Few people live without a major upheaval that has a financial impact, such as buying a first home.
Few people live without a major upheaval that has a financial impact, such as buying a first home.
Break big goals down to small steps that can be taken one at a time, and slowly make a transition, while celebrating the small successes along the way.There is an inextricable link between time and money. Accountants and economists talk about "the time value of money". Investors talk about "timein the market" and contemplate the value of compound interest over time.
Time is a key ingredient in reducing investment risk, because the longer your investment time frame, the less impact from short-term changes in the value of investments.
To understand how to get the most out of your money you really need to understand how to use time to your advantage. One key aspect to focus on is the link between time and major life changes and how this affects finances. Few people live without a major upheaval that has a financial impact, such as buying a first home, having a child, being made redundant, or retiring. Between these key life events, sometimes we set goals for significant change. New Year's resolutions are good examples, but significant change can also be triggered by feeling bored or wanting more out of life. The secret to making major change is to take time.
Break big goals down to small steps that can be taken one at a time, and slowly make a transition, while celebrating the small successes along the way. For example, it is better to successfully save a small amount each week than to unsuccessfully attempt to save a large amount each week. A goal of a beautiful home is easier to achieve if you plan for it to be the second or third home you buy rather than your first.
A goal of retiring can be easier to deal with if it is achieved by gradually working less and spending more time on recreational or community activities. Good things take time.
* Liz Koh is an authorised financial adviser. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free by calling 0800 273 847. For free e-books see moneymax.co.nz and moneymaxcoach.com
