It’s widely reported that money is one of the leading causes of stress for young people. To help with this I want you to consider the idea of taking a Money Day.
I’m going to show you how spending just one day a year focused solely on your money basics will get you on track, could easily save you $500 per month and clear your head of all that worry.
My goal here is to help you save money, find some more money, and also start to automate the money in your life.
The end result: as a young person you lose the anxiety that money can cause and you can get back to surfing, Spanish lessons, visiting your grandma or making sweet Insta-stories with your pals.
To start with, take annual leave or a sick day, whatever you can get away with. Try not to do this on the weekend. View it as work. It’s not going to be fun, but it is really important and it’s going to make a huge difference in your life.
Here’s how the day looks! Get stuck in:
6:00am – Get up early and exercise
Go for a run, yoga, surf, swim. Go to the gym. Whatever it is, clear your head before you get started.
7.30am – Shower and breakfast
Rinse the sweat off and try finishing with “30 seconds cold, 30 seconds as hot as you can handle, 30 seconds cold again”. I got hooked doing this after reading an article last year and now do it almost every day. Trust me, when you do this right you’ll be buzzing for hours.
Eat something healthy and filling. I usually go for oats with cinnamon and rice malt syrup (like healthy honey, it’s gold!). I’ve exercised, so even my Dad bod can handle the carbs.
8:00am – Sort your superannuation
A lot of my younger clients often say that they’re too young to worry about super. You seriously need to avoid this attitude. Don’t believe the popular speech that the benefits won’t be around when you get there.
Super is a phenomenal way to build a really solid nest egg for when you need it later in life. It’s all done in a tax-effective environment, which means when you finally do get to access your super, what you see is what you get. Unlike other investments you build outside super that will be taxed heavily when you sell them, it’s all tax-free once you hit the right age.
So, let’s make sure you’re making the right steps now to build this up for later on.
Firstly, you need to find all of your super accounts. You can check your super by registering for the Australian Taxation Office’s online services via myGov. Alternatively, call ATO on 1800 012 238 and they will tell you what super funds you have.
Do the research
Do not close any super fund that contains insurance before you speak to a financial adviser to review your needs for this type of cover. You don’t want to be left without insurance.
You need to collect all of the details of each of your funds so you can make a call on which one is best to hold onto. You need to know which are costing too much, or aren’t performing and need to be rolled over.
Grab your research sheet
Consolidate your super funds
Thirdly, you have to consolidate your funds. You want to get the balances, and find out what the fees are. You want to find out what sort of insurance you have, chances are you’ll have life cover, maybe some total permanent disability and possibly even some income protection.
Now, these types of cover could be really important depending on your situation, but insurances within super aren’t necessarily the best option. I’ve had lots of trouble trying to claim for clients who hold this cover specifically within their super funds.
The point of taking this money day is to get the basics sorted. Some of the extra stuff, like the advice that needs to be provided on the back of this, is also highly valuable. It’s not something you’re going to achieve on money day, but make this your starting point. Then book an appointment to speak with someone. We offer a free 15 minute phone call if it will help you.
10:00am Money Day – Credit Cards
Prevent the fraudsters
This is a huge one for finding quick wins. Check all your credit and debit card statements for bank or merchant errors, as well as fraud.
I usually do this about once a month. I go back through every item and make sure I know what it was. I’ve wrongfully paid for all sorts of things on my credit card, from a women only gym membership to a Chinese restaurant in Mexico City. It’s happened at least ten times. This checking exercise alone has saved me at least $2,000 to $3,000 over the last couple of years.
List your regular payments
The next step is to painstakingly go through all of your accounts. Grab your phone and list all the regular debits/payments. The main thing here is to get an idea of how much is really leaving your account every month and become conscious of what those items are.
Chances are you’ll find items in the same category that you’re doubling up on. E.g. I was given a free Apple Music subscription for 18 months last time I upgraded my phone (thanks Telstra!). However, we were paying for Spotify at the same time and these services are basically identical. The same goes for Foxtel, Stan, Netflix Apple TV, and now Amazon Prime!
11:00am – Automate and get your life back!
