One of my biggest challenges in budgeting and managing our household finances is Lack of Self Discipline. It has actually been my biggest problem in life in every area!
There are very few people who don’t suffer from it, they are usually the accounting types, they are the people who say to me, when I talk about budgeting or setting up a spending plan, ‘yes you’re right, I already do this. You are not really telling me anything new.’ The rest of us, we try all sorts of computer programs, spreadsheets, workbooks etc and still can’t seem to get our finances under control for any length of time.
I have tried them all, how about you? I’ve tried to do the spreadsheet thing – I went through this phase where I would actually fill in a spreadsheet with everything I purchased for the month, it was broken down into lots of categories and it was all really pretty and very detailed – and I did it for about 2 months. Then I got behind in filling out the information, it was all too hard and so I just scrapped it.
If you are like me you don’t want to be filling in spreadsheets or workbooks all the time you want to be able to set up your budget/spending plan once and then forget it.
That’s what I do now and have done for many years now an I will share it with you in my book.
One of the biggest challenges I see when I help people budget and manage their household finances is relational espionage and financial infidelity. In the video, we had a bit of a laugh about it however, if it is happening in your relationship it is certainly no laughing matter!
Let me explain – Financial Espionage is when you set up the budget and your partner sabotages your efforts to get the finances under control. There could be a couple of reasons for this behaviour.
Maybe the plan to change the finances was made by one partner and the other partner feels as if they have no control over the situation, because they have been “put on a budget”, either they disagree and a “discussion” follows, Or they go into covert Financial Espionage and they say (usually under their breath!) ‘Oh yeah – sure we are’ and then they use relational espionage to ruin the budget.
Sometimes the partner doing the Financial Espionage is feeling neglected and is “paying them back for the neglect”. There may be others but these are the main ones I have seen.
Financial Infidelityis where you buy things for instance a dress (I use this one because I see it often), put it in the wardrobe, take the tags off and six months later you wear it out. Your partner says ‘oh is that a new dress?’ and you say ‘oh no, I’ve had it for ages’, It is the truth because you have had it for ages. But we know deep down it’s a lie.
Both sexes do it, it just seems that it’s the women who admit to it!
If you want to change your financial situation then these sabotaging behaviours need to be overcome. If you have a problem communicating with your partner then maybe some professional help is in order.
Whatever you do it is important to forgive and work together on a solution.
The 70/30 PrincipleThe 70/30 principle: 10% is towards giving, 10% is towards investing, 10% is towards saving or provisioning, and 70% is towards living.Now, some of you are saying “what are you insane? How can you tell me I need to live on 70% of what I already can’t live on?”If you are feeling a little bit of stress right now, let me relieve it for you: 10% -10% -10% - 70% is optimum.If you have debt right now, you are probably not going to be able to do that.Let’s just say, this is what we are aiming for.If you can’t do 10% do 5% or 2%, just do something!It is changing your habits and putting into place some good habits that will make the difference.This is not theory; we were practicing these principles for six months prior to Glen becoming unemployed for 18-months out of 24, when our income went from $160,000 p.a. down to $26,000 p.a. If you cannot imagine having an 84% drop in income, I’m with you, we lived it and I cannot imagine how we did it. We actually practiced these principles when our income was $26,000 with a $300,000 mortgage, and three small children!That is why I can say with conviction “It doesn’t matter what your income is you can do this”.Even when we were on unemployment benefits, we were practicing these principles, it was more like 5-5-7 per cent. For my personal budget that was about $2.00 a week towards Investing, you might say, “that won’t make a difference” , Well it did to me! I was so proud of myself when I had $500 left in my investing account at the end of that time.It’s not a lot, however, it is a good start!So what I am saying is, get your mind around changing a few habits, do what you can to set that up and aim for 10% -10% -10% - 70% in the long term.These are foundational principles, and if you don’t put the foundational principles in place, you are building on shaky ground!My passion is to get people’s foundations solid, because I know that once you’re ahead, you’ll never be behind again.It is just amazing how this works.
Have you heard of the “pay yourself first principle”?
I have heard it a million times and actually practiced part of this principle for about 20 years, except that I didn’t understand a really important thing, “investing”?I used to put away 10 percent of my income and when it built up would go and spend it.That is not what the principle means.
You take 10 percent off the top of what you earn and you invest it.
Why do we invest it?
It’s your seed money; if you were a farmer, you would always keep some seed to do your next crop, we need to have some seed for our money tree.If you don’t have a money tree and you lose your job, you’re probably a few weeks off bankruptcy.
The only reason why we did so well during that 84% drop in income was because we had a money tree, we liquidated our assets and used them.
The other reason you need to have a money tree is to be prepared for opportunities.I am just amazed that the opportunity of a lifetime comes by, about once a week.If you don’t have some seed money on the money tree, you cannot take advantage of those opportunities.
One of the most important things you need to do is to get educated about investing. Especially if you are a little afraid, because for sure if you don’t invest, it’s actually more risky than investing.By the time you get to retirement, if you have not got some investments in place, It’s not going to be very pretty on the pension, if there is even one by the time we retire!
My passion is to get your foundations solid and then begin education process on investing.It’s not really that difficult; it’s about changing the way you think about things and educating yourself so that you know how to ask the right questions.
Investing is the part that I didn’t get for 20 years of putting away 10 per cent of my income.Investing is building up an asset that grows in value that could be sold in an emergency.
If you don’t plan for this portion to come out of your income, it is going to get fritted away.I don’t know if you have heard that saying, “it takes money to make money”. Well, if you don’t ever start putting that money aside for this purpose you will never be able to make money.
You have to actually take the money out and plant it somewhere else so you can’t touch it, because what do we all suffer from?Lack of self-discipline!
Investing is not; a new car, a holiday, or a widescreen TV.The sales person will tell you that your investment in that new motor-home is so many $$ well, it is not an investment. It is called a depreciating item and if you buy it tomorrow and sell it the day after, you’re not going to get what you paid for it.
