After 10 years working with many different types of clients, I have noted two things in common with people who have confidence and success with money:
- They have been able to create a series of small wins, that in turn lead to bigger wins, and…
- They have developed a habit of saving
It is widely reported that the highest cause of stress in the world revolves around money. The American Psychological Association (APA) & Australian Psychological Society (APS), who has conducted the annual Stress & Wellbeing in Australia survey since 2011, both report that Personal Finances topped the list for five years running, and this is leading to more serious health issues.
If you are continually stressed about money it makes it very difficult to be motivated and positive about your future, and without this you don’t get far. To live a sufficient life, you need clarity and confidence. After many years of working with clients to create this, I’ve seen the magic that ensues once you get it right, and I want this for you.
Small wins give you a feeling of accomplishment and this positive reinforcement allows you to develop positive habits. They keep you motivated to continue along your path and push through difficult barriers.
Developing a habit with a series of small savings-wins will help you build the foundations to living a less stressful, more fruitful life. When it comes to your finances, the key is to save money regularly, successfully and with purpose.
Renowned life coach, Tony Robbins, constantly drills into his messaging that true happiness comes from progression and growth, it is part of our biology. This is hard to deny. Whilst it is highly beneficial to pause and reflect, we’re at our best when we avoid standing still for too long.
By creating and forming a simple savings habit and watching the fruits of your labour grow, it will ensure consistent progress and change your life for the better.
Simplicity is the key – let’s look at how we do it…Starting with $0 is perfect, you’re not alone. You just need to start. Once you begin to build momentum, with a manageable contribution on a regular basis, you’re taking responsibility for your financial future.
Here are my four easy rules:
- Give it PURPOSE – Absolutely imperative in creating habits. Finding a reason is easy, but remember this is all about you:
- Emergency fund (It’s boring but essential, more on this below)
- That motorbike that gives you the good feels
- Sending your daughter to the school you went to
- Training in a jiu jitsu camp in Brazil
- 3 months off to climb Mt Kilimanjaro or hiking the Appalachians
- Make it manageable – if you can’t afford it, you won’t keep it up. Simple. $20/week or $3000/month, this doesn’t matter at the moment, what is important is that you start with something you can handle and increase it as you gain confidence.
- Automate it – we are human, don’t let this fact ruin your big plans. You don’t get to think about it. Save first, spend later. Base this on the regularity of your income and have it transferred automatically out of your account the day you get paid. Choosing to save is not an option. Force it. This is very important.
- Celebrate your wins – be proud of what you’ve achieved and acknowledge it with high fives, tequila, or whatever works for you.
Now, where do you put it?
This isn’t quite as important as the process of doing, but it needs to be difficult to access i.e. not under the mattress or in your home loan offset account.
Developing a life-changing habit and saving the funds will have a far bigger impact than whether you earn 1, 2, or 10%. It is the behaviour and the confidence you build that will help you win!
A great place to begin is an online high-interest savings account. These work well as you don’t usually have card access, you can start at $0 and earn bonus interest with regular contributions. Google “high interest savings account” and you will find a number of sites that will help you compare options from reputable institutions. You can compare interest rates, bonus interest and other conditions.
Alternatively, depending on your experience with investing, you could start with a managed fund made up of a range of investments, but these usually require a starting balance of $5,000+ and come with their own risks.
[Caution: This is not financial advice so speak to a financial planner before you go down this track. If you are not confident with investing, leave this option alone for now. You can build towards this later as you gain confidence around the process and you start to see it work.]
Remember, this is all about your ability to reduce stress, gain confidence and take control of your money. If you don’t have an emergency fund, start there. Build a buffer sufficient to cover 3 months of your income.
Once you have this, quickly turn your focus towards more exciting goals. With some fallback in place to cover life’s hiccups, you can strive forward with renewed motivation and really get stuck into that bucket list!
I hope this helps to set you on the path to reducing money stress, thinking bigger and living the life you desire.