If you’ve paid off your home, have a healthy stash of super and take a holiday overseas each year, you’ve made it financially. That’s the view of many Australians according to recent research.
A study by comparison site Finder found paying off the mortgage is the financial milestone 74% of Australians value most.
Having enough in super to retire comfortably comes a close second for 59% of us, and one in three people see the ability to jet-set overseas each year as a sign of financial achievement.
These are all reasonable goals, and definitely a lot more sensible than owning a sports car, which 5% of people say indicates financial success (for the record, cars are a dreadful investment!).
A plan of action
No matter what your financial goals look like, you’ve got a far better chance of achieving them with a plan of action in place.
Let’s say for instance, that you’re keen on paying off your mortgage early. It’s a smart strategy that will leave plenty of spare cash to devote to overseas travel. And it can be done.
Start with your loan
The trick is to plan how you’ll get there with clear steps that you can stick with over time. A good starting point is to check the rate you’re paying. The average variable rate is currently 5.3% – that’s a terrible rate when you consider there are plenty of loans costing less than 4%.
If you’re sure your loan is competitive, one of the easiest yet most effective strategies to be mortgage-free sooner is to pay a bit extra off your loan each month.
On a mortgage of $400,000 with a rate of 4.0%, tipping just $20 more into the loan each week could see you clear the slate 18 months ahead of schedule and pocket savings of $17,217 on overall interest.
Grow your super
If you’re keen to grow your super, talk to your boss about contributing to your fund through salary sacrifice. This is where part of your before-tax wage or salary is paid into your super rather than receiving it as cash in hand.
Before-tax contributions are taxed at just 15%, which is below the personal tax rate of most workers, so salary sacrifice can be a very tax-friendly way to boost retirement savings. Chances are, after a few pay days you won’t notice the difference in your pay cheque but it can have a valuable impact on your final nest egg.
Think about your money milestones
The start of the new financial year is a good time to think about the money milestones that matter to you – from building a portfolio of investments to starting a successful business or being able to retire early. Don’t just nut out some goals though, think about how you will achieve them, and start putting plans into place to make it all happen.
We can help
It’s an area where good advice can pay off. Start a conversation with us today. We will work with you to prioritise goals, and develop a roadmap of action that helps you work through your personal bucket list.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
