The three factors to consider when planning your retirement are: annual income, accumulated wealth, and retirement age – or what I like to call the ‘retirement triangle’.

During my 18-year financial planning career I have presented at seminars on the topics of wealth accumulation and retirement planning dozens of times.

Following each presentation, at least one attendee approaches the lectern and makes the comment, “I thought there would be more to it than doing a budget.”

The attendee must think there is some silver bullet that will deliver them untold riches.

There’s not. In fact, the answer is quite straightforward. Budget.

How do I save for my next holiday or car? Do a budget.

How do I repay my home loan faster? Do a budget.

Can I afford an investment property or holiday home? Do a budget

Where is all my salary going?
Do a budget!

Can I afford to retire?
That depends on your budgeted income needs.

Getting the message?

If your chosen financial adviser starts offering investment solutions rather than discussions around your income and budget, look elsewhere, as they are only interested in selling you something, rather than coaching you to make smarter financial decisions.

Most clients quiver at the mere thought of a budget. It conjures memories of what they were forced to do with their limited income when they were students or had a young family. The result was usually a restriction on all the discretionary expenses that provided enjoyment (fashion, dining out, travel etc.).

Once you started earning a higher salary, kids moved out of home or you paid off your mortgage, the ability to spend freely felt like the weight of life had lifted off your shoulders. Sound familiar?

The concept of a budget, however, is just to have an awareness of where your income is going during all stages of your life. Once you know what you are spending your money on, you can decide if that is the best use of it. Most people are forced to make trade-offs.

Do I dine out once a week or go away on a holiday for a week?

Do I take annual interstate or overseas holidays, or do I retire earlier?

A budget does not dictate your life, it empowers you to make decisions and value your time.

A client who scribbles a few expenses that come to mind (on the back of an envelope) the night before an initial financial planning meeting will not get any value out of the appointment. The whole financial planning process will be based on inaccurate information.

However, when a client attends an initial appointment with a budget tried and tested over a number of years, this says their income requirement is a certain amount, and we can safely use this figure for the financial advice analysis – no assumptions and more importantly, no surprises!

If you need help starting a budget, there are many tools available online. However, personally I direct my clients to the Australian Securities and Investment Commission’s (ASIC) Money Smart website.

A word of warning: your budget won’t be perfect straight away. Don’t let this stop you from making a start. Some of my clients take two to three years to fine tune their budgets. They make adjustments over time and eventually it becomes second nature.

When you look back at your decision to create a budget, you will tell everyone that it was the most important financial planning decision you ever made.

At Advice SA we provide goal-based advice through discovery meetings that allow you to uncover your ‘blue sky’ dreams. Call us to find out what’s possible for you.

Mark Bastiaans is an Authorised Representative #296627 of Guideway Financial Services Pty Ltd ABN 46 156 498 538 AFSL 420367.

The information provided above contains general advice that does not take into account your financial situation, specific needs or objectives and is not intended to be personal financial advice and should not be relied upon without written advice from Guideway Financial Services Pty Ltd.