There’s no denying our first financial lessons come from our immediate family or the people closest to us. However, the money lessons being instilled in us are rarely sound financial advice which will work in our favour.
Here are some ways to turn unhealthy money mindsets into smart financial decisions.
Myth 1 - Save your way to retirement
How many times have you been told the only way to make money is putting it in your bank account?
The truth is, nobody ever got rich by saving money with a traditional bank.
Investing on the other hand, is a way for your hard earned money to work even harder to help you meet your financial goals.
Long-term investing looks at investments for ten years and beyond. The benefit of long-term investments is you can ride out any downturns in the market and give your investments more time to go up in value.
For those with an appetite for risk, short-term investments are an option to bolster your wealth. Investing in short-term, high return assets will allow you to collect immediate returns.
- Know how your super is being invested: understanding how and where your super is being invested is critical as this is one of the biggest investments you’ll have
- Consider voluntary contributions: remember, the idea of super is for you to access it later on in life, so adding to your contributions can help boost your balance
- Make the most of the tax benefits: there are a bevy of tax benefits available inside Australia’s super system. This includes tax deductible contributions, co-contributions from the government, and spouse contributions. So make sure you’re across any tax benefits to boost your wealth
Myth 2 - You need to be a millionaire to invest in property
Many ‘ordinary’ Australians believe property investment is something ‘people with a lot of money’ do - not realising how accessible - and profitable - this kind of investing can be.
With interest rates at a historic low (yes, even with the recent increases!), ‘good debt’ is easy to get and providing you have equity in your home, a stash of cash or a share portfolio, getting a foot in the property investment door isn’t as hard as you might think.
Over the long-term, the value of well-located residential real estate may increase, however, like any investment, property too runs in cycles of high to low.
It’s also important to note property investment is not a get-rich-quick scheme, it can take up to 30 years to develop financial freedom through property investment/s.
Myth 3 - Get a good job and work hard
There's a set system which was drilled into generations of Australians: work hard at school, do well at university, get a good job at a good company, and you’ll be financially secure for the rest of your life.
Newsflash: this is no longer true.
We're in a new world of work. People today will have on average, 10 jobs in their lifetime with at least one - if not more - complete career changes. And their work will be a mix of full-time, part-time, and freelance/contract, with the occasional side hustle.
Gen Z (born in late 1990s to 2000s) are stepping away from the typical success formula and working for themselves. Countless millennials are going the side hustle route and turning their dreams into full-blown multi-million dollar businesses.
Remember, each individual will need to carve out their own unique path to wealth; one which fits in with their goals and takes advantage of all the ways financial gain can be made in today’s tech driven world.
Educating yourself and becoming financially literate is one of the best investments you can make. Finding a trusted mentor or advisor who has a deep understanding of how to leverage your particular situation is invaluable as you build and execute your wealth strategy.
Speak to a Fiducian financial planner to find out what you can do today, book a free consultation.