Financial Freedom – 5 Tips To Ensure You’re Building A Bright Financial Future | Being a habitual saver is a useful practice that will help you feel secure about your finances and lifestyle over time. When it comes to building a bright financial future, however, saving is only the first step. Here are five things you should consider doing next to help you in your journey of wealth creation:
1. Get Help With Your SMSF
There are many long-term benefits of having a Self Managed Super Fund (SMSF), particularly when it comes to enjoying more control of your estate planning and investment choices. Be mindful that having this level of autonomy over your superannuation is also considerably riskier. Unless you are in the industry yourself, you should always seek professional help from SMSF Accountants to get the most out of your fund and ensure everything is managed correctly.
2. Diversify Your Investments
This is a timeless piece of advice that you will have heard before and will probably keep on hearing. The reason for the popularity of the advice is simple – it really works to keep your finances safe and maximise your returns in the long run. Consider diversification in every investment decision you make. For example, if you invest in liquid assets, consider investing in a range of ETFs, securities, mutual funds, and even cryptocurrency.
3. Plan For Retirement
It’s unfortunately common for people to avoid thinking about retirement until they start seeing signs that they’re not able to retire when they hoped to do so. Don’t let this be you. Get real about retirement being a part of your future. Staying on top of your super, as mentioned in step 1, is important. So is thinking about your lifestyle and housing.
Take into account what your cost of living is now, then ask yourself what it may be in future. Do you plan to have a home paid off or use your superannuation towards a home deposit? Are you likely to travel more, move to a different city or country? Would you prefer the flexibility of renting long-term? This way, you can plan based on realistic expectations of what retirement could look like for you.
4. Have An Adequate Emergency Fund
It cannot be stressed enough. An emergency savings fund will make a world of difference when you are faced with unexpected or difficult financial circumstances. The past year certainly has proven how things like employment, health, and housing security can change at the drop of a hat. To help you stay afloat during times of uncertainty, aim to save up six months’ worth of living expenses in your emergency account.
If you find yourself forgetting to put money aside, consider setting up an automated direct transfer between your accounts every month. It may take a while to build up the full amount, but you’ll be grateful that you did this when a difficult time comes.
5. Know What You’re Saving For
‘Begin with the end in mind’ – that’s how Stephen R. Covey, author of The 7 Habits of Highly Effective People puts it. Covey’s advice is that you must know what kind of financial future you want in order to give yourself the best chance of achieving it. Make note of your short-term and long-term goals so that you can track your progress over time. Writing your goals down makes things more likely to happen and helps you to stay motivated.
It will take some time to incorporate all of the above into your lifestyle. Be patient and remember that your future self will thank you for the hard work you put in now.