This week I’m changing course. I’ve asked John Trent, an expert Financial Advisor to many of my clients, to give me some insights into his long career as an advisor and some tips for you to take away:
With over 25 years experience, it’s safe to say that I see a lot of the same recurring financial mannerisms amongst my new and existing clients. I want to give you some real insight into the knowledge I’ve gained over the course of my career. Here’s my take on 7 common topics that could change the way you handle YOUR finances.
- A real savings plan
Most clients who come to me have always struggled with a “real” savings plan because, well, life gets in the way. Here are the basic rules: 1. Always pay yourself first. Even 5% of your salary, it doesn’t matter. Have it direct debited to an account that is out of sight & out of mind. 2. Set a reasonable saving goal. It needs to be real. Too many people set unrealistic goals i.e. “what I want to have in 30 years”. 3. Establish a time frame – perhaps 12 months and then see how much of your goal has been achieved. Don’t get discouraged.
- Stop living pay to pay
Prioritize your spending habits, prioritize debt. You must start now! With a number of my clients I use an envelope system, where with each week of their pay they allocate an item for the costs per week. For example, for petrol, place $50 into 1 envelope and put it in a drawer, for food place $300 in another envelope. Get all of your paperwork in order, and determine the strategy needed. If the first priority is to get rid of credit card debt, then focus on one item at a time so that the end goal doesn’t seem so unattainable.
- Why some people have money and others don’t
The following are the differences between how the two think and act. Those who don’t have money blame others, they always have thoughts like “this is something I need”, “I want to live in the moment”, “I will start saving later”. Those who have money set goals, are organised and finally, they READ. The only way we can ever understand and improve our quality of life is to read. There is numerous information in our age of technology on how to really understand money.
- Money & Gen Y
Do you really want me to be honest? They believe “the world owes me a living”. They have become dependent upon their parents, and the world has also changed again. The reality is that when this age group reaches 60, it is highly unlikely any form of pension will be available from the Australian Government. They also have the attitude of “I will inherit”. Over the years, I have advised my retiree and near retiree clients to join the “SKI CLUB” (SPEND YOUR KIDS INHERITANCE). You can just see the blank look on the 20-30 y.o kids’ faces.
- How many clients are already following a successful plan?
I have seen more recently that this number has increased in the retiree and pre retiree. Many now read and have researched all areas for retirement planning. The 50 plus age group are generally fairly well versed in the importance of money and the independence it brings.
It’s the 20- 50 age bracket that is of concern. They’re trying to juggle families, debt and cash flow. Still, the education for them is very poor. 70% of this group would not have a direct plan in place before I see them.
- Financial issues causing a strain on your relationship?
Sit down with each other and talk. Collate all paper work. Quite often the mountain is not as big when you have everything in front of you. Rationally work through what you have and what you owe. Again, read and research. Once you have researched and you feel you can tackle each item, set a plan in place. If it all seems too much and you’re beyond this stage, then seek the help of someone who can act as a third party and guide you in the right direction, preferably a qualified financial person and not family or friends – be careful with this.
- What’s holding you back – fear or ignorance?
Both have a part to play, however, I have found that clients coming to me are now better at engaging advice. The conversation of fear is now about how they want to have a plan in place, because otherwise they are going to keep heading down the track they are on. The ignorance is where a really good adviser can guide them to overcome this through education. After the first meeting with a new client, I always ask them to go and read up on certain parts of information that I have discussed with them. Next time we meet, I give them a little quiz. This is already helping them to be in control of their own financial destiny.
Ready to start the conversation? Feel free to post any questions below and one our team members will be happy to get in touch.
John Trent is Senior Financial Advisor at Evergreen Financial Group. He has 25+ years in the financial planning industry, an Honours degree qualified Accountant with a Masters in Business and an Associate Diploma of Financial Planning along with numerous industry specific accreditations including SMSF advice.