Few of us are born wealthy and none of us are born with the financial knowledge we need to succeed. It is not easy for most of us to get our finances and budget balancing right the first time, as financial health and stability is more of an acquired skill with all too many of us lacking in that area. Like most things, saving and living within a solid budget requires work, dedication, and commitment with few people getting it right the first time.
As we make mistakes, we also pick up some bad habits and learn some from others along the way, which adds even more stress to an already stressful situation. As time goes on, many of us realise that life is getting shorter and possibly our bank accounts aren’t getting any bigger. This is when wealth creation advice might help.
This isn’t necessarily a post about how wealthy a person should be – rather, it is more about addressing 9 key wealth management issues that are most likely affecting your cash flow. They could consequently be affecting your ability to plan ahead. Are any of these issues stopping your cash flow? Let’s take a brief look at what they are.
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Debt Management
Debt management is the number one issue affecting most people’s cash flow today, which is why it made it to our number one spot. Since cash flow is key for effective wealth planning, debt tends to take up a majority of our extra cash, and many times the payments mainly consist of high interest costs. This means you’re paying financial institutions to hold onto your debt while your wealth situation stops improving.
Most people don’t get into debt thinking about this until they are in over their heads. More people should be asking themselves, “Will this debt make my financial situation better or will it break it?” Sometimes debt is necessary, but those situations are often few and far between. The majority of the time, we are spending more than we have or need, which is detrimental to our long-term and possibly immediate financial health.
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Retirement Planning Challenges
Today’s retiring generations are facing financial and health concerns that the majority of retirees did not have to face 30 years ago. As healthcare and health improves, people are living much longer, which means many are working longer in order to afford a retirement that lasts longer than it may have had to for the previous generation. As extensively covered in previous posts, a clear vision of your retirement years will help you plan better earlier on in life.
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Investment Problems
Investing can be a little overwhelming and a difficult thing to wrap our heads around, which is why so many people avoid it or fail at it. Unless you’ve got the specific experience and knowledge required, it is important not to go this one alone or without consulting with a qualified financial advisor.
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Planning for Education
Both school and university are expensive, but in today’s world, it seems most things are more expensive than ever before. This makes it even more difficult to manage to retrain/upskill or further your education while remaining financially stable at the same time. Adding to this pressure, you may also want to send your kids to a great school, so they also have the best opportunities in life. Planning how you can build your wealth while paying off all of these tuition fees can take some serious juggling skills in today’s expensive world without the right financial advice.
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Family Risk Issues
Are you prepared for the unexpected? Most people aren’t, and even those who seem to be doing extremely well in the financial arena are subject to unexpected financial setbacks. Planning ahead in case something goes wrong such as a car breaking down, appliances breaking, or sustaining injuries that keep you away from work, are examples of situations that often set many people back.
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Legacy Planning Challenges
Many people want to leave a legacy or an inheritance to their children and future grandchildren, but as you can see, points 1-5 are already overwhelming to handle as it is. How on earth can anyone afford to leave money behind these days? With proper wealth planning, it is entirely possible and it may be something you will have to work into your wealth management plan at a later time.
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Business Cash Flow Issues
At times, business owners may not have enough funds to take advantage of certain opportunities – or just run short on managing company expenses. As a result, some business owners are seemingly left with no option but to take the risky move of using their own funds (putting their personal assets on the line), which often disrupts the cash flow process as well.
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Planning for Unique Situations
Whether it is building your family home or planning for an amazing vacation, these situations can quickly stack up against your cash flow. A mortgage on a home is often better than paying rent, but borrowing to go on vacation or saving extra funds for your dream holiday could be setting you back on the wealth planning track.
No one is condemning you for wanting a nice holiday, but sometimes these things can wait, be scaled back or at least be reasonably worked into your wealth building budget, which should be looked at together with your financial planner.
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Tax Issues
Whether it is business or personal, taxes could hinder your ability to save and invest. No one can escape paying taxes so this one is harder to avoid, but a sit down with a qualified and experienced planner can help you to factor both business and personal taxes into your plan so you are not living pay cheque to pay cheque, trying to cover too many expenses all at the same time.
So, what next?
As we’ve extensively pointed out in this post, there are several issues that are most likely blocking your cash flow, and some of these issues could be something standing between you and your ability to create the wealth you need.
Talking with a financial advisor or planner, such as the team at Ethica Private Wealth Specialists on the Sunshine Coast, may help you to sort some of these issues out and plan ahead so they won’t hold you back from reaching your goals any longer.