Financial Independence – Where to Begin and who to Trust

Financial Independence – Where to Begin and who to Trust Sue Stewart, Financial Adviser, CFPCM

There is a strong relationship between being in control of your money, and wellbeing.  Recent NZ research (by Financial Services Council) shows that those that seek financial advice early will be at least 4% p.a. better off over time, have 50% more in their KiwiSaver account, and more disposable income.

Control of your finances = peace of mind and reduced stress. 

The reasons most sited for not seeking financial advice is that people felt they needed to have some money before they sort advice – and they didn’t know who to Trust.

Procrastination is the thief of Financial Independence!

Easy Steps to Implement Financial Independence

  1. Seek financial advice early to help establish your financial goals and set up your Financial Plan.  Your Plan will evaluate where you are now, help define where you would like to be, and set timeframes to achieve your different goals.  Your adviser should be beside you over the years, to adjust as your circumstances and aspirations change, and to help keep you informed and on-track. 

  2. Have an Emergency Fund – with 3 months of your living expenses kept in bank deposit, you will be able to make more considered financial decisions, during tough or unexpected events.

  3. Maximise your KiwiSaver/Superannuation opportunity – know who your KiwiSaver is with, which fund it is invested in and ensure this aligns with your risk tolerance and timeframe for needing your funds (ie home deposit objectives or retirement).  Ensure you match contributions with your employer, or if self-employed, contribute the minimum of $1,042 p.a. to qualify for the government tax contribution (small amount but still a 50% return that mounts up over time!).

  4. Pay Off Expensive Debt – repay loans or debts with the highest interest rate first (so credit cards first) then work your way down from there.  It is very satisfying and motivating as you eliminate debt and take charge of your expenses.  Always repay your credit card in full and on time – if this is not achievable consider cutting it up!

  5.  Start a regular savings programme in to a diversified (but also liquid and flexible) investment as soon as possible.  This will provide you with options and opportunities as funds accumulate.  Consistency and regularity are key to making the most of compounding interest and dollar cost averaging.  The longer your savings timeframe the stronger your financial position will be:

If you are 25 and invest $500 per fortnight for 40 years you will accumulate $2,680,000.

If you procrastinate until you are 40 you will need to save $1,500 per fortnight to accumulate $2,680,000 by age 65 years.

  • If nearing retirement know what you can spend – statistics show that the average retiree spends only 25% of their available wealth in the first two decades of retirement.  With a Spending Plan in place, you will have confidence of the level of retirement income that can be supported.  

  • Protect what is important to you – all the actions above are dependent on your ability to continue to earn your income.  As part of your Financial Strategy a sound insurance Plan is critical to protect your earning capacity and if need be, the people you love.  These insurances may include appropriate levels of income protection, private health insurance, life cover etc.  As your Financial Security improves then you can decrease the levels of your insurance, which may be at a time when they are becoming more expensive.  Seek advice and get this right from the start!

Woman in medicine, will arguably face greater challenges than male counterparts juggling career opportunities with family responsibilities.  As a student, Women in Health Network is a great community to look to for practical advice on how to manage your studies and aspirations.  The Auckland branch has been running for about 5 years and Otago University also this year opened a branch of WiHN, providing mentoring as well as informative presentations throughout the year.  For more established practitioners Wahine Connect and Women in Medicine provide mentoring and general support to help improve your experience throughout your medical career.

MFAS are here to assist you achieve financial independence by providing advice on investment, insurance, and home loan options.  Our team will be present at most medical conferences through the year, including Women in Medicine (Wellington 12-15 May), GPCME North (9-12 June), RNZCGP (21-24 July), GPCME South (11-14 August) and Rural Health Network (9-10 September).  If you are attending any of these conferences please call by our stand for a chat or, just give us a call on 0800 379 325.