11 Aug Lock Your Money Away
Before I start talking about this very important topic, I want to ask you a very honest question.
Word of warning there is only one correct answer, and you may not like the result.
What is the one thing that is holding you back from building true financial wealth?
Some of you are going to blame your parents.
Some of you are going to blame a lack of information.
Some of you will blame your bosses.
Some of you will blame a lack of time.
Some of you will blame the government.
All of these responses are WRONG!
There is only one thing that is holding you back from building true financial wealth.
You are the only person who is responsible for your wealth or lack thereof.
You are the only person that is in control of your income.
You are the only person who can save for a house deposit and then pay down the mortgage.
You are the only person who can build up your super so that it can provide for your retirement.
You are the only person who can control the people who are around you.
You are the only person who can design the life you want to live.
Jordan Belfort puts it best “The only person who is standing in the way of where you are now and where you want to be is the bullshit story you keep telling yourself.”
No truer words have been spoken.
So what does this have to do with your super?
One of the reasons that people are not able to live the life they want to live in is a lack of commitment. It is not so much they don’t have a plan, is they don’t want to lock themselves into that plan.
Let’s make something very clear; if you are not willing to lock yourself into creating the world you want to live in, you will be forced to live in the world that someone else creates for you.
So if you want to build up your superannuation, so you don’t have to rely on the government to fund your retirement, you have to lock yourself into that plan.
A lot of people argue that you shouldn’t put money into your super because that money will be locked away.
I would argue that is exactly the reason you should lock your money away into super.
Shiny Object Syndrome
Have you ever thought about why people struggle to save for the things they want? Because that money is not locked away. Because it is locked away, they can use that money for whatever they want. Then people get caught up in ‘Shiny Object Syndrome.’
Shiny Object Syndrome is when you take your focus off what you set out to do (your goal or dream lifestyle) and get distracted by something else (the proverbial shiny object). It is first observed in small children (who always want someone else’s toy) but is carried on when you move into adulthood.
For example, let’s say you want to save $30,000 for a house deposit (the goal). After two years you have saved $15,000, which is pretty good.
You say to yourself, “Gee I have saved well I am going with my friends on holiday to Bali (the shiny object) as a reward to myself.” Cost $2,000.
After the holiday you say to yourself “Gee I enjoyed that holiday, but I have always had it on my bucket list to go skiing in Japan. I am going to do that in six months time.” Cost $4,000.
Then you say to yourself “Gee now I have caught the travel bug now, forget saving for a house I am just going to keep traveling for the rest of my life.” Cost, well over $300,000, because the time you get all of the travelings out of your system, you then realize you still need a place to call home. You then need to save for another few years by that time that property you were looking to buy has gone up a few hundred thousand in value. And let’s assume you have learned your lesson and don’t get distracted by another shiny object like family or a car.
Distractions are the main reason you are not achieving what you want to achieve. And in a world where are constantly distracted by a familiar buzzing or beeping coming from our pockets, distraction is all around us.
So when we do have an option to save money but requires us to lock that money away, we don’t like it. We are so used to distraction and (perceived) flexibility that we don’t like locking ourselves up and committing to the one thing.
Hence we don’t like making additional contributions to our super.
But it is exactly what we should be doing. Because the money is locked away. It cannot be used for travel, or a new car, or some other kind of shiny object.
Don’t get me wrong; I would not ever recommend putting all of your money into super. Firstly, the law prevents us from putting all of your money into super, i.e. there are limits. Secondly, we all need a cash buffer in our accounts when things go wrong. Thirdly, we need to consider our investments outside of super just as much as inside of super. Fourthly, shiny objects are sometimes good to get!
But that is where I like to start with something small, like The Power of 30 ($30 per week) and start putting that into super. Then increase it every year by $5 or $10 per week.
You won’t miss it. And it won’t have a major impact on your ability to save for other things such as a home.
But regarding your super, it will make a considerable difference.
And it is money that is locked away for something you truly need – and want.
Stop getting in your way – commit to taking control of your finances and making additional contributions to super.
What is the best way to put money into your super? That is a great question, and it does depend on your circumstances. By putting money away into super you can save some serious tax money, or the government will deposit free money into your super (no joke!).
If this is a topic that you would like to discuss in more detail, please go to www.MasterYourMoneyNow.com.au/getstarted to book in your complimentary 30 minute strategy session.
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Disclaimer: This information is general information only. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs. Past performance does not guarantee future returns.
Chris Carlin is an Authorised Representative (No. 1235031 for financial services and No. 514748 for credit) and Master Your Money Now Pty Ltd ABN 65 627 229 681 is a Corporate Authorised Representative (No. 1265677 for financial services and No. 514747 for credit) of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523