Starting the year with a financial plan (and why you shouldn’t avoid it)

Posted on 17 January, 2019

Financial planner Katherine O’Sullivan gives some non-scary and valuable advice on money matters. You’re welcome.

There are two lessons that Kat learnt early on which helped set her on a path of financial independence and future prosperity.

The first involved her dad borrowing $1 off the then-primary schooler in order to buy his daily newspaper. He insisted that money borrowed deserved 10 per cent interest repaid on the loan. Soon Kat was racking up enough 10 cent pieces to accumulate pocket money at a far greater rate than her friends.

The second lesson came when a friend who was a financial planner encouraged teenaged Kat to save a little bit of each pay from her first job.

“I wasn’t really engaged with putting the money away each week, but when I found out what I had available to buy my first car, I was blown away. In seeing what it allowed me to do, the seed was planted about continuing on that journey and helping people to make good financial decisions so they can achieve their goals.”

Katherine O’Sullivan

Cut to almost 10 years later and Kat has done just that—forging a career in guiding other people to similar levels of understanding and control of their money. As the first woman financial planner employed by Canberra firm Much more than money, Kat compares herself to a personal trainer.

“I genuinely want to help people…Just like a personal trainer likes to help clients get results through weight loss or improving fitness, I enjoy seeing my clients kicking financial goals and living a life that’s important to them.”

This means looking at saving and spending patterns, future investments, superannuation, debt and contingency planning.

She likes to dispel any misconceptions that seeking professional advice from a financial planner is a choice made only by the wealthy.

“A saying we always use in our Much more than money team, ‘You don’t go and see the architect after you build the house’. We want to get people on the right track as early as possible, setting them up with strong foundations so they can build their best possible financial ‘house’. Consequently, my client base is quite varied, from those we call Next Gen who are the 20-30-somethings getting their foundations right, through to the retirees enjoying all that retirement has to offer, and everyone in between.”

Kat says she believed that often women felt overwhelmed and a little frightened about unpicking their financial situation and considering the big questions of the future. She also noted social media provided additional stress-points.

“I think women are often comparing, trying to keep up with the Joneses or scared of being judged and often I get asked ‘how am I tracking compared to other people you have seen?’. The truth is, we are all on different journeys and what people want to achieve is very different from one person to the next.

“Naturally, women are emotional creatures and when we introduce money into the equation, stress levels start to kick in! For those already feeling financial stress, having a plan to gradually turn this around can really alleviate the stress. Without a plan, a tough situation is only going to get worse. While it might be tough to sit down and confront your financial position, this will be short term pain compared to a long life with limited financial choice.”

Much more than money deals with every possible financial consideration from super advice, tax planning, portfolio management, retirement advice, cash-flow and debt management, wealth protection, wealth creation, small business advice.

For those unsure of the process, Kat would typically hold an initial meeting with a client to try and understand their unique financial position.

“Generally, there is trigger that has initiated the meeting—they want to fix something, avoid something or accomplish something. We take a values approach to financial planning so its exploring what’s important to them in life both tangible and intangible and then looking at the tools they have currently available to assist them on this journey. From there, we also identify any gaps in their situation and discuss if and how we can help the client going forward and the fee involved.

“There is no pressure for the client to proceed and the initial meeting is at no cost so my view is, even if they decide not to proceed, hopefully our meeting will open up conversations across the dinner table and they may even implement something we discussed. So either way, it’s a success!”

If a client decides to go ahead, they pay a flat, 12-month service fee and come back for a second meeting to nail down strategies followed by six- and 12-monthly reviews. Some clients stay on throughout their careers, planning in stages, while others dip in and out as their circumstances change.

“Imagine a life free of financial stress, where you know what you need to be doing with your money, when you need to be doing it and having someone to make sure it all happens. This is what we aim to deliver for all our clients so they can achieve their own ‘Return on Life’”.

Kat’s tips for starting 2019 on the right financial foot

• Check yourself before you wreck yourself! Don’t get sucked in by having to own everything now. Go back to basics and save if you want something rather than falling prey to After Pay and credit card debt.
• If you have built up debt, start paying off the debt with the highest interest rate first or even consider consolidating the personal debts into your mortgage, but make sure you make extra repayments off the mortgage to ensure you have the personal debt component paid down in a couple of years.
• Consolidate all your super funds into one—this does require a little more thought as generally there will be personal insurance held within the funds and if you leave the fund you will lose the insurance, so you need to carefully consider this.
• If you have a mortgage, consider using an offset account as your savings account, and even your everyday account if you have strong financial discipline.
• Set up a cash bucket and start putting money aside as your war chest/emergency bucket.
• Set-up a realistic budget and stick to it—you might not think you are getting anywhere initially but you will see savings grow or debt decrease over time. Remember, don’t save what is left after spending, but spend what is left after saving!
• If you get that promotion or additional source of income, continue as though you are earning what you were previously. Use this as an opportunity to get ahead!

Katherine O’Sullivan is an authorised representative of Godfrey Pembroke Ltd Authorised Financial Services Licensee. Any advice given in this article is of a general nature only and has not been tailored to your personal circumstances.

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