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Young adults

If you’re young and studying or building a career, you mightn’t think there’s much an adviser can do for you until you’ve got more cash in the bank. But now is actually the time you should be setting some financial goals and putting a savings plan in place to help you work towards a new car, a trip overseas or a home deposit. Managing your money properly can make a big difference to your lifestyle now and in the future.

Investments
Committing to a savings plan and making good investments are important factors in growing your wealth. What is your savings goal?

Saving for a car, holiday or home deposit. Be disciplined in your savings and be aware of how compound interest can work to your advantage. The term 'compound interest' refers to the fact that if you leave an investment alone, each year you will earn interest on both your capital and the previous year's interest. This enables your investment to increase in value at an exponential rate.
Gearing This term describes borrowing money for investment/property. Negative gearing is when the cost of the investment (i.e. interest) is higher than the income received (which has taxation advantages since the deficit is a tax deduction). Positive gearing is when the investment yields a positive amount after considering interest on loan.
Cash flow management Use your cash flow wisely. Try to save for purchases to minimise interest payments on credit cards, and maximise interest on your savings. Be aware of late fees.
Debt Management (Credit cards/HECS/ personal Loans) Reduce any credit card debt.

Taxation
While you’re young, it’s a good idea to start thinking about how you can get the most out of your financial situation such as:

investment reporting for personal tax and Capital Gains Tax issues
debt management strategies: offset accounts and debt consolidation.

Insurance
Insurance is a really important part of your financial plan—you work hard to build assets and you should think about protecting them in case something goes wrong. Think about:

Income protection This can pay you 75% of your normal salary if you’re unable to work due to accident or illness, helping you to meet your expenses (especially important if you have a debt).
Trauma insurance Pays a lump sum if you suffer certain health conditions.
Life insurance Pays a lump sum upon death (especially important if you have dependants or have debts that you want to clear should you pass away).
Car insurance/Contents insurance Protects your personal lifestyle assets against loss.

Redundancy and changing jobs
Growing your career is important and as you change jobs, it’s good to make sure you’re on track to meeting your financial goals and objectives. Take the time to review your:

income and expenses
goals
superannuation.

Superannuation
Many of our clients approaching retirement wish they started saving for their superannuation at your age.
Why? Because it’s taking them longer than expected to reach a stage where they can comfortably retire. Failure to plan, is planning to fail.
It’s important to start thinking about:

Superannuation Educate yourself about what it is and how it works. After all, it is your money for retirement. How can you keep adding to your super if you begin a family or stop working?
Government co-contribution By making personal after tax contributions to super you could be eligible to receive additional funds from the Government (dependent on your level of salary).
Extra contribution to superannuation You can make contributions before tax (salary sacrifice) which may be beneficial for tax reasons, or personal after tax contributions.
Investment choice What is right for you given you should have a long time until retirement.
Consolidation Make sure you only have one superannuation account so you don't lose track of your super. You might have several super accounts from previous part-time or casual work. It will save your funds from being eaten away by additional fees and charges and ensure you know where your superannuation is at all times.

Retirement planning
There are a couple of issues you should start to think about regarding retirement planning such as:

How much you'll need in retirement, and your plan to achieve this (considering the effect of inflation on living expenses).
Define your lifestyle, financial goals and objectives for now and for the future.

Estate planning
In the event of a worse case scenario, have you considered:

How to make sure your assets go to who you want them to? You need to have a valid will at all times that is updated as your personal circumstances change. You should also have a Power of Attorney.
Superannuation: Who will receive your super? You can nominate a beneficiary or your estate.
Who will look after your children if something happens to you? You need a will that deals with guardianship issues, and have discussed this issue with family/friends.

Legislative and government changes
Occasionally the government makes changes such as the co contribution scheme which can help boost your super by up to $1500 each year. Think about how you could benefit from these changes by maximising your opportunities and minimising your tax.

Planning for a brighter future
Planning for your financial future can be a positive experience and that’s where we want to assist you—we can help you work through your financial goals and objectives and provide you with tailored solutions to maximise your opportunities.