As my career flourished in the late ’20s and early’ 30s, I didn’t think about dropping $ 400 on a new designer dress jacket, a meal at a fancy restaurant, or a night at a fancy hotel.
I remember spending about so much to have a copy of my childhood The Lord of the Rings recovery on a hard, cloth-covered face of a specialized antique bookstore.
Very cool, right?
But then one day, you find yourself 40 years old as a divorced single mother who has no home, has never invested in stocks or property, and has no idea if she is on her way to a comfortable retirement.
I’m the classic example of someone who knows a lot about something in theory, but who was pretty shitty when it came to putting it into practice.
But as the dust began to set in my new life, I began to slowly pick up and prepare for my financial life.
The basis of all my progress, I think, is a budget system I created to sort, organize, and track my money – the system that this book is ultimately designed to teach you how to use.
For two decades, the authors of the Australian Unity Wellbeing Index survey have asked Australians to rate, on a scale of 1 to 10, the degree of satisfaction they are with their lives. His clear conclusion is that it is not money, per se, but “financial control” that matters most. “People with lower incomes may achieve higher well-being than those with higher incomes, as long as they have higher perceived control over their financial position,” the study authors conclude.
In fact, financial control is part of a golden triangle of happiness that primarily determines our well-being, along with personal relationships and a sense of purpose.
During my career as a financial journalist, I have observed how many people, such as readers, publishers, fellow journalists, politicians, and voters, think about money.
Overwhelmingly, I see people trapped in a pattern of thinking that money is too complex, too overwhelming, to understand. It is also common to believe that money is boring (it hurts my soul!) Or that it is the case that some people suck money.
The good news is that if you’re one of those people who believes in these things, love, you’re wrong. Don’t feel too bad about it. There is a whole financial system that benefits from your overwhelm. To fight it, you need to learn to manage your thoughts and emotions about money.
Because, let me tell you a little secret. In his heart, money is very simple.
In short, money is just a means of exchange. Give your time and skills to your employer and they will give you money in return. Then take that money and exchange it for all the goods and services you need and want to live a happy life.
Here it is: money explained in a few easy sentences.
The smart thing is that if you can learn to curb your spending desires throughout your life, you can reduce your need to work as much or for so long. Alternatively, you can work harder and improve your skills to get more money to exchange for more things you want to buy. You can choose.
The only problem is that in your lifetime you are likely to find periods of time in which you will not be able to exchange your time for money. You will still have to buy things, of course, but you will not have the money to finance them. Economists call this the “life cycle hypothesis” and it requires a process known as “consumption smoothing.”
When you are very young, your parents are likely to tell you the difference, paying for food and lodging until you leave home.
In early adulthood, when you’re studying or not earning a lot of money, you’re likely to incur some debt to finance your income deficit. Going into debt to finance your education or travel can be a good decision if, over the course of your life, you broaden your horizons and increase your potential for future income.
At some point, however, you will have to pay for the things you bought and repay the debt.
To do this, you need to keep earning money and start earning some paychecks. This is the time to start thinking about paying off your debts and start reserving some extra money to support yourself in the future when you grow up and can’t work or don’t want to work.
And that’s really all there is to personal finance.
Many personal finance books allow you to start dreaming about your individual “monetary goals.” But I think there really is only one goal that people need, and that is to generate enough lifelong income to fund their lifelong desires and needs.
If I had to summarize personal finances (for non-retirees) in one sentence, it would be: Spend less than you earn; invest the rest.
THE 10 MAIN EXPLOSION HACKS
- HOUSING: Check the price of your mortgage in less than a minute by searching Google for “MoneySmart Mortgage Calculator”. It defaults to the average interest rate on new home loans. Lenders book all their best rates for new customers, so check out how they compare to yours!
- ADDRESS: Check the city council’s website for regular days of garbage collection or household waste. I once got a couch worth about $ 3,000 free from a neighbor who moved to an interstate. It’s recycling and saving at its best.
- UTILITIES: Buy the cheapest energy provider in your area. Victorians go to the Victorian Energy Compare website and everyone else to Energy Made Easy.
- TRANSPORT: Shop online for great tire deals. Find the size of your tire, which is usually displayed next to the tire. For example, mine is 215/65 R16. Enter these details on Google for some great deals.
- FOOD: Buy your pantry first. You’ll be amazed at how long you can last without resting. Challenge yourself to last as long as possible before you go shopping!
- HEALTH: You only pay for “extra” health insurance if you actually receive more claim benefits than you pay in premiums. You only need to have eligible hospital coverage (not additional coverage) to avoid paying the Medicare surcharge.
- EDUCATION: Download your local library app to access a world of free books and audio on your iPhone. BorrowBox is common.
- APPEARANCE: Spacing your beauty dates. If you normally go there every eight weeks, try it every 10 weeks.
- LIFESTYLE: Try to give up alcohol for a period of time. Start with a week and see if you can extend it to a month. Alternatively, experiment with just drinking on the weekends or when you’re away from home.
- PROFESSIONAL COSTS: Take advantage of zero percent credit card balance transfer offers. Be wary of high commissions or reverse interest rates (and try to get the card paid before the interest-free period ends).
Many people believe the myth of money “I came out too late and I will never have enough.”
The reality, however, is that most Australians retire with enough money to live on when their private savings are combined with their full or partial pension.
According to a report from the Grattan Institute, many Australians may in fact expect to enjoy a higher income during retirement than they did during their working life, due to the relative generosity of the old-age pension. compared to other working age social welfare payments.
The single age pension for singles today is about $ 25,000 a year and $ 38,000 for couples. JobSeeker, on the other hand, pays only $ 16,367. In fact, many Australians receive a pay raise during retirement.
This is not to say that living on an old-age pension alone will finance a particularly lavish lifestyle, especially if you don’t have a home. But it is something. And it’s not going anywhere.
Of course, the only real way to know what income you can expect in retirement is to follow up and project your actual spending habits.
How much do you spend on food each month? How about traveling to the doctor? How Much Does Your Health Insurance Cost? How much do you spend on gas?
If you want to buy a house, retire comfortably or apply for a loan to generate wealth, you will need an idea of your annual expenditure. You will need a “budget”.
I think the reason a lot of people back off when they see or hear the word budget is because it indicates something too restrictive, similar to a diet. This word diet also has a bad reputation. This is because it is usually associated with an individual kind of the diet, that is, one in which the amount of food consumed is limited to less than a person’s daily caloric requirement, with the goal of achieving weight loss.
A budget is simply a statement of what you earn and spend over a period of time, along with a calculation of the resulting surplus or deficit.
A budget can be as simple as a piece of paper in which you write down your estimated income, expenses, and the resulting surplus or deficit. Yes, this information will show you whether you are saving money or not. But the budget itself is agnostic as to whether or not you should save. This is entirely up to you.
The real purpose of a budget is to give you an idea of your overall financial situation. You may be afraid of what this image might reveal, but a budget can’t hurt. In fact, I think it can only help you by giving you the clarity you need to start making better decisions about where to spend your valuable money.
I firmly believe that creating a budget is the cornerstone on which all good money decisions are built.
My name is Jess and I’m good with money. Very well, in fact.
And so can you.