Are you underestimating the power of your income?
Over the course of your working life, the money that you earn will probably be one of your most significant financial assets.
It’s likely to be worth a lot more than any vehicle you own, and maybe even more than the value of your house.
As a very rough calculation, if you were to earn $65,000 a year over 40 years of your working life, you’d earn $2.6 million before tax. As your salary increases, so too does the multimillion-dollar sum you could expect to earn over a lifetime.
Why does it matter?
For lots of people, their income and ability to work is their primary source of financial stability.
It’s what keeps the bills paid, allows them to put food on the table and pay for housing for their families. Then there’s all the extras!
The unexpected loss of an income can make a huge difference to the wellbeing of an individual and those who depend on them.
Your income gives you power
As well as covering your expenses, having reliable income can allow you to invest and grow your net worth through the accumulation of assets.
When you turn your income into investments, whether that’s through property or investing in things such as shares, managed funds or your KiwiSaver plan, you’re often able to achieve higher levels of wealth than you would have if you had just kept your income in the bank.
That steady flow of income gives you options and opportunities to make those investments.
Protecting your livelihood
So if your income is your livelihood, what can you do to protect it?
There are lots of different approaches you can take: Keeping up with developments in your industry can help, so that you’re continually employable. If you own your own business, thorough planning, and a sound but adaptable strategy can help to ensure you remain profitable. You might look to diversify your income sources so that you are not so reliant on one.
But beyond that, insurance can help.
Income protection insurance can step in when you are unable to work, due to illness. In New Zealand, ACC will usually cover you if you are off work due to an accident. But there is often little help available if you cannot work because you are sick.
Income protection can be called on to help pay the bills while you are not working, allowing you to focus on recovery – not worrying about your finances and those who depend on you.
Time to talk?
If you’d like to talk about protecting your income, or whether your current policies remain appropriate, get in touch with us. The team at LifeDirect can help you understand what is available and what might be a good fit for you.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
