I think that if I were to live the whole of my life sticking to a budget laid out on a spreadsheet, I would go bonkers!
Budgeting like a banker would stress anyone out, I’m also not suggesting that a household running on chaos, robbing from Peter to save Paul, is a great option either. What I would like to suggest is some strategies that have worked for me. They are simple and can be applied into any household or circumstance.
- Know and understand how much you earn. What I mean by this is know exactly how much money is put into your bank account at the end of the week or fortnight or month. That amount is all you have, and you need to base your lifestyle around that. Spend some time knowing where you spend your money and ask yourself if it is important to have in your life.
- Don’t overspend on your home/accommodation. This one is hard and will raise emotions for some people. If you want to get ahead, you need to be realistic about how much you allocate to your living expenses. If you do want to live in accommodation that is nicer than you can really afford you might need to look at options like sharing, living in a more affordable area or researching other ways to live in a nicer place like house or pet sitting.
- Avoid any sort of credit. This includes a credit card, store card, payment plans, higher purchase – anything to avoid excessive interest rates. Learn the discipline of saving for the thing that you think you want or need. Often you will find that by the time you save the money you realise that you don’t really need it anyway. Saving money also has a positive psychological impact, the main on being reduction in your stress levels by taking control of your financial security. Saving will create the discipline of learning to live within your means. The discipline of delayed gratification can be applied to all areas of your healthier life.
- Yes! Immediately as soon as you start to earn an income look at investing. You can do this with as little as $500. If you start this discipline as soon as you start earning your later life will be very comfortable. If you haven’t started when you were young, then the next best time is right now.
- Never lend a friend more than you are willing to lose. I have never asked a friend to loan me money, and any money than I have loaned to friends was an amount that I could afford to lose at the time. For me, friendship is way more important than the money. Imagine a friend avoiding you because they owe you $50, and if they do place more importance on the money than the friendship then their promise of paying it back was never sincere and the friendship to them wasn’t as valuable as it was to you. Not a friend in the first place.
- Eat/entertain at home – you get so many health benefits from eating at home. You learn to cook, you eat wholesome foods, you learn to become resourceful, you know what you are putting in your mouth. You could co-ordinate this with friends if you live alone. You could cook a dish and take it a friend’s home or have a few friends come over and cook something together. Eating together is scientifically proven to boost mood and serotonin and improves longevity (just make sure that the food is wholesome and nutritious)
Obviously these six simple suggestions can be further explained or explored. I will state here that I am not a financial planner or trained to provide financial advice. What I am sharing are principles that I have adopted in my life. I have been rock bottom and had big credit debt and nowhere to live. By following these principles and getting good financial advice, from a professional adviser, I have completely turned around my financial position. Financial stress is a real thing, and stress can impact so many other areas of your healthier life.