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What is financial planning for low income earners?
More than ever before, it’s crucial that we debunk the commonly held misconception that low-income earners needn’t seek financial planning and counsel. At Inovayt we believe that everyone should have access to financial planning which is why we have put together this blog on financial planning For low income earners. The cost of living continues to surge, with the gap between the ‘rich’ and the ‘poor’ having steadily increased over the past three decades, Just this past week, it was announced that the student loan threshold would be clawed back as of July 1, from approx. $56,000 to $45,000 a year, leaving those with higher education debts out of pocket sooner than anticipated. Further, in this year’s federal budget, Treasurer Scott Morrison promised tax cuts to working Australians for the 2018-2019 period – a political manoeuvre which initially appears progressive. However, the forecast for tax cuts from 2024-2025 shows a drastic trajectory for those in higher income brackets but an alarming plateau for those at the lower end. These are just some of many indicative events of a fluctuating economic agenda as far as wealth disparity is concerned – if you’re a low-middle income earner it’s ever the battleground out there. As a low-income earner, it's crucial to prioritise financial planning in order to achieve financial stability. This can involve creating a budget to better manage your expenses, finding ways to increase your income, building an emergency fund, paying off debt, and saving for long-term goals. Additionally, you may be eligible for government benefits such as the Low-Income Health Care Card which can provide additional support. To ensure you're making the most of your financial situation, we recommend speaking with a financial advisor who can provide personalised advice and support.
The Good News…
One of the biggest misconceptions around financial planning is that it’s reserved for the wealthy, or that you need to ‘have money’ in order to benefit from advice; this couldn’t be further from the truth. In spite of the economy’s turbulence, reclaiming your financial empowerment, regardless of your bank balance, is entirely achievable and it is the job of a well-rounded financial planner to guide you through this. Of course, there is a spectrum as far as the complexity of advice goes, but a large component of modern financial planning is designed to be accessible to everyone - from pensioners, to single parents, to avid investors.What Does Financial Planning For Low Income Earners Look Like?
Financial planning can be that just – planning. It can be something as simple as evaluating your superannuation and ensuring you’re in a low-fee fund or getting advice on life cover or income protection. For some people, it might be getting assistance to access the First Home Super Saver Scheme (FHSSS) to buy your first home. For others, it might be about week-to-week budgeting, re-structuring finances, consolidating accounts, putting in place basic measures for improved debt management, or starting a regular savings or investment plan to re-focus your personal goals and objectives.Creating good financial habits for the benefit of your family's future
Creating good financial habits is essential for the benefit of your family's future. Here are a few tips to help you get started:- Budgeting: Create a budget that accurately reflects your income and expenses and stick to it. This will help you stay on top of your finances and avoid overspending.
- Saving: Start by setting aside a small amount of money each month for emergency savings and work towards building a larger nest egg for the future.
- Debt Management: If you have debt, create a plan to pay it off as quickly as possible. Consider consolidating your debt to simplify your payments and lower the interest you pay.
- Planning for the future: Consider setting financial goals, such as saving for retirement, paying off your mortgage, or funding your children's education. A financial advisor can help you create a plan to achieve these goals.
