A Personal Journey
Financial Management is not part of the school curriculum in NZ, no one teaches Personal Financial Management at the tertiary level. If your family has no business experience then you probably don’t have a business mentor at home. There are plenty of people who make a living from advising clients, there are plenty of websites that can introduce you to tools and help – but where do you get some personal insights to the really important aspects of money, debt and how to create wealth?
On a personal level, I had no teaching, no advice, no mentor on how to prepare my finances for life. It was not until I studied for my MBA ( aged 30) that I started to understand that as the years go by life changes, major events force change, and they can have a significant on your later years. Issues such as health, insurance, type of work, employment, economic downturn, pandemics, etc can all play a big part in your ability to live life as you want to.
So here are a few of the experiences and learning that I have had, along the way, that have resulted in me being in a reasonable place for the later years of my life – both for me, my wife, our children and later generations. I certainly could have done better – but I also could have done a lot worse. You don’t know what is in the future so you need to plan for the uncertainty and the unforeseen that will surely arise.
So for what it is worth – here are some golden rules:
- Start early – have a plan, have some goals, integrate business, work and personal issues. The longer you are working on the issues the better the outcomes. Take advantage of Compound Interest ↓
- Compound Interest – the most productive tool in the box. Use it. Start early ↑
- Spread the Risk – types of investment, timing, uncertainty, world view. Do not have all your eggs in a specific basket.
- Regular review – you change, your circumstances change, the world changes – make sure you change so that what you do suits your goals. Do not put your plan in the bottom drawer to gather dust.
- Know yourself – risk profile, family perspectives, money, assets, wealth, returns, inheritance and so on
- Use the tools – Retirement Commission, Compound Interest, Spending Habits, Spread Sheets, Experts ( be careful, do your homework), Cash Flow, Inflation. Plans
- Understand the Law – Tax, Capital Gains, Bright Line Test, Trusts. And most of all – NEVER get a red flag in Wellington.
- Protection – Trusts, Insurance, Estate Planning, Regular Reviews, Legal
- Use Experts – Finance, Legal, Accountant. But be careful – they are all about making money themselves – so be careful in your choice. Fees can be a killer if not properly assigned, assessed and reviewed. The cost of fees needs to be managed, but lower fees do not always mean a better outcome.
- Electronic – there is much info on the internet, not all of it truthful. Be careful. Verify info, tools, outcomes, company productivity and so on.
Robin Martin
P.S. This article is part of my Secrets of Success series, aimed at helping business owners and entrepreneurs with some of the key components of business success. The insights I wish I’d had at the start of my business career. I hope that by passing on these little gems of knowledge I can give you some support and help you along the pathway to growth and prosperity.
