We recently presented at Mum School, an idea developed by ‘mumtreprenuer’ Jessica Vatoff. It was a wonderful opportunity to speak with smart, strong and independent women who are also juggling the challenging task of being a mother. If you have children or you’re planning for a family, you’ve probably noticed that your priorities might have changed, especially when it comes to your finances.
The purpose of our Mum School session was to make the point that whilst the structure of these women’s lives may have changed slightly, it doesn’t mean that their finances or their financial goals have to be compromised.
After reflecting on our session, it occurred to us that what we spoke about was incredibly valuable – not only to these mothers, but to everyone. Whether you’re at the beginning of your career, starting a family, or your children have just flown the coop and retirement is looming, the concept of financial freedom is achievable.
Let us explain how.
Does it feel like the perfect storm?
I know this seems like an odd question to ask, but it’s worth considering, particularly when it comes to getting on top of your finances and setting yourself up when it comes to managing your wealth.
Are you currently in the market for a house? Do you want to upgrade your home or purchase an investment property? If you’re living in Sydney or Melbourne, you’re probably aware of the out-of-control property prices despite this supposed property downturn we’re in. We’ve also spoken about how hard it is to even qualify for a loan and the proverbial hoops you need to jump through to keep lenders happy. And then there’s the rising cost of living. Everything seems just so much more expensive, right?
Combine this with the constant daily bombardment of information, the revolving churn of social media feeds, and the inability to never switch off and, yes, you’re in the eye of the perfect storm. This storm can cloud (pardon the pun) our judgement when it comes to moving forward financially, causing feelings of frustration and fear.
What are your frustrations and fears?
In our experience, there’s a range of common frustrations that people face and might resonate with you. These are:
- The feeling of not getting ahead financially and experiencing the ‘hamster wheel’ effect – you keep going through the cycle, but can’t seem to step off and take those steps forward to grow your wealth.
- The feeling of being too busy. Many of our clients just don’t have the time or are simply too exhausted to sit down and really consider their options.
- The feeling of being left behind. Do you find yourself comparing your situation to others? Do you question whether or not you’re earning enough?
So what can you do about it? In our experience, most resistance comes from the idea of having to sacrifice lifestyle. People are reluctant to take action and control because of the thought of cutting back or compromising. However, it’s easier to address these frustrations than you think.
Set rock-solid goals
Whilst it’s all well and good to want to reach financial freedom, it’s significantly easier to get there with goals in place. If you don’t know where you’re going or what you’re aiming for, how will you know if you’re on track? It’s at this point where we take our clients through a goal-setting process: we talk about what they truly want out of life, what it all looks like and where they want to be. Surprisingly, we meet with couples that have never really discussed their goals – it’s about focusing on the details, understanding goals and finding clarity.
Build a clear budget
The dreaded ‘b’ word – are you one of those people that find it hard to not only put a budget together but to actually stick to it? You’re not alone. In fact, there’s probably only been a handful of people come through our office that are disciplined enough to stick with it. But here’s a tip. Usually, when people budget, they try to reduce spending from every category of outgoings, leaving them unhappy and resentful. So, flip it on its head. Instead, choose an area of expenditure that you really love, that makes you genuinely happy. It might be travelling, eating out or doing fun activities with your children. Attempt to double or even triple your savings. Then, look at areas that don’t bring you as much joy, or that could be cut back without too much pain, and make cuts there. This way the enjoyment you get from one area spurs you on to remain disciplined in others. Don’t forget though we still need to make sure we create enough overall surplus to put towards our other medium and longer-term goals.
Map out your strategy
Once you’ve got your goals in place and you’re across your budget, you can start to consider how you’re going to get there. For example, if you’re trying to purchase a home within two years and you need to save $100,000, you’re going to need to set aside $4,166 each month. Now look at your budget – do you have that amount of surplus cash flow? If not, what areas can you reduce from? If there are no areas that you can reduce from, then it might be worth revisiting your goals and desire timeframe to make sure it’s achievable. Setting unrealistic goals will make you less motivated to put in the work required to achieve them, whereas seeing progress and being close to achieving something important to you will spur you on (give it a go and see for yourself!)
It’s possible – trust us
Despite the craziness of everyday life, ticking your wealth goals and achieving financial freedom is possible. You can attempt to do this yourself, but working closely with a professional financial adviser can coach you on how to view your money from a different perspective. They can also navigate you through unexpected financial circumstances, whilst keeping you on track. At Talem Wealth our approach is a tailored one. We spend time getting to know you, your family and what you want to achieve. If you’re ready, then speak with us today.