Where do I begin?

It might feel overwhelming at first to start but here are the sequence of topics we should understand well before moving onto the next.

Step #1: Foundation and Mindset 

One of the most important things to understand first is yourself  – why personal finance is important, what sort of mindset to be in and how to set goals. With the wrong mindset and not understanding the purpose of personal finance – falling out of good habits can happen before any progress is made. 

Step #2: Saving 

This section touches on how to save, where to park your savings, what happens to money in your savings, how to draw up a budget and see how your money moves. 

It is important that we the income we have coming in is exceeding our expenses going out. If we cannot end with surplus money, saving money to invest will be difficult and only put you more behind where you had started.

Step 3: Understanding Taxation 

I get it, tax sucks, but is an unavoidable part of being an adult. As they say “In this world, nothing can be said to be certain, except death and taxes”.

Any income or money you earn is subject to taxation. Understanding how taxation works in Australia, what it means for you and ways to be smart with tax are all important aspects of managing your money.

As income increases, tax generally does so getting the right behaviours and understandings right early on, can have a large impact on what we have left over. 

Step 4: Investing 

Make your money working for you. 

If you can make your money, make more money – why not? It will mean you have more money for later (the end goal of personal finance) 

Understanding why investing is important and how to do it based on your risk appetite will mean you don’t have to work for every dollar you need in the future.

Step 5: Retirement/FIRE 

FIRE or Financial Independence Retire Early is a movement where  the goal is the accumulate sufficient assets or funds to cover your living expenses. This gives the person the flexibility to reduce paid work or reduce it where they see fit. Understanding how to get to this stage is an important part of a lot of savvy personal finance gurus. 

Optional Strategy: Property 

Having a roof over our heads is important – either that by owning the home you’re living in or renting. It forms one of the largest expenses that everyday Australians face. 

Property can be used to supercharge personal finances but only if done correctly. It isn’t a compulsory strategy for everyone but must be considered to some degree by most chasing personal finance.