Insurance Articles
Rags to Riches
Posted by admin - 25/03/09 at 04:03:20 pmWe’ve all been guilty of a spending spree from time to time, but what blows your budget on a regular basis? There are tough times ahead and according to Paul Clitheroe, the author of ‘Making Money’, we need to pay close attention to where our money is and be smart about how we spend it.
The keys to success during tough economic times:
* Think about what you want your life to be like.
* Set yourself simple goals.
* Plan to consistently spend less than you earn.
* Put savings into buying and paying off your home.
* Once your home is paid off, put your normal mortgage payment into shares and property.
* Remember that risk equals return.
* Avoid “get rich quick” schemes. ‘
* Plan to minimise tax.
* Plan for retirement early in your life.
* Always remember money is no good if you don’t enjoy it. Money provides choices but shouldn’t overshadow health, family and friends.
Ten steps to financial security
1. Have a plan
Write down your objectives – Should contain your objectives, your budget, your current financial position and any relevant and important facts.
2. Budget and control your money
The truth is, everyone has trouble saving, regardless of their income. When budgeting always consider saving as getting rich slowly.
3. Save little, save often
$1 a day saved between age 18 – 65 will give you about $400, 000.
$2 a day would mean you have $800, 000.
Saving $5 a day means you will have about $2 million.
Simply remember that it is commitment to regular saving that is most important.
4. Don’t take silly risks
Risk equals return so if something offers a higher return there is a higher risk involved. Lotto and a small Melbourne cup wager are okay – just keep in mind that the chance of winning lotto is about seven million to one.
5. Don’t plan to save cash
Generally we can’t save cash or money in a savings account. Arrange for money to be automatically taken out of an account into a savings account.
6. Plan to own your home debt-free
Owning your own home and eliminating the debt against it as quickly as possible is the key to wealth creation.
7. Invest in super
Super involves regular saving, it is tax efficient, it is invested in good long-term assets and you can’t touch it!
8. Minimise tax
Tax should not drive investment decisions. Always try to minimise tax but never let it influence your investment decisions. Do not negatively gear solely for a tax break.
9. Protect your assets
Get insurance to cover your home and contents and care but also to cover yourself – Medical and income protection insurance are important.
10. Seek advice if you need it
If you get professional advice make sure you are aware of the issues and decisions they are making for you. Don’t leave every decision in the hands of a financial advisor.
For further information, go to www.money.ninemsn.com.au.
Source: www.ninemsn.com.au
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