Wealth Connexion offers 6 easy to follow steps to creating a quality Wealth Creation plan.
A wealth creation plan helps you to identify your financial goals, both short-term and long-term, make realistic investments that best suit your needs and assist in the implementation and creation of a money management plan. Ultimately, to have wealth creation in Brisbane in 2021 means implementing a wealth creation plan, helping to get your finances in order and considers all possibilities for the future.
1. Manage your Cash Flow
There is a saying ‘cashflow is king’ if you do not have steady and reliable inflows of cash coming into your household or business, neither will be sustained. It is crucial to measure inflows and outflows of cash continuously. This is an important habit to get into, over time, this can provide you with a clear overview of your spending to inform future spending and act as a guide towards your savings and investment goals.
Taking the simple steps of monitoring cash flow and implementing a household budget based on that cash flow will reveal exactly where your money is going and provide insight into your financial position against your future financial objectives. If you are looking to manage your cash flow and implement an effective budget, Wealth Connexions can assist, being proud providers of a business focused on wealth creation in Brisbane for our clients.
2. Protect Yourself
The greatest asset you will ever have is yourself. Your ability to create and maintain income is of a high priority, which is centered around your ‘ability and capacity to maintain ongoing good health’. In case of an injury, it is important that you are protected, having tailored specific income insurance to you and your circumstances are crucial.
Things to consider when obtaining insurance:
- Identify the structure of cover you need. For example, should it be owned through superannuation or personal, and establish the pros and cons of both options.
- Consider the tax consequences applicable based on the premiums paid and any benefit received as a result of a claim.
- Employ a reputable insurer, one with a strong track record, and can best meet your needs.
When it comes to the impact of an injury, illness, disability, or death, on your household, ask yourself:
- Is my income protected if I am unable to work due to injury?
- Would I be able to afford the additional costs endured after a trauma event?
- Through my superannuation fund, do I have additional cover?
3. Then, Pay Down Inefficient Dept
Inefficient debt can be classified as debt you cannot claim a tax deduction on for the costs and interest on the loan. These loans are referred to as non-deductible debt, commonly including, credit cards, store cards, personal loans, and home mortgages.
Commencing the implementation of a cash flow and budget system, by identifying any surplus in cash flow (net income) and using it to pay down the highest cost of non-deductable debt. Non -deductible debt offers no tax benefits for any interest paid, so it should be paid off first, as it is an ongoing cost to you. Ultimately, the faster you pay down the capital of your loan, the less interest you will pay, allowing you to be free of your debt sooner.
4. Engage with your Super
If you are an employee in Australia earning more than $450 per month, you are entitled to a Superannuation Guarantee (SG), paid by your employer directly into your superannuation fund, which is 9.5% of your wages. A superannuation fund offers a low tax environment for you to invest and grow your money for retirement. A key strategy to maximize the benefit of your superannuation is to start young and save more regularly.
So, have a realistic long-term target for how much superannuation you would ideally like to have for retirement. Once you have that goal, begin monitoring short-term targets against it to ensure you will be able to meet your pre-established goal for retirement.
Structure your Wealth to Grow
With the increased options and flexibility of our modern world, investing outside of your superannuation can at times, be complex. It is important to gain an understanding of what you are investing in or saving for. Once you gain that understanding it will help direct you to the type of access and tax structures you may require.
Commonly, people will have numerous investment goals, depending on how these investments are structured, this impacts their susceptibility to change, accounting for the time frame of your investments, your level of flexibility, and the level of risk you are taking with that investment.
Time frames for goals and the type of investment made:
- short term (less than three years) – lessen the risk you take with your money by focusing on short-term goals, helping reduce the likelihood of loss.
- medium-term (between three to five years)
- long term goals (greater than seven years) – the investments may be more growth focussed.
Primarily, what will grow your wealth is tailoring your investment portfolios and products to the objectives you have and reviewing these frequently.
5. Plan your living and Deceased Estate
There are several key steps you need to complete to ensure you have effectively planned for your Estate, both living and deceased.
Having an up-to-date Will is vital, it should specify how your Estate is to be distributed, who the beneficiaries should be, and the structures required to manage these benefits, for instance, a Bare or Testamentary. The nomination of multiple appropriate Executors to execute the Will is also required.
Another step that is often overlooked is a person’s Living Estate. It is essential to appoint a Power of Attorney (enduring), to guarantee, should you lose your ability to make financial decisions for yourself, that someone is acting in your best interests to make those decisions for you. Additionally, it is important to have someone appointed as Power of Guardianship (Medical Power of Attorney). This person would make medical decisions for you, regarding your welfare, if you were in a position where you could not make them for yourself.
The key aspects of Estate Planning are as follows:
- Have an up-to-date Will and suitable structures in place;
- Inform Nominated Executors that they are Executors and on the location of your Will;
- Have appropriate nominations for Enduring Power of Attorney;
- Have a suitable Power of Guardianship (Medical Power of Attorney);
- Nominate guardians for underage children in your Will;
- Have valid death benefit nominations on any superannuation and pension and;
- Ensure there is an appropriate level of cover and beneficiary nominations for your Life insurance policies.
All of these aspects above, we look after for you. If you are looking to generate a plan for wealth creation in Brisbane, speak to the experts at Wealth Connexions.
