Financial planning is, by its nature, forward-looking. What counts is where you are now and what you do in the coming months and years. That said, there’s good reason to pause and take a look over your shoulder to see how far you’ve come. Why? Because taking stock of what you have achieved so far can spur you on to even greater things in the future.
Aside from congratulating yourself for having the sense to take advice and work to a plan, pausing for a look at where you’ve come from also provides an opportunity to review your current circumstances. Even the best financial planning needs some tweaking to make sure they it is optimised for the next few years.
Don’t have a financial plan? In that case it’s well worth looking at what you may have missed out on, and making a decision to do something about it.
Has compounding been working for you?
Much of our future financial security relies on regular savings coupled with the power of compound interest. For example, if you’d set up a savings plan[1] two years ago with an initial deposit of $10,000 plus weekly contributions of $100, and assuming an after-tax return of 6% per year, by now you will have earned $1,892 in interest.
Underwhelmed? If you’d had that same savings plan running for 10 years, the interest compounds to a more impressive $27,200; saving you a nice nest egg of $89,000. Keep going and the interest component will continue to accelerate.
Maybe you’ve done better than that, upping your savings as your income has increased. But if instead you’re thinking about what might have been, remember that the sooner you start the sooner you’ll reap the rewards.
Are you protected?
Financial planning is more than just savings. Protecting what you have is critical to your family’s security.
Over the years have you enjoyed the peace of mind of knowing that your loved ones would have been financially secure if you had died or been unable to work? Now may be the time to review personal life insurances. As children become independent and savings grow, you may find yourself paying for cover you don’t really need. Conversely, if your family is growing or you have taken on more debt, maybe your life insurance needs a boost.
Where to from here?
So how do you feel as you look back at the past five, ten or twenty years? Can you give yourself a pat on the back, or do you feel like giving yourself a kick in the pants? Are you glad you took advice, or regret that you didn’t?
Whether it’s time for a review and a tweak, or laying the foundation stones of a brand new plan, we are ideally placed to help you make the most of the coming years and decades. Give us a call to see how I can help you.
[1] Not including any fees or charges.
Sources:
MoneySmart compound interest calculator @ www.moneysmart.gov.au
This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
