Friday, June 22, 2018

Why You Should Get Your Financial Sh*t Together and How To Do It

Studies show that financial stress is comparable to actual physical pain – ain’t nobody got time fo dat.

So it’s time to be the boss ass financial chick you were born to be and get your financial sh*t together - I’m going to share with you how I do it and how you can as well. 

We all know how good is feels to not only be able to financial support yourself and your lifestyle but also have the confidence of financial security behind you. I could talk about finances for ages because women taking control of their money is something I am so passionate about but I’m going to keep it to my core tips.

I’m certainly not a genius in the field but I can share what works for me and hopefully help you in the process. I am a huge believer that it doesn’t matter how little your income is, if you handle your money well then you can afford to live comfortably and stash away some savings.

Now I know there are certainly exceptions to this and life isn’t always as simple as that but, within reason, you should be able to put away a little each week (or however often you get paid) to go towards something you are saving up for or simply for the sake of having a financial safety net.

In this post I’m going to be talking you through the ways I handle my money, some are life changers and others simply small habits that reach big goals.

First of all I must preface that I am a follower of the ‘Barefoot Steps’, that being the biggest selling financial guide in Australia currently ‘The Barefoot Investor’. I was a sceptic but after reading I can safely say that I am converted into the cult. So some of these tips have been bred from what I have learnt in the book while others are separate and based on experience.

Have separate accounts 
Finances can get messy when all of your money is in the one place – all in the same account. I find that organising your money into different accounts is the best way to ensure you have enough to pay your bills while keeping track of what you have leftover to spend.

I follow the barefoot steps and have 5 separate accounts – seems excessive?
Only at first but you get used to it.

Everyday - for bills and general expenses
Smile- Saving up for something you really want to pay off like a credit card, student fees or car loan.
Splurge- Savings for something like a holiday, new dress or anything frivolous you want to splurge on.
Fire Extinguisher- This money is for the unexpected bills like rego, vet expenses, car repairs, your laptop even dying perhaps. This is your first safety net for when you get thrown financially.
MOJO- This is where your confidence and financial freedom comes from! Having a few thousand, or even more with as much as you can manage, stashed away that you aren’t allowed to touch in the event that you unexpected lose your job, are unable to work or something like that.

Divide your savings every week 
Now it’s time to get clear on how much money goes towards bills / living expenses and therefore how much you can afford to save. The basic split is 60% on expenses and 40% into savings. Being consistent with this means it’s impossible to fail – you’re set up for success. The best part about it is how realistic this method is because as explained above, the savings accounts are safety nets there for you to use when you absolutely need for the purposes they have been assigned for.

The Barefoot Steps recommends you split your income by the following percentages
Everyday (60%)
Smile (10%)
Splurge (10%)
Fire Extinguisher (20%)
MOJO (any additional savings or money you run into)

Look for a side hustle 
So the biggest concern you might have right now is how to live on just 60% of your income, especially if you work part time or are on maternity leave so have limited money come in.

There are two solutions to this; budget relentlessly or look for a side hustle to bring in some extra income. In the Barefoot Steps as well, it is recommended to boost your income by $10k a year through a side hustle to take some financial pressure off.

Take whatever your passion project is and throw some energy into making it profitable. You could sell some paintings you make, offer your freelance graphic design services, start a boot camp, publish some writing on your blog etc. It’s the perfect balance of doing what you love, offering to the help the world in something you are good at and making a nice little extra income on the side.

Budget Relentlessly
The other alternative is to budget relentlessly which could mean lowering your living costs. There are some things that don’t budge like rent, electricity and petrol but other things you can be a little savvier with.

Instead of girls’ night drinks on the town you could invite your friends over and cook them a homemade meal with cocktails. Instead of Uber Eats you can meal prep for the week to have convenient food ready at the go. Ditch the $5 morning coffee and make it at work, start buying the budget brand instead of the premium brands in the supermarket or put yourself on a makeup/clothing spending ban for a month. There are always little ways to cut corners and save money here and there. All these small changes definitely add up in the same way swapping cream cheese for hummus takes inches of your waist.

So those are my biggest 3 tips (thanks for the Barefoot Steps); have multiple accounts, set an exact amount you save in each of them and look for some side income to boost your financial security.


Teresa Halminton said...

Thank you for sharing the tips! Financial sh*t is such a big problem for me right now.

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Lizie Carrel said...

The side hustle is very important in today's life because we can't totally depend upon our jobs it takes time but never give up on what you love.