Given these benefits, why do some of us easily manage our dough whilst others engage in a perpetual exercise of juggling Peter to pay Paul with seemingly little control of our bread? I think it's mostly because rarely are we taught about coinage.
Our education curriculum may well have taught us world macro and country micro economics but very few of us have ever had lessons on running our own personal financial empires. It's a bit like getting taught to use a computer but never learning the intelligent ways in which to buy one. This lack of learning frequently leaves a gap within us, resulting in adverse emotional, relationship and financial effects. In an attempt literally to "plug the gap", below are some things I think all women should consider at particular age points in their lives.
SINGLE AT 25
The one relationship that will travel with you throughout your life, all of your life, is the one you have with money. If you're bright, clever and smart, you'll decide early on in your life this particular relationship will be played on your terms and by your rules.
Two rules to implement are:
(1) Determine to be in control of the moo la opposed to it controlling you
(2) Practice financial independence throughout your life
To practice control, you'll need to gain an awareness of how you think about the dollars, euros, pounds and yen. This will involve examining where your beliefs originate from. You are likely to have subconsciously subsumed someone else's view of the gold. e.g. your parents. Become aware of how your own race and culture, upbringing and money personality interact to shape your thinking and money belief system. Once you've established this, decide if you are served well by what you think and how you act. Like global positioning systems, upgrades are usually needed to the money thoughts that pass through our little grey cells.
To improve your thinking and to practice the control you'll need in life to move ahead, acquire a little knowledge. Remember knowledge is power – but only if you choose to use it.
Once you've got to grips with your new, improved money mind-set, you'll need to implement a money map
to assume financial control. Your money map will tell you financially where you are right now and will put a marker in place showing you where you want to get to. Its purpose is to act like a GPS – guiding you ultimately to your financial destination.
All good money maps provide financial points of reference and your personal money map will be no exception to this decree. These "orientation points" will help you practice the second vital rule I've mentioned.
The secret to practicing Rule 2 is so simple it's almost embarrassing. To live a life of financial independence requires you to have money and assets. These things are a girl's best friend. They'll bring you options in life. To gain the ability to make choices you'll need to hit the orientation points contained in your money map. Some compass bearing points you are likely to include in your money map are:
• Eliminating dumbo debt. This includes all debt that doesn't grow your wealth such as student loans, credit card debt and consumer debt.
• Creating a money reservoir. This is like having an emergency savings stash. It should never be touched except in cases of extreme financial emergency. Buying those Jimmy Choo shoes that are on sale does not constitute an emergency.
• Paying Mr 10%. This is where you pay yourself a certain amount of money (ideally 10% or more) every time you get paid, before you pay any of your bills. Mr 10% constitutes your goal account. In other words, all funds channelled into this account should be saved towards meeting a goal such as saving for a home. As such, withdrawals from this account should be very, very limited. For legal reasons Mr 10% should always be held at a separate bank from any bank where you have a cheque account or loan account.
• Putting something away for your grey old days. Yes at the age of 25 retirement is a billion light years away but those years can go at warp speed. Get a little something tucked into KiwiSaver. This is your own personal investment into your future years.
To enable trouble free navigation to your orientation points, you'll need an awareness of incomings and outgoings. How much money do you regularly get and where does it come from? Typically, our incomings consist of wages so incomings are easily identified. What's a little harder to establish in today's plastic fantastic age is outgoing traffic. What do you spend your money on and when do you do your spending? Rent and power are easily detected but tracking discretionary spending can prove to be an evasive exercise. To assist, for one week only, write down in a notebook, every little thing you spend your dosh on. This especially includes all spending done via Eftpos and credit card.
Once you've gathered the above info, create a blueprint. Allocate your money to dumbo debt repayment, your money reservoir, Mr 10% and KiwiSaver. What's left over is what you have to enjoy for discretionary savings. If this exercise reveals a shortage, get creative. Bring in extra income and/or decrease expenses and start living below the line.