“A $250,000 Christmas Gift” by Tina Zawila

This week I had the pleasure of meeting with a 23 year old starting out on his financial journey.   His parents bought him an invaluable Christmas Gift – a voucher entitling him to a meeting with me to improve his financial literacy and education.   I’m sure he was very excited when he opened that gift on Christmas day!!

So, I knew I had a task ahead of me – to show this young guy the value of good financial advice!

We started with some basic principles:

1. Personal Budgeting – He was the proud owner of his home and his first mortgage.  How was he managing his money to ensure the mortgage was paid and that he could pay the rates, insurance, repairs and all the other ‘perks’ of home ownership?  And most importantly, was there enough left over for some fun?  I showed him how Xero (online accounting software) could help him in this area.
   
   
2. Insurances – Now that he had moved out of home and has a mortgage, had he considered how he could pay his bills if he became sick or injured and couldn’t work?  And what if something happened to him – would he like to leave the house to his Mum and Dad minus the debt?   We discussed the various insurances available – life, sickness and accident, trauma etc. 
   
   
3. Superannuation – At 23 I expected him to yawn throughout this part of the meeting, but I actually believe this is the area he will act on immediately!  I demonstrated how salary sacrificing as little as $10 a week into superannuation could grow into over $250,000 by the time he is ready to retire!  Yes, that got his attention.  In fact, to put $10 into superannuation, he would only have to give up $7.40 out of his net pay (due to the tax savings).  And just to show him the power of starting early, I demonstrated that for me to be in the same position when I am 65, I would have to sacrifice $80 per week into super…this is the difference between acting on this advice when you are 23 or 46!

Of course, there’s still lots for us to discuss in future sessions such as wealth creation and investment and who knows, one day he might want to start or buy a business.  But for now, he has a few actions that he can take to review and/or improve his financial position.

Please note that these principles are general advice only and you must consider your own individual circumstances. 

The professional team at Sothertons, can assist you on your individual financial journey no matter how far along the path you are.  Call us on 4972 1300 and let us help you, or someone you love.