Spending LESS than you earn!
Seems obvious doesn’t it, if you have 10 dollars then make sure you spend 9. So why does it trip me up so often? In fact, it trips many of us. It’s easy to keep track of how much money comes in because it magically appears each month. Unfortunately, there are so many different methods for it to leave – cash, EFTPOS, Credit Card and even internet transfer. My particular problem is that I don’t have any rules or any way of keeping track of my spending. So I live like a king for one week but like a beggar for the next three.
I’ve definitely struggled with the golden rule at times but it is the fundamental basis for everyone on their own personal finance journey. I tend to get hit by a bout of FOMO and then suddenly money isn’t so important. We all have good intentions but they get lost in the day to day hustle and bustle. Swiping my card doesn’t feel like real money, I should probably do something about that.
Spending more than you have is also stressful! If you’re spending less than earn, paying off debt and knowing that you’re in a better financial position and it will consciously or unconsciously take a weight off your mind.
Kiwis are generally pretty bad at saving. There are signs that we’re improving but we’ve got a long way to go. A great starting place is PocketSmith for starting a budget and working out what you NEED to be saving already. It’s terrifying, I’m supposed to putting aside $337 a month for retirement! At 26, that’s an unfathomable amount but probably needs to be done since the baby boomers won’t leave much for the rest of us.
The Savings working group is looked at helping kiwis saving and they’re calling on the public for ideas. What would make you save more? Should Kiwisaver be compulsory for everyone? What tricks do you use for helping you save?
The other half of the phrase refers to ‘what you earn’. If you earn more, then you can spend more without upsetting the balance. Together I’m sure we can work out some ways to squeeze out a little extra cash some way or other. The ideal situation long term is to ‘make your money work for you’ but that’s still a wee while away. At least for me.
Now that we’ve established a golden rule of spending less money than you earn, we can build on it from here. There are lots of steps to this process, setting goals, getting an idea of your current situation, making a budget and finding systems that work for you. Personal finance is truly is a journey but it gets easier with practice.