LOOKING at the headlines right now, it’s easy to get spooked by the stream of bad news.
The sharemarket is volatile, property values are flat and a question mark hangs over the health of the global economy.
As individuals, there’s not much we can do to influence these events. But there are plenty of simple steps we can take to protect our own financial wellbeing.
Sixteen years ago, when I first wrote the book Making Money, I explained several steps that provide the foundations of financial security.
Back then, the economy was chugging along nicely. But having spent the last few months updating the book, with the new edition coming out in the first week of September, I realise these steps are still relevant.
A plan is essential. It doesn’t have to be overly detailed but you need to include key goals such as buying your first home within three years, or paying off your credit card in 12 months. Or you may want to live mortgage-free in 10 years.
Drawing up a sensible budget and using this as your spending guide, rather than your credit-card limit, is the best way to gain control of your money.
Aim to own your home debt-free. Eliminating your mortgage as quickly as possible will see you save a fortune in interest and free up cash to invest.
Take an active interest in your superannuation, and make extra contributions whenever you can. Super is tax-friendly, it’s generally invested in quality assets and you can’t get your hands on the money until you need it most - in retirement.
It’s also essential to protect your assets. Most people insure their home, contents, car and other valuables. But the other asset you need to protect is you. There are times, especially when we’re raising a family, when we need sufficient life cover. Income insurance is often worthwhile too - remember, it’s tax deductible.
Risk equals return. We instinctively look for an easy way to make money quickly. As a result, each year thousands of Australians lose money to scams.
We need to accept that if something offers a higher return than normal, it will have a higher risk.
These steps aren’t complicated, follow them and over time they will help you achieve financial independence. For more information on managing your money and building wealth, take a look at my book Making Money.
* Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and commentator for Money Magazine.
The sharemarket is volatile, property values are flat and a question mark hangs over the health of the global economy.
As individuals, there’s not much we can do to influence these events. But there are plenty of simple steps we can take to protect our own financial wellbeing.
Sixteen years ago, when I first wrote the book Making Money, I explained several steps that provide the foundations of financial security.
Back then, the economy was chugging along nicely. But having spent the last few months updating the book, with the new edition coming out in the first week of September, I realise these steps are still relevant.
A plan is essential. It doesn’t have to be overly detailed but you need to include key goals such as buying your first home within three years, or paying off your credit card in 12 months. Or you may want to live mortgage-free in 10 years.
Drawing up a sensible budget and using this as your spending guide, rather than your credit-card limit, is the best way to gain control of your money.
Aim to own your home debt-free. Eliminating your mortgage as quickly as possible will see you save a fortune in interest and free up cash to invest.
Take an active interest in your superannuation, and make extra contributions whenever you can. Super is tax-friendly, it’s generally invested in quality assets and you can’t get your hands on the money until you need it most - in retirement.
It’s also essential to protect your assets. Most people insure their home, contents, car and other valuables. But the other asset you need to protect is you. There are times, especially when we’re raising a family, when we need sufficient life cover. Income insurance is often worthwhile too - remember, it’s tax deductible.
Risk equals return. We instinctively look for an easy way to make money quickly. As a result, each year thousands of Australians lose money to scams.
We need to accept that if something offers a higher return than normal, it will have a higher risk.
These steps aren’t complicated, follow them and over time they will help you achieve financial independence. For more information on managing your money and building wealth, take a look at my book Making Money.
* Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and commentator for Money Magazine.
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