Take care of the pennies and the pounds will take care of themselves………
I love this phrase. Yes it’s straight out of nanna’s handbook, but nanna was right.
To have a good life you need to have a good relationship with money. And that means getting educated, organised and practicing discipline, not for a few months, or one year, but always.
You need to think about every dollar you spend and save whenever you can. Save on the daily mundane things that make no difference to your life whatsoever, so that you can take the holidays you want, buy the clothes you love and have a fabulous retirement as well. It’s simple but it’s not easy.
What I would like you to do is think about money the way you think about food. Splurge once in a while, but not every day. Every mouthful you eat has consequences to your health and your waistline, and every dollar you spend has consequences to your well-being and wealth. You need to improve your mindfulness around wealth just as much as you need to improve your mindfulness about your health.
Does spending $10 a day on coffee, $15 on lunch, $50 on a dinner out, with $30 for wine fulfil your lifelong ambitions, or are you just going with the flow, totally caught up in today’s consumer society where more is less?
Would reducing your daily and weekly spending make you feel more in control and help you take your well-deserved holidays paying cash, not on credit make you feel amazing?. I bet you it would.
Simple things like cutting back to one coffee a day, and buying lunch only once a week, will save you enough money for an overseas airfare, if that’s what you want. Or it can take years off your mortgage. It’s really all about having your cake and eating it too. You just need to be sensible and get your spending under control.
Being thrifty doesn’t mean buying cheap stuff, it means opting for quality over quantity. Always buy the best you can afford. Just make sure you don’t do it too often. You don’t need 20 pairs of shoes and a new dress for every special occasion.
Watching what you spend will not only improve your bank balance, but your whole sense of well-being.
Move to a simpler way of life, cook, garden, go to the beach or the park, stay at home or visit friends. Appreciate the simple things. Get back to basics, real values. What is the most important thing to you?
The best things in life aren’t things.
The best things in life are moments in time spent with loved ones, or by yourself admiring nature. So focus on the good stuff and learn to respect your money, take care of your health and your life will be fabulous.
It’s no sacrifice
Having a spending plan is about gaining a clear understanding of where your money is going. It will help you begin to prioritise and plan for those things that are really important to you, like an overseas trip or saving to buy a car – as well as longer term goals such as paying off your mortgage sooner, buying an investment property or save for a fabulous retirement.
Your ability to create wealth is not determined by how much you earn, but to what extent you can spend less than you earn.
In other words, it’s your ability to save that will determine the value of your wealth in the long term. Of course, prudent investing also plays a part, but if you can’t save, you’ll never have enough money to invest.
A spending plan will tell you at a glance whether you’re spending too much on the things that you want, rather than on the things that you need.
And to be perfectly honest, if you don’t know where your money is going, how are you going to be able to make the changes you need?
I’m not saying it’s exciting, but it really is the first and most important step towards financial independence and it shouldn’t be taking lightly. I realise it could be as uncomfortable as stepping on the scales after Christmas, but it might just be the reality check you need.
It’s your wakeup call to identify opportunities to rein in some unnecessary spending and devote these savings towards more meaningful, worthwhile pursuits.
The most important step is to make a start. Take the time to prepare a user friendly spreadsheet, and for this I highly recommend using ASIC Money Smart Budget Planner. It will break down your expenses into an easy to understand pie chart which is a lot more useful than a spreadsheet of numbers. Let’s not bored you into inaction before you get started!
So then the next step is of course to work out where you can reduced your unnecessary spending and then stick to it, even if it’s just a trial period for 3 to 6 months – you may be surprised at how much you can save in just a short space of time.
Don’t make your spending plan too restrictive – allow enough money for occasional treats and entertainment. You’ve got to enjoy your life.
A spending plan shouldn’t be a penance. It’s about making small incremental changes to your spending behaviour so you can improve your financial position in the long run, and help you to reach your goals sooner.
Spending Tips
- Make a list before you go shopping and only buy what you need.
- Consider shopping at Aldi and Costco.
- Buy non-perishable items in bulk when they’re on sale, like laundry detergent, toilet paper and dishwashing liquid.
- A lot of utility providers offer discounts if you pay your bills on or before the due date. Check to see whether your eligible and consider switching providers if you’re not.
- If you’re looking to buy major appliances or electronic goods, wait until end-of-financial year or Boxing Day sales and shop around for the best deal.
- Take your own snacks and lunch with you to work, at least some of the time.
- Only buy one coffee per day, or do without it altogether.
- Instead of withdrawing and spending money as you need it, withdraw a set amount each week and only spend what you have in your purse.
- Use a debit card, not a credit card.
Wealth is like your health, you’ve got to look after it! It’s time to get started…let’s chat!
