Spending Too Much? It Only Takes 6 Months To Turn It All Around
By Dale Gillham, Chief Investment Analyst at Wealth Within.
Are you sick of living week-to-week? Perhaps bills always come as a shock and Mi-Goreng has all too often been the meal of choice? It can be more than frustrating walking a financial tightrope, constantly living like a king or queen over the weekend and pauper come Monday.
According to the Australian Psychological Society, financial stress is more of a bane on Australia’s populous than it ever has been – and rightly so! There is no worse feeling than a precarious future. Sure, it’s easy to spend as you go, and you may even have some amazing days/nights as a result, times you’ll cherish. But ultimately – and this will happen – you’ll get sick of scrounging at the end of your working week, fortnight or month.
Here at Wealth Within, we believe in bettering your future, and so we’ve created a simple to follow 6-month plan that eases you into being financially responsible – a plan that will allow you to continue your social life whilst building your wealth on the side.
Month 1 – How much I am spending v how much I am earning – AKA a budget.
Budget – a buzzkill word, make no mistake. This word tends to send a shiver down the spine of the spontaneous individual. With this in mind, we suggest an initial ‘soft budget’, to ease you into being mindful of your money.
It’s already clear that you’re spending too much, start by looking at the little things, places where you could shave off at least 10% of your outgoings without noticing. Do you really need Stan and Netflix? Could you have bought a cheaper bottle of wine? Perhaps commit to one whole week of cooking and packing lunches – you’ll be surprised at how much you end up with at the end of 4 weeks making small, mindful changes.
Month 2 – Choose something to save for!
You’ve saved 10% of your monthly income! Set this aside and pat yourself on the back for getting this far, breaking habits are never easy. In order to keep this “new you” going, pick something to save for. It could be a new pair of ray bans or festival tickets, but whatever it is, ensure that it’s something fun.
*Be sure to carry on your 10% savings rule during month two!
Month 3 – Increase from 10% to 20%
By now, your self-control has technically doubled. No matter your overall earnings, 20% of two months income is a great achievement. It’s now time to categorize your spending and create a real, detailed budget.
Determine how much you spend within each category e.g. entertainment, food, bills, rent. Now minus a portion from each category (where possible) until you have reached a total of 20% of projected savings.
Month 4. Utilise your utilities
Can’t carve any more coffee’s from your week? All out of new recipes? Can’t possibly fathom squeezing any more dimes from your day-to-day? It’s now time to think bigger. Grab your last set of utility bills and commit to halving them – that’s right, half. Do your washing once a week instead of when you need ‘that shirt’. Turn the power points off if you aren’t using them, use a blanket instead of a heater – whatever your methods, if you stick to them you’ll be amazed at how much you can save if you’re mindful of the billing black hole.
Month 5. Treat yourself, and then batten down the hatches
You’re nearly there! Lots of people falter in saving because they bite off more than they can chew, overcommitting and then binge-spending until there’s no money left. Knowing yourself is the best way to keep yourself honest – in this case, you like to spend.
On the first weekend of the 5th month, treat yourself to a day (or two) of splurging. Do it all, go out for dinner, buy some clothes, catch up with friends for drinks, movies, coffees, brunch – you name it. But come Sunday night, the rest of your month should be that of the amish. Depending on how spartan your lifestyle, you should be able to make back what you spent within a week or so. By the end of the month, your savings will have been topped up, and your urge to spend satisfied.
Month 6. You’ve worked for your money, now let it work for you
You did it! You saved more than you ever have in your life. But other than offering peace of mind, what is your new-found money doing for you? Rather than a high-interest bank account, start thinking about kicking off your first stock portfolio – the most wealthy among us don’t stop earning money when the day finishes – even when they go to sleep, their money is working hard for them.
Visit www.wealthwithin.com.au to start your future in trading.