How To Master Your Money & Crush Your Finance Goals!

It’s time to master your money & crush your financial goals!

If you are like a lot of people we speak to, you want to master your money. If you’ve been killing it at work and moving up the ladder but your bank account isn’t feeling the same love, you are not alone! As financial advisers for young families, we hear you! It’s a common concern that despite earning a decent income, it feels like the money just slips away. But fear not, you’re not alone. In this article, we’ll explore why this happens and give you practical tips to start saving and get on track.

The High Cost of Living and Lifestyle Inflation

Living in Australia can be pricey, and young families feel the impact too. Expenses like housing, education, and healthcare can eat away at your income. Plus, as your family grows and your income increases, it’s easy to start spending more on non-essential items, leading to less savings. This is known as ‘lifestyle inflation’ – when your spending increases to match your income. As you get a promotion or raise, your wardrobe gets a makeover. You start dining out more. You go on bigger, better holidays! It’s ok to reward ourselves occasionally. The issue comes when the spending increases as much as your income.  

Solution: Master the Budget Game

To combat lifestyle inflation, it’s time to create a comprehensive budget. Keep a close eye on your income and expenses, and identify where you can cut back. Prioritise saving and set up automated transfers to a separate savings account each month.

Lack of Financial Planning and Goal Setting

Without knowing what you are aiming for you will never hit your target. Figure out what you really want in life and what you need financially to make that happen. This can be anything from special holidays, to supporting family, to launching a startup. 

Solution: Set Goals and Make Magic Happen

Sit down with your partner and establish specific financial goals. To start, ask yourself:

• How much do you need to put aside?
• When are you going to need access to the money?
• What resources do you already have?

Whether it’s buying a house, building an emergency fund, or saving for your children’s education, having clear objectives will keep you motivated. Work with a financial adviser to create a tailor-made roadmap for your family’s dreams.

Insufficient Emergency Fund

Life can throw some curveballs, and unexpected expenses can derail your finances. Without an emergency fund, you might need to resort to credit cards or loans, causing debt to pile up and adding to your financial stress.

Solution: Make a Safety Net a Priority

Aim to have an emergency fund that covers three to six months’ worth of living expenses. Start small by setting aside a portion of your income each month into a separate savings account. Soon, you’ll have a safety net that brings peace of mind and guards your long-term financial health.

Not allocating where your money goes 

This key step is often overlooked. Many people don’t know what is coming in or going out and this can cause huge amounts of frustration. There is an amazing way to rectify this though, without needing to keep receipts of every single thing!

Solution: Instead of just a savings and transaction account, use the bucket approach.

Allocate a percentage of your income into different accounts (‘buckets’) for different purposes. You can do this even if your income fluctuates weekly. Some bucket examples include:

• Travel fund
• Emergency fund
• Kids
• Bills & loans
• Investing (shares, investment property)
• Financial Freedom fund

You can then spend what you have left guilt-free because your top priorities are covered. This is called paying yourself first. It’s the number one way to make better use of your income.

The Dreaded Debt Monster

Car loans, HECS debt, credit card debt – these financial obligations can quickly gobble up your income. High-interest debts can be especially burdensome, making it harder to save for your future.

Solution: Crush Debt Like a Champion

Create a smart strategy to pay off your debts, focusing on high-interest ones first. Consider consolidating your loans or making extra payments whenever possible. Remember though – if you consolidate your loans continue to pay them off at the same rate as now, otherwise you may end up worse off! By doing so, you’ll speed up the process and free up more money to save and invest.

Retirement? It’s Never Too Early to Prepare

You might think retirement is a far-off concept when you’re raising a family and dealing with various expenses. But trust us, starting early is key to a secure financial future. Rather than thinking of it as ‘Retirement’, let’s think of it as ‘Financial Independence’, and we want to start as early as possible!

Solution: Plan for Financial Independence Starting Now

Don’t miss out on retirement savings options, like extra superannuation contributions. Contribute consistently and increase your contributions when possible. Start a separate bank account with automated payments that will go into an investment for your future as well. Start small, begin now. Compound interest is your friend, so start planning for those golden years today.

Feelings vs. Finances: Mindful Spending to the Rescue

Our emotions can sway our financial decisions. Stress, happiness, sadness, or even peer pressure can lead to impulse spending and losing sight of your goals.

Solution: Spend Mindfully and Keep Your Goals in Sight

Before making a big purchase, take a step back and think about whether it aligns with your financial priorities. Give yourself a cooling-off period for expensive items to avoid hasty decisions. Practice mindful spending habits and involve your partner in major financial choices to ensure you’re both on the same page.

Unlock the Power of Financial Knowledge

We learn a lot of things at school – money management isn’t one of them. So, when we leave school and land in the real world, the ever-present advertising and marketing hijacks us. Credit card and loan offers are being pushed and before we know it, all of our income is being used up. This is when people start living paycheck to paycheck. In all the busyness many young families overlook the importance of financial education.

Solution: Invest in Your Financial Know-how

Without knowing the ins and outs of personal finance, you could miss out on valuable opportunities to save and grow your wealth. Empower yourself and your family with financial knowledge. There is plenty of information on this topic. Make the time to learn. If needed, get solid financial advice from a professional. The more you know, the better equipped you’ll be to take control of your financial future. Your future self will thank you!

Manually managing your finances 

Managing your finances manually is hard. Most people have their rent and loan payments automated, so the next step is to automate payments into your other “buckets”.

Solution: Set up automation

Automate regular payments through your online banking. Then, just check in occasionally to see your savings start to grow. The peace of mind that this brings is unbelievably powerful!

That’s a Wrap!

Gaining control of your money feels incredible! It clears your mind and creates confidence, rather than frustration or anxiety. The answer isn’t making more money, it’s about what you do with the money you have. Go forth & master your money now!