Managing your money is like managing your health – if you develop good habits (and try stick to them), you won’t need to constantly worry about money or your health. If you develop bad habits, it will be a constant battle to achieve balance in both aspects. Much like our health, our financials need regular reviewing. But, like our exercise habits, we often jump from one extreme to another; periods of obsessive saving and diligence to periods of little restraint and disregard of consequences.
You might be thinking, but surely a bit of saving (obsession?) isn’t detrimental? And for your financial health, it might not be. If obsession is what leads to a correction in negative financial habits and drives a person to track and measure their income and expenditures, then a little obsession can be a good thing. But we all know what they say about too much of any one thing. The passion for moving your finances in a better direction can quickly become a singular focus that can prevent not only you but those around you, from enjoying the everyday experience.
That’s not to say that spending with less care is better for you. “I might die tomorrow” is no justification for a lack of budgeting or irresponsible spending. For extreme spenders, there is a massive opportunity to increase your bank balance by shifting to a mindset of saving. This will give you the confidence and means to spend without the guilt of cutting costs in other areas.
Financial balance can be easily achieved with the right strategies and a bit (ok, a lot!) of discipline. With some common-sense concepts, sound strategies, and proper (regular) cash flow management, you will discover that financial balance and security can be achieved.
Goals are a great way to keep your spending and saving on track and within specific parameters. Whether it’s paying off loans, owning a home, saving up for a renovation, or going on that dream holiday, set goals for yourself – make them attainable, review them regularly, and share them with family and friends who can keep you accountable and help you stay on track.
That’s not to say that extreme spenders don’t have goals, it’s just that their personal goals often aren’t pegged to their financial goals. Rather than saving for a holiday, it would be funded by credit, increasing the financial burden and dulling the enjoyment of the holiday with guilt and ominous debt and interest charges. For those who fall prey to unhealthy financial behaviours, anchoring personal goals to a financial goal can lead you to better prioritisation.
Arrange for a portion of your income to be saved automatically into a separate, preferably hidden, bank account. You can’t spend what you don’t have, and it makes the path to your financial goals that much easier.
Actualise your spending
Rather than think about money in terms of dollars and cents, think of it in terms of how much of a certain ‘thing’ you’re forgoing. If you eat out one night, that’s half a pair of those leather boots you’re after. A night out could be ¼ of an airfare. For extreme spenders, that next credit card spree could be next month’s skydiving adventure paid in full. You don’t have to strike this balance perfectly every single time, but understanding what your money means to you on an intrinsic level can help you make necessary sacrifices.
Building good financial habits is the path to ensure you’ll have the money you need when you need it. Everyone’s personal situation is different, so you should always contact your financial adviser for tailored advice before making any decisions. We truly believe that finances, not just life, is all about balance; it’s important to live each day to the fullest, making the most of every moment, but each day must be balanced with a thoughtful consideration for tomorrow. The cycle of spending and saving that we often see needs the correct balance in order to achieve financial security and success.
This article is for general information purposes only. It has been prepared without considering your objectives, financial situation or needs. You should, before acting on the information, consider its appropriateness to your circumstances.
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