I often hear from clients who have a deep fear of running out of money. This fear is understandable given the uncertainties of life, especially in these challenging times. However, letting this fear take control can hold you back from reaching your financial goals and achieving financial freedom.
Most people fear running out of money because they don’t fully understand their finances. They may not have a clear understanding of their expenses, savings, and investments, and this can make them feel insecure about their financial future.
Your current Money Management system gives you clarity around where you are at financially. You know exactly what you spend each week on food, fuel, and fun. You know your monthly surplus cashflow position, your savings rate %, and most importantly your Debt Free Date!
People’s personal experiences with money can shape their attitudes and beliefs about it. For example, if you grew up in a family that struggled financially, you may have developed a scarcity mindset with a deep-seated fear of running out of money.
What actions can you take to overcome the fear of running out of money?
One proven way to secure your financial future is to take some key steps before you retire. These steps include paying off your home, buying at least two investment properties, and salary sacrificing 5% of your income into your superannuation fund.
Pay off your home:
Paying off your home before retirement is a game-changer for your financial security. By eliminating your mortgage payments, you will have more disposable income to invest, save or spend. This will make a huge difference to the quality of your lifestyle during retirement.
It is the reason why you’re on this money management system – to be debt free before retirement!
Buy at least two investment properties before retirement:
Investing in property can be an effective way to build wealth and eventually generate passive income. By buying at least two investment properties before you finish work, you can diversify your investment portfolio and create a reliable source of rental income. Property investment can also provide capital growth over the long term, which can be used to fund your retirement. Ideally giving a property 10+ years to grow and compound in value is the minimum time required for it to become positive cash flow.
Salary sacrifice another 5% of your income into your superannuation fund:
Superannuation is an essential part of retirement planning in Australia. By salary sacrificing an additional 5% of your income into your superannuation fund, you can increase your retirement savings and reduce your tax liability. The earlier you start contributing to your super, the more time your money has to grow and compound.
Of course, these steps may not be suitable for everyone, and your individual circumstances will dictate your financial strategy. It’s always best to seek advice from a financial professional to develop a personalized plan that aligns with your goals and risk tolerance.
The earlier you can implement each of these steps, the faster your fear of running out of money will be overcome. It’s a simple yet effective strategy that I’ve seen families implement and end up with a very comfortable retirement.
