Written by Melissa Grimshaw
Did you know? According to Wemoney Financial Wellness survey 2021-2022:
- 1 in 3 Australians don’t feel confident with their current financial situation.
- 8% are just surviving when asked what best describes their financial situation.
- 6 in 10 Australians worry about debt, with 46.5% worrying about debt on at least a weekly basis – On the flip side – 46.6% of us feel financially stable.
At the end of each pay cycle, have you ever stopped and asked the question of yourself “ Where does my money go?” If you can answer the question, then you are on the right track. If you can’t, then maybe it is time to take control.
In all the “How to be successful with money books”, there seems to be a few themes that are consistent across them all:
- Pay yourself.
- Set goals.
- You need to make changes – if you want change.
- There is a strong link between our mental/physical health and money.
- Have a budget/plan- helps you obtain control.
There are those 2 words: take control… I know who has time for that, who wants to sit down and work out income vs expenses and start tracking what you spend. Suddenly you feel overwhelmed or a big yawn is coming on!
It does not have to be that way. There are so many tools around today that can help, or just give yourself a rule of thumb to follow every day, depending if you are a “micro or macro “picture person.
The simplest tool is a piece of paper and pen or if you prefer digital – a spreadsheet that just lists your expenses taken from your three months bank statement.
Review if you can cut or refine some of those expenses – even categorise them. For Example:
- Need – rent/mortgage, electricity, food, debt repayment.
- Want- daily lunches out, daily takeaway coffee, impulsive buys – new shirt.
- Makes life good- going to see your favourite band, travel, weekend away, coffee treats.
Go over and over it a few times and really think about the “Wants” and “Makes Life Good” columns– can a “Want” be cut back a little and fall into “Makes Life Good”? For example, rather than buying lunch every day at work, buy once a week on a Tuesday as a treat.
I have done exactly that, rather than a daily takeaway coffee each morning, I have once a week treat on a Thursday morning – I really look forward to Thursdays as a result.
Understanding how money makes you feel is another important step.
It is perfectly normal to have negative feelings when thinking about money. Each one of us sees money in a different way. We may have anxiety over whether we have enough to pay the bills each month, or we may have feelings of guilt or shame when we spend impulsively or simply just by having debt. We may feel envious seeing other people with money or we may feel just too scared to spend any on what we want or even need.
There is a lot of research, many books, and articles that are written that indicate that “money” can affect our physical well-being as well as our mental well-being.
So how do we see money in a positive light rather negative?
There is no right or wrong answer to this, but there is one fact – it is a change of mindset.
Money is emotional, as are all relationships!
Money and You are in a relationship.
Rather than looking at debt as a burden, look at what it has done for you: provided you, your trade or degree, purchased a house or a car to get you to a weekend away with friends.
Once you understand how it makes you feel, another step is to simply acknowledge what money means to you.
What is the main objective that money gives you? Allows you to pay the bills on time, enjoy a nice meal out, or have some savings for a “rainy Day’. Your objectives with money, helps form your idea of a “balanced life”.
Let’s go back to the concept of “pay yourself”.
We have all come across budgeting rules – 50/30/20 Rule, i.e use 50% of your income to pay needs, 30% for wants and entertainment, and 20% savings and debt repayments. However, the one thing all the budget rules that I can see have in common, again is to pay yourself.
This does not have to be even a large amount to start with depending on what your situation is.
It could be as simple as swapping an expense (a want), such as buying a daily lunch to 1 lunch a week and converting that amount of money to savings (pay yourself) each week instead.
If you don’t have the discipline of not spending what you see in your account, then place it somewhere that you don’t see.
There are so many options available today that allow you get started with as little as $5 a week – and it can be invested. The $5 a week earns interest and may be reinvested, and in turn, that reinvested income earns more interest. The power of compounding kicks it and you see your $5 a week investment grow.
The concept is true of any amount that you put aside each week and wherever you choose to invest in the market or cash– which is another whole topic in itself.
BUT don’t underestimate what the $5 a week could do for you:
- It is giving you control ;
- It is changing your mindset;
- It is giving you a goal;
- It is paying yourself each pay cycle;
- It is giving you a better understanding of money and what it can do for you;
- It is giving you the change, to give you different results;
- It is educating you and developing a deeper relationship with money in a positive way and setting you on what hopefully will become a rewarding financial journey that is YOURS……
Remember: The pain of discipline is better than the pain of regret.
Fun Fact: The nickname of the first Australian currency back in 1813 was the holey dollar because it looked like a donut.