How many times have you promised yourself that this year you’ll save more towards your money goals, only to find yourself back in old spending habits before Easter eggs hit the supermarket shelves?
We’ve all been there. Whether it’s our health, fitness, lifestyle or money, we start the year with the best intentions, only to let them go by the wayside, as life, work and commitments get in the way.
According to comparison website Finder, 79% of Australians have set New Year’s resolutions for 2020, the majority related to health or money, and it’s likely no surprise to most of us that around 80% of these will fail by February.
Why? Because many of us set ourselves up for failure; making resolutions that are too hard to keep, unrealistic, and don’t take into account our lifestyle, priorities or emotional and social needs.
If you’re serious about your money goals in 2020, it might be best to scrap the new year’s resolutions and start with a new mindset.
You can learn to save
Our mindsets are often set by our upbringing; how our parents or caregivers managed money (or didn’t!) and the degree of financial security we experienced during childhood will influence our own attitudes towards finances.
If you have always had trouble saving, it’s easy to think you “aren’t a saver” and continue on with bad habits, but the reality is you can change your attitude towards money, and if yours is holding you back, it’s probably time to.
According to ASIC’s Australian Financial Attitudes and Behaviour Tracker, 41% of women agree that they find dealing with money stressful. If you can relate to this, it’s a mindset that could be holding you back from achieving your financial goals.
If you are in this situation, it’s worthwhile making your first goal about changing this mindset so you can set yourself up for success in the longer term.
Take a few simple steps to start thinking differently about money, such as:
- Knowing where your money goes – This might sound like a simple one, but ASIC reports that only 21% of Australians look at their bank and credit card statements. When my clients review their expenditure, they are often surprised to discover that they are spending cumulatively large amounts on insignificant purchases. Changing some of these small behaviours can be the start of a great savings plan that won’t see you sacrificing the things you love.
- Educating yourself – if you don’t understand how compounding interest works, you can’t be making the most of your money. When it comes to saving, it’s your BFF. Get to know it.
- Getting expert advice – Seek out finance experts and get some guidance on where you should be aiming and how you can get there. You might be surprised about what you can achieve, and a good adviser can act as a financial coach, keeping you on track and helping you achieve your goals.
Focus on the why, not the what.
When it comes to saving money, if you start by focusing on all the places you should cut back, it will feel overwhelming (and boring!) pretty quickly.
Instead of focusing on the sacrifice, try focusing on what it is you want to gain through your money goals.
Make it a really specific goal – it could be paying off a debt, saving enough for a holiday, or just having some spare cash in your bank account. Whatever it is, put a specific timeline and amount around it, and take a moment to imagine what it will feel like to achieve it. It might sound cutesy, but keeping the focus on your why makes the ‘what’ a little easier to stick to.
Live for today while planning for tomorrow
The right money goals should allow you to enjoy your lifestyle today. Plans that sacrifice everything you love won’t work in any area of your life, but you do need to think about your priorities.
Take a look at areas where you typically spend a lot of money and dig deeper to understand why it is a priority for you. Then you can look for other ways to meet this need. For example, if you are spending a lot of money on dining out, is it the food itself or is it the company? If it’s the latter, eat at home, and meet up later for a drink. If it’s the food – then you may need to look at other areas to cut back.
At the end of the day, life is about trade-offs and you will need to adjust your priorities, but a financial goal shouldn’t see you giving up everything you love, or it is destined to fail.
With the right mindset and focus, and maybe even a little expert guidance, you can achieve your money goals in 2020 and beyond.
This Financy article was provided by financial planner, Emily Lanciana, who will be hosting a free finance bootcamp in Melbourne on February 25th. Click here for more details and to register. Can’t make the Melbourne event? Sign up here for our email bootcamp and get tips straight to your inbox.
General Advice warning: The information provided in this article does not constitute ﬁnancial product advice. The information is of a general nature only and does not take into account your individual objectives, ﬁnancial situation or needs. It should not be used, relied upon, or treated as a substitute for speciﬁc professional advice. Apt Wealth Partners (AFSL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.