We recently talked about how personality traits can make some Australians more averse to wealth management strategies compared to others. As we know, personality types can actually have a significant impact on the way you psychologically deal with your finances and, ultimately, your ability to reach your financial goals.
In many cases, it’s about finding the right tools for the right personality type. In the first of a four-part series, we’re going to tackle the Secret Squirrel personality trait and outline techniques to overcome financial insecurities to make smarter investment.
Are you cautious with your finances? Does stockpiling make you feel at ease? If so you should read on, because you might have some of the traits of a Secret Squirrel.
Do you squirrel away your savings?
Notoriously focused, Secret Squirrels are dedicated when it comes to building up their safety net. They might salary sacrifice, forgo taking that holiday they have been dreaming about or make frugal decisions in their personal lives by living at home or following a strict budget — all in the name of saving. If you’re doing this, then you’re to be congratulated, considering that Australia has some of the highest personal debt levels in the world. According to the Australian Bureau of Statistics, mortgages alone make up over 55% of personal debt, followed by investment debt, personal loans, student loans and then credit card debt. However, apprehension and being over-cautious can hold Squirrels back when it comes to fast-tracking wealth and making smarter investment choices.
Secret Squirrels need transparency and honesty
For Secret Squirrels, it’s all about education, guidance and a step-by-step approach when it comes to any form of investing. A good financial adviser will work closely with their clients to find investment options that are going to be financially beneficial, but aren’t going to unduly risk any hard-earned savings. Additionally, at Talem Wealth, we find that individuals with the Secret Squirrel style of personality tend to feel more comfortable when they can easily access and see how their money is working. It’s one of the reasons that we encourage our clients to use the Moneysoft app. Easily accessed from your smart phone, the app provides our clients with complete transparency of their money. You can keep track of all transactions, see money going in and out, giving you a clearer picture of your financial situation. Additionally, the app can automatically categorise expenses and set financial goals, a holiday for example, for you to follow. Essentially it’s a tool where you can start to build a better understanding of how you spend your money and how you can improve your spending habits, while still being in full control.
Moneysoft is designed with full financial transparency in mind. It’s perfect for anyone that wants to keep a close eye on their spending and saving.
But what’s wrong with saving?
There’s nothing wrong with putting your earnings into a savings account. In fact, a savings account is a fundamental part of your financial-toolbox: they’re safe, they’re secure, and you can access your funds whenever you need. However, the crucial issue with savings accounts is that they offer notoriously low rates of return. Currently in Australia, the average interest rate is around just 1%. So the question to ask yourself is, what do you want to be doing with your savings? Keep it secure, or grow it over the long term? If your answer is the latter, then being proactive and alert means you can make the most of your savings. Many banks and financial institutions promote introductory interest offers for savings accounts where you can benefit from interest rates around 3%. However, these will only be for a set period of time, so be prepared to continuously move your money around.
Consider low-risk investment opportunities
Term deposits can be an alternative method of growing your savings and there’s the opportunity to double your interest rate. Patience (generally not an issue for Squirrels) is required, as your money is invested over a fixed term with a fixed rate. Term deposits are an effective method of building wealth, particularly if you have a large sum of cash sitting in the bank. If you’re a Squirrel that’s ready to take the plunge into investing, then bonds are another low-risk option. Rather than investing into stocks and shares, when you purchase a bond you are essentially loaning money to an entity, typically a corporation or government, to fund projects or activities. In return, you receive regular interest until your loan is paid back.
Let’s get your money working harder for you
At Talem Wealth we understand that, just like your personality, everyone’s financial situation is unique. We work closely with our clients to assist them achieve their financial goals — no matter how big or small. If you’re ready to take the next step with your savings or are ready to explore some low-risk investment opportunities, then talk to us today. We’d love to help.