Two families in the same neighbourhood go off to work each day with similar incomes and similar expenses. They each have two kids in the local primary school and the kids go to school together. They invite each other for barbecues and get to know each other pretty well.
Gradually though, one family begins to accumulate more wealth. They buy a new car, have overseas holidays and eventually an investment property. The two families drift apart.
The answer will be different in every case, but in many cases it is as simple as having a financial plan.
We all know that if we make a budget we can save. We all know that our house and then our superannuation are our major assets. But if someone asked you whether or not you should sacrifice some of your salary to build up your superannuation, or what the impact in fifteen years would be if you paid your mortgage fortnightly instead of monthly, what would you say?
Many people avoid thinking about their long term finances, thinking they will do that when they have a family, or pay of the house.
Even people who have a structured approach to saving do not understand the advantages and disadvantages of the various investment and salary packaging options they are presented with.
To really build wealth, you need a solid financial plan and the best time to make a financial plan is before you make a long term commitment such as buying a new car or house, or when you have the opportunity to restructure your finances such as when you get a new job or unexpectedly get some money.
Finding a financial planner who will work with you rather than simply try to sell you a product, is the tricky part of the process.
Here is a quick checklist of things you need in a financial planner:
· Does not represent a particular lending company, insurance firm or bank
· Explains to you how they make their money, so that you understand what you are paying them for and what motivations they have for providing you with advice
· Listens to you and maps out your plan before trying to guide your thinking
· Gives you the time to think through what you are doing and seek a second opinion
Westender is sponsored by a couple of local financial advisers who offer independent, fearless advice. While we encourage you to do your own research and see who else is in the market, we also encourage you to support the organisations that support the magazine you know and love.
Suzy Butterworth of Yellow Brick Road has been a long time supporter of Westender, advertising in the days when we were a tabloid newspaper and a fortnightly magazine. She has brought her extensive local experience and hard work ethic to Yellow Brick Road because of the range of services it offers.
Founded by Mark Bouris, best known to many people as the Australian host of Celebrity Apprentice, Mark’s mission is to provide ordinary Australians with access to good financial advice. This is the business model that made Merril Lynch one of the world’s leading stock brokers. Take a service that has traditionally been a preserve of the wealthy and provide access to ordinary people.
You can find out more about the company online.
This month, Suzy is offering a free financial advice package to any Westender reader who organises their home loan through Yellow Brick Road. Worth $1,650, the free package is limited to advice on income, super and mortgages, if you own a vineyard, a beef farm and mining shares, you are going to have to pay for your advice like everyone else.
When you call Yellow Brick Road mention the WestEnder and take along a copy of Suzy’s advertisement with you for the initial interview. That’s all there is to it. And Lakshmi’s blessings on building your wealth. You deserve it.
<caption>Lakshmi is the Hindu Goddess of wealth, fortune and prosperity – oh and beauty as well.