Get yourself in position to achieve your financial dreams in 2014 with these money saving tips from this extract from money mentor Nicole Pedersen-McKinnon’s new 12-Step Prosperity Plan.

Years ago, I heard a quote from supermodel Kate Moss that really stuck in my mind. When asked how she maintained her fabulous figure, she (more or less) replied: “It’s easy – you just have to want to be slim more than you want that piece of cheesecake, or that chocolate bar etcetera.”

The quote resonated with me because the same technique works for fabulous finances – it is easy to reach your longed-for money goals, you just have to want them more than you want those shoes, or that perfume etcetera.

I have a theory any of us is capable of spending any amount of money. I distinctly remember getting my very first pay cheque from my $24,000 a year job as a cadet journalist – and wondering how I was ever going to spend all that cash! Guess what? I managed it, and have been managing it ever since.

Think about how much, after tax, you currently earn a year (if you don’t know this figure, grab a calculator and multiply your after-tax weekly, fortnightly or monthly pay by 52, 26 or 12 respectively). Now, estimate how much you might have earned in your working life. What do you have to show for all this money?

If the answer is not much, there’s a fair chance you struggle to resist spending your whole pay packet. But here’s the thing – anything you manage to save now, you will get to spend later. In fact, this will ensure there is something left to spend later. It’s not about blanket denial but about deferred spending. And I’d venture you’ll enjoy more what you work for, and look forward to, anyway.

Top Tip Tute: Is micro-spending ruining your future?
Find out in my video.

So it’s time to start dreaming; I always say you need strong motivation to resist instant gratification. Busting out of debt, if you have any, should be your top money priority. But think too about the fun stuff you want in the short, medium and long term:

The next one to two years: 

For example, an overseas trip. Does a friend have an upcoming wedding in Thailand next year? Maybe you fancy a more expensive, longer sojourn the following year? (NEVER use credit for something for which you’ll have nothing to show afterwards but photos). On the sensible side, other goals during this timeframe might be to pay off a credit card and/or a personal loan.

The next three to five years: 

Is your car going to need replacing within this period? If so, you’ll need to start planning to meet the expense (NEVER borrowing for a depreciating asset, one that will fall in value). Or perhaps you would really like a new kitchen.

Five years and beyond:  

The ultimate goal – for all of us – should be to ensure by the time we retire that we have repaid at least our Very Bloody Bad Debts (my term for nasty personal debt that earns you no income) and that our income will be adequate when we stop work. Remember, the money employers are required to pay into your super fund is unlikely to be enough to sustain you for the whole of your retirement. So in this category you could include repay the mortgage and build a nice little nest egg.

Next, make a list like the following of these most-desired money goals. Write beside each one the date on which you would like to achieve it. Then put an estimate of what the goal will cost and how many pays there are until your target date. For example, if the target date is three years away and you are paid fortnightly, multiply 3 (years) x 26 (the number of fortnights a year). Finally, divide the cost by the number of pays to find the amount you have to put aside each pay.

Short-term goals (1-2 years)


Medium-term goals (3-5 years)


Longer-term goals (5 years+)


Top Tip Tute: How can I stop micro-spending?

Scrimping and saving is not much fun but it can yield fantastic results. The trick is to make your goals specific and terrific: A trip to Fiji… A paid-off house by January 2020… Retirement five years before you can get at your super… Now that’s worth holding some back.

And make like Kate Moss and skip the cheesecake and you’ll find yourself in great shape, in more ways than one, earlier still.

This is an edited extract from Nicole Pedersen-McKinnon’s new 12-Step Prosperity Plan, available exclusively on Together with a fully-customisable prosperity tracking tool, it forms a money makeover system that is delivered 100 per cent online and accessible to all. 

Nicole is the founder of and developer of the 12-Step Prosperity Plan, an achievable and even enjoyable blueprint to take Aussies from worry to wealthy. Nicole’s writing has earned her top personal finance awards in both the United Kingdom and Australia. Her career credits include founding and editing The Australian Financial Review’s Smart Investor magazine, and reporting and editing for the magazine arm of the UK’s Financial Times. Author, qualified financial adviser and Fairfax’s Money Matters columnist for the last decade, Nicole is a regular on television and radio. She talks money without the mumbo jumbo. Follow her on Twitter @NicolePedMcK.