According to a recent report by financial adviser Perpetual Private, 57 per cent of Australians believe their finances are stopping them from pursuing their plans for the future, with 34 per cent saying they think about their money situation constantly.
The research titled What do you care about?, which surveyed 3,000 Australians, found that Australians list their financial position as one of the top three things they care about in life, next to family and personal health.
As a result, 57 per cent indicated they checked their account balances frequently, while 46 per cent avoided making unnecessary purchases, and 45 per cent sought out discounts when shopping.
However, despite this concern, only 27 per cent of those surveyed were found to have established goals for their savings, and just 11 per cent had a regular investment plan.
Gary Lembit, senior manager of client insights and analytics at Perpetual, said Australians must allocate time to create a plan for their finances in order to achieve their long-term goals.
“If you have a resolution around your finances, write down your goals and develop a plan with actionable steps to get you there,” he said.
“Put thought into your likely income and expenses over the long term, the value of the things you want and how much time and wealth you are willing to commit to achieving those things.”
Mr Lembit said it is fundamental that Australians acknowledge the cost of the milestones they hope to face in their lifetimes in order to establish investment strategies that will provide them with the level of returns needed.
“It is beneficial to evaluate your life goals around important questions such as: How much will it cost to live in the area you want to? What level of education do you want to provide your kids? These are big milestones requiring significant investment. So thinking about life goals early is important,” he said.
“Planning how much you will need to accumulate to realise them is going to give you a tremendous amount of financial relief.”
Here are Mr Lembit’s top tips for individuals set on organising their finances:
- List and value all your assets, including real estate, retirement savings, shares, vehicles and even jewelry;
- Compose a budget and monitor your expenses. He recommends a variety of applications that can be used to track your savings and spending habits;
- Decipher your key life goals and understand the costs. Mr Lembit advises considering the type of dwelling you want, its location, your desired family size and their likely education needs etc;
- Top up your superannuation with additional contributions;
- Write down your debts, including your mortgage, credit cards, loans etc;
- Put any additional or unexpected funds you come by into paying down your debts;
- Approach a financial adviser about creating an investment strategy; and
- If retirement is on the horizon, consider estate planning and allocate beneficiaries on your financial accounts.
There is little point for most couples to save more than $400,000, outside their own home. However if Australia had a universal age pension, with no asset or income test, there is an incentive to save. That is the real problem.
Are you serious? Your lifes goal is Age Pension. Have fun with that.
There is an incentive to save so you don’t have to solely rely on the Age Pension which only provides a simple life in retirement. I plan to be like my mother who in retirement is taking overseas trips every year.
You gotta stop your mum doing that. She is spending your inheritance. Crazy advice
A. Its her money – she earned it so she can spend it.
B. If she lives another 40 years I will still very likely receive a sizable inheritance.
C. I don’t need her money. My husband and I are in our early 30s, own our home, are debt free and have surplus income which we save each month.
been reading too much unshod adviser??
I hope you’re not an adviser Steve. I’d rather have $1mil and spend $600k enjoying myself to end up with your $400k just to get more Age Pension. We all know how trustworthy our government is to be more reliant on Age Pension rules.
Steve, you are correct in your thinking as the other commentators probably haven’t done their homework. This figure as a target is especially true for immigrants who arrive on our shores in their early 40’s with no pension savings. Unless you can put clients in a fund guaranteeing 7.8% p.a. after costs or in a fund that can deliver a $55,000 a year income (ASFA figures minus the $5000 annual holiday) then stop saving at age 67 with (in today’s money) $387,000 as (based on 5% assumption) you will need $1,100,000 (in today’s money) to have the same $55,000 a year income. In fact, at less than 7.8% per annum your combines Centrelink and super pension goes DOWN annually until that point where you become self funded. Rather pay off the mortgage and have no rent or mortgage to pay by 67 and focus on getting to the $387,000 mark (in today’s money).
Thanks – I now see the point Steve was making.
Well, the cost of advice on a regular investment plan SOA is how much?
$10k