Financial Planning – How Early Advice Can Make All The Difference

An image of board with the career planning
In some respects, asking why people don’t pay attention to their finances early on is a lot like asking why we don’t go to the gym every day; we all know we should, but without an immediate need, there’s just not enough force to motivate us.

Turning a blind eye to personal finances generally won’t cause any immediate trouble, but no matter how hard we try to ignore it, our finances are intertwined with our daily lives and the choices we make.

Money of course isn’t everything, but it can provide us with options at times when our personal choices are difficult enough, without adding financial restrictions.

Giving your finances the right attention early on, and aligning your personal journey with your finances can smooth out life’s ups and downs and shift your focus from what’s affordable, to what’s most important.

The following story illustrates the results of one couple’s finances, that were aligned with their personal journey early on in their relationship; in the beginning their financial plan went unnoticed, but as the years past, the difficult times in their personal journey were eased…

Meet Imogen and Marcus

Imogen was 27 when she married Marcus. When the couple decided it was time to start a family, Imogen was working in a large department store. As her pregnancy advanced, Imogen gave up her job to stay at home and prepare for the baby. Marcus, a warehouse fork-lift driver at the time, decided to take on a second job to supplement their income. Being a hardworking employee, his boss promoted him to Warehouse Manager a year later.

Imogen and Marcus were blessed with a son. As the years went on, they had two more children – another boy and a girl. As the children grew and started school, Imogen decided they were settled enough for her to return to part-time work.

Planning their finances from the beginning

From the very beginning, soon after their marriage, Marcus and Imogen had planned their finances carefully. This involved engaging Deb, a financial planner, with the task of helping them structure an insurance and savings strategy. Through Deb’s ongoing guidance, the young couple found that they could afford annual holidays and private school fees. They were even able to put enough aside to cover unexpected events.

The years passed, and one by one their children began to leave home. The couple found themselves in a very favourable position, thanks to the financial planning of their youth. With Marcus now a partner in the warehousing business and earning a good income, Imogen – at age 52 – decided to take an early retirement.

Life does not always go as planned

Unfortunately, life took a tragic turn. While living comfortably on Marcus’s salary, he suddenly suffered a heart-attack, was rushed to the hospital and died shortly after. At first, Imogen was overwhelmed with the thought of having to handle insurance policies, investments and superannuation. Marcus and Deb had always dealt with these matters, and she had been happy to leave it in their hands. In fact, other than relying on their bank account balance for paying bills, Imogen had little involvement.

They had help with their financial plans

Because Marcus and Imogen had worked with Deb for so many years, she had become a close family friend. To Imogen’s relief, she found that she could now turn to her for help. Deb quickly took care of the insurance claims and organised for Marcus’s superannuation to be paid out. She also took the time to make the recommendation that Imogen pay off the remainder of the mortgage. While dealing with the loss of her husband, having this burden lifted off her shoulders was a God-send for Imogen.

Once the insurances, superannuation and the investment portfolio had been considered, Imogen was relieved to find that she would be well provided for.

However, she was still unsure of the best method for handling her money. What would her tax implications be? What about having a regular income?

Deb started by defining Imogen’s needs and level of risk tolerance. Once these issues had been covered, she moved on and addressed her tax situation. A portfolio was then structured that would provide Imogen with an income stream she could live off.

After a few years passed and Imogen turned 60, Deb advised her that her own superannuation was now accessible. She then reviewed her investments in order to maximise her income potential, while also minimising her tax liability. Imogen then shared that one of her and Marcus’s dreams had been to retire at the beach. Through Deb’s guidance, she sold her family home and settled into a comfortable beachside apartment.

Imogen’s personal choices were not limited because of money

At age 65, Imogen made the decision to downsize; this freed up enough additional cash for her to open investment accounts – with the help of Deb – for each of her four grandchildren. In celebration of her 70th birthday, Imogen decided to cruise with her dear friend. Again, with Deb’s guidance, a partial redemption was made from the most appropriate of her investments so she could enjoy her vacation to the fullest and in style.

When we least expect it, life has a way of throwing curve balls. Even though Imogen was widowed unexpectedly, the early financial planning and the good advice of a financial planner allowed Imogen to not only survive but to thrive. She was able to maintain an enjoyable lifestyle during her retirement years. While Marcus was sadly unable to enjoy those years with her, he would definitely rest in peace knowing she was well provided for.

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Imogen and Marcus’ story is as individual as their circumstances, however at times we may all find ourselves in situations we have no control over, leaving us with the decisions we’re forced to make as a result.

While we can’t anticipate everything life has in store for us, we can ensure that the decisions we make are not limited by our financial capacity.

 

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