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We have had a number of planning meetings with clients recently where a lot of time is spent trying to get a handle on their lifestyle expenses. We understand how difficult it is for clients to do this, but it is a vital part of financial planning.

Knowing your cost of living is essential for financial planning. It helps you be intentional with cash management and redirect surplus income towards financial strategies such as protection policies, saving & investment plans, and pension arrangements. Without knowing your expenses, you won’t know what surplus is available. Adhoc costs like car replacements, house renovations, upsizing and major celebrations should also be considered. Being aware of your lifestyle costs can help you plan for these expenses and avoid having to borrow or liquidate an investment asset at an inopportune time.

Our role as financial planners is to help you live the life you want now and into the future. To do this we look at your lifelong cash flows across various scenarios, bringing all your income, expenses, assets and liabilities into play. We review and adjust input annually as your lifestyle reality becomes clearer.

In order to achieve financial resilience, you need to build a range of financial strategies and depending on your circumstances these strategies will likely include protection policies, saving & investment plans and various pension arrangements.

A primary step to achieving financial freedom is to earn more than you spend, redirecting the surplus income, in order of priority to the various products noted above. Sounds obvious but if you don’t know what you spend, you won’t know what surplus is available.

Knowing your lifestyle costs makes you more intentional with your cash management. Our cash flow system default is to assume surplus income is spent until we instruct it otherwise. You would be amazed at the impact year on year saving or investing surplus income has on your planning with very little effort required from you.

If on the other hand the surplus income is being spent, and you are not aware of it, the spend is likely to be discretionary. As we move to a cashless society the increase in discretionary spend is huge. Unfortunately, discretionary spending is rarely impactful which is why clients don’t note it in their expenses.

When advising clients on what level of investment risk they can take we look at what return they need their money to generate. Without knowing what the need is and when they need it, this is simply guesswork and not to be recommended.

To sum up, financial management is essential in attaining long-term financial stability and prosperity. By adhering to the previously mentioned steps, you can take charge of your finances and work towards your financial objectives. Always maintain discipline, exercise patience, and seek expert advice when required. With the correct mindset and resources, financial success is achievable.


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