Managing your money - it's up to you

Published Date: 2018-02-15 | Source: Simply Financial Services | Author: Simply

Managing your money - it's up to you

Financial Freedom - it can be yours.

Financial freedom feels like a big goal - and you need to be brave. Brave enough to examine the real causes of your questionable spending habits, brave enough to make a real change. This is the important stuff that comes before spending assessments and budgets and planning for that beach holiday. If you don't know why you behave a certain way financially, you won't be able to make any changes.

Action

It's time to step into action. No more procrastinating. It's probably the one step you've been dreading: the budget. We've all done this in the past, and most of us know what it's like for a budget to fail. The thing is, there is no one-size-fits-all type of budget. We are all individuals, and we all have our own budgeting styles. Most people set a budget and then rely on willpower to stick to it. Then, when they don't stick to that budget, they beat themselves up for not having the commitment and staying power. From there it's a short hop to total surrender. But few people question willpower itself. Everyone has it, but it is a limited resource, and nothing drains willpower more than making decisions - that's why it's easier to ignore YouTube in the mornings. So, make it easier on yourself.

Make it easy

Take decisions away (can't rack up more credit card debt if your card's locked in your drawer at home), and be realistic.

You're more likely to stick to a budget if it includes an incentive. Take Ramit Sethi's budget guidelines, for example: he suggests allocating:

  • 50-60% of your income to fixed expenses,
  • 10% to investments,
  • 10% to savings, and
  • 20-35% to 'guilt-free spending'.

The exact balance will vary from person to person, and we would include 5% for unforeseen events, but the key point is:

Budget for things that make you happy

Happier people have more willpower and, well, you see the pattern. So, you've done the hard work and you're on the road to financial freedom, but there'll be difficulties on the way. You're going to drop the ball sometimes, and even if you budget for them, there will be unforeseen expenses that threaten to break the bank. As far as possible, remember: be curious, not judgemental.

Take heart from your wins

Once a month, re-assess where you stand, and if you've made mistakes, accept them and move on. This is a process - usually much longer than one year - so give yourself some space to learn and grow. Take heart from your wins, and reward yourself every now and again for your good work. With that mindset, you'll get a lot more out of this than just a good-looking bank balance.

Need more detail or info? Want to share your success stories? We'd love to hear from you on our Facebook page. Otherwise, keep tuned to #SimplyMoney for more financial advice you can actually work with.



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