Automate your debts and other payments
We’ll come back to that list of regular payments in the afternoon sesh, but while you’re in your net banking, it’s time to automate everything where possible.
So firstly, if you have one, pay your credit card off every month. Set up an automated payment. If you can’t make the full payment, take whatever you can set as a minimum and pay that automatically each month. Then add to it when you have extra cash.
If you have more than one debt, start with the highest interest rate first and pay the minimum on the others and the maximum on this one. This will save you heaps in the long run.
Automate your savings
Once you’ve dealt with the credit card or other expensive personal debt, next it’s time to automate your savings. As Warren Buffett says “Pay yourself first.” As much as we might want it to, this doesn’t mean go and spend. This is about paying your savings account (or offset account if you have a home loan) first.
So, whatever day your pay lands each week, fortnight, or month, set up an automated payment for the maximum you can handle. My initial suggestion is to set it up as per my Financial Launch Pad. Find an online high-interest savings account with no card access. You’re making a regular payment to the account so look for one with bonus interest. If you need help navigating this, we have an Ask and Explore Session specifically to help you get set up here.
You are killing it! Everything is now automated and you’re creating some incredible habits that will set you up for financial success. You’ve earnt yourself lunch. Get outside and stretch your legs. After lunch, it’s all about the providers and everyone’s favourite financial tool, your budget.
12.30pm – Screw your providers
Time to screw
Earlier this morning you made a list of all your regular payments. Now it’s time to call them all and negotiate them down. Start with the following:
- all insurance
- house and contents
- health insurance
- car insurance
You might also have some forms of life insurance and income protection outside of superannuation. If so, let me know; if you’ve had the policy for a while, there’s a good chance it’s expensive, out of date, and/or needs review.
This exercise will take an hour or three, but it is huge for you because every one of the above is negotiable. The best way to do it is to do a quick search online using companies like iSelect or Finder. Locate a better deal than yours, and then call your current provider to explain how disappointed you are that you’re paying much higher than what Company X is offering. Tell them you’d really prefer to stay but unfortunately, you have to ensure you’re getting the best value for money.
See how much they can do to help. This exercise alone could save you $10, $20, $30 a month per provider!
It’s Money Day – Go hard for the extras!
You also never know what they’re able to throw in, so once you’ve got the price nailed, don’t stop there. This is where you want to talk to your providers about whether they have extra deals like free music subscriptions with your phone, or an extra month or two free. Consider the option to bundle your phone and your internet together. All the insurance can also be bundled.
Shake the tree! You could find yourself saving a couple hundred bucks a month if you do this well across all of your providers.
3:00pm – Budgeting
Finally, you’ve already done a lot of the work for completing this, and the final thing you need to do, and this is one of the most important steps in taking control of your financial life, is completing a budget.
Get the same budget template we use with our clients, right here:
Free budget template
Now, I’m the last person to embrace a strict, frugal lifestyle – life’s too short. So this is certainly not about me telling you what to spend your money on. But I know when I keep a budget, I naturally have more money. When you keep track, you become conscious of your spending patterns and where you can improve.
If you don’t understand it, you’ll never be able to control it. Knowing your expenses can’t be taken for a granted. This is your ability to control your financial life.
Your financial success will be highly influenced by your behaviour and your ability to control your spending.
Completing this exercise once every 6-12 months or so will set you up for life. It will give you a good understanding of what you are spending, and you should see a surplus.
With that surplus, you then need to decide what you’re doing with it. We’ve already talked about automating your savings. If you’ve got more money left over, then you need to increase debt repayments or increase savings.
From there, it’s time to talk to a financial adviser so that we can help you dial it up, protect your downside and capitalise on your opportunities.
You’ve completed Money Day – congratulations!
You’ve just completed a full day of working on your finances and you can put this particular exercise away for another 12 months. You seriously only need to do this big day once a year. It’s not much time out to sit down, become aware, negotiate some savings and make some money.
If you do this properly, you should save yourself upwards of $500 a month. It creates higher consciousness around your spending, lower monthly bills and faster debt repayments.
I’d love to hear how you go, let me know in the comments.
Good luck with it and congratulations on completing your Money Day and taking the first big step towards controlling your financial life!