ADVISER INSIGHT
Paul Korst is a Senior Financial Planner in the Ipswich office. With over 20 years in the financial services industry, he brings a wealth of practical knowledge. Paul takes great pride in helping his clients live their best lives. He believes that financial discipline is the building block for creating financial independence.
Quoting former Navy SEAL and now author, Jocko Willink, Paul shares his philosophy that we can achieve freedom through discipline. “While discipline and freedom seem like they sit on opposite sides of the spectrum, in fact, they are very connected. Freedom is what everyone wants - to be able to act and live with freedom. But the only way to get to a place of freedom is through discipline. If you want financial freedom, you must have financial discipline.”
We spoke with Paul about his thoughts on maximising the benefits of surplus cash flow.
Becoming mortgage-free marks a significant milestone in your financial journey. Being strategic about how you spend the increased surplus cash flow can set you up for the future.
“The security of owning your home outright is a goal most of our clients share. Paying off your mortgage can free up cash for travel, building retirement savings and other long-term plans,” says Paul. “If you have paid down your home loan, it is a great opportunity for wealth creation,” he says.
Paul acknowledges that it is a common human tendency to discount the future in favour of today and that it is easy to fall into lifestyle creep, where our spending increases to match our diposable income. Everyone’s circumstances are different, and some planning can help you to keep this in check whilst still enjoying life.
When speaking to clients, Paul recommends four steps so that you can utilise the surplus in a way that works for you.
Budget
Paul acknowledges that this is not something most of us enjoy but believes that it is an essential first step to getting the most out of your financial resources.
Creating a budget provides awareness and understanding of where you spend your money and what you can do with it. The MoneySmart Budget Planner is an excellent tool for getting started. Becoming mortgage-free quite often frees up 4 to 5 times the amount of surplus cash flow you are used to having, so the next step is to decide how much of this you want to devote to a wealth creation plan.
Make it automatic and regular
Set up regular banking debits to direct your funds to the accounts you want them to go to. Quite quickly, this becomes a financial habit, and that’s what dictates your outcome.
Get advice
Where to direct mortgage-free surplus cash flow is determined by your unique circumstances and your goals. The great thing about the financial planning process is that it can help people to bring their future life into the present, where we can implement strategies to help make their future life a reality. We will work with you to create a bespoke strategy that considers your objectives, appetite for risk, investment options and tax implications.
Start now
The most important step is to act as soon as possible as this will help you achieve the best long-term financial outcomes. A good financial plan implemented today is better than a perfect plan implemented next year.
