Around the blog spaces that I read, more and more people are discussing money, times being a bit tighter than before, some are worried about renting or have had to sell the house or are worrying about hard times they have fallen on.
Many are asking, what are your tips? What can you share that gets you through bad times or keeps you out of them?
I have been hesitant to write too much, after all we are not driving around in new cars, we have a big mortgage, our kids are not too special to not be wearing hand me downs.
This process works for us, if things are tight for you right now you probably think you can't do it, but you really can. At least you can set up the accounts and organise the direct debits to occur.
It may not make you rich and certainly won't make you famous, but it should provide you with more control of your money, allow for better financial independence and prevent sleepless nights worrying about unexpected bills.
Whatever you earn, it gets split like this:
Live on the rest.
As your income improves, make the percentage in save and invest a little bit higher. If you are in a really tough time, drop it to a couple of dollars, just to keep/begin the habit.
Rules for Invest:
This is easy. Set up an online savings account and have 10% of your take home salary/allowance automatically put into this account.
This can include superannuation or making additional payments on your home loan, but remember you can't get your super out and your mortgage may have fees to access some funds.
Never touch it.
Unless it is going towards an investment purchase such as a house, shares, etc. A car is not, ever, an investment.
Do not have easy access to this account, eg, make it one without an ATM card.
This is another online savings account that you open and have 10% put into. This account is left to accumulate over time. When the fridge blows up, you can get at it. If the health insurance is causing you grief, dip in. But mainly, use it for saving for things. For instance, if you want a weekend away, save up to $500 and when you reach it then book your trip. If you need new tyres for the car, you can access savings. Regular bills like power and groceries are not paid from savings.
If you can trust yourself, you can be like Mr H and have envelopes. He writes the object he wants on the outside and puts his money in til he has enough, then off he goes to Bunnings or JB HIFI.
We live on 80% of what we earn. This goes up and down a lot, especially as I have never returned to work full time since Popps was born. I have had two full years with no income and received no maternity leave pay and Mr H is a shift worker so his pay changes depending on the fortnight. If we can't live on this amount than we are living beyond our means. When we are struggling to pay the bills it means we have bought too much that fortnight. Usually on going out, food, wine, magazines or something not really 'essential' (though fun)!
No matter where you are at, just get started. When I was on mat leave we had an account that just got $1 a week, but it kept the system going.
If your living financially with Invest, Save, Live (which is my own little concoction and not a tested system by anyone other than our household) there are a couple of other things to know.
Buy now and pay later schemes are gifts directly from the devil. Only people already wealthy gain from these. If you think you can afford it, than put it in the savings account.
Your credit card should be a debit card if you are using it for online shopping.
Time is the best thing to help you save money. Just get started, get the accounts set up, get the habit going, once you start you hardly notice the money going, especially if it leaves before you even see it in your account.