The BIG 5 Which Will Determine Your Financial Future

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The BIG 5 Which Will Determine Your Financial Future

  • February 1, 2021
  • Posted by: Daniel McGregor
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  1. How Much You Save

Being able to save some of your income is the NUMBER ONE determining factor in how financially successful you will be! The only way you can get ahead financially is to save. What you can turn those savings into then depends on what you do with the money, but if you’re not saving anything you have nothing with which to build wealth. What strategies do you currently have in place to save money?

  1. How Much You Borrow

Debt can be a financial noose around your neck. That’s because there is so much money being borrowed to purchase things that are only going to go down in value. Borrowing can be a good thing if it’s used for investment, however, most people get bogged down with a huge mortgage which then prevents them being able to save and invest, let alone borrow and invest. Therefore, one of the key decisions that will impact on your financial future is how much money you have to repay. If it’s not too late, then be mindful of how much you’re willing to borrow to buy a home as the higher your mortgage, the harder it is to create wealth outside of the home. If you already have a home and mortgage, then the trick is to get the mortgage paid off ASAP! Leading to…

  1. How Quickly You Pay Off Debt

Many people don’t take debt seriously enough because they don’t understand the long-term implications of borrowing money and having to pay it back with interest… the banks do though!

  • Firstly, pay off credit cards. Generally, credit card debt has the highest interest rate (for this reason, avoid credit card debt wherever possible).
  • Next, pay off other non-deductible loans. A car loan would be an example of a non-deductible loan. Your mortgage is also a non-deductible loan.
  • Then pay off deductible loans.

  1. How Seriously You Take Insurance

Far too many people ignore the importance of insurance because they believe it’s a waste of money and/or don’t think bad things will happen to them. You only have to turn the news on every night or read the newspaper each day to see the reasons why insurance is so important. When it comes to insurance, you must understand that your most valuable asset is, in fact, your ability to earn an income! That’s why if you have a family who depends on your income, you have to have adequate life insurance.  Whether or not you have a family, income protection insurance is a must. Failure to have these will result in financial ruin if anything serious happens. Trust me, no one who’s ever received a life insurance cheque or claimed on an income protection insurance policy has ever been heard to say, “I wish I had less insurance.”

  1. How Much You Invest

Every time you spend a dollar, you’re making a choice between spending that dollar today versus having it available to spend in the future. If you choose to save a dollar for the future, it can then be invested and grow into more dollars. This is the essence of creating wealth and how much wealth you can create will determine the choices you will have and the lifestyle you can lead in the future. There are easy ways to start investing and continue investing that don’t require you to give up the lifestyle you enjoy, but will enable you to live a much better life in the future.

P.S. Your super means you are already investing… that’s why your super is really worth paying some attention to!

How are you tackling ‘The BIG 5’?

Cheers,

Daniel