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I came across a thought-provoking article on ABC online recently, about three indigenous women who turned their lives around with a little money education and awareness.
They’ve each fought homelessness and stereotypes to turn their lives around. And that’s an awesome achievement. Definitely something worth celebrating.
It’s not often we hear a ‘good’ news story about finance – usually household debt, interest rates and tax are the topics that make the headlines.
But, the truth is, as the experience of these women shows, with a little education and awareness we can all improve our lives financially. It doesn’t matter where you are or what you’ve got, becoming ‘money wise’ is a skill you can learn.
This is why I am a big believer in budgeting.
Because when we take the time to sit down with our bank statements and look at what we’re really spending (versus what we think we’re spending), it can be a great big reality check.
…Those magazines and choccie bars, along with the petrol at the service station…
Takeout dinner a few nights a week, lunches, coffees, muffins and brekky on the weekend, when you’ve already got a fridge full of groceries.
The shoes on ‘sale’ that perhaps you don’t really need. The phone upgrade that you’re paying for (plus interest) in your monthly mobile bill. These are all ways we get trapped into spending. And really, they are ways we could be saving.
Not all schools teach the ins and outs of everyday finance. Some do. But the simple fact of the matter is that the more control you have over your money, the better off you will be financially. And all you need to have more control are a little education and encouragement.
Accumulating wealth is about making sensible money choices. At the end of the day, if you really want the latest iphone, then by all means put it on your ‘wish list’. But consider your options before you leap – is it really best to bundle it in with your monthly plan, or would you be better off paying for it outright? Have you calculated the interest and therefore the total amount the phone will have cost you when you finish paying for it? By which time there probably would have been several other, newer models released?
Impetuousness can be a costly habit because a lot of the time, money seems ‘invisible’ –when you’re just waving a card about and not actively looking at the money that’s coming into, and going out of your bank accounts, it’s harder to see and track your spending habits.
But if you’re serious about making your money work for you, then you need a savings plan. Then when you have accumulated some cash you need to consider what you’re going to do to make sure that money works for you, and this is where investments come into the equation.
A managed fund can, if you want it to, operate like a long-term savings account. You can start a managed fund with just a few thousand dollars, and because it’s invested in a diverse share portfolio, it will very likely earn you better returns than a savings account. At least that’s the case right now. And then, if and when you need the money, you can withdraw it.
Some other basic principles of personal financial management include taking an active interest in your superannuation (even if retirement seems a very long way off) as well as obtaining some personal insurance. Tailored insurance will protect you if something goes wrong. This is why it’s sometimes called ‘wealth protection,’ because having adequate insurance means that you’ll be covered financially in the event of personal disaster (illness, accident, job loss) and your savings and investments can remain intact. You can, at least, remain in a steady position without going backwards financially.
Many people don’t understand the potential money has to open up opportunities for the future, so if you feel like you don’t know where to start, then you’re not alone. A money coach/financial planner can help. And the cost of the initial planning session can be funded from your superannuation, if personal cash-flow is “a bit tight”!
Contact Step Up Financial Planning Group, based in Orange, NSW, if we can help.
The information contained in this article has been prepared without taking into account your individual objectives, financial situation or particular needs – it is GENERAL ADVICE ONLY. Before acting on any information in this article, I recommend that you consider whether it is appropriate for your individual circumstances.