There’s always that person at a dinner party. They come, armed with a ten year plan. Hell, they’re already three years into their ten year plan and ahead of schedule. If those people make you envious, then perhaps it’s time we sat down and worked out our own ten year plan. Most importantly, where will our finances be in ten years? Here are some scenarios, and how to change each one to ensure a great financial future.
Scenario One: Debt Exposed
Surely the greatest threat to our finances over the next decade is debt. As we know, some debt is good. If you spend the next ten years chipping away at your mortgage, then you’ve made progress towards consolidating your assets. But if the debt is consumer debt, or high interest personal loans, the next ten years could leave you increasingly financially exposed. The 10 Year Fix: Work out a budget and how much you can put towards your debt repayments. Try and increase it every year for ten years, until you are free of your financial obligations. Ensure all your debts are consolidated and that you’ve investigated the lowest interest options.
Scenario Two: Retirement Focused
It’s an increasing concern for many Australians that, while we all invested so much time in our mortgages, rent payments and groceries, we haven’t invested in our retirement. If, ten years down the track, you haven’t organised your retirement savings, you could be starting to feel the pressure. The 10 Year Fix: Whatever age you are, twenty or fifty, start investing a little extra into your retirement savings and let compound interest do the rest. Take advantage of government co-contributions, and look at whether superannuation can be part of your next pay rise.
Scenario Three: Consolidating Assets
Perhaps you’re paying off the house, perhaps you’re looking to start investing. Ten years down the track, you could be well on your way to a nice portfolio of assets. You’ll be looking for dividend and capital growth, and having very sensible, impressive conversations at the dinner party (as long as your debt maintains a sensible relationship with your investments). The 10 Year Fix: The best thing to do now is to diversify and continue to increase your knowledge about investment. The sharemarket typically takes a decade to even out a profit, so play the long game and you’ll see the benefit in ten years.
Scenario Four: Debt-Free
Maybe you don’t own your own home. Maybe you don’t own a car or a computer. But if you’re keen to live without the burden of debt, this might be you in ten years time. Living without having to make monthly repayments, or worrying about the interest on the credit card bill. The Ten Year Fix: Debt is clearly your priority over the next decade. Whatever debt you have, you are intent on eliminating, which might require some big cuts to your expenditure. A budget and some nifty savings plans will be your greatest weapons to achieve this.
The best part is, we can choose how we want our finances to look in ten years time. What we do now can achieve any of the above scenarios- good or bad. So make the small changes, and you could have the financial future you’ve always hoped for.