Welcome! Today we are going to discuss a somewhat taboo subject – money.
Disclaimer, I am not a financial professional. These are just some tips which I have learnt to be effective tools for my own personal financial journey. It is also worth mentioning that I am in Australia and have previously lived in Canada, however this advice should help (I hope) wherever you are.
Now, here are 5 simple tips you can implement today in order to better manage your money.
1. Create a basic budget
I’m sure you have heard of this one and for a good reason. Creating a basic budget creates power over your spending habits. By power I mean ownership, an awareness as to where each dollar is going and whether its working for you or taking away from your personal wealth.
For example, a $5 coffee each day, two $15 t-shirts, three paid $20 lunches/dinners (or brunches) a week equates to $4420 a year, or if you want – an international holiday. This is just an example as to how unconscious spending can add up!
This doesn’t mean you can’t enjoy all of the aforementioned pleasures, more so just that if you have allocated weekly funds for these and still addressed all of the important things (savings, bills, investing etc) you are much better off and of course, less stressed.
There are various online tools and apps available today to better track your money. Some of them also allow for a basic budgeting spread sheet and I would highly recommend using one. A quote try and always live by is. “Always pay yourself first.”
2. Get cash out on pay day
Now that you’ve worked out a budget and you know where your money is going, I would recommend taking out your allocated spending money. Let’s say that you’ve budgeted $50 a week for recreation, getting that $50 out in cash not only makes you less likely to spend it, you’re also able to use my personal favourite trick.
Leaving my debit card at home.
Nowadays, with us moving toward a cashless society, spending has never been so easy and its been proven that we have far less impulsive habits when using cash. See the below.
Another great advantage with this tactic is that the banks can’t track your spending. When you’re trying to secure a home-loan, the banks are going to go through your spending with a fine toothed comb. If they can see a burger for $12, shoes for $22 and eight beers for $100, they will not be as pleased as if they see one transaction of $50 and they have no idea where its being spent. Try it sometime.
3. Automate as much as possible
I can be an impulsive spender, most people are the same. This is one of the best tactics I have adopted. Go into your bank, or if you like, a bank you don’t have a relationship with. Doesn’t really matter. Ask them to set you up a high interest savings account that you cannot touch (take money out of) unless you physically go into the branch and sign paperwork. Once you have done this, automate X amount of your pay to go into this account, kick back and watch the money accumulate.
I would recommend starting with something like 5% of your pay and test it. If you’re living at home with parents/family go hard, allocate as much as you think you can and survive on the rest.
This was how i managed to save $30,000 in 18 months to travel the world, whilst paying rent/living out of home on a modest salary. Try it and let me know how you go 🙂
4. Set goals and stick to them
Many people join the gym and amble about with no idea what they are doing. The same can be said with people using their money. Most just have it come in, then watch it go out. No strategy, no goals. This is not the most productive method when it comes to finance, obviously.
I personally find setting goals really important, set yourself weekly, monthly and then a long term goal. This will help you keep your eye on the prize and keep you motivated. Have something to work toward, it’s better that way.
5. Reward yourself
You’ll enjoy this one, I do. No use just letting digits accumulate in your bank account for no reason is there? Set a monthly goal, allocate a little extra and take yourself out. If its a joint goal with you and a partner, even better – make it a little date night and reward your hard work. Just make sure it’s within your budget 🙂 This will make you more likely to maintain your positive spending habits and less likely to just throw your hands in the air and spend willy nilly. Most of all, make sure you enjoy the fruits of your labor from time to time.
I hope these simple little tips work for you, assist you in reaching your goals and that they help you set yourself up for a more financially free life.