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The financial stages of life

Financial stages of life

While no two people will have identical life experiences, it is possible to follow some general guidelines on how our financial lives will progress through different stages.

Setting out the characteristics of various life stages can be a useful way to help highlight financial issues and priorities. Of course this will vary from person to person, but the general foundation this provides is something we can all build upon.

Early yearnings

During our twenties and into our thirties most of us will experience many firsts, which will all have a profound impact on our financial future and will require a planned response if we are to take full advantage. Our early employment brings with it the chance to establish some sound savings habits that can last a lifetime and can fuel wealth creation.

Finding a life partner brings greater responsibilities and expenses along with increased income and assets. This requires a higher level of financial planning so that life, income protection and disability insurances are put in place to help protect each other’s livelihoods and savings plans are put in place to build toward major goals, such as buying a home or travelling.

Starting a family and buying a home in this phase will also require protection plans to be well established as a priority.

From an investment standpoint, your early years are an opportunity to incorporate growth assets such as shares and property into your wealth creation strategy, given the amount of time you will have to take advantage of their greater long term growth potential (assuming this also fits your personal risk profile).

Middle aged consolidation

Hopefully your income will be increasing, but your expenses may also be burgeoning as children grow, education costs escalate and perhaps the family home is upscaled. This puts an increased emphasis on budgeting so that debts and expenses are kept in check and a longer term savings and investment plan is in place.

Superannuation needs to be given adequate attention too, as your super assets will likely be growing and thus giving you more scope to diversify the way they are invested.

Protection needs during this stage will peak, to cover the growing family expenses and mortgage commitments. Neglecting this important aspect of financial planning could result in financial catastrophe if breadwinners and homemakers are not adequately insured.

Financial life stages

Cresting the hill

Assumedly, the nest will begin to empty, mortgage expenses will reduce and insurance needs will begin to taper. These factors can create an increase in discretionary income and an opportunity to supercharge important investments. This could include loading your superannuation to maximise concessional limits and expanding your property, share and managed fund portfolios, so that dreams of financial independence can start to become reality.

This is also a time when we should be looking at positioning our assets to take full advantage of the tax opportunities that present themselves in the run up to retirement.

Relishing retirement

Stepping into retirement should hopefully be stress-free if you’ve planned carefully. You should ideally enjoy the well-earned fruits of your labour but this requires careful structuring of your portfolio, using a combination of growth and income based investments and income stream plans, as well as planning the liquidity needed for major purchases and lifestyle experiences. At the same time your social security position needs to be considered, so that you can take full advantage of entitlements.

Passing on your estate to beneficiaries needs due consideration too, so that the wealth you have built is preserved in accordance with your wishes and for the maximum benefit of those who will inherit it.

Why advice is so important

Each life stage has its challenges and complexities and this is where some experienced, professional advice can make all the difference. Your financial adviser is ready to guide, coach and support you on every twist and turn, so that you can be confident and secure along every stage of the journey.


Life changing checkpoints

Life changing checkpoints

While no two people will ever have exactly the same life experience, there are key events in life that can have a profound effect on our priorities and financial situation and our financial success depends on planning proactively around them.

Finding our feet in the early years

Our twenties and thirties are a succession of milestone events, such as starting a career, a family, a home and a mortgage. The decisions you make in these formative years have a major impact on your future financial success and security, so it is critical to make well informed and thoughtful decisions about good savings habits, well controlled use of debt, developing a strategy to grow your net worth, taking advantage of superannuation opportunities and the protection of lifestyle through personal insurance.

Building on an established base

As you move to middle age your income may well be increasing, your family expenses and you may need to upgrade the size of your home and expand your mortgage. Your personal insurance must be continually reviewed to reflect the burgeoning financial responsibility and your investments and super need to gain increasing sophistication and diversity to ensure you are maximising wealth accumulation.

Making the most of new opportunities

As we move deeper into middle age there will come a point where expenses and income will peak and start to taper off. Children leaving home and a mortgage being paid off present golden opportunities to accelerate your wealth creation. Setting yourself up for retirement takes over as your financial priority, including the maximising of tax benefits and taking advantage of transition to retirement strategies.

Retiring in style

Once you finally take the plunge into retirement your focus once again changes toward the selection of investments and income stream plans that will provide a worry-free lifestyle and maximise social security.

