Tis the season to be bombarded with lots of advice.
This can lead us to a situation of “Paralysis by Analysis”. I love this phrase because it so accurately describes my natural state. I spend far too much time reading, planning and analysing something rather than actually doing it. When it comes to my personal finances, it always started with making a budget. I’d sit down and diligently write out my incomings and outgoings but then the trouble would start. How much should I save? Should I make an ambitious budget or an easy one which I can definitely stick to? How much should I spend on food or fun? There is a wealth of information available AND that’s the problem. I read and read and read, making elaborate plans which never come to fruitition.
I’m definitely making progress though, by applying that classic little phrase – “Just do it”. It’s better to get started and do something (anything!) than spend ages preparing a system. Also, the best time to start looking at your personal finances is RIGHT NOW! Not next week and not in January as a new year resolution. No one keeps or even expects to keep their resolutions! Pick something you like the sound of and run with it. Then stop reading more information until you’ve actually implemented something.
One of the tricks I’ve actually DONE, which really helped me this year was renaming my bank accounts in my online banking. It was much harder to withdraw money from my “Central America” account than from a “Savings” account. Once I started seeing the money building up, it became easier and easier to put money in that account and leave it there!
Another experiment has been recording a rough estimate of my net worth. I’ve tallied the totals of my savings and Kiwisaver and deducted my debts, mainly my student loan. Before anyone says it, I wasn’t interested in it as an ego-thing but more as a method of tracking my progress. Once I started seeing my graph going upwards it was addictive and I didn’t want to ruin it. Keeping track of all this was really easy in a spreadsheet and all the information easily available online. When something is measured, it improves! Both of these tactics were quick and easy to do STRAIGHT AWAY and as a result I’ve kept them up.
That’s the real key to personal finance, getting into good habits. When you have good habits, you’re used to doing the right things so it’s easier to tweak and adjust if you hear other great ideas!