Month: April 2019

So many times people throw their hands in the air when it comes to money – where does it go, and how does it slip through your fingers? What many people don’t know is that their problems with money need to be unlearned before they can get ahead. So even if you’re clueless about money, here are five steps that will help you understand what you need to unlearn about money to improve your finances.

Don’t fall victim to desire.

Do you spend on items that end up in the back of the cupboard in six months? Do you buy those things on credit? This desire for expensive, fancy, or superficial items may be holding you back financially. Challenge yourself to look but don’t buy these items for six months and see how much you have saved. Once you start to see results, it becomes easier to say “no” to things you desire, and increasing your savings and investments becomes just as rewarding.

Don’t put it off.

Have you ever said “later’ when it comes to doing something about money? So often we put off doing something to put ourselves in a better position. Whether it’s to add more to super, save 10 per cent of your salary, or put together a budget. The thing about time is it does not stop. The sooner you start, the better it will be.

Don’t believe everything you know as truth.

Did you grow with up parents telling you there was never enough? Did you believe that earning money was hard? Think about what beliefs you grew up with around money… These beliefs may be holding you back. So question what you know, research and make sure you’re simply not following the beliefs of others.

Set goals, and think ahead.

So many of us don’t hit goals, because we don’t even have them. Do you focus on today, next week and next month, instead of next year, 5 and 10? The broader your focus is, the more likely you are to achieve those big picture goals.

Actually take action.

Do you know how to do a budget? Or what you will need to retire? So often people don’t know what action to take, so they don’t take any. If you want to know if you can do yourself, go to the ASIC money smart website and use their calculators. If you need help, it’s time to find the right financial planner for you.

We all do it – fall into money traps without even knowing. Life is so busy today, there are so many pressures on us, that sometimes making fast decisions is all we believe we have time to do.

However, making decisions quickly around money can lead to long term pain. After 25 years of working in the finance industry, I have learned a thing or two from some of the best money minds in the country. One of the biggest traits they have all shared is being deliberate in their strategy, and patient.

Here’s how to avoid the three biggest traps around money and think like a money master.

1. Avoid the impulse purchase.

Whether shoes are your thing, or whether it’s a new car, spending money without having a prior plan can often lead to trouble. While it sounds like common sense, a lot of the time we are buying things to give ourselves a short term ‘high’. This high does not last however, but what usually is the credit card debt, or hole in our bank account. Be deliberate in your purchases. That’s not to say you can’t have it. But plan it, do your research, find the best deal and THEN enjoy. Oh, and if you are buying it in on credit card without a firm plan and timeline of how to pay it off, best to give it a miss. Credit debt = trapped.

2. Don’t keep your money in one account.

It allows you no control or visibility about where it’s going and what you are doing with it. Rather, set up at least three accounts, for which money is moved every time you get paid. The first is your working account (bills, everyday living) the second is your TREAT account (what have you been wanting that makes life fun?) and the third is the rainy day, don’t touch, hands off account. The third account is the one that will help you sleep at night. Make it a high interest, hard to touch account. This give you the peace of mind that if the worse happens you are ready. How you split the amounts is up to you – but at least 10 per cent should go into your rainy-day account.

3. Value investing over consuming.

Think about assets that are rising in value – like your home. Vs things that are falling in value – like your car. Start to think of your purchasing in terms of what can you buy that rises in value. If you have never bought a share, ETF or managed fund, you can do so through your super, or outside of super. Oh, and speaking of super – are you putting enough in? You can put up to $24,000 a year in super at the lowest tax rate of 15%. It’s crazy not to take advantage of this tax saving, and prepare for your future. After all, according to research from Griffith University, up to 80% of Australians that are generation X and Y may fall short of a comfortable retirement.

Money traps are everywhere, and the older you get, the more you realise that having patience, being deliberate and becoming prepared are sure fire ways to avoid most of the traps and get ahead.

Vanessa Stoykov is a money expert and financial storyteller, who believes that unlearning money behaviours is the first and most important step in building a wealth plan and have the life people deserve. Her website vanessastoykov.com has tips and resources to guide you on your path. Her debut novel, ‘The Breakfast Club for 40-somethings’ is the beginning of thinking about your financial future. You can find it at all good bookstores.

Until next time,