Advice is critical

Your financial adviser can provide you with objective and informed guidance to help you manage all of the financial decisions you need to make throughout your life. It pays to have qualified, professional advice on your side every step of the way.


Don’t gamble on financial advice

Don't gamble on financial advice

In an age of information overload and pervasive social media it seems everyone has an opinion they want to share. Being able to discriminate between what is useful and what is fanciful is increasingly important – especially when it comes to financial issues.

A little knowledge can be a dangerous thing

Ever had the temptation to jump on the web whenever you get an unusual pain to try to ‘self-diagnose’ what it might be? Or perhaps you have noticed a new wonder diet on your social media news feed that just happens to contradict the diet you read about last week. A little knowledge can be a dangerous thing and when it comes to the internet a lot of discretion needs to be applied to the relentless clamour of opinion and advice from sometimes dubious sources.

Of course having the ability to access information and do research at the touch of a button can be extremely useful. The internet has empowered us through the democratisation of information, but while the benefits are undeniable, there is also a danger of ill-informed opinions and vested  commercial interests being mistaken for well-considered and independent advice. This is particularly important to recognise when it comes to something as critical as your financial wellbeing.

Be careful who you listen to

The internet is not the only place where you may find questionable financial advice. Many of us have friends or family who feel compelled to give their heartfelt opinions on investment ideas. We open the newspaper and we are assaulted with exaggerated commentary about markets being a “blood bath” or in “free fall”. Then there is the hysterical reporting on the property market.

The bottom line is that advice on critical areas of our lives should always be taken from professionals. If you have an illness you see a doctor. If you have a legal problem you talk to a lawyer. For your financial future it is always best to use a professional planner who can give you advice that is independent, well researched, takes into account your priorities and goals and provides a sober long-term view of what is right for your situation.


Reverse parenting: When is the right time?

Reverse parenting: When is the right time?

There are often signs that an ageing parent is having challenges with day-to-day life. Sometimes, through pride and because they don’t want to be a burden, they will try to minimise these issues.

Most people want to stay in their own homes for as long as possible. They may want control over what type of help will be put in place or be concerned that they will be pressured to move into a care facility. It’s best to talk with your parents long before the signs start to show, so that they are part of the decision process rather than on the outer.

Some of the signs that your parent may need help include;

  • Problems walking and frequent falls
  • Poor judgment or forgetfulness, such as leaving the stove on, or leaving the house unlocked
  • Disinterest in personal grooming and infrequent bathing
  • Difficulty preparing meals, lack of interest in food
  • Mishandling finances, bills left unpaid
  • Problems managing medications and scripts
  • Difficulty getting to social events
  • Increased confusion or memory loss
  • They seem lonely or sad

You will need time to do research

When making your choice of living arrangements, it’s important to know what services are provided and which are not. Assisted living facilities generally provide private living quarters and 24-hour staffing to help residents with basic services such as administering medications and meals. They do not provide skilled nursing services; however, nursing homes do.

The cost of power bills, food and social activities may also not be included on some accommodation options. You need time to find the service most suited to your parents’ needs.

Finally, the issue of cost needs to be addressed. While this is the last thing you want to be worried about, the reality is you need to know how your choice will affect you and your parents financially.

Our financial advisers can provide comprehensive cash flow analysis based on possible accommodation fees, living costs, tax implications and the financial treatment of the family home. You will quickly know what you can afford and, importantly, the impact on your financial situation after the move into aged care.

If you think it’s time to consider these options, please talk to us.


Ask Troy: What do you want to know?

Ask Troy: What do you want to know?

We want to hear from you.

What questions do you want answered? What topics do you want to learn about?

We want to help you, your family and friends.

Please send an email to to let us know. Want to be anonymous? Why not leave a sneaky voicemail when our office is closed – 1300 850 531.

Go on. Ask away!

And we’ll do our best to answer your questions.


Planning around life’s key milestones

Planning around life's key milestones

Life’s journey can sometimes be a roller coaster and all of us will have a unique variety of experiences, but there are some key events that will happen to most of us and these can be important markers for planning our financial security.

Life is punctuated with events that can involve changes in lifestyle, relationships, opportunities and commitments. These are often celebrated occasions that bring positive changes, but they also have profound implications for our financial situation that need to be accounted for in our insurance planning.

