Money opens doors and opportunities. Paying cash, often brings negotiable further discounts. It permits living in relative comfort, rather than surviving on "struggle street'. Saving, even a little of what you earn each pay is both enabling of choices and additional pleasure in the longer term. Debt on the other hand is disabling and prevents those suffering under its all encompassing grip, from living more fulfilling and stress free lifestyles. Money is not generally easy to come by and most of us work hard for our living, often in jobs we do not particularly enjoy and for little, other than the financial rewards our work brings. However, achieving your goals usually does involve making at least some short term sacrifice in order to achieve long term gains and goals. But making those very disciplined sacrifices are well worth it, when you finally gain the keys to your first home, or head off to the destination you have long wanted to explore.
I confess that watching my bank balance grow, rather than deplete, brings me a certain degree of joy. It means I am gaining purchase power towards achieving yet another goal or ambition in my life.
Are you struggling to save for a mortgage, dreaming of a bucket list holiday destination, or even desperate to reduce your debts?
I was able to pay off my home and even improve my "renovators dream" in a little over ten years on a single, medium level income, as well as more recently and previously having managed to travel extensively, both within Australia and overseas, on a regular basis.
I did not travel, whilst paying off my mortgage. I am not very good at sleeping if I owe money and paying off a mortgage was amongst the most stressful undertakings of my life. I had to be creative to find ways of making my budget stretch and earn a little more cash on top of my wages from teaching, to even consider the improvements my house demanded to remain structurally sound and liveable!
Never travel on credit, you will pay huge interest that may likely cause you stress way beyond the value of your experiences and hold you back financially for years to come. Thankfully I have always been very conservative with my use of credit cards and have only ever travelled when able to fund my travels with cash, I do know instances of people still paying off their dream trip, fifteen years later!
There are times I have struggled financially through ill health, to the point of having to run garage sales and market stalls to find the funds to pay bills and feed myself. I even used up all my precious backstop funds during those times. I caught up again, having sold my first home and risking a tree change. Had I not, I may yet have been living a hand to mouth existence and struggling with my health and stress levels, instead of living comfortably and debt free, with minimum stress.
Most importantly, always live at least within or below your means. I was pretty good at this, but even so, ill health proved a financial as well as physical and personal challenge. The better at living below your means you are, the more cash you can put towards your financial and life goals, like owning your own home, travelling, or, even having children. So, set aside those contingency funds for when hard times hit you by surprise; they generally do at some point in life!
The following is the best advice I can possibly give, based on my own experience on how to achieve a healthy bank balance, a home of your own and even make it to the places of your dreams!
- Set yourself a savings goal; something you want passionately.
- Set up a special purpose, low fee bank account. Do not mix up your special goal savings with your general expense account.Open this account when you have enough money set aside to avoid bank fees for a minimum deposit, then add to it regularly.
- Pay a regular amount into this account every pay.
- Put every available cent of loose change into a piggy bank. When it fills, add the sum to your savings.
- Budget to save. Work out realistically,based on your current billls for the past 6 months, how much you need to spend on food, utlility bills, transport clothes and insurance and some for discretionary purposes every pay period and stick to it. Build in even $5, or $10 of savings if you are on a truly low, subsistence income. In better financial circumstances, aim to save about a third of your income every pay.
- Set aside a contingency fund, for emergencies. Do not begin your goal savings until you have at least $1,000, preferably more, tucked away for unexpected bills, fines, medical, or car problems. Hopefully, these won't all fall at once, while you initially establish your contingency, or backstop fund.
- Use cash and avoid the temptation of credit cards for non essential expenditure. View your credit cards as needing to be paid in full at the end of each month to avoid paying interest.If necessary freeze your credit card in a take away food container in your fridge and only defrost it in a real financial emergency. Credit cards are a very expensive form of loan!
- Put any gifts of money, or pay rises straight into your special purpose account.You don't miss what you have never had!
- Make and take your own lunch to work everyday, this will save an absolute fortune!
- If you enjoy decent rather than instant coffee at work, keep a plunger or coffee bags on hand. This is much cheaper than going out for a coffee, or buying a take away one. Calculate how much you will save over the course of even one week. Do the same with lunches. Saving lunch money and putting a few dollars a week into my bank account, bought me my first horse. Later I used the same strategy to buy my first second hand but reliable car. After selling my horse I put the funds onto fixed deposit in the bank and there it stayed until I bought my first home!
- Dine out for special occasions or a few times a month, but eat mainly quality nutritious food, prepared yourself at home. Poor nutrition is bad for your overall health and well being. Stick to a food budget and make good use of fresh seasonal produce and specials, as well as food discount stores to stretch your food budget as far as possible.
- Build in some treat money. Don't expect to live like a spartan and not want to indulge occasionally, this is where your discretionary money within your budget comes in. If you don't budget for some treats, you are way more likely to blow out your very strict and unyielding budget, a bit like blowing the strictest of diets, so you actually end up gaining weight, because you turn back to your comfort foods. Retail therapy will not get you that house deposit, or dream travel destination!
- Find fun free ways of enjoying yourself and exercising. Local parks, window shopping, walking the dog, walking around different neighbourhoods and looking at homes and gardens, going out jogging, or cycling, if you have a bicycle, or gardening are all free activities and ways of getting a good deal of free exercise. Gym memberships are expensive!
- Buy mainly pre-loved second hand furniture, homewares and even clothes. I recently needed some new wine glasses and bought a lovely set of 4 at a local opportunity shop for $2.50. New they would have cost at least $15-20.
- Cull things you no longer need or use and organise a garage sale or market stall to sell them off. Put proceeds into your special goal account.
- Accomodate a boarder if you have a spare room. More if your home is big enough.Overseas homestay students pay well and are usually reliable.
- Consider taking on a second job. People always need good cleaners, baby-sitting, ironing, even basic meals, prepared for them. Dogs need walking and pizzas delivering. Be careful of over-stretching yourself though!
- If you have a unique skill you particularly enjoy, turn it into a paying hobby. Writing, photography and looking after other people's animals have worked for me!
- Turn off unnecessary lights, appliances and slightly reduce your heating temperatures. Not only will you save money but help the environment.
- Always have adequate insurance, to cover the replacement costs of your home, posessions and income or protect you from the worst case scenarios of travel!