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Financial Nirvana: What is it and how do I get there?

Financial Nirvana is being 100% in control of your financial future and being in a state of euphoria that you have no concern or stress about your money. Getting there is a journey of conversion from being bystander to taking charge of your situation and pointing it to your destination goal.

Where do you start?

1. Conversation

Everyday decisions about money is made but money is not something we are uncomfortable talking about. Most of us feel it’s a private topic and it isn’t a top 100 topic to bring up at the dinner table. Money is very important, perhaps too important. Our brain is telling us to get it 'right'. The inevitable consequences are that the money decisions often become too hard and not always properly resolved. Face the reality that you need to start addressing your money issues. Acknowledging that you're struggle initiating these conversations.

2. What do you Want?

This goes hand in hand with the discussion above. You have to accept you need to change something and it usually comes with a sacrifice and we only make sacrifices if we really want something. You need to want it badly. And we mean, really want it. People say they ‘want’ to start getting ahead, but it’s obvious that what they want more is going out with their friends!

You may also find that declaring your determination (e.g. by telling your friends) will help you cross the invisible line of procrastination. If it doesn’t challenge you, it will never change you!

3. Positivity

We are continually swamped with ‘breaking news’ minute by minute. The emphasis is a resounding negative. The bad news is good copy. This stuff is very sticky! It sticks to our brain and it clouds our vision when it comes to looking ahead. It’s going to be extremely difficult for you to start planning your life if you’re constantly worrying about the 99.9% of the stuff you hear about has typically zero impact on your personal life and you have zero control over it.

4. Values

Money isn't the outcome, it's just a means to obtain what really makes us happy. Consider the things that make you happy, your values and things that you truly believe in – things that mean a lot to you. Allowing yourself to think about what’s really important to you will form the basis for your financial decisions later on.

5. No More Waste

Watching your expenses and knowing exactly where your income is spent is totally crucial. Yes, I’m talking about good old budgeting! Here, more important than anything else is to have the right attitude. Don’t think of budgeting as deprivation; rather see it as elimination of wastage. Or simply just being aware of what happens to your income. Just in case it’s not obvious, the purpose of this step is to align the way you spend your money with your personal values from the previous point.

6. Debt

Most of us have debt. Some of it can be good, some of it, bad. The trick is to distinguish between the two and only pay down the bad one.

Remember two things here:

It’s nice to consolidate your bad debt to one low interest repayment. But let’s get this right – Debt consolidation gives people false hope. It creates a feeling that you’re doing something about your debt. In fact, you haven’t started yet - a low interest rate will not pay off your debt. Only you can do that.

Don’t waste your time investing or saving if you still have personal debt. Unless you’re paying considerably less interest on your debt than you can consistently earn (after fees and taxes) you need to focus on getting rid of your debt first.

Correct structuring of your debt and planning ahead can also determine whether you have options once your circumstances change. It’s vital to obtain the right debt advice and get it right from the start.

Budget Allocations

This is where you start allocating your surplus income to different allocations, whatever you want to call them, based on your values and things that make you happy. Everyone’s budget will be different but the three main allocation you have to end up with are:

Allocation #1 – Protection

Smart people realise that protecting the funding mechanism of all your future plans – your income - can make a difference at the finish line. We’re talking about planning, being in control and not leaving anything to chance. This naturally involves being smart and transferring the risk of losing the income to an insurance company.

Allocation #2 - Cash buffer

Start building your emergency cash for any ad-hoc, unplanned expenses. You want to end up with at least 6 months’ worth of net income as your cash buffer. Being smart here means NOT using what banks sneakily call ‘high interest saving accounts’ if you have a mortgage. No savings account will offer you higher interest than the interest you pay on your mortgage. Using offset account/s linked to your mortgage means you can effectively earn a tax free ‘true high interest’ on your money.

Allocation #3 – Wealth

The chances are you’re probably already investing – in your super. This will be no different, except you invest outside super where you will be able to access your money before you retire. Again, the key will be keeping it simple and just doing it.

Final Word

We hope these general tips will help you with prioritising in your money decisions. Make an appointment to meet with us to have a transparent conversation and can start the process of being guided, encouraged, educated to reach your Financial Nirvana.



This information is current as at 09/05/17. This article has been prepared by Heart1Stop, a social media brand owned by Heart Mortgage Services and Heart Financial Advisers. The information contained in this article is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The views expressed here are not those of Heart1stop, Heart Mortgage Services, Heart Financial Advisers, shareholders, directors or staff and associated contractors and business associates. This article has been prepared without taking into account any person’s objectives, financial situation or needs. Because of this, you should, before acting on any information contained in this article, consider its appropriateness, having regard to your objectives, financial situation or needs. Any taxation information contained in this article is a general statement and should only be used as a guide. It does not constitute taxation advice and is based on current laws and their interpretation. Each individual’s situation may differ, and you should seek independent professional taxation advice on any taxation matters. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. It is not the intention of Heart1Stop or Heart Mortgage Services and Heart Financial Advisers that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party of Heart1Stop or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties ("Third Parties") who are not related to Heart1Stop. These links are provided for convenience only and do not represent any endorsement or approval by us.

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