Let’s take a closer look at what some of these key events are and how your financial plan may need to respond.

Tying the knot

Transitioning from single life to being a couple is one of the most dramatic lifestyle shifts we could ever make. The freedom and independence of the single life is now transformed into a dependent union, where you share your living space, your time and your finances.

You now have responsibilities to each other that may need protecting with insurance cover, so that there are no financial problems if something untoward were to happen to either of you. This may involve some life insurance and TPD insurance, as well as arranging for you both to have income protection if you are both working.

A place to call home

Not long after marriage (and sometimes before it), you will likely join the many who take on the major commitment of putting down some roots in your own patch of real estate. There is a lot of appeal in the sense of achievement this can bring, but it also flags a major financial commitment that you are not likely to want to give up in a hurry.

Life insurance is therefore a major consideration when you make such a major life change, with the objective of enabling either partner being able to pay out the full mortgage amount, if the worst was to happen. Income protection supplemented with trauma insurance may also need to be reviewed to cover any increase in monthly outgoings and to avoid having to give up this major asset if sickness or accident occurs.

The patter of little feet

No other life event carries with it the same level of responsibility as the birth of a child. In one instant, you are both taking on the mantles of provider and protector for a new and very dependent life. A future of nurturing, providing and caring is now mapped out ahead of you for many years.

The massive responsibility that this new addition brings, makes it essential to review cover so that funds are available to create an ongoing income stream if one partner were to suddenly be taken out of the picture, thereby allowing the surviving partner to focus on raising the child without the worry of needing to work.

This applies to both partners, regardless of whether they are working or in a stay at home situation. Extra funds may also need to be included in insurance planning to cover large one off costs like education or vehicle replacement. Each new child that comes along will of course increase the level of cover needed.

You’ve got the job

Career mobility is a much greater issue than it was in days gone by. Several job changes over your lifetime are now the norm and each change may represent a step up in responsibility and an increase in income. This normally also results in an increase in expenditure and an improvement in lifestyle.

This may well leave you in a situation where there is a dangerous disparity between your income and your income protection cover, so it is vital to take the opportunity to review cover in order to maintain your financial independence if sickness or accident puts a temporary or permanent stop on your income earning ability.

If you have had a major life event recently, talk to your adviser about keeping your cover up to date.


The hardest but most important thing to do, is stick to the plan

The hardest but most important thing to do is stick to the plan

There’s a saying that I really like. It goes:

“It’s not about what you earn, it’s what you do with what you earn, that matters.”

The truth is that you don’t need to be a high-income earner to be in control of and growing your money. Regardless of how much you earn, if you have a plan and stick to it, you can be pretty confident you’ll see some success.

Let me tell you about a couple I have known for many years, and what they did to take control, that ultimately gave them the choice of whether they wanted to continue to work, or not.

I met this couple about 15 years ago. They were referred to me by a client who encouraged them to come and talk to me. They were both successful professionals and had a great lifestyle. But they weren’t really making any headway on paying down their mortgage or investing for the future.

So we sat down and created a plan.

We created a system for managing their cash flow that included a planned amount to spend, that didn’t force them to live any less than what they had done previously.

We also created some automated flows of money to direct their funds to where it needed to go to help build their wealth for the longer term. This included paying down their mortgage, contributing to their super and investing in shares.

The couple still did things like go on regular holidays, but they were conservative about other purchases like cars and material items. They wanted a good lifestyle and to donate to charities. And they even did renovations on their home.

Every six months they would come to see us and we would review their progress and tweak the plan.

They were amazingly disciplined and followed the system we had put in place. Some years it was a challenge and there were a few bumps in the road, but they would get back on track and do what they needed to do.

“If you deviate from the plan, the likelihood of succeeding is low.” – Troy Collins

They went through the GFC and still kept to the plan. In fact they paid off their mortgage in the middle of the GFC!

About five years out from his planned retirement at age 60, one of the couple didn’t think he could go on for another five years of work. So we sat down, adjusted the plan and he was able to retire in two years instead of five.

Because they stuck to their plan and had built their wealth over a number of years, they were able to make some choices about work, right when they really needed to.

They are both now retired and living very comfortably. Their discipline around their cash flow management and investing has allowed them to now live off passive income.

