Enjoy the now and secure your future
Managing your financial situation always involves a tension between living your life now and preparing for your future.
The worry about not getting the balance right—making unnecessary sacrifices now or not having enough money for future goals—is a common and valid concern we hear from clients. You want to live your best life now, which means not being overly frugal or constantly worrying about your future. At the same time, you don’t want your current lifestyle choices to impact the wonderful life you envision for yourself down the road.
Balance whatever your stage of life
We all have financial goals—whether you are saving for your children’s education, working towards a once-in-a-lifetime overseas trip, freeing up finances for a gap year, or setting yourself up for a wonderful retirement. It’s important to balance your ‘now’ with your ‘future’ when it comes to spending, saving, and investing to ensure you can achieve those goals. You don’t want to regret your spending, or on the other hand, live a frugal life and look back on opportunities you missed while you were saving.
The tension between the ‘now’ and your ‘future’ finances can be even more heightened when you have retired. It can be a strange adjustment to suddenly not have a wage coming in and instead live off your savings, superannuation, and investments. It’s common and quite understandable to worry about not having enough to last, particularly given that a 65-year-old today may live well into their 90s and could spend up to three decades in retirement.i
However, many retirees live unnecessarily frugal lives as evidenced by a 2020 Retirement Income Review, which found that most people pass away with the bulk of their retirement wealth intact.ii Those who live frugally often do so not out of necessity but because they don’t understand their financial needs, including how these will change over time, and how much they can afford to spend.
How the balance changes over time
Finding that balance can be difficult. It varies from person to person, and your approach to saving and spending will change at various stages of your life.
If you are paying off a difficult-to-maintain level of debt or in the final stages of scraping together a deposit for a home, making sacrifices now in the way you live your life might feel okay. Similarly, if you have spent much of your life building wealth, loosening the reins a little and going on that cruise might be something you are extremely comfortable with.
Certainty now and confidence in the future
Whatever your stage of life, achieving the right balance comes from having an in-depth understanding of your financial situation now and establishing and maintaining a personalised plan that considers all aspects of your finances—your earning capacity, level of debt, assets, and very importantly, the life you want to live today and your goals for the future.
The value of receiving professional support from one of our financial advisers is reinforced in a recent report, which indicates that advised Australians are significantly more likely to say they feel confident in achieving their financial goals (71 per cent) compared with those who are not receiving support (55 per cent).iii The same proportion said they were living well now, stating their finances allow them to “do the things I want and enjoy in life.”
This confidence from receiving personalised advice also means being more prepared when leaving the workforce (and a wage) behind. Advised Australians are significantly more likely to feel very or reasonably prepared for retirement (76 per cent) compared to those without advice (45 per cent). iv
The key to achieving a balance between living your best life now and being financially secure in the future is knowledge. If we know that tomorrow is shaping up well for us, we may worry a little less today, feel less guilty when we spend, and be less likely to have regrets about spending.
This is where seeking professional financial advice can help. Our team can work with you to understand your goals and create a roadmap to provide financial certainty now and confidence in the future. Contact our wealth team today.
Sources
i https://www.aihw.gov.au/reports/life-expectancy-deaths/deaths-in-australia/contents/life-expectancy
ii https://treasury.gov.au/sites/default/files/2021-02/p2020-100554-ud00b_key_obs.pdf
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