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When building wealth, it’s all about cash flow

Without a secure income stream, even the best laid financial plans can come undone

You’ve probably heard the mantra ‘cash flow is the lifeblood of any business’. And our friends in Government know the importance of cash flow – as mining revenue has reduced, they’ve had to make unpopular cutbacks to maintain a surplus.

It’s the same with those looking to build wealth: it’s all about cash flow. Without a steady stream of cash coming in, it’s hard to achieve the lifestyle you want – both now, and in the future.

The first thing a long term financial strategy should address is your income security: is your cashflow protected in case you’re unable to work? We can’t develop strategies to make best use of your income without first ensuring your income is secure.

Your cash flow protection needs boil down to a few basic questions:

If an illness or accident prevented you working for an extended period…

  • Would you want your income to be replaced? Would you want 100% replaced, or could you make do with less? (ie what bills would stop coming in, versus those that might arise due to your illness or injury?)

  • Would you want your debts paid off, or can they be ‘put on hold’ until your income starts again? (Would you rather lose your house or your mortgage?)

If you or your spouse were to pass away unexpectedly…

  • Would you want your family to be financially better or worse off? At least as well off? For just a year or two, or on an ongoing basis?

If you have a family, or any financial commitments such as a mortgage or loan (or even rent), you need to seriously consider your answers to these questions.

It’s important to seek professional advice about your personal situation. Call The Practice today to book a complimentary meeting to discuss a wealth protection solution that provides affordable peace of mind: (03) 8888 4000 orwealth@thepractice.com.au.

Written by:
Matt Morrison