Accountability to a third party (us) was a big factor in their success. It encouraged and supported their discipline and there was a feeling of shared responsibility.

Ultimately, they made the choice to stop drifting and take action. They took control and have reaped the benefits.


Where are you at with your plan? Are you drifting or sticking to it?


Who’s the chief of your family’s finances?

Who's the chief of your family's finances?

I’ve been married to my beautiful wife Marilo for over 20 years. As my childhood sweetheart, we got married young. We started with nothing, and over the years have built a successful business, had three children, built a house, moved several times, and lived a life that’s not uncommon for most Gen Xer’s.

But it hasn’t just happened. We’ve set goals. We’ve worked hard. We’ve made tough decisions – some have worked out and others haven’t. That’s life.

We have, and continue to take an active role in building and nurturing our relationship, our family, our health and our finances. Sometimes, it’s not easy.

But we’ve found that taking on specific roles in our relationship has been really helpful. We know where our strengths and interests are, and we’ve tried to put them to good use.

Let’s look at the financial aspect of our relationship, which, let’s face it, can be a challenging aspect for many couples.

Because of my skills and interests, I take on the role of Chief Financial Officer (CFO). Not just in our business, but in our relationship and family’s finances.

Now being our family’s CFO might sound a bit silly, but I treat that role in our relationship with just as much care and planning as I treat that role in our business.


Our family and the money we earn, spend and save is a lot like a business. We produce income, we pay tax and we have expenses. We take some risks to get ahead, like borrowing to buy a home and invest, and we always have to be conscious of our cash flow.

As the “directors” of our family, Marilo and I make big decisions together and we get help from experts when we need it. And while I might guide the financial strategy (I am a financial planner after all), she always knows what’s going on and is comfortable with it.

We track and know how we are going on a monthly basis – a bit like a business does with Profit and Loss statements and Cash Flow reports.

There are emotional decisions and there are practical decisions to think about. But we always talk about the things that have a big impact, before we do anything.

And every six months or so, we revisit our family financial plan and review how things are tracking. We discuss what’s working and what’s not. Whether our goals have or haven’t changed, and we refine, improve and enhance the process and strategy so we get closer to the outcomes we’re trying to achieve.

In fact, it’s a lot like what we do here at Collins Financial Group, for both our clients and our business. We act as the expert CFO for our clients’ family finances, helping them work towards achieving goals for themselves and their own families.

So tell me, how seriously do you take your family’s finances? Do you run things like a well-oiled machine and bring in experts when you need to? Or are you more like the business that’s up to its eyeballs in debt and struggling to pay the staff each week?


Time and dollars – Living today and planning for the future

Time and dollars - Living today and planning for the future

The most important thing when it comes to investing is to consider the outcome that will give us the financial independence we desire.

We need to think with the end in mind.

Financial independence involves two key things:

  1. Time: The date or time when we have the option to stop work and be financially independent. For most people this is between 55 to 65, but some are earlier and some later.
  2. Dollars: The second most important thing to understand is what income is required at that point in time.

From there, we can work out what capital you need to accumulate to get there.

It’s critical to ensure you’ve got enough time to accumulate the capital required to produce a passive income in the future.

Our belief is that for every $30,000 worth of income you desire in today’s dollars, you’ll require at least half a million dollars to achieve that outcome.

Once the end game is known, we work back to where you are today.

What are your current assets?

What are your current liabilities?

What is your current cash flow situation? What’s coming in and what’s going out?

The goal is to create investments that generate a passive income and create tax efficiencies for you, so you’re not working harder, but getting your money working smarter for you. When you get more and more money working for you, you can work less and less.

We also need to track our progress on a weekly or monthly basis. With any well run business or financial plan, we need to understand your position every 30 days, so we’re only ever 30 days behind how we’re tracking against original budgets.

We also need to ensure there are parameters in place that include managing the risk associated with investing, and the risk associated with injury or illness. We need to insure our current cash flow, to ensure that future cash flow is achieved.

Ultimately, understanding what the outcomes are that you want to achieve, and then putting a plan and process in place, will assist in achieving those key financial outcomes.

And that is part of the financial aspect of setting goals.

With goals and a flexible plan in hand, we’re that much closer to happily living in the moment, instead of stressing out about the future. The longer term plan actually helps us better focus on today.

Living today, and planning for the future!