Time to change your goal focus: Financial to Lifestyle

Lower your tax, invest in property, save on insurance – Why you might be focusing on the wrong goals

The initial chat I have with most potential clients involves me asking them to describe what their goals are & why they want to speak to a Financial Adviser.

One of the hardest parts of this initial chat is helping clients tell me the difference between; what they think they need and what they really want.

I’ve developed a simple technique I call ‘The Why Game’, and it goes a little something like this:

Me: What can I help you with?
Client: We want to buy an investment property and pay less tax. (What they think they need.)

Why?
So, we can grow our assets.

Why?
So, we can sell our assets to pay off our debts faster.

Why?
With the leftover money, we can buy our dream home on land near our favourite beach.

If I could help you own your dream home, but you needed to pay more tax & never purchased an investment property, would that be OK?
That wouldn’t worry us at all.

Why?
We really just want to live in a house we love on a beach in the future. If we could use the house as a holiday home until we move permanently, that would be unbelievable.  We went on holiday to the beach with our family growing up, and we really want our kids to have that lifestyle too. (What they really wanted)

Everyone knows the saying, a means to an end.  Logically, the end result is the most essential part. Are we spending too much energy striving for lower tax, cheaper products, and investment properties and not enough on our real goals?

Given that intention drives actions, are we making decisions based on the means and not the end to our own detriment?

The focus impact

Short-term

While the individual gains some short-term tax deductions, it’s only a matter of time until rent increases & they’re paying more income tax. If their property increases significantly as they planned, they will need to pay a large amount of capital gains tax when they sell it to pay off their debt.

Long-term

Suppose the individual sells their SMSF investment property at retirement as planned. In that case, they’ll likely be able to avoid all capital gains tax. In addition, because they have more personal cash flow, they can contribute to superannuation in a tax-effective way.

Focusing on what really matters

Outline your vision, prioritise your goals & work backwards from there. I like to put my real goals into three buckets:

Focusing on the right goals will help you make the best decisions. While the means along the way shouldn’t be dismissed, you don’t need to achieve them. After all, they are simply levers to help you get where you want to go. They’ll be an afterthought once you’ve achieved the things that really matter.