A high income but no time for you
16 May 2014
Earning a high income is a great start to financial success, but it's what you do with your money that dictates whether you will ultimately succeed or fail.
Whether you have climbed the corporate ladder or are a self-employed success story, the results of your labour are usually defined by the size of your house, the type of car you drive, your generosity in giving, and the lifestyle you lead - not just now but also when the music stops!
Many people who fit this description portray the outward signs of success - and why not. They are earning considerable incomes, often well over $500,000 a year. However, I often wonder how many are independently building wealth early enough to see their lifestyle sustained throughout retirement. It can be a rude shock to realise you must reduce your standard of living considerably in retirement, or keep working into your late 60s or 70s to get there.
Sacrifices along the way
High-powered jobs demand long work hours, often including weekends, and limited family time. Add to this email, smart phones and iCloud and it means that people are increasingly tied to their work at all times.
With this commitment to work, the focus on personal and financial planning can be opportunistic, deferred or simply ignored. Believe it or not, the opportunistic approach is often the worst. Too many high income earners chase tax deductions, either through tax schemes or negative gearing, without due consideration of wealth creation and diversification strategies. Such deductions are promoted more and more as the end of the financial year approaches, meaning many time poor professionals let the perceived tax benefits get in the way of proper research.
Often, even basic financial considerations are lacking, such as:
- How much do I spend each month?
- How much should I be saving?
- Will my family be all right if something happens to me?
- When can I afford to retire?
Delegation – the secret to success
My experience when dealing with high income earners is that the very best are good at delegating. They recognise that they cannot do everything themselves. They understand the time it takes to properly research opportunities. They are leaders, decision-makers and want to maintain control. A financial specialist will accommodate these traits and act as the individual's financial coach.
The advantages of employing a financial coach include:
- setting goals;
- managing your cashflows;
- having a savings plan;
- structuring your affairs to maximum effect;
- managing tax;
- making informed decisions;
- employing your own research team;
- having someone who knows your financial situation and who is there to help if you're not around;
- measuring your progress and keeping you on track.
If you are in this position and not seeking professional financial advice to strengthen your future, you may find that you don't achieve your goals. When it comes to the important things in life take time out for the things which really matter, you and your family. Some careful planning now will go a long way to ensure you continue to enjoy the lifestyle you've strived so hard for over the years.
To learn more about Phillip, view his online profile.