According to the Australian Psychological Society 2015 survey, 49% of people worry about their personal finances making it the nation’s number one stressor.
It’s safe to say this affects us at work, either subconsciously or consciously as we wonder what to do, as we look for another job or hold down two jobs. Then there are those people who can’t afford to retire thus creating a bottleneck for promotion. I have friends in this situation.
Unfortunately it’s generally not until people are nearing retirement that they take more notice of their financial health and become concerned with having enough for that longest holiday of their life (ie retirement). As an example 10 years from retirement you only have 260 fortnightly pays left and a remaining mortgage of $100,000 can take 10 years to pay off, depending on interest rates among other factors.
So how can we prepare ourselves so that we enjoy peace of mind, knowing that if we lost our job or some other event occurred, we’d have the financial reserves to see us through?
Here are 3 first steps…
Step 1: Get a realistic view of your situation
Once you are measuring something, you can manage it.
Do a budget, covering your income and expenses as they stand now, realising that this is fluid. Yes you’ve heard this before but have you actually done it? Have you recorded for a period of 3 months to get a realistic view?
Before seeing someone I always get them to spend 10 minutes on a budget so they have an idea of their surplus or deficit. However the biggest difference I saw was one couple who thought they had a surplus of $1000 a fortnight when in fact it turned out to be a deficit of $500. That’s why they came to see me – they didn’t know why they weren’t getting ahead.
What is surprising for most people is how the simple act of recording can help with confidence in making changes.
Step 2: Work out your endpoint
The next step is to work out what you want retirement to look like and of course this involves conversations with significant others.
Once you have your start point and endpoint you can fill in the dots and contingencies can be catered for. Namely you want to pay down bad debt and build assets to support your retirement income. This may sound like an enormous task but it’s not. It’s just a matter of developing a positive association with money and healthy habits, much like you did when learning to brush your teeth.
Step 3: Get started
While this is a very general overview, here are a couple of tips to help you get started…
- Allocate at least 15 minutes per week to review your finances and discuss them with your significant other, if you have one.
- Look at financial calculators online to determine how quickly you can pay off debt and accumulate savings, as well is how much you may need for retirement.
- Make it fun! This way you’ll keep doing it. Use colourful tools (ie calculators, spreadsheets, paper, pens etc), create vision boards, and reward yourself with inexpensive, healthy connection (e.g. giving each other massages).
The way we think determines the lifestyle we lead and thus how much money we need, now and for the future. And more money rarely solves a money problem.
When you build practical skills for a healthy mind, body and wallet, you are indirectly providing yourself with a pay rise.
When will you make some time for your financial wellbeing?