Month: July 2020

There is no doubt that COVID-19 has forever changed the way we live and think. Most of us now have accepted that some things will never be the same, and the new normal includes more change and more flexibility in how we live our lives.

And, of course, one of the biggest things that have changed since the virus began is the way we view and use money. While so many have lost their livelihoods and are suffering real financial hardship, others are worried about future income and what the world will look like even once a vaccine is found.

When it comes to money, no matter what position you are in, it is good to change your thinking and attitudes now, to prepare for whatever comes next. Here are three ways to think about your money in the new world we are living in.

1. You have enough.

You don’t need those new shoes, clothes, camping equipment, or whatever else it is you have been looking at. If you think about the fact that all of your possession used to be money, have a look around your home at all the things you have that you don’t use, or would rather have the money back on. Now is a time for less rather than more. Make use of what you already have and turn off apps and social media if it makes you want more.

2. Cash is king.

You need savings for security. It is no longer enough to have a credit card for emergencies. You need cold hard cash. Which may mean selling things you no longer need, or not going on dinners out and holidays, in order to save. Whatever you have to do, get yourself a cash savings pot and guard it. If these times have shown us anything, it is that change can come at any time, and you need to be prepared.

3. Get rid of credit and live in the cash economy.

No more buying things on AfterPay and lines of credit that you need to pay back. If you don’t have the cash for it, don’t buy it. I know that can feel harsh, but the harsher reality is spending years of your life working to pay back things you already have. Make sure you look after the future you as much as you of right here and now.

Sometimes it feels like most things are happening outside of our control. These three new ways of thinking, which I have adopted and are giving me peace of mind, can at least give you some control over your financial future, via the decisions you make right now.

Until next time,

Vanessa

I read with some dismay the numbers coming in from the first $10,000 released under the super early release scheme.

With more than 1.4 million applications approved so far, more than 460,000 of these were people under the age of 30. While the scheme was created to help people in dire financial need, the analysis shows that more than 40% of people spent on additional purchases such as leisure, entertainment, cafes and personal care.

While I understand that when you suddenly come into some money that you did not expect, you like to treat yourself. That’s human nature, and at a time like this, where COVID-19 has had such a big impact, it’s no wonder that people want to spend on things that you make you feel good in the here and now.

But before the next $10,000 becomes available in July, I would like people to think of the bigger picture, and consider not taking any more money from their super, if they can avoid it.

Here’s why:

1. Taking $10,000 out now for someone under 30 could mean losing $50,000 in retirement.

Double that for the second $10,000 and its $100,000 less you have in retirement. While that time may seem far away, it will come.

2. It’s putting stress on “future you”.

A friend once told me that hustling for money when you are over 60 is like running with a stocking tied around your ankles – it’s hard, cumbersome and damn near impossible. With all the uncertainty in the world today, don’t you want to think of a future where you don’t have as much pressure around money?

3. There is no certainty in our financial future any more with government spending.

Who knows how many more pandemic and catastrophic events may happen in the next 30 years? Better to shore up your own future with savings intended for your retirement, than gambling that the existing system will still be in place.

The age old question of now vs later is a big one. And if you have already taken your first super early release, maybe it’s time to think about how else you can make money, and leave yourself an insurance policy on future you.

After all, you are responsible for your own financial future.

Until next time,

Vanessa