Because I think it's really easy NOT to manage your money differently to people around you – to simply do what everyone else is doing. Ok, this may be completely fine if you’re only surrounded by successful people with happy life and balance. If this is the case, no need to read further.
If you’re still reading though, you need to realise one thing - most people around you can't help you - they've done more money mistakes in their lives they would ever admit to...
They’ll tell you things like - 'You’re young, enjoy life, you have plenty of time…’
What they don't say is - 'You'll end up like us - having to slave for forty odd years working in the jobs you hate (but you’ll turn up to anyway because you have to pay the bills somehow), all just because you leave important money decisions for later’.
I wonder how many of them would say - 'Don't copy what we did. Learn how to prioritise with your money. Learn how to save and invest when you get your first job. It's when you have much less commitments and much more flexibility. Don’t waste your early years and use your time potential to your advantage.’
If you form your good money habits and start early, your life can be full of options later. Options like working doing what you love (most likely owning your own business), living closer to your work and being home early every night so you can read your kids a book before they go to bed. Isn’t that what life is all about - spending memorable moments with your loved ones?
In order to get there, you need to stop living for today only. Although it sounds great and hippy, what it’s going to create for you is money slavery.
Instead, start looking at your life in ten-year blocks. This means looking at a consequence of every decision you make with your money - what will it be in ten years’ time?
For example – How much do you spend on coffees, lunches, dinners, drinks, parties, clothes every week? Let’s make assumptions, but be fairly conservative, shall we? One coffee a day ($4), three lunches a week, including weekends ($60), trendy café brunch on Saturday ($20), one dinner a week ($40), drinks on the weekend ($100), one new outfit per month ($150).
Putting all the ad-hoc expenses aside – trips, buying of new gadgets, birthdays, holidays etc. our regular assumed expenditure totals at staggering $282 per week! Once that $282 leaves your wallet, it’s gone forever. The opportunity you had is lost.
Now, let’s imagine you’ll keep doing some of those things, but only spend $132 per week – meaning you save and invest $150 every week.
Starting at zero, investing in a low-cost diversified share fund, in ten years, you’ll end up with a portfolio worth over $145,000! Boom!
Who said it’s hard to buy a home in Sydney? It can be, if you do what everyone else around you is doing. But if you start this exercise at 18, you’ll have some options available to you at 28, right?
Ok, you may not want to buy a home, but you can invest this money for income and have a perpetual portfolio generating over $7,000 per year income (whilst still fully preserving the capital). It’s a great way to fund your annual holidays – with no extra work required. Ever.
These are pretty basic concepts which are simple and easy to understand. But are they easy to do? No way!
Two main reasons:
That’s where you need clarity, focus and a constant push from someone else to make sure you stick to your plan and you don’t mess it up. After all, it’s worth every cent – have options to live your life the way you want it.
What are you planning to do with your opportunity? One thing is clear – it’s never too late to start.
Need some help getting clarity and focus with your money?
NB: Numbers are based on 2015 prices (written in 2015), however the same principles apply.
General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.