Budgeting and Financial Planning

So your child wants to be a doctor. How are you going to help your child meet that goal?

Let us explain the process of accumulating wealth and investing. It may sound simple, spend less than you earn – but without a workable and understandable financial plan to keep you on track, it isn't easy.

Talk to us to see how we can help you make financial decisions that allow you to meet your goals and at the same time “sleep at night”!

Let’s take a typical scenario–

Jeff (42) works full time and his wife Sally (38) works part time. They have 2 children at primary school. They also have a Home Mortgage to pay off.

Jeff and Sally’s goals are -

To send their 2 children to a Private Secondary School
To have a holiday in 5 years time to visit grandparents overseas
To reduce their mortgage

How can a financial planner help Jeff & Sally?

• Look at Jeff & Sally’s current income and expenses, assets & liabilities. Assess their current financial situation.
• Work out how much they will need for private school fees, overseas holiday and how much will need to be put on the mortgage.
• Produce a budget for Jeff & Sally showing where they will find the money to invest to meet their goals.

Possible strategies to achieve goals

• Given their ages, Jeff & Sally may be best to concentrate paying off their mortgage.
• Contribute regularly to a Managed Fund to save money for private school fees. A Managed Fund that pays a reasonable return along with the effects of compounding will mean they are well on their way to meeting private school fee commitments.
• Consider borrowing to invest in good quality direct shares. Providing they have paid enough off their mortgage, they may even considering borrowing against their house to get the money to buy the shares. Along with advice from a Financial Planner, shares can be selected that provide a return that will meet interest payments and provide capital growth and / or income via dividends.
• Overseas holiday – how will this be met? Could be met via selling direct shares in 5 years time or taking out of the managed fund – perhaps increase the amount contributed to the Managed Fund to cover the expense of an overseas trip.
• Given their ages, superannuation is not an immediate priority. However, there are certain things that Jeff and Sally can do to accumulate superannuation funds. Worth considering would be whether or not Sally is eligible for the government co-contribution, or if it was worth Sally considering salary sacrificing an amount into superannuation.
• Ensure Jeff & Sally are getting any Centrelink payments they may be entitled to. This may include a Family Tax Benefit or a Child Care Benefit.
• Ensure insurance is adequate to cover unforeseen circumstances.

Jeff & Sally now know where they are currently placed and more importantly how they are going to meet their financial goals. We guide you through the budgeting process each step of the way.

Talk to us to see how we can help you make financial decisions that allow you to meet your goals and at the same time “sleep at night”!

Disclaimer:
This case study contains general advice only. You need to consult with your financial adviser before implementing any of these strategies