Why you should make your financial mistakes on paper first

28 January 2022, 5:10 am

Why you should make your financial mistakes on paper first.

There is a big difference between a financial plan and real life.

A financial plan takes into consideration your existing situation, helps you set goals and then puts into place the best possible course of action to bridge the gap between the now and your future.

At worst, a plan can be all wishes and hopes.

At best, it is a guide.

But no-one has a crystal ball, and as you execute a plan, you’ll inevitably find you’ll have to adjust your actions to take into account market changes or events that no-one saw coming.

Having said that, there are a lot of good reasons why you can and should make as many mistakes on paper before you make them in real life.

What do we mean by that?

Well, it comes down to looking at options and working out scenarios in relation to your personal financial situation.

For example, let us say you were looking to buy an investment property. You could just go out and buy a property that fits into how much you could borrow. That might be fine. However, there is a lot more to a good investment strategy than just this.

You’d need to look at your cashflow, whether you have a further cash buffer, location, rental yield, the age of the property, trends in that location, your overall investment diversification and a wide range of other factors. Right now, at the beginning of 2022, the property market is super hot, with some capital cities and certain regional areas growing strongly.

But will this last?

The media is already talking about some people who moved from the city to regional Australia, feeling like they have become isolated and are missing the city. Will we see a flight back to the cities in 2022 and 2023 post-pandemic? How long will these historically low interest rates maintain and what will happen if they go up?

I guess what we are saying is to spend more time looking at options on paper, look at potential mistakes, and then choose more wisely based on good information. This is making mistakes on paper.

And the extra time spent making mistakes on paper will be more than returned to you when you avoid making them in real life.

Reach out to organise a no-obligation meeting with a Finwell Group team member. We’d love to have a chat and answer these questions for you. That is why you should make your financial mistakes on paper first.

Call us on (03) 9017 3235 or email better@finwellgroup.com.au

The information in this article is general in nature and does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.