Think financial advice is only for later in life? The truth is, starting early can help you build wealth, manage debt, and secure your future. Find out how simple strategies today can set you up for success tomorrow.
Picture this: you’re catching up with friends, and the conversation drifts towards money — mortgages, credit cards, maybe even that dream holiday you’re saving for. For many, finances feel like a juggling act between bills, lifestyle choices, and occasional splurges. It’s easy to think that seeking financial advice is only for those with complex investments or nearing retirement. But the truth is, getting professional guidance early on can make all the difference. Finances aren’t just about balancing the books; they’re about creating a strategy that works for you today and sets you up for the future.
With time as your greatest asset when it comes to building wealth, by taking action now, you can harness strategies that make the most of it. Here’s how to get started:
Harness the Power of Compound Interest
Compound interest, often called the most powerful force in the universe, works by earning interest on your interest. This simple concept can yield dramatic results over time.
Imagine starting a savings plan at age 30. If you contribute $2,000 each year to an investment earning a 6% annual after-tax return, in 30 years, your $60,000 contribution will have grown to $158,116. Thanks to compound interest, you’d have effortlessly gained $98,116. The longer you save and the more you contribute, the larger your balance will be.
Manage Your Debt
The wrong type of debt can severely impact your future wealth. High-interest debts, such as credit cards, should be avoided when possible. Consolidating multiple debts into a lower-interest loan can help control debt and save you significant interest.
Even with “good” debt, such as a home loan, strategic repayment methods can yield substantial savings. For example, on a $500,000 mortgage with a 4% annual interest rate over 30 years, the monthly repayment would be $2,146.90. By increasing your repayments by just $166.67 per month ($2,000 per year), you could pay off the loan in under 25 years, saving $80,144 in interest.
While the savings plan might deliver bigger returns due to the higher interest rate, paying down your mortgage is a low-risk strategy. An adviser can help you balance the risk and reward, ensuring you’re comfortable with your investment choices.
But where will the money come from?
For many young Australians, setting aside a couple of thousand dollars each year for savings or debt reduction is manageable, while for others, it may require a bit of creativity. Start by looking at everyday expenses — small changes can add up quickly. For example, cutting back on takeaway coffees, dining out less frequently, or reconsidering subscription services can easily save you over $2,000 a year. By making mindful choices, you can free up extra funds to invest in your future.
Don’t Forget Protection
No matter your age, life’s uncertainties can strike. The financial consequences of death, illness, or disability can be devastating, especially when you’re younger, as the impact on your long-term financial goals can be significant. How will your retirement look if you can no longer earn an income or contribute to superannuation?
Many Australians are underinsured when it comes to life and disability coverage. Your adviser can help ensure your family’s wealth creation plans are protected.
The right time to seek advice?
Simple strategies like setting up a savings plan or increasing mortgage repayments are steps anyone can take. However, in today’s complex financial environment, tailored expert advice can help you maximise the opportunities available. This includes selecting the right savings structures (superannuation or non-superannuation) and investment products that align with your risk appetite and priorities. A financial adviser can also help you uncover hidden savings and evaluate different strategies.
Ready to meet your financial adviser? Book a time today.
