We’re about to embark on a journey to financial independence, and it’s going be a wild ride. But before we start fantasising about those fancy investments, let’s take a moment to lay down some solid financial foundations. Trust me, you’ll thank me later.
First things first: let’s kick debt to the curb
Say goodbye to those pesky bills that haunt your dreams. We’ve got two strategies to tackle this beast.
Option one: the Debt Avalanche. Imagine lining up all your debts in order, with the one carrying the highest interest rate sitting at the top. Make minimum payments on all of them, and then go all out on the debt with the highest interest rate. Knock it out of the park! Once that’s done, move on to the next one. Keep going until you’ve vanquished every last debt. It’s like slaying dragons, one by one.
Now, for those of you who like quick wins and a boost of confidence, we’ve got option two: the Debt Snowball. Picture your debts lined up from smallest to biggest. Same deal with the minimum payments on all of them. But here’s the fun part: put some extra cash towards the debt with the smallest balance. Crush it! Then take that extra money and add it to the next debt on the list. Keep rolling that snowball until you’ve conquered all your debts. You’ll feel like a superhero.
Next up, we need to build a solid emergency fund
Life loves throwing curveballs at us, whether it’s a sudden job loss, medical issue, or car breakdown. But fear not! An emergency fund is your secret weapon against these financial disasters. Aim for three to six months’ worth of living expenses to start. Adjust as needed based on your own circumstances. Trust me, when the unexpected strikes, you’ll be ready to tackle it head-on without resorting to expensive financing.
let’s talk budgets
Yeah, I know, budgets sound boring, but they’re a necessary evil. Think of it as a blueprint for your financial dreams. It ensures that your spending aligns with your goal of achieving financial independence. Here’s the lowdown on creating a budget you can actually stick to.
Step one: List all your fixed and variable expenses, along with your sources of income. Don’t forget to jot down any savings you manage to squirrel away each month.
Step two: Dive into your variable expenses. These are the costs you have the most control over. Scrutinise them and make adjustments where needed. Be realistic, though. No need to cut out every ounce of fun from your life. We’re aiming for balance here.
Step three: Shift your attention to those fixed expenses like food, clothing, phone bills, and all those streaming services you can’t live without. Take note of where you can trim the fat and follow through. If you manage to score some discounts, update your budget accordingly.
Step four: As you fine-tune your target expenditures, keep an eye on how it affects your bottom line. The goal is not only to balance your budget but also to increase the amount you can save and invest each month. Cha-ching! What can you cut out to boost your investable income?
Step five: Don’t forget to regularly check in on your real-life spending versus your budget. It’s like giving yourself a financial reality check. You got this!
Alright, now let’s talk insurance
I know, I know, it’s not the most exciting topic, but hear me out. Insurance is like a safety net for those unexpected curveballs life throws at you. It’s there to protect you and your loved ones financially. Take a look at life insurance, income protection, Trauma & TPD as well as your private health insurance to make sure you’ve got enough coverage for your situation. It’s like having a superhero cape to shield you from financial disasters. If something happens your financial independence goals won’t be impacted, plus you will have peace of mind that your family are looked after should something happen to you.
Last but not least, super contributions
No, not the ones with a red cape and an “S” on their chest. We’re talking about voluntary superannuation contributions. Before taking a break from your career, planned or unplanned, why not take advantage of the tax benefits? Make extra contributions to your super before tax while you are working, either through salary sacrifice or employer contributions. It’s a smart move to ensure you don’t end up with a retirement outcome that’s less than stellar.
So there you have it, folks! The roadmap to financial independence. Now go forth, slay those debts, build that emergency fund, budget like a boss, protect yourself with insurance, and supercharge your super contributions. Your financial freedom awaits!
Have a question? Send an email to hello@concordwealth.com.au