for growth.
He came to me for financial advice. He wanted to start off on the right track now that he is earning a decent income.
I mentioned to him how fantastic it is that someone as young as him is interested in managing his cash flow and getting into a good position for the future and retirement.
This confused him. “Retirement? That’s so far away.” He really just wanted to know the amount he should be saving, so he can buy the things he wants now.
It’s true that for someone near the beginning of their career, retirement can seem so far away it’s impossible to think about. But it’s never too early to form good financial management habits.
It’s a bit like the idea that breaking, or forming a habit takes 30 days. Well, when it’s a habit that will shape your entire future and financial wellbeing, it can take longer than that.
There’s a quote by US-based financial expert, Suze Orman that really resonates with me: “A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.”
I shared this with my young client. Sure, retirement might be ages away – but his main focus throughout his life and career won’t always be financial management. Things change and the unexpected happens all the time, and you want to be prepared.
Here are 3 things I shared with my client that he should do today to create wealth for tomorrow:
1. Earn more, save more
I know, “earn more” doesn’t seem like very practical advice. But it’s a good opportunity to think of things you can do to generate some extra income. This could range from putting in some overtime, to monetising your hobby.
Whatever your earnings, it’s important that you save. Don’t lock yourself into a vicious cycle of spending outside your means, or only saving the spare change you have left from your pay cheque after a week of spending on things you don’t need.
A great way to get into the habit of saving is to set up an automatic bank transfer to a separate savings account, to occur each week or fortnight coinciding with your payday. If you are a salaried employee, when you get a pay rise, this is a great opportunity to increase your savings amount before you get used to spending the increased amount of income. You wont even notice it, except as your savings grow faster.
2. Give yourself flexibility
There are certain goals that many of us think we should be aspiring to. A brand-new car to prove how successful our career is, buying a big home and the best appliances, and so on.
If your determination to obtain these things is so great that you end up taking out a loan you can’t afford, it’s a great way to get yourself into financial trouble – fast. It’s essential that you are in a position where you can commit to the life of a loan before you apply. An alternative may be delayed gratification whereby you save towards your goal and buy the item outright. You will likely find the sense of achievement much more rewarding and enjoy using the item more.
3. Find a good financial adviser
It can be difficult to be objective about your own income and expenses. Sometimes it takes an impartial and expert observer to make you realise that something is not actually a necessary expense, or that perhaps you should be saving this amount and investing that amount, etc.
Bonus Tip: Want to get started today? I use a simple tool to track progress towards individual goals. You can download it here and watch the video which explains how to use it effectively.
By keeping these things in mind and listening to professional financial advice, my client is in a position to work on his habits now to set himself up for financially stable future.
I offer a 30-minute financial review session. In this session, I can review your current financial situation. I can see if I can help you achieve your financial goals and the best (and quickest) way to do so. You can contact our office on 07 3102 4948 or book a time that suits you via the link below.