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Australians, as it turns out, are notoriously bad savers. And saving is the key to wealth creation. It’s that simple.
So where do you start? Give up coffee.
Just kidding! … Well, sort of.
The thing is, most of us spend mindlessly, and technology has made this incredibly easy – we’re tapping, popping pins, swiping, even transacting straight from the smartphone.
And you know what? It’s the ‘little purchases’ that can actually do the most damage to your bank account.
For example, if you buy one take-away coffee every day of the year, did you know that you spend more than $3,500?
It’s worth thinking about … because added to that might be the occasional muffin, the odd coffee shout for a friend or colleague or a mid-morning cheese toastie on a cold day.
Similarly, at the petrol station. It’s more than likely that your weekly stop for fuel might be accompanied by a chocolate bar and maybe a trashy mag. Or an ice-cream and a cold drink. These little expenses that you think next-to-nothing of, are actually hindering your ability to save.
People ask us all the time – ‘How can I be wealthy’? Well, there’s only ONE pathway to wealth, and that is having control over your money. This means knowing what you earn and what you spend. There’s no magic formula, but for many people it is a change of mindset.
We don’t want to be the fun-police, but we are BIG FANS of detailed budgeting. And we can promise you, that once you sit down with our free budget worksheet you’ll understand your finances better than you ever have before.
From this point you can start to see where you’re spending unnecessarily, and you can identify ways to cut back spending and increase saving.
Then, when you start to build your savings, you can use that money to add to your assets (maybe property?) or even just pay more off your existing mortgage, to build your equity or become debt-free faster.
Maybe you can consider a portfolio of investments through a managed fund – most people are surprised to find that you can start a fund with as little as a few thousand dollars, and it will accumulate over time. Then, as one of our clients likes to say, you can “earn money when you sleep!”
If you’ve got a keen eye on your future, then add to your super fund.
The mantra is: Every little bit counts. Even if you don’t have a specific goal in mind, we do recommend that you should at least be aiming for a ‘Rainy Day’ fund (3-6 months of living expenses) so that you have a built-in buffer in case something goes awry.
If you’re serious about reaching financial goals then there is only one way – set the goal and plan for it.
In the same way that when you want to get fit, you hire a personal trainer, or if you want to get ahead in your career you engage an executive coach, if you want to get ahead financially, then consider a ‘money coach’.
A professional financial planner can help you understand all the options available to you.
Life should be enjoyed, and yes, by all means have the coffee! But understand what it’s costing you. And remember that small changes to your spending habits will make a big difference over time.