7 FINANCIAL TIPS YOU CAN USE NOW
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Articles by The Professional Trustee Team
In Chinese horoscopes, 2014 is the Year of the Horse. As we all know, in horse racing there are some horses that are a sure fire bet to back. Then there are the horses you'd wished you'd backed. Finally, there are the nags you'd rather never have set eyes on, let alone wasted your hard earned money backing. An analogy can be made with respect to employing your money.
There are some actions and opportunities which are guaranteed to put you ahead in the financial wealth race to prosperity. Conversely, there are some things you can fail to do which are certain to negatively affect your financial performance. On the basis you want to have a stellar 2014 financial year, read on ….
1. Applying the Grey Cells
Our greatest asset, well for most of us, is our brain. The little scorecard in our heads usually analyses information quickly and provides us with directions as to what we should and shouldn't be doing in the financial stakes. Of course the answer to our financial direction depends upon what information we feed our brains with. For this point, be aware of your thinking. Are you operating with all the requisite, current, pertinent information you need to make your monetary decisions?
To ensure your brain stays on the correct track, gain a little education. Read and then discuss. Most people in their specific fields are happy to share information with you. Being armed with the right information (e.g. key drivers, common issues, etc) decreases the chances you will make an adverse financial decision. It also facilitates an awareness of opportunities to increase your wealth, other than investing in the traditional housing regime Kiwis know and love. By way of illustration, from talking to people, I've been told there are good opportunities to make financial headway by getting involved in construction, dairy, tourism, food and beverage manufacturing, and forestry.
2. Employing the Right People
We all need to be aware of our long list of talents. Equally importantly, we need to be conscious of our potent list of faults, even if they comprise a short list. Having this cognisant awareness empowers us to seek out the right people to assist us in making and implementing high quality decisions. This enables us to achieve positive future financial results. Always ensure the people on your team are qualified to give you the advice they are handing out and have your best interests at heart.
3. Understanding the Numbers
Many of us make the mistake of not being acquainted with the numbers in our lives. Numbers tell us what we have coming in and what is going to head out. Numbers ensure we don't over extend by over spending. Numbers help us avoid adverse financial situations like buying too much property with great long-term capital growth prospects but failing to realise those ambitions because we run out of cash flow to fund the actual holding. Ultimately, you need a complete understanding of the timing and flow of your money, including a numerical comprehension of all investments you are intending to undertake. Making blind decisions, including failing to keep in check debt-to-asset ratios, will get you an "F" for fail.
4. Managing the Dollars and Cents
Before you manage your money, you need to understand it, so take heed of the above point. Once you are armed with information, actively set about managing your moo la. Employ it. Set up the correct bank accounts. Choose the right loans for your needs.
5. Following a Money Recipe
The chances of baking a great chocolate cake dramatically improve when you follow a recipe. The same can be said in respect of your gold. The odds of achieving a financially positive 2014 are increased when you follow a money plan. Get one. These plans tell you what your financial position is right now, what sort of financial personality you have, what investments you will feel comfortable with and what you should do to ensure you reach your pre-chosen financial destination. They can even tell you what investments to buy, where to invest and what time you should invest. Then all you have to do is implement the plan.
6. Briefing Out
It never fails to amaze me how wound up people get when it comes to their accounting. If you don't like doing it, brief it out. Sure this is going to cost you but if you are smart with your time, you'll sensibly employ those hours making far more money than what you pay your accountant/bookkeeper. Not only does this save pulling your hair out but it puts money in your pocket. More to the point, it enables you to have up to date information as to your financial position, consequently letting you rest easy at night.
7. Implementing the Correct Accounting System
This heading says it all. Stop fighting with your calculator and accounting system. Get advice from your accountant as to what system is appropriate for you. Many people are turning to Xero with good reason. Get this sorted and your life becomes easier. You'll likely to save on accounting bills too.
SNAPSHOT
None of the above seven points are exactly rocket science and most of them don't require great intelligence or even technical ability to implement. All they require is a willingness to spend a little time endeavouring to make a better financial future for yourself. Unfortunately, many people hinder their own financial progress by failing to adhere to these basic points. Will you fall into this camp? Your decision. But don't delude yourself. Not making a choice, not taking appropriate action, is actually making a choice. A choice not to live the optimal financial life you possibly can.
Look out for my next blog on the final 7 financial wealth creation tips for 2014.
If after reading this blog you need help, please contact us. We're here to help. That's our job. In the interim, best wishes for an amazingly financially successful 2014 year.
The Professional Trustee Team
© Gilligan Rowe & Associates LP
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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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Gilligan Rowe and Associates is a chartered accounting firm specialising in property, asset planning, legal structures, taxation and compliance.
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