Be smart with your money
You only get to spend your hard-earned dollars once, so it’s important to be smart about how you use them. Here are some ideas to consider as part of your approach to long-term financial planning.
Create a spending plan
Financial planner Lisa Dudson, of Acumen, suggests you start by creating a spending plan, which is “really a budget in disguise”.
Keep track of your spending with a spreadsheet, or use separate bank accounts for bills, savings, money you want to set aside for investments, treats and other things.
“Don’t get too hung up on the ’right’ way to do it, focus on what works,” says Lisa of finding a way to track your outgoings.
Avoid bad debt
Save for the things you want and pay cash for them. “Debt generally costs a lot of money,” says Lisa. “Research shows that people spend 20% less when using cash, because they are more aware of where their money is going.
Credit card debt is often termed ‘bad debt’ because the money isn’t working for you in the way that debt you accrue to buy a property is, for example.
Mind the gap
Your goal is to create a bigger gap between what you earn and what you spend. The bigger the gap, the more money you can save.
“You can increase the gap by earning more or by spending less, or both,” says Lisa.
Take a minute to think before you spend
Always try to be mindful about spending. “A great tip is to spend one minute longer thinking about your buying decisions – ask do I really want it, do I really need it, or can I get better value from my money elsewhere.”
Don’t be scared of money
Finally, Lisa suggests you work to create a positive relationship with money. “So many people are scared of money and believe managing your finances is all too hard. Try to keep things simple: pause, breathe, think through your options, then make a decision.”