In the past I’ve advised anyone who wants to be their own financial adviser to treat themselves like they’re a business.
Imagine you ran a business. What questions would you be asking to make sure you made profit and avoided going broke? These are good questions to ask of yourself, if you’d personally prefer to be richer as time goes by, rather than poorer.
When you think about it, the business approach to getting richer must be:
- Earn as much income from working as possible.
- Make sure you pay the lowest costs (interest rates, fees etc.) possible on your loan products.
- Get the best interest rates on your savings.
- Be in the best-performing super funds being mindful of the fees/costs you will be charged.
- Be always on the lookout for potentially great investments outside of super. This could be the property you live in, the investment property you invest in and the stocks you accumulate.
The ‘business’ we’re talking about could be called ‘Me, Richer’ and the 5-step plan is a solid start to your business/financial plan. Diligent business owners try to maximise income and minimise costs. They don’t set-and-forget these important things, instead they regularly monitor these makers or breakers for their business.
Normal people don’t think there’s a big difference to their material life if they pay 1% more for a home loan, where you might be paying 4% rather than 3%. But let’s just test that out for a $500,000 home loan.
Over a 30-year period, if you were on a 4% home loan, you’d pay $859,347.53 in total. However, if you were always vigilant (like a smart businessperson should be) and you researched and got a 3% rate for your home loan, the total cost of the loan would be $758,887.26.
So that little bit of professionalism that you’d expect of a wise businessperson, applied to your money life, would save you close to $100,000!
That’s 100,000 reasons to stop living your life in amateurish money chaos and should convince you that being businesslike, when it comes to money, really pays off.