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How to Set and Cost Your Financial Goals

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)

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Medium-term goals (3-5 years)

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Longer-term goals (5 years+)

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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 TheMoneyMentorWay.com. 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 TheMoneyMentorWay.com 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.

January 23, 2014

Q&A with MyBudget’s Tammy May

Most of us have some sort of financial stress in our lives, whether it be credit card debt, mortgage repayments or wanting to save for the future but finding it unattainable. Tammy May has always wanted to change that by helping people take control of their finances. In 1999, the South Australian businesswoman founded MyBudget when she was just 22, and today, the company manages over $425 million of salaries and employs around 250 people. Tammy has won both EY Young Entrepreneur of the Year and South Australian Business Woman of the Year awards, and this year made the BRW Young Rich List.

SHESAID chatted with Tammy to get her best money saving tips, financial advice for women in their 20s, 30s, 40s and 50s, and how she fits being a mum into her busy day.

Congratulations on making the BRW Young Rich List! Tell us about your journey from starting MyBudget to becoming one of Australia’s most successful businesswomen today?
Thank you. Certainly when I started MyBudget I didn’t have any grand plans to become a successful business person. I actually started MyBudget to help people, to assist people to eliminate the financial stress in their lives and improve their financial position. That being said, deep down I always thought that by doing something so profoundly good for people that it would grow and become a success. I am very proud of the team I have working with me. They truly care about our clients and come to work every day to make a difference. MyBudget wouldn’t be where it is today without them.

Definitely the journey has had some tough times, for example it has been difficult educating the market about what we do and the difference we make in the community and in people’s lives. Despite the challenges we have faced I have always remained unwaveringly passionate about what we do and been dedicated to improving our clients financial positions.

Describe a typical working day for you…
I normally drop my kids off to school in the mornings on my way to work. I find this is a good  time to have a chat to them about their day ahead and any after school activities they might have on.

After I arrive at work, I get myself organised for the day, starting with a daily 15 minute huddle with my senior management team. Generally I spend most of my day in meetings relating to marketing and communications, and sales (depending on the day I may also have finance and human resources meetings) or strategy sessions relating to the company in general. In between meetings (and sometimes during) I eat lunch at my desk (I try to eat healthily where I can). Occasionally I will go out for a lunch meeting.

After the working day is finished (normally 6pm) I go home to have dinner with my partner and kids, or go to watch their sport and try to get to the gym when I can.

Your business helps people get out of debt and take control of their finances. What’s the first thing someone should do if they’re in debt?
Budgeting is the most important tool for taking control of your finances, and getting out of debt. The first thing you should do is to create a budget – this will give you an idea about where, when and how much you’re spending. It will show where you can trim spending and free up some cash to pay back your debts faster. Make sure you include all of your income (if your income varies, use an average from your ‘year to date’ figure on your payslip) and everything that you spend money on. And most importantly, make sure your budget is flexible.

Life doesn’t always goes exactly according to plan, so you need to make sure you leave a buffer for unexpected expenses – this is the only way that it will be realistic and work for you.

Do you think women are taking more of an interest in their finances these days?
I personally think women are becoming more independent every day and part of that independence involves understanding and taking control of their finances. Our statistics also show that women are 80% more likely to be the one looking after the finances in a relationship. From paying the bills, managing the cash flow to organising finance. It tends to be the responsibility of the woman. So yes, I believe they are taking more of an interest – which is fantastic.

What is your best piece of financial advice for a women in her 20s/30s/40s/50s:

* 20s – Try to avoid using credit for bad debt (e.g. shoes, groceries, holidays etc). Use a debit card instead. Avoiding credit cards in your 20s will set you up with good spending habits for life.

* 30s – Begin paying extra repayments on your mortgage. Both consistent and ad-hoc additional repayments such as bonuses and tax returns work to reduce the principal on your mortgage faster. The earlier in the loan term you begin making additional repayments, the greater the benefit in terms of time and money saved will be.

* 40s – Take stock of your financial goals. Review them regularly. Your goals now will be different than they were in your 20s and 30s. Seek professional advice to ensure you are on the best path for financial freedom in your later years.

