At PFA, we often work with high earning individuals and couples. We find among them some very common traits: hardworking, professional, time poor, and at some level they feel financially disorganised. Having a higher income usually means you’re exceptionally good at your job but doesn’t mean that someone taught you the financial know-how to make the best choices.
So, to help you spend more time on a beautiful island and less time stressing, here are four of the common tips we give clients who are high-earners:
- Don’t think retirement, think financial independence. You have the capacity to build an investment portfolio that creates an income stream to meet all of your expenses. Once you do this, you’re financially free. Free to keep working the job you love, or free to do something else entirely. Financial independence lets you create the future life you want.
- Live within your means. By as much as you need to. Once we set a financial independence target we can work out how much you need to be saving and investing each week/fortnight. Living within your means is key to creating the excess cash flow you need to invest.
- Investment structures matter. Investing in super, a life insurance bond, a family trust or through a company all have their place and help to minimise tax and maximise returns. If all of your investments are within your own name you may be paying far more tax than you need to.
- Start now. The sooner you get good financial habits and systems into your life the higher the impact will be throughout your life. It’s much easier to start with good habits than to put them in place down the track. It’s much cheaper to put your investments inside a trust now, than it is to try and do it after you’ve held the asset for 10 years.
If you’d like to speak with someone who can help you get financially organised and on the path to independence, give us a call on 9382 8201. The initial meeting is free and all costs will be explained up front so you can make a decision about the investment you’re making in your own life.