Future Proof Your Finances

Future proof your finances and move beyond thinking about your short-term financial situation and focus on developing plans for the long term.
This involves paying attention to economic trends, considering your career prospects over time, and identifying opportunities as they arise. Above all, it means being adaptable and willing to alter your strategies when necessary.
Thinking about your future finances has numerous benefits. For instance:

Expenses

Many people make the error of only looking at their weekly or monthly expenses when budgeting for the first time. This approach can leave you unprepared for significant annual costs, such as car servicing or holiday expenses. To create an accurate household budget, you should assess your actual expenses over the past 12 months.
However, planning for the future requires taking this one step further. When deciding how much to save, you should consider the following:

• Are you planning to have children, and how will this affect your family's finances? If you already have children, have you taken into account how their expenses may change as they grow older?
• Do you have any aging appliances that will need to be replaced soon? This could include a new car

Income

Spending your income wisely is a good start, but looking ahead is even better.
What are your salary expectations for the next few years? There is no one correct answer to this question, as it depends on your circumstances. For example, you may be a recent graduate with a lot of room for career growth, or you may have reached the top of your current salary range. Perhaps you work part-time for family reasons, or you're looking to reduce your workload from a high-stress job. Does your expected salary align with your spending plans? You don't want to commit to a large mortgage if you may have to work fewer hours soon. Conversely, you may decide to stretch yourself now to buy your dream home because you're confident that your earning potential will increase. Looking ahead is crucial for making intelligent decisions today.

Investing

Don't worry, we're not suggesting that you need to study the stock market. Investing can be as simple as ensuring that your money is working for you. For example:

• Do you have your savings in a high-interest account? In recent years, interest rates have been so low that savings accounts have yielded almost no return. However, this has now changed, and it's worth shopping around for an account that meets your goals.
• Are you satisfied with your superannuation fund? Performance and fees vary among funds, so it's worth taking an interest. Unless your job requires you to use a particular fund, switching is usually easy.

Protecting & Planning

We can’t predict the future, but sound financial planning allows for both good and bad times. There are several things you can do now to protect your family and reduce the impact if you lose your job or your expenses increase. Consider:

• Paying off debt: When times are good, it's tempting to take on some debt. Whether it's a car loan for a new vehicle or a personal loan for a vacation, you'll pay it back soon enough, right? However, being over-leveraged can be risky. During a downturn, debt can leave you vulnerable. This is particularly true for debt against a depreciating asset (such as a car or mobile phone) since you may not recoup the money if you sell. Consider paying off any consumer debt as quickly as possible to reduce your expenses. At worst, you'll be better equipped to handle a drop in income. At best, you'll be able to use that extra money to save for your objectives.

• Building an emergency fund: This is a reserve of money that is easily accessible, typically held in a savings account, to help you cover unexpected expenses such as losing your job, facing a medical emergency, or needing to make a major repair or purchase. Financial experts suggest aiming for an emergency fund that can cover at least six months of your living expenses. Even if this seems like a daunting goal, remember that having some savings set aside is always better than having none at all. 

   

By planning ahead and being prepared for the unexpected, you can increase your financial security and peace of mind.