* 50s – Make adult children pay board. If your grown-up child is working and still living at home then rent should be paid either as a flat rate or percentage of their salary. Establish rules to lighten any friction that may come later.

Most of us are saving for something, whether it be a holiday, a car or a house. What are your top money saving tips to achieve your goals
Make sure you have regular savings in your budget. Putting your savings in a separate bank account, that you cannot easily access is a great way to avoid the temptation to draw on them. If you want to increase the amount that you can afford to put aside for savings, you need to look for ways to cut down your spending.

You could:

–        Shop around for cheaper rent, phone, and insurance deals.

–        Plan your meals, buy in bulk and compare prices at the supermarket. Growing your own veggies can also save you some money.

–        Eat breakfast at home and take your lunch to work instead of buying. Use the coffee machine at work instead of buying take-away coffees.

–        Make your own cleaning and beauty products – there are some great websites out there that provide recipes.

–        Have a BBQ at home instead of going out, and ask your guests to bring a plate.

–        Car pool or take public transport to work instead of driving – this will cut down your fuel and parking costs.

However you choose to go about it, budgeting is key.

What is your advice to someone wanting to start their own business today?
Make sure you are passionate about your business idea. It’s that passion that gets you through the tough times and allows you to keep going. It’s also important to surround yourself with positive like-minded people. Where possible try to seek out the absolute right people to assist you and experts who know more than you do. My last piece of advice is that you should have a business plan, even if it’s just written on a piece of paper. 

Who inspires you both in the business world and beyond?
I am inspired by many different people. On a personal level, my Nana truly inspires me. She is strong, funny, loving and kind. Professionally, I am inspired by Dale Carnegie and his principals. So much so that myself and many of my executive team have undertaken the Dale Carnegie Training Course. He was truly an amazing man! Certainly also business people like Richard Branson, Steve Jobs, Oprah and many more.

November 27, 2013

10 Money Saving Ideas to get you Started

Get Set by 30 is a fantastic new book by award-winning writer Annette Sampson that will have you on the road to financial security and wealth as you head into your thirties. From saving, super and smart home ownership this little gem has it all covered in language that’s not going to make your eyes glaze over.

Get Set by 30 is a straightforward question-and-answer guide that will help you handle very money-related question life throws at you with the poise of a finance professional. Whether you’ve got $50 in the bank or are earning $50,000 a year, you can start managing your money to enjoy the life you deserve.

Here’s a sample of Annette’s sound advice, focussing on saving money…

10 savings ideas to get you started

    1. Cutting out just one packet of cigarettes a week, or one or two drinks, will save you as much as $10 a week.

 

    1. Unless you’ve got the system rigged, gambling is money down the drain. Rethink your attitude to things like poker machines, scratchies and Lotto.

 

    1. Take your lunch to work. Even doing this just one day a week will save money.

 

    1. Takeaways and pre-packaged meals are expensive. Rediscover or discover the fun of cooking. Pasta and red wine with friends at home is cheap as well as fun.

 

    1. try to do your shopping in one go rather than continually dashing to the corner shop. Consider cheaper brands where you don’t lose out on quality, and don’t shop on an empty stomach.

 

    1. Try cutting back to just the magazines you really can’t live without. Avid book reader? Scour second-hand stores, share with friends or join a loyal library to supplement your purchases.

 

    1. Technology has made out lives much better, but it’s also added to our expenses. Do you really need unlimited Internet access? Are you on a cost-efficient mobile phone plan? How often do you watch all the channels on Pay TV?

 

    1. Are you using your phone cost-effectively and taking full advantage of the cheaper off-peak rates and other special offers?

 

    1. Consider cheaper alternatives in entertainment. Maybe it’s the movies that incur unexpected costs – why not rent a video one night a month instead?

 

  1. Buying a second-hand car – rather than the new ego-driven model – can save you heaps!

from Get Set by 30 by Annette Sampson ($22.95, Allen & Unwin). For more fantastic tips on saving money and sorting your life out in general, get Get Set by 30. Available in good bookstores everywhere!

October 15, 2002