How To Start Planning For Your Future Finances ‘Cos No One’s Gonna Do It For You

financial planning

I hate to disagree with pop music from 2011, but we can’t live our lives like tonight’s our last night. I guess ‘think about your future’ doesn’t really work over an EDM drop, but it does work for our finances.

Look, I get it. It’s exhausting to consider your financial future, when it’s so much easier to live paycheck to paycheck, saving for whatever shiny thing or holiday that’s on the horizon. But investing in your long-term wealth doesn’t have to be so scary, and, if you’re smart about it, it doesn’t mean sacrificing those everyday pleasures: I’m not suggesting you have a sad office tuna can meal every day for lunch.

Here are four steps to start planning out your future and work out how to invest, inspired by Sharesies, the Sharesies platform lets Australians buy shares and exchange-traded funds (ETFs) in the Aus, NZ and US markets at no minimum spend — meaning you can start investing whether you have $50,000 or $5 to spare.

After you’ve perused the below steps, chuck a listen to the latest investing podcast, Unlikely Investors – it’s a finance podcast but designed for people who know diddly-squat about investing. So, you know, a cool finance podcast.

Figure Out Your ‘Time Horizon’

If you’ve ever spoken to a finance whiz, you’ve probably heard the term ‘time horizon’ before. Unfortunately, it’s not, to my knowledge, the name of an ’80s arcade game, but it is the fundamental thing you need to work out before investing. Essentially, it all boils down to one question: when do you want your investment to pay off?

If you’re looking to cash out in a few years, that probably just looks like a good savings account or a term deposit. It looks a lot different to investing for the long-term — then you have decades to play with, which means you might want to consider long-term growth options, like shares and ETFs. And with a long-term horizon of a decade or more, you don’t need to have a mass amount to start off. With time on your side, the important thing is to start building that base, even if it’s just, say, investing $5 a week. Or say you only invested $5 in a year: if there was a 10 per cent increase within that year, it becomes $5.5, and the subsequent year’s 10 per cent increase turns that $5.5 into $6.05 – an example of compound returns. Time is on your side. (This is, of course, just an example of growth, and not a guarantee).

What’s Your Budget?

Before you invest, you need to work out where your money is currently going. Be honest in drafting a budget, and you’ll see where you’re actually spending big: is it having seven streaming service subscriptions? Your phone bill? Going out to the cinemas?

The answer isn’t to cut back on items that add up, but to consider their value or whether you’re actually going to give it up. Sure, getting delivery every Saturday after a night out isn’t cheap, but I know it’s an unavoidable cost in my life (not taking questions or comments at this stage!). Where can investing fit in, realistically, to your life without drastically altering it? It’s easy to go too hard when starting out, which means you might end up cashing out your investment out of need, and then feeling like you have to start all over again. Be realistic!

Rainy-Day Funds

Speaking of: it never feels good to prematurely pull out of an investment, which is why you need a separate rainy day fund. Things happen unexpectedly, and it’s important to have money aside to support yourself no matter what pops up. I know it’s all your money, but relying on your investment money for those emergencies will inevitably mean your investments will get paused at some point, which is a frustrating experience. Protect yourself and your future, and include some savings in your budget.

What Type Of Investing Makes Sense For You?

When it comes to the market, there are all sorts of strategies to guide your investments. For long-term investing, you want to have a plan beyond ‘timing the market’, AKA trying to predict lows and highs to make a quick profit. The benefit of long-term investing is that you don’t have to be across every single fluctuation or do a lot of regular research: you’re more concerned about the year-to-year than the day-to-day. We have a guide to five different investing strategies so you can find what makes sense for you, but the important thing is to think about it before diving in.

Keen to invest too? Sign up to the Sharesies platform and use promo code “UINVEST” for $10 in your account, ready to invest. 

All investing involves risk. T&Cs and fees apply for use of the platform provided by Sharesies Limited.
$10 applies to new accounts only. Promotion T&Cs apply and for use of the platform provided by Sharesies Limited. This series is sponsored by and promotion is provided by Sharesies AU Pty Limited, as an authorised representative of Sanlam Private Wealth Pty Limited (AFSL No. 337927).