When it comes to financial planning, there can be a bit of gap between how good we think we are, and where we're really at.
That's quite understandable – a lot of the things you deal with when you're planning for the future are complex, and understanding all of it often requires lengthy study. But by identifying our financial shortcomings as a country, we can target problem areas and start building wealth that much faster. Let's take a look at where Australians might benefit from more financial advice.
1) We don't think about long-term financial planning
The Australian securities and Investments Commission and EY Sweeney team up every quarter for the Financial Attitudes and Behaviour Tracker, which surveys people on how they work with money.
In the most recent edition, short-term financial planning (3-5 years) was common – 45 per cent of us did it. However, only 25 per cent of us had a 15-20 year plan in place. It comes back to that age-old question, "where do you see yourself in ten years?".
As you start buying property and shaping a retirement plan, you have to think about what your finances will look like 10, 15, 20 years from now. It can be daunting, especially if even short-term planning is a struggle. That's where a financial advisor proves invaluable – we know the many journeys people take, and how you can get started on yours.
2) We're not prepared for financial emergencies
Could you get by if you were suddenly unable to work? One of the most important parts of any financial plan is thinking about how you continue paying home loans and maintaining upkeep if you are injured, fall sick or have to take time off work to care for someone – an increasingly common occurrence as we get older.
However, only 7 per cent of us would be able to do that for a three month period, according to the Tracker. Annual leave only goes so far – accounting for the unexpected is part and parcel of a good financial plan.
3) We're not seeking help
Only 20 per cent of Australians discuss their financial situation with a professional
The majority of us are saving money, which is great. Not as wonderful is how few of us seek professional advice to make the most of it. ASIC reports that only 20 per cent of Australians discuss their financial situation with a professional – slightly more among people over 55, women and home owners.
But according to an NAB report from last year, nearly two-thirds of the country are facing at least some level of financial stress. The numbers don't lie – if you think you're performing well with your money, the chances are there's a lot of room for improvement.
That's where the Invest Blue team can help you out. Whether you're setting up for retirement or just getting started on an investment plan, we can offer tailored, specific advice that can give you financial freedom for life.
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