A financial advisor’s tips to support your financial wellbeing at any life stage

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When you first begin earning a reliable income, cash flow management is the critical financial skill that may assist your financial wellbeing.

• Control your spending: Develop the discipline to live within your income so that you don’t fall into bad financial habits — including debt traps such as spending money you don’t have on credit cards or buy now pay later schemes.
• Prepare for emergencies: Once you learn to limit your expenses to your available income, you can then start building savings into your budget. Your emergency fund will have the first claim on your savings. Building an emergency fund is an urgent and essential task.
• Invest in your future: Initiating some sort of investment is an important task at this stage. Investing now is about building good habits and putting compound interest to work over the next 30+ years. If purchasing your first home is on the goals list, consider making additional super contributions as part of the First Home Super Saver Scheme.
• Consider insurance: Unless you have dependants, life insurance isn’t vital at this stage, however, income protection and basic health insurance are important considerations (especially if you’re over the Medicare levy surcharge income bracket).
• Stay on top of your debts: How to best service any accumulated debt that you may have, such as student loan(s), is also an important element, as is controlling your use of debt (think credit cards). Forming bad behaviours and/or any one-off mishaps can have long-term consequences on your financial future.

Main areas we can help (including typical life stage factors):

• Goal setting/Financial direction (property rent vs buy, travel considerations & wealth creation ideology)
• Cash flow management (building your structure and creating good habits)
• Debt management (home and/or investment loans)
• Personal insurance (protecting your income)
• Superannuation (ensuring fees are competitive, funds are invested correctly and consider the First Home Super Saver Scheme)
• Investing (doesn’t have to be large amounts).

This is the phase that is the most challenging since many of the elements of financial planning need to be serviced.

• Grow your income: You should have now progressed in your working career and/or business and you should be focusing on increasing your income. This is an important part of growing your wealth. Growing income gives you more opportunity to build your savings and contributions to your wealth creation plan.
• Increase security with insurance and entitlements: You may have dependants, and therefore life insurance and understanding/maximising your Centrelink entitlements are both critical elements. Consider funding your personal insurances via superannuation at this stage as it will take the strain off your cash flow plan (if you’re down to one income).
• Avoid lifestyle creep and control your cash flow: If you’re SINK or DINK (single /dual income no kids), then making hay whilst the sun shines is your main priority. Increasing your investment/saving contributions is essential as your income increases as opposed to falling into ‘lifestyle creep’.

Sticking to a cash flow plan is critical to be able to find the money for the many short, medium and long-term goals you are likely to have at this stage (which can often seem overwhelming and unachievable). You should consider investing your surplus income via a diversified portfolio of growth assets, an investment property (if bricks & mortar is your thing) or catching up on any missed superannuation contributions if you’ve had time out of the work force (as you always need to keep an eye on your retirement capital).

• Formalise your estate plan: Building a basic estate plan by creating a Will and making clear (and valid) nominations on your superannuation and any insurances is also an important factor at this stage in your financial life.

Main areas we can help (including typical life stage factors):

• Goal setting/Financial direction (starting a family considerations)
• Cash flow management (couples combining finances/maximising Centrelink benefits)
• Debt management (refinancing, margin loans, house upgrade loan)
• Personal insurance (life insurance)
• Superannuation (understanding whether you should make additional contributions due to time out of the workforce)
• Investing (children’s education funding, FIRE plans – Financial Independence, Retire Early)
• Estate planning (inc implementing Wills).

In the lead up to, and throughout retirement, cash flow management becomes the focus of your finances once again (for those not in the top 5% bracket).

• Track your spending: Understanding what it costs you to live is imperative to any retirement planning activities as it is this figure that will ultimately determine the WHEN. If this figure is too high then it may involve trade-offs, such as working longer, working in a part time capacity, downsizing the house or tightening the spending reins (which is often the hardest thing to change at this age).
• Moderate the risk in your investments: Managing your accumulated investments to generate a return but also manage risk (seeing as you have limited ability to accumulate again) is the primary investment activity.
• Minimise taxation: Ensuring your superannuation is structured from a tax minimisation perspective is also key, as this can have a huge impact on your ability to retain capital, along with planning for future Centrelink entitlements (age pension & commonwealth seniors health care cards).
• Restructure your insurance: Life insurance may be relevant only if it is required to protect retirement income for the spouse (but hopefully at much lower levels if any) and debt should not be a big part of your finances at this juncture.

Main areas we can help (including typical life stage factors):

• Goal setting/Financial direction (when and how to retire)
• Cash flow management (cost of living throughout retirement)
• Debt management (extinguishing debt)
• Superannuation (contribution strategies, converting to Account Based Pension(s) and reducing investment risk)
• Retirement planning (modelling and trade off discussions).

You can hear more from Ben on our podcast, or read his tips to build a financial foundation.

Need to talk about financial anxiety? We know financial difficulties are one of the biggest stresses you can experience. If your mental health is affected, please reach out to Nurse & Midwife Support. Call us 24/7 on 1800 667 877 or email us.

Financial advisor & Director, Wealth Health Co

Armed with a Bachelor of Commerce from UWA, Ben started his financial planning career in 2013 and has since worked for three different private wealth, broking and accounting firms as a senior financial advisor.

During this time, Ben undertook further studies and successfully completed an Advanced Diploma in Financial Planning, Self-Managed Super Funds and Margin Lending. Ben has also achieved all of the educational standards as required by the Financial Adviser Standards and Ethics Authority (FASEA).

When his nose is not at the grindstone, Ben loves spending time with wife Steph, their son Leo and their two furry boxer kids Billie and Mr Wilson. Ben is also a 20+ year member of the Fremantle Football Club, visits his local gym regularly and enjoys fishing, 4WDing and boating with his friends.

Contact Ben on 0477008502.