Planning for the future: A guide for millennials

MLC’s recent ‘Australia Today’ whitepaper revealed that a third of Australian parents believe their children (Gen Y’s and millennials) won’t be able to live the same lifestyle as them.

These are concerns frequently echoed in the media by young and old alike. Owning a home is becoming an impossible dream for some, while securing full time employment seems to slip further and further from the grasp of young Australians.

This is where planning for the future, both financially and in terms of long term lifestyle goals, becomes key. Being new to the workforce and receiving a regular pay check are the first steps to planning for the future that you want to have, but it’s not enough.

Earning money doesn’t automatically translate into accumulating enough wealth to lead the lifestyle that you want. This doesn’t mean flashy cars and clothes, this means having the luxury of choice when you need it. Things like taking time off work to have kids, going back to university or travelling to visit relatives are choices that some of us may wish to make in the future.

Without a solid financial plan, being able to have this flexibility may not be possible.  

Tom Davis ADFS (FP), Principal Adviser at MLC is passionate about holistic financial planning. He believes that for someone new in their financial journey, setting up for the future can begin with three simple steps.

Discovery

The first stage in this process is figuring out what is important to you now and in the future. This means asking yourself the tough questions says Davis.

“I’m talking the goals side here. It could be financial or career but generally speaking it comes back to family and lifestyle. Where do you want to live and what type of job do you want? Do you want to catch the train to work or drive? Do you want to be your own boss?” says Davis.

A good way of starting this process is asking yourself what are the three most important things to you now and then build a strategy towards those three things.

Seeking professional advice at this stage of the process can also help put you on track for future success.

“If you get the first part right and focus on things that are important to you, it’s much easier to make these things happen,” says Davis.

“The people who do really well have their goals and objectives front of mind and they are always taking one step at a time to achieve those goals.”

Related links

• Taking the pain out of saving
• Money myth busters
• Top 10 food trends and how much they’ll cost you

Detail

This step is all about getting your head around exactly what comes in and what goes out of your bank account. These aren’t numbers that are necessarily easy to face up to, especially if you’ve let your spending go unchecked for many years.

Davis suggests using a software program to assist in this stage but avoiding ones that are too automated in terms of input, otherwise you won’t engage and create sustainable long term habits.

“If you don’t know what the numbers are, you just stick your head in the sand,” warns Davis.

“A lot of apps out there are too automated or not based on real numbers, and use hypothetical or best guest scenarios.”

This sort of imprecise record keeping prevents you from getting a good handle on detail so finding a tool to track spending that engages and supports your journey is essential to the process.

Vision

“It sounds a bit corny but having visibility is extremely important because sometimes if we don’t see our goal, it’s like it’s not there,” advises Davis.

Keeping on track with your vision can be harder than it seems once you get bogged down in everyday routine.

“The people who become quite wealthy, but also happy, are the ones who can look furthest into the future. The common traits that these people have are they make decisions based on what’s important to them. They don’t make flippant decisions based on what their neighbour or their brother or sister might think”

Some strategies Davis suggests for keeping goals front of mind include using a dream board as a visual representation and writing down your goals and reading through them every day.

Related links

• Compare savings accounts
• Compare transaction accounts
• Savings accounts calculator

Compare bank accounts