Eight steps for becoming a financial control freak
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In a recent US Prudential survey, more than 50% of women said they feared ending up penniless. Ouch. Suze Orman, who has built a huge following in the US, says that women's relationship with money is dysfunctional. In her view, we can certainly earn the money but we put everyone else's needs before our own.
Whilst the spending habits of the under-thirties single woman would appear to my eye at least, to disprove Suze's theory at least from a needs perspective, take a look around at the more mature women with kids. I think you'll find it holds true. We need to take more control of our own destinies.
Here are my tips for financial control and bonus extra cash too:
- Become a control freak.
Control freak (noun) informal - a person who feels an obsessive need to exercise control over themselves and others and to take command of any situation.
- Pay yourself first.
I asked Janet Menzies, co-founder of Heads over Heels to define 'pay yourself first' since she was advocating the approach.
"I've always thought about it as setting a goal of how much you save, and putting it aside even if you go backwards." She says.
Just as I was about to yell, "but you don't go into debt to save," she went on to say, "Then, you cut out fat or 'perks' until you aren't going backwards. It's recognizing that not saving for the future is not an option, no matter what."
Quite, Janet. In fact I like it so much I'm going to start doing it this month; The Sara Luxe Fund is born. What's yours called?
- Cut your costs – the simplest way to make more money by exercising control is to go through your costs and cut out unnecessary wastage and profligate spending habits. Get costs under control, then any extra money you can negotiate in future will really be worth something.
- Read your financial statements. All of them. Yes, I know, I'm going on about this again, but at the risk of stating the bleeding obvious, these tell you how much you're worth, how much you spend, and whether you're going backwards, forwards or standing still. All of which is the essence of financial control.
- If you can't face setting aside an hour or two each quarter to review your position, consider paying a trusted bookkeeper to collate and report on them for you. If you're really time poor or just can't be bothered, there's a great outsourced service that delivers consolidated statements and charts for an agreed period at an agreed fee. Try Sophie Andrews and her team at The Accounts Studio or Mel Browne at Accounting and Taxation Advantage
- Hunt down any free money available from the ATO. At the time of writing, subject to certain conditions, you can get a free $1000 paid into your super by the government when you put in $1000 of your own. At a compound growth rate of only 5% pa, in 20 years, your $1000 contribution when matched by the ATO, could become $5306. Check it out here
- Optimise your tax - Talk to an accountant about whether you, or you and your partner can jiggle stuff around a bit to save tax. If you can, it's instant money, well year-end anyway, and can be well worth the accountant's fee.
- Get smart and take in interest in finance. It might seem dull but really, it's what you're working for more of in the first place. It's your money and your risk, stay informed.
You really don't have to do it all yourself if you can't face it or don't know how. There are a plethora of people out there, lord love them, who just adore spread sheets and nice orderly columns of numbers. They'll gladly work with you to get you back on track and in control. It might cost you a little but how much could you save in cured profligacy and peace of mind?
So get the money demons under control as soon as you can, it's the first step to making more of what you have and valuing your financial prowess. Then you too can be one of the 50% of women confident of dancing in furry pompom slippers and an Agent Provocateur nightie, quaffing quality sherry in your dotage.
I don't manage money for anyone except my family, nor do I give financial advice, and my opinions are my own unless stated otherwise. My writing should not be construed as general or personal advice. You should consider obtaining independent advice before making any financial decisions.