- Money can be a really overwhelming topic to start learning more about.
- Not knowing how to get started can feel like you’re stuck, with 7 out of 10 people postponing financial decisions.
- Look at what you earn, owe and build as our 3 steps to get started with money management.
Sometimes it’s difficult to take the first step.
Money can be a sensitive topic that we’d rather ignore than address. According to research, 7 out of 10 people postpone financial decisions, with only 30% feeling comfortable with their current money management practices. Learning about money management can be tough but here are 3 steps to kickstart the process.
To get started, look at what you: earn, owe and grow.
Taking action is difficult on something you’re not comfortable with. It can be easy to let a fear of failure stop you from taking action. However, the costs of not getting started with these 3 things adds up.
Part of psyching yourself up to take action includes thinking about who you want to be in 10 or 20 years’ time. Think about the life choices you want to make and being in a position to fund those choices. With that in mind, here are the 3 things you need to get on top of when it comes to money.
Here are 3 steps to get started with money management:
1. Let’s start with the money you earn
Do you count down the days until payday? There’s nothing better than when payday rolls around but nothing worse than not knowing where that money has disappeared to.
If you can’t tell me where your last pay packet went, my first step would be to start keeping tabs on where your money is going. This could include starting a budget, to monitor and plan where your money goes. Keeping tabs on where your money goes means you can reign in your spending and make meaningful choices about how your money should be working for you.
2. Then look at the money you owe
Now that you’re maximising what you earn, it’s vital to look at your debts. Debt can weigh you down because it promises your future cash towards past decisions. In short, you are robbing your future self to pay your past self.
As an example of this in action, let’s take the credit card coat. Yes, I once met someone who took out a credit card so they could buy a designer coat at 19. No judgement, I’m sure was a great coat and to them, at the time, it was money well spent. However, it wasn’t their money to spend and that means they now the bank an ever-growing sum in interest payments.
Whether it’s credit cards, buy now pay later payments or car loans, write down everything you owe. Then set about deciding how you want to pay that debt back. The aim is to get in control of your debts so that you know what you owe and how to be debt free in time.
3. Finally, look at how you can grow your money
Given your motivation to take action is your future self, growing your money is a must. This includes your retirement fund. We tend to let our employer decide our retirement fund for us or go with the default option because it’s easier. In doing this, we forget that not all funds are created equal.
It’s important to start caring about where your retirement money is so that it starts growing in the right direction. Look at your current fund and how it currently operates in terms of returns, fees and where it’s invested. Then look at competing funds to see whether you could get a better offer elsewhere. Shopping around could save you money and set future you up in the retirement village wearing cashmere rather than acrylic.
Remember: Start with what you earn, owe and grow.
By choosing to take an interest in your money, you are choosing to take control of your future. Look at what actions you can take to start putting those goals in forward-drive and making the future you want a reality.