A budget and doing the basics very well are pivotal in laying the foundation for becoming money smart, growing your business and still getting 'the good life'.
When I first entered in to financial services as an account manager, I was assigned to the principle adviser of the firm. He was a great man who taught a very important lesson; “Alex, it’s the simple things in life and basics done well that tend to make the biggest difference”.
At first, I thought he was just referring to a better rate on a savings account, home loan and fee savings on a super fund. It’s only as I get older that I am starting to realise a difference perspective. It’s also our daily habits and routine that make our lives both financially rewarding, and, filled with more enriching and meaningful experiences both in the being in the present and at a later point in time.
Imagine yourself 10 years from now – what does life look to you?
This is a good question to ask yourself; I don’t about you, but I would preferably want to be richer than staying the same (and in real terms actually be poorer).
It's the little things that can end up making the biggest difference. For example, normal people don’t realise that an extra 'third' coffee a day stacks up over 20 years.
$4 per coffee X 365 X 4.5% X 10 years compounded = $18,439
Okay, I know what you’re thinking, an extra coffee is hardly going to break the bank. But then as you start adding on all the other little extra things, the $18 grand over 20 years quickly gets a lot bigger.
A better example is the difference between a $600,000 home loan at 4% as opposed to 3% over a 20-year period. The difference over the same period of time is $73,991 less in repayments – now add that to your second cup of coffee every day with everything else.
Equanimity Financial Services specialises in providing advice to healthcare owners, particularly Exercise Physiologists, one of the beliefs we share is that if you find 10 minutes a day to meditate and 15 minutes of proactive exercise that will compound their client’s health over time, and prevent issues such as osteoporosis or type 2 diabetes. And what they also find is that it is human nature to procrastinate, so if you’re lacking the clarity with your money here’s some quick wins to get you started –
1. Start with the end in mind; don’t just write down your financial goals, draw them out -
2. Pay yourself first and automate everything
3. Have a necessary spend, splurge, invest and rainy-day fund.
4. Save to invest, don’t just save to save
5. Track and review your expenses every month or quarter
It’s only until recently where I’ve shifted my perception about money being a tool, not the goal. The road to being broke, is twice as hard as it is being rich. And, it’s these subtle shifts in our perception that can have significant implications on our net worth 10 – 20 years from now. Positive steps in the right direction now can ultimately result in more holidays in retirement and spending quality time with the people we care about.
Your ability to budget will determine your fundamental success to wealth creation. If you’re not in a position where you would like to be financial, its can be traced to your capacity to save or increase your earnings.
If you find yourself still struggling with your financial position, following the link to understand more about your financial strengths at https://financialstrengthsscorecard.scoreapp.com/ . We’re also hosting a webinar every second Wednesday (beginning September 30) which talks about the importance of investing in property, shares or inside your superfund.
The information provided in the article is general in nature and may not be relevant to your personal circumstances. For more information about clarifying your financial future, seek professional advice and feel free to drop us a line at email@example.com