Building a solid financial foundation
Whatever your goals – whether saving for a house, putting the kids through private school, or ensuring you’re comfortable in retirement – you must start with a sturdy foundation.
That’s why Wealth Effect's financial roadmap begins by building that foundation. We map out your plan so you’re ready to cope with life’s unexpected hurdles.
Here are the four pillars of a solid financial foundation:
1. Get in control of your lifestyle debt
Credit cards are convenient. Providing you pay them off every month, they’re a great financial aid. But when debt starts to pile up, it can be the start of a slippery slope, because banks charge you interest upwards of 20% if you don’t pay it back on time.
So the first step is to pay off those credit cards and store cards. Sound daunting? We can guide you through the process, step-by-step, and help you put measures in place to limit your card usage and make sure you don’t rack up those numbers again.
2. Build up an emergency fund
Emergencies are a part of life. It’s important to be prepared to deal with them, whether it’s a plumbing crisis, a sudden illness, car repairs or temporary job loss.
Once your debt is paid off, you should start to build up an emergency fund equal to six months of your living expenses. This way, you’ll be ready for anything that comes your way, and you won’t need to rely on those expensive credit cards.
3. Prepare yourself for the unexpected
What’s your biggest asset? Your house? Think again.
The most important thing supporting your financial security is your ability to earn money. What would happen if you had an accident or became sick and couldn’t work anymore? What if – touch wood – you weren’t here to care for your family?
You insure your house and car, so why not what you earn? To avoid the financial hardship and loss of security that comes with income loss, the next step in making sure you and your family are set for the future is getting life cover, income protection and TPD (Total & Permanent Disability) Insurance. You’re worth it.
4. Wills & Estate preparation
Protecting and providing for those we care about is something we all want to do.
Planning for the distribution of your estate is a complex but necessary component of your overall financial wellbeing. It requires much more than just preparing a will – especially if you have beneficiaries – and it may involve numerous administration requirements. However, if managed properly, careful estate planning can streamline the distribution of your legacy and protect your assets into the future. Planning your estate may encompass the following considerations: drafting a will that works, deciding the responsibilities of your executor, choosing your Power of Attorney, planning your successors, deciding on an appropriate trust, reducing tax liabilities.
Once you’ve established your financial foundation, it’s time to put together a roadmap to meet your individual goals.