Our society is not geared towards delayed gratification. In fact, Executive Coach and Behavioural Scientist Milo-Arne Wilkinson describes us as a 7-minute society.
It’s not necessarily a good thing, ironically it’s the time between ad breaks on TV shows – just enough time to keep you engaged before you do some online shopping while you wait for MasterChef to reappear. So how do you make sure you are financially sound in the distant future if you’re set in the 7-minute cycle?
We spoke to three experts on how to make sure there’s cash in the piggybank for your retirement: Milo-Arne Wilkinson (Executive Coach and Behavioural Scientist), Diana Saad (BT Senior Financial Planner) and Bryan Ashenden (BT Head of Financial Literacy and Advocacy).
1. You won’t miss 1%
Milo recommends starting your changes small and incrementally so you can gradually build over time without feeling it too much. One example of doing this might be putting an extra 1% this year into your savings or superannuation (compared to the current amount you put in) and then increase it to 2% next year. This option would depend on your finances as well as caps on superannuation. If you build up slowly, you’re more likely to stick to it and it won’t feel as much a sacrifice (because you won’t notice it as much). Bryan compares this to salary sacrificing to super where the automation means you don’t even feel the money being transferred and you can also access benefits like a 15% tax rate on the contribution compared to your marginal rate.
2. Start planning early and make it fun
Diana believes the earlier you think about your finances and start to do something, the better for your future. Or as Bryan says, “you don’t start planning for retirement when you’re going to hit it – it’s too late”. “There is no magical number for what you need in retirement, it’s all personal to you.” Planning your finances doesn’t have to be dry and boring, Diana likes her clients to think about the adventures they want to have in retirement so they have a clear goal they are saving for. Milo agrees, noting that the best way to make your future finances a priority is to get in touch with your desires first – then you are often happier to make sacrifices to get there.
3. Switch your maybes to a must
Too many people tell Diana that sorting out their finances (and getting advice if they need it) is too hard and too time consuming. She doesn’t buy it. “If you’ve got time for Facebook and Insta, you have time for this”. As Bryan mentions, it doesn’t all have to be long meetings and stress – there are so many ways to sort out your finances from bite-sized chunks (a phone call with an adviser perhaps) to longer sessions. It’s all about prioritisation – or as Milo calls it, changing your maybes to a must. She uses an Uber analogy – you call an Uber, you have control (you know who is picking you up, when it will arrive and your journey is logged as you go) and you have choices. Alternatively, you wait on the corner to hail a cab; you don’t have control over when or who or even if you get to where you need to go – and no choice.
You can still live for today and plan for tomorrow. Define your future. If you are struggling with planning for your future finances, speaking to an expert can help.
This Information current as at 4 April 2017.
This article provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This information does not constitute financial advice. This information has been prepared without taking account of your personal objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.
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