There’s a certain tone, and maybe head tilt, friends give me when they want to talk about money.
asserted
they → ’ → money
It’s usually accompanied by a: “Hey, Nicole”.
asserted
It → accompany → Hey
It often happens at trigger points in their lives – the points where most of us suddenly get serious, or at least curious, about savvy financial strategy.
asserted
most → happen → strategy
Graduating and starting work, getting married, definitely, having a baby, are some.
asserted
Graduating → graduate → baby
Divorce, turning 50, the scary realisation you’re not far from drawing down your super and it’s looking sad, are others.
asserted
others → turn → super
No matter what the trigger, there’s a simple piece of advice I give first, before going into detail.
asserted
I → ’ → detail
It’s this: You control your money, it doesn’t control you!
asserted
it → ’ → you
Here are my three oft-repeated, all-important follow-up points.
asserted
points → repeat → ?
Recognise your in-built financial biases
A sense of empowerment versus impotence is vital, and that is especially so in a cost-of-living crisis where interest rates are going up and property prices falling.
asserted
prices → recognise → crisis
Your economic comfort is to some extent determined by your money coming in and going out, although you have more influence over that than you may think.
uncertain
you → determine → that
In fact, it’s possible you can make positive changes today.
asserted
you → ’ → changes
Forget the Reserve Bank rates or shock taxes in the budget – the real financial obstacles to overcome may be inbuilt psychological saboteurs.
uncertain
obstacles → forget → budget
Here (as almost everywhere), your childhood plays a big part.
asserted
childhood → play → part
Is it an absorption or a reaction to your experiences and observations about money growing up: anxiety over bills, fights perhaps?
asserted
it → grow → bills
Maybe you had insufficient money to do fun stuff.
asserted
you → have → stuff
Or our parents uttered possibly even more destructive words:“But we’ll do it anyway”.
uncertain
we → utter → it
These formative experiences are subsumed into your own financial fabric, and you need to recognise that to overcome them.
asserted
you → subsume → them
Start thinking of it like this and your finances may get more focused.
uncertain
finances → start → this
Figure out what you really want
You shouldn’t seek money for money’s sake, but for the options and opportunities it can bring you to create the life you want to lead.
asserted
you → figure → life
All of us need strong motivation to resist instant gratification – that’s a human condition.
asserted
that → need → gratification
Successfully managing money is easier if you can project forward to the gain, not the pain.
asserted
you → manage → gain
Start thinking of it like this and your finances may get more focused.
uncertain
finances → start → this
Which brings me to the crux of the matter: How are you ever going to arrive financially if you don’t know where you’re going?
asserted
you → bring → matter
Only the most disciplined person can stash cash purely for stashing’s sake.
asserted
person → stash → sake
The rest of us mere money mortals need a reason, and that reason needs to be so sweet you can almost taste it.
asserted
you → need → it
That might be saving to take a year off to travel through Europe, buying a new car loan-free, or doing whatever floats your boat enough to mobilise and prioritise your money.
uncertain
whatever → save → money
But it’s not enough to set these delicious goals.
asserted
it → ’ → goals
You should also cost and then calendar them.
asserted
You → cost → them
Here’s how:
- Figure out how much they are going to cost
- Determine when you want to enjoy them, and then
- Divide the cost by the number of pays in the interim period, to see if it’s feasible to hit your target date.
If your saving schedule isn’t feasible, you may have to delay a little.
uncertain
you → ’ → little
And only at this point when chatting to friends about finances do I give specific money intel.
asserted
I → chat → intel
Know how to get what you want
That pep talk is followed by me introducing some easy but highly effective ideas into the conversation.
asserted
me → know → conversation
Super’s tax treatment means more money goes in than you would receive in the hand.
asserted
you → mean → hand
Fractional investment apps like Raiz and Sharesies let you regularly invest small amounts that you will barely miss.
asserted
you → let → that
Left alone, returns quickly grow by harnessing the power of compounding.
asserted
returns → leave → compounding
It will stop the power of compounding working against you.
asserted
power → stop → you
You can do this with all of the above points, by salary sacrificing to super through your employer or scheduling direct debits to micro-invest or pay down debt.
asserted
You → do → debt
Try to remove the possibility of life’s busyness getting in the way of your long-term goals.
asserted
busyness → try → goals
If you understand how to direct and determine your financial future, everything can be a bunch easier.
asserted
everything → understand → future
Nicole Pedersen-McKinnon is author of How to Get Mortgage-Free Like Me, available at nicolessmartmoney.com.
asserted
McKinnon → get → nicolessmartmoney.com
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products.
asserted
Advice → give → investing
…and 2 more, not listed.
The Aporia
