top of page

The 5 elements to “real” financial planning

When you are on holidays, do you find yourself dreaming about your life always being like this? That is what an awesome, financially independent retirement should be like.

We all want an awesome retirement. But unfortunately, far too many Australians are not making the right decisions today, which will undoubtedly hurt them down the track. It doesn’t matter your age or career status, everyone should be thinking about their life in retirement.

The role of a REAL financial planner is to firstly, understand what you want to achieve, then map out an actionable plan to get you there. We call this “real financial planning” and it is all about getting a clear picture of your circumstances and building smart strategies to help you reach your financial goals.

To get a better understanding of what ‘real’ financial planning looks like, we can break it down into five key elements.

1. “Real” financial planning requires a genuine written financial plan

Many studies have shown over the years that you are nearly 50% per cent more likely to achieve your goals if you write them down. In real financial planning, having a written plan is the cornerstone of the entire process.

A good way of looking at a written financial plan is that it is similar to developing a business plan. You wouldn’t start a new business without first doing a deep dive into how you’re going to grow that business and what steps you’re going to need to take to make it happen. It’s exactly the same when planning how you’re going to build your retirement.

2. Your written plan is your ‘northern star’ for all-important financial AND investment decisions

Once you’ve got a written plan in place, it must guide all your important decision making. This process keeps you on track and will help you avoid trouble further down the line.

For example, it might be a good time to purchase an investment property. However, if that property is going to increase your debt and weigh on your cash flow, then it might not be the right time for you personally. It’s all about tying your actions into your overall long-term plan.

3. Your investments are important, but they are NEVER the main focus

One of the biggest mistakes many people make is thinking that financial planning is simply selecting the ‘right’ investments.

Investments are a critically important piece of your Awesome Financially Independent Retirement. However, they’re the fuel that makes the engine run that pushes you towards your goals – but they’re never the main thing.

The vast majority of the financial planning industry likes to put their attention on certain investment opportunities. We see this with stockbrokers or even investment newsletters. The focus is on investment analysis, which is greatly different from financial planning.

Putting too much emphasis on trying to select the right opportunity without considering if it’s right for your goals is one of the key reasons most people never achieve what they are trying to do.

4. The plan covers all the important things: insurance, wills, loans, etc. not just the fun things

While it might be fun to watch the value of our investments grow each year, real financial planning is often about dotting the i’s and crossing the t’s. That means it’s important to consider all the small things that could ultimately make a big difference to your future.

5. The plan is reviewed regularly

Understand that things change so we’ll need to address the plan as we go. REAL financial planning reviews your current situation and assesses whether the strategies are moving you towards your goals. If either your circumstances have changed, or your goals have changed, or the strategies aren’t pushing you in the right direction, then we review and revise everything to get you back on track.

One final thing to consider…….

The government has put in place higher education standards for financial advisers to meet by the year 2024. Make sure your chosen professional has the appropriate qualifications or are on the path to achieving them. You don’t want to spend time and money with your financial planner only to find that they are leaving the industry in 2024.

Tanya Carlson holds a Master in Financial Planning and has completed the required FASEA exams. Amplify Wealth Management plans to be providing you with REAL advice for many years to come.

While all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Tanya Carlson, GPS Wealth Ltd nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information

bottom of page