What would you do if you had $10,000? Would you spend it? Would you stick it in your mattress? Share it between your friends and family? Maybe it would be a much better option to make the cash work for you and grow your personal wealth.
When you are considering what to do with your ‘extra’ cash there are 5 different things to consider.
1. What are your financial goals? Do you want to save some money for your children’s education or build your wealth for retirement so you can enjoy your desired lifestyle? Listing your goals can be a great guide for working out how you want to invest your cash. Your financial strategy isn’t about making money, it’s about creating the lifestyle you want.
Lifestyle goals, not financial ones
The first thing to remember is that your financial strategy isn’t about making money, it’s about creating the lifestyle you want. So instead of saying you want to make X amount of dollars by 2030, think about what you’d like to use that money for.
When you’re setting your goals, take into account the various aspects of your personal and professional life. Depending on your situation, that may include your education, career, family plans, creative aspirations, hobbies and passions.
Different goals for different life stages
When it comes to your goals, think about the short, medium and long term. For instance, some of your goals might be achievable in the near future, like taking a holiday or trading in your car, while others might be for further down the track, like buying a new home or setting up a business.
You should also think about how your goals might change at different stages of your life. When you’re just starting out, your goals may include moving out of home and finding a job. After that, you may want to start a serious relationship and have a family. And once there are children in the mix, your focus is likely to shift towards paying for their education and putting savings aside for the future. Then later, you’ll want to be well prepared for retirement so you can enjoy the lifestyle you’ve worked hard for.
It helps to think of your goals as steps along life’s journey. By mapping out what you want that journey to look like, you’ll have a better chance of enjoying each step along the way.
2. Pay off some debt. If you have some extra cash it may be a great time for you to pay off that high-interest credit card, loan or mortgage.
3. Boost your super. You may find that your employer’s contributions are not enough to provide you with the same lifestyle you have while you are working.
4. Consider diversifying your assets. Look at what your current assets are and what investment options may suit you – shares, EFTs, property etc.
5. Build your emergency fund. Life has many ups and downs and having some emergency cash may help alleviate some of life’s twists. A good idea for an emergency account is to make sure it is a high interest savings account.
Everyone’s financial plans are different and will often change during different times in your life.
If you’re not sure where to start or if your existing plan is maximising your investment strategy then give us a call. We’re always up for a chat!