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Tuesday, January 18, 2011

What if your boss dropped your income by 10% and you couldn’t get another job?

You would survive, wouldn’t you? You would spend less and adjust.

Most people have the ability to direct a portion of their pay to a different bank account. Decide this year to put 10% of your take home pay into another bank account. Leave it there, and live on the rest.

At the end of the year, you’ll have enough for a memorable holiday – or better still, half for a holiday and half to begin investing.

Be the best boss you have ever had, reduce your take home pay be 10% and enjoy the benefits.

Are you set financially for a happy new year?

“Money doesn’t buy happiness” - it does seem to help, at least to a point.

Recent research found that happiness increases along with income up to about
$US75,0001. Beyond this amount, people may feel more successful but they aren’t necessarily any happier.

The difference lies in how people view money.

People who accumulate money just for the sake of it, or to ‘keep up with the Joneses,’ are unlikely to see much real improvement in their well-being.

On the other hand, people who focus on growing and protecting money so that it supports their lifestyle ambitions, and is there when they need it, are far more likely to be happy with their life.

This may explain why a person living in a two-bedroom cottage in the outer suburbs may be happier than someone living in a mansion by the sea.

Most of the clients I speak to associate happiness with a positive balance of social interaction, career, health and financial security. If there’s no financial plan or direction, it’s very hard for people to feel secure and stay positive in those other areas of their lives.

Research from the Association of Financial Advisers highlights the value of financial advice in this quest for happiness, finding that people who seek advice are “significantly happier with the manageability, diversification and return of their current investments than those who are unadvised.”

Essentially, people who have a sound financial plan in place have a greater sense of focus and realise that money is simply a means to an end.

It’s not just the strategic or specific recommendations that a person receives; ongoing advice unlocks value for clients in diverse ways. For example, a client may seek advice about choosing the right super fund yet derive the most value and satisfaction from getting clarity on financial goals for the first time, and the discovery of what they were looking for in their lives.

Remember that having a plan and financial goals also means you’re more likely to improve your saving habits and debt management.

In addition to the financial worth, clients who seek advice can benefit from greater emotional rewards.

In research commissioned by the Financial Planning Association of Australia, 66% of respondents said that financial advice gave them peace of mind. 63% also said it gave them greater control of their finances, while 46% said it gave them the ability to save.

Most people value having some control over their finances. Of course, you can’t put a value on the peace of mind of having a personalized, structured plan or knowing your family is properly protected – these benefits are priceless.

Other less tangible benefits of financial advice include time savings, because someone else is looking after the paperwork and reducing the hassle and stress of having to keep on top of investment markets and legislative changes.

Your best chance of reducing money worries may come from developing a financial plan that’s specifically designed for your circumstances and goals.

Often the most financially successful clients realise that money is simply the fuel to help us reach our goals, rather than the destination itself. Designing a financial plan that’s based on helping you achieve your lifestyle ambitions is the key to financial well-being.

Kick start your way to financial happiness.

Call Hugh Kilpatrick from RIadvice on 03 9471 0080 today.

*Hugh Kilpatrick is an Authorised Representative of RI Advice Group Pty Limited ABN 23 001 774 125, AFSL 238429. This article does not consider your personal circumstances and is of a general nature only. You should not in any way act on the information provided. You should obtain professional financial advice specific to your circumstances - including needs, goals, desires and investor profile.