During these trying COVID times, I am sure that there is one lesson that we have all learned, and that is the importance of ‘saving for a rainy day’.
Whilst there is no doubt that spending is more enjoyable than saving, there is also no doubt that uncertainly and a shortage of cash impacts our mood, our relationships and can result in us feeling extremely stressed and anxious.
Whether we are a saver or a spender will generally depend on our own unique circumstances. For example, do we have a mortgage? A high paying job? Are we married?
By completing the following table, you should be able to broadly assess the total amount of earnings that you have received during your working life, to date. If you are married or in a joint relationship you should have your partner complete this exercise as well.
Step 1:
Do you remember the first full-time salary you earned?
If so write it down. $ ___________________
Do you know the highest salary you were paid?
(For most people this will be their current salary.)
Write it down. $ ____________________
Total the two salaries $ __________________
Divide by 2 to get the average $ _____________________
Multiply this average figure by the number of years you have been working
Total Gross Income you have received to date
$ ____________________
Note: If you are married you should have your spouse also complete the above and add the two gross incomes together.
Step 2:
Now with all that money prepare a list below of all your Assets.
- Home
- Car
- Investment Property
- Bank account
- Shares
- Superannuation
- Other
Total $___________________
Now do a list of your Liabilities:
- Mortgage
- Credit card
- Car loan
- Personal loan
- HECS/ HELP debt
Total $___________________
Subtract the total Liabilities from the total Assets
This figure represents your Net Assets or Net Wealth $ ____________________
Are you happy with the assets you have acquired so far during your working life?
What areas do you feel need improvement?
From my experience, people with the highest salary are not necessarily the most financially independent. It is probably 70% disciplined saving and 30% earnings or income.
To accumulate wealth you need to set goals, create a strategy to achieve these goals and regularly monitor your financial position.
Should you require further assistance, please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166.
The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.
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