Your Money, Your Wealth

Your Money, Your Wealth

What's Your Horizon

Jacqueline Hodges

Have you ever looked out to the distance as you stood at the beach or on hill and wondered how far it was to the horizon? It seems so far away. And just like the horizon, planning for your retirement and into old age seems so far away. But time goes by so quickly, so your planning should begin earlier rather than later. Yet, it can be overwhelming conceptually to plan for today, tomorrow and some other relatively unknown date far into the future. So, in this article I will provide you with some guidance to begin your financial journey.

Let’s start by thinking about your life stages as different horizons. Life stages are the significant milestones in your life. To align your plan to your life stages, think about your short-term, mediumterm and long-term needs and wants. Once you understand your short, medium, and long term needs and wants you can begin to plan how you will achieve those needs and wants and when you want to achieve them. You needs and wants are quantifiable goals and targets.

Time Horizon

Short Term < 5 years Medium Term 3 to 10 years Long Term 10 to 20 years +

For example, if you want to buy a new Tesla in the next two years, then you have a short term goal. You know that the entry price for a new Tesla is around $70,000. So your plan will include how you are going to achieve this goal. Can you pay for the new car with savings you already have, or will you need to borrow to finance the purchase?

Thinking further along the horizon, if you want to go on an adventurous driving trip around Australia in the next five years, you have a medium-term goal. A trip around Australia requires quite a lot of planning but it is quantifiable. You can estimate the costs and the time frames.

Your long term horizon, that is more than 10 years into the future, may include stocking up on big ticket items prior to retiring, renovating your house, retiring to the beach, or making a tree change. Again you can prepare and plan how you will meet these goals.

Life Stages

There are several theories on life stages, and how the stages are interpreted. Lifespan psychologists consider these as periods of development, moving from infancy through to adulthood, categorising the milestones of life into eight or nine stages such as Erik Erikson and Joan Erikson‘s Eight and later Nine Stages of Life, or even 12 stages such as Dr Armstrong’s The 12 Stages of the Human Life Cycle. Others base the life stages on broader conceptual grouping or simplify the development into three or four stages.

There is no rule as to how you identify with your life stage, and in some cases you may slip back to an earlier stage. For example, you have a baby in later life, you may slip from an empty nester back to motherhood, or you may retire but then return to work or business.

Choose the life stage that you identify with or that resonates with you and then begin your financial journey.

Begin Your Financial Journey

You will no doubt have ambitions and goals to live your life the way you dream and desire. It may be to create a relaxed lifestyle, it may be forging ahead with new plans, or it may be to continue just as you are. Whatever your plan, it is yours. It may be yours alone. If you have a partner you may prepare a financial plan jointly. It will still be yours.

You may have longer term plans. You may have envisioned your retirement. It may be a sea change with a life at the beach, a tree change to a regional lifestyle block, or a caravan trip around Australia.

By beginning your financial journey you can make the plan and prepare to live the life your dream or if necessary revise that dream into a realistic goal.

Make a date

Whether alone or with your partner, fix a date in your calendar to schedule some ‘financial me time.’ Be prepared on your date, have a clear a space, have a notepad ready to record your thoughts and ideas.

You might like to write on paper with a pencil and have an eraser ready to change things as you go. You can use a variety of tools, such as a mind-map, post-it notes, an excel spreadsheet, an electronic notepad or a whiteboard. Whichever tools you are going to use, have them ready and close by when you start your date.

Give Yourself a Gift

Your date doesn’t just have to be financially rewarding, you’ve earned yourself a treat for doing a good job. So, whether it’s buying a bunch of flowers, burning a tranquil incense, splurging of something luxurious, or just a smile in the mirror give yourself a gift. Positive reinforcement is powerful.

Improve Your Financial Literacy

Make time to learn about financial matters. You can read blogs and books, listen to podcasts about personal finance and investments or speak with your financial adviser. Financial literacy is something you can learn.

“The best time to start was yesterday. The next best time is now.”

– Unknown

Speak with Your financial Adviser

How you fund your lifestyle choices requires planning and the earlier you start you will be able to control saving and preparing. Once you have your goals established you need to consider how much you will need to fund those goals. Ask yourself these four questions. Are your goals feasible? Do your plans make financial sense? Are they viable? Can you save enough to fund those goals?

Your plan may be a multi-pronged approach. You may be waiting to downsize from the family home into a smaller property and use the excess equity for your retirement funds. You may already have a sizable superannuation fund and investment portfolio and feel confident that your retirement is secure.

If you haven’t got a plan yet, that’s ok. Now is the time to focus on your future, consider what options you have and set your plan in motion.

Jacqueline Hodges is a Chartered Accountant, Registered Tax Agent and SMSF Auditor. She is a Financial Adviser and an authorised representative of Wealth Today. She has a wealth of experience having worked in the financial services sector for most of her career. Jacqueline is a firm believer in continuing education and holds a Bachelor of Commerce (UQ), a Master of Taxation (UM), and a Financial Planning Certificate. She established her own accounting firm servicing individual investors and small businesses in 2005 and complemented the business in 2015 with the opening of the financial advice division.

Disclaimer: The information contained in this article is general in nature and may not be relevant to your personal circumstance and needs. Taxation, legal and other matters referred to in this article are of a general nature only and are based on laws existing at the time and should not be relied upon in place of appropriate professional advice.

We recommend that you assess whether the information is appropriate to your needs and if appropriate speak with a financial adviser to discuss your needs, financial situation and investment objectives. HQ Wealth Pty Ltd as trustee for HQ Wealth (CAR 1238791) and Jacqueline Hodges (AR 1238790) are Authorised Representatives of Wealth Today Pty Ltd (ABN 62 133 393 263), AFSL 340289.