Busting the top 5 myths about sorting your finances

Wondering where all your money goes is common: no matter how much you earn, it seems like there’s never enough and it just seems to vanish. By putting your finances in the right place you can get rid of that feeling, go further and achieve more. However there are a few myths about getting your finances sorted. It’s important to put these to rest.

 

1) I don’t earn enough to save

This is common belief and it’s just not true. A study into wealth by two economic professors from Dartmouth and Harvard Universities showed that the biggest factor in wealth isn’t how much you earn, it’s what you do with the money you have. The study found that income explained as little as 5% of wealth dispersion. The single biggest factor in wealth creation was simply how much people chose to save: ‘the differences in saving choices among households with similar lifetime earnings lead to vastly different levels of asset accumulation.’[1]

 

2) It’s all too complicated

Wrong. Getting your finances into shape isn’t about devising complex strategies or schemes. It’s about finding out what’s coming in, what’s going out, not wasting money on bad debts and developing some good habits around money. When you know where your money is, you spend less time and effort chasing around after it.

 

3) I can do it myself

Some people are great self motivators, can get up at 6.00am and do all the household chores before going to work. The rest of us need some help. It’s always easier when you have an expert guiding you, motivating you and giving you advice. It doesn’t just make the process a more rewarding experience, it has been proven to bring better results. Another study looked at the impact on saving of seeing a financial adviser. It showed that  people with an adviser saved an extra $1,590 every year compared to those without.[2] Over time that adds up to thousands of dollars more, simply by seeing an adviser.

  

4) It’s too late to start now

Is it really too late to have more available cash? Getting help in organising your finances can quickly pay off. The study that showed people saved more with a financial adviser showed that someone who started an additional saving plan with an adviser at age 60, would save an extra $29,000 by the time they retired at 65 2.

 

5) I won’t be able to enjoy life

Getting your finances sorted isn’t about suddenly stopping all spending and sitting at home being miserable: it’s about setting clear goals about what you want to achieve.  Plus it means that when you do splash out, you’ll know what you can afford. You won’t blow a hole in the budget and then feel guilty. Managing your cash well means enjoying what you do have, instead of worrying about what you don’t.

 

Find out more

Judge Financial Planning has a specific program designed to help you get your finances sorted so you can save and invest to meet your life goals.

To find out more call 02 4032 7934.

 

 

[1] Choice, Chance and Wealth Dispersion at Retirement, Steven F Venti and David A. Wise, National Bureau of Economic Research

[2] KPMG  Econtech Value Proposition for Financial Advisory Networks, 2011