With Christmas looming and New Year following, resolutions fly around everywhere – by March they are often a distant memory and by Easter we’re hopping into chocolate delights. We let ourselves off the hook because it’s too confronting. We know it’s important but life gets in the way and we just don’t get around to doing those things we planned to do. Worst of all, we beat ourselves up for our failings which leads to negative thinking and letting the external influences control our lives.
We can speak with great authority on this, as we have done this plenty of times ourselves and the feeling of let down and failure can be all too consuming. So, let’s create a practical plan to overcome this issue using this time of year as the example. Many of us are now inundated with Christmas gatherings, end of year parties, celebrations, etc – how do we decide which ones to attend? Generally, the “Lock it in Eddie Principal” applies.
We are invited to a street gathering on the 18th of December but the work Christmas Party has been locked in since September on that same night, almost 100% of us will respectfully decline the street party because we already locked in that night to go to the work function.
So, let’s apply the same logic to our year end resolutions thinking through the prism of personal finances, being financially secure and organised.
The resolutions are often:
1. Must get that Will and Power of Attorney done
2. Need to sort out my loans with the Bank
3. Really want to get those HR policies in place at work
4. Must build that marketing campaign to build the pipeline so May to July is never again as quiet as it was this year
5. Must sort that superannuation and personal insurances out
6. Must upgrade the way we do things in our business to be in the 21st Century
7. The list goes on……
The step to take before Christmas (when we are all extremely busy) is to make a series of phone calls and lock in these actions for specific dates & times in 2016.
Arrange a meeting with:
1. The solicitor in February to get the Wills and Power of Attorney’s done
2. The bank manager in March to review all your loans
3. Yourself (yes, yourself!!) in January for 2 days to get the HR policies done
4. Your marketing manager (may be yourself) for 3 hours in March to create a campaign for May to July
5. The accountant and financial planner to review the super and insurances in February (as this probably fits in with the will)
6. The IT guy in March to find out some options around our systems
7. That course on creating systems in February that our accountant is running
Bang! Resolutions made and actions booked and we’ve now committed that time to another person so are far less likely to let them down by a change or no show. So, when that crazy customer rings up in February and says “I need to see you tomorrow” you can say “Sorry, I’ve already booked a meeting to review my insurances which has been locked in since December so can’t do tomorrow – how would Friday suit you?”
All of a sudden life didn’t get in the way of getting that important task completed and come December 31st, 2016 you can say –this year I achieved ………………………………..
Wayne & Diane’s story
Wayne & Dianne are in their mid 30s and own a plumbing contracting business in country Victoria. Over a period of 5 years their family business has continued to grow. They have enjoyed this period of success which meant that they could reduce their business debt and reinvest funds to grow the business.
However, a real issue has been the fact that their tax bill has increased each year to go with the business improvement. Wayne & Dianne were happy with the business improvement but now were extremely keen to transform this business improvement to enhance their personal wealth. After a discussion with their accountant Wayne & Dianne decided to make a sustained investment to their future via contributions to their superannuation fund. The commitment was to invest $20,000 each for both Wayne & Dianne per year for a five year period to add to their current $30,000 balance each in superannuation.
What was the problem?
Wayne & Dianne felt they were paying too much tax from their business success. They felt that the success of their business was not being seen in growth in personal wealth as they entered their early 40s for all their efforts to improve their business Wayne & Dianne couldn’t see that their personal financial future was being secured.
The Solution and result;
As the superannuation is tax deductible, they saved $12,000 in company tax every year for five years (i.e. $60,000 in tax). At the end of the 5 year period they had a combined $310,000 in superannuation after paying all taxes and fees associated with the consistent contribution and earnings. They invested each of these funds via a Self Managed Superannuation Fund to a share portfolio that contained $250,000 in blue chip shares. The remaining $60,000 was invested in cash funds.
Now after 10 years of working hard in the business not only did they have a solid business asset which was salable, they had begun to secure their personal financial future with $310,000 in net investment assets that they had full control over.
Every situation is different, so if you would like to find out more information about what superannuation strategy is right for you click on this link where you can register to attend our FREE upcoming Superannuation Strategies Information Session. Seating is limited so call Lynda on (03) 9744 7144 to book.
your seat today.