A recent study has shed light on the bad long term financial planning habits of Australians.
Results from Perpetual’s recent ‘What do you care about?’ research report revealed that Aussies’ financial situation is one of the main issues on their minds, with only family and health ranking above.
The main conclusion from the report was that there is a significant gap in long term financial planning among Australians, finding that only 27% of Aussies had actively set personal savings goals, and just 21% had initiated a regular investment plan or invested unexpected funds.
According to Gary Lembit, Senior Manager Client Insights & Analytics at Perpetual, the report highlighted that Aussies aren’t proactive about fulfilling their life or financial goals.
Lembit urged Aussies to consider their likely long term income and expenses, as well as the value of things they want to purchase and, “how much time and wealth you are willing to commit to achieving those things.”
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We tend to do better when it comes to short term money management, with further findings showing that 57% of Aussies regularly check their bank balance, 48% consciously avoid unnecessary spends and 43% predominantly purchase discounted items.
However, it’s long term planning where we tend to fall down, with the survey revealing that 56% of Aussies admitted to not spending adequate time on planning for their financial future. For 55% of those surveyed money was the key barrier to achieving their plans, 34% suggested that ‘work gets in the way’ and 13% indicated additional obstacles was the issue.
Despite ‘time and money’ being the common denominators keeping people from achieving their goals, Mr Lembit continued to stress the importance in persevering, and asking yourself questions like, “how much will it cost to live in the area you want to? What level of education do you want to provide your kids?”
As Mozo director Kirsty Lamont explained, “planning long-term is super important, especially with interest rates on savings accounts starting to drop. Now’s the time to start thinking about your savings and how to get the most out of them.”
Top tips for getting on top of your finances in 2019:
- Developing a budget and tracking your expenses is the first step to planning your long term money goals because it helps work out where you stand, and how to reach your goals. There are loads of money management apps out there to make this a simple process.
- One of Perpetual’s top tips is to assign a monetary value to your key life goals (like buying a house, sending your kids to a certain school or university, or your retirement plan.) It’s all good and well fantasising about that waterfront mansion you dream of retiring in, but without a plan, it remains just that, a dream. By putting a specific dollar amount against the house of your dreams, you can then set achievable, actionable goals and make a strategic plan to ensure you get there.
- Perpetual also suggests going through and listing out all your debts (mortgage, credit cards, loans) and then making a plan to pay them off with additional or unexpected funds. The sooner you pay off these lingering debts, the less interest you’ll pay, and the sooner you can start thinking about moving toward your other financial goals.
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