Life means change
From the different life stages we go through to travel to children to where we live to careers and sometimes illness. Not much stays the same.
I am going to focus in on how finance and change often go hand in hand. Either finance causing change or change significantly impacting your finances. Highlight how some of these changes impact you and what you can do to minimize, prepare and -even more importantly- benefit from these changes.
1) Mortgage & lending changes
If you have a mortgage you will know that rates change. But so do products, and policies. New products are created, The banking regulator (APRA) and the corporate regulator (ASIC) issue new regulations to the lenders. This changes what banks can lend out, to whom, how much and under which conditions.
Many of these regulations are targeting property investor lending but first home buyers and people looking to upsize are impacted as well. For instance, the change in assessing a persons living expenses and the requirement to justify your living expenses applies to all borrowers.
2) Banking & banking service changes
A bank used to be the place where you kept your savings and had your mortgage. Your money was cash but you knew your bank manager personally. Roll forward to today: Your money is plastic (or your phone), banks control all of your cash (flow), you probably don’t know anybody at your branch and everything from salary deposits to automated bill payment and credit cards are done via your phone and pc. Banking -or finance- is seemless integrated into our lives.
The service proposition has changed. Most banks now offer some kind of app or software build into their online banking systems to help you analyze your spending habits. Alocating expenses into categories to help you see quickly where you are (over) spending. The tools are basic now but in the years to come they will become almost equal to accounting software. AI learning and rapid software developments (including software that asks you better questions) will improve the quality and experience.
3) Technology changes
But the banking apps only go so far. The nature of those services means it will always be a few steps behind dedicated money management software. Platforms / apps like moneysoft, moneybrilliant or monefly take the money management service much further. By incorporating your complete financial position (assets, super annuation, goals, …) they bring to you tools that rival financial planning -though don’t say that to your planner….-
These are not merely a way to track your spending but also a tool to help you map out a financial future of your choice, set (short term and long term) goals, create milestones and track progress. Educating you along the way on how wealth creation works. And as this is your money, your financial position and your future it pays to know this stuff.
And often these platforms are provided by money coaches or money planners who specialize in helping you uncover your goals and aspirations and stay on track. A money coach should propose new (better and faster) ways to set up and manage your finances. Financial structuring that makes it easier for you, helps you keep more money in your pocket at the end of the month. Some basic examples are splitting up your everyday accounts into a spending account, a bill pay account and a savings account. Working towards a financial buffer for emergencies. Putting in place some personal protection mechanisms in case of a serious life event. These are simple steps to remove (finance related) stress from your life. Imagine going to work knowing you have enough money in the bank to cover three months worth of expenses and your next holiday is planned and paid for. Would that be a good feeling?
4) Times and circumstances change
5) Plans change
6) The finance industry has changed
Follow the following principals:
- Work to create an income
- Budget to make sure there is surplus income (cash flow)
- Invest the cash flow to generate wealth and an income stream for life
We see clients who’s financial situation can be improved to the tune of $400 to $1000 per month by a few tweaks.
Our commitment is making sure your current mortgage and financial setup is still right for you.
At a very rapid rate.
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