Nike would have to have the best advertising slogan of all time – Their “Just Do It” refers to the basic human failing of knowing what we should be doing but not doing it. While Nike may have been referring to our fitness goals we could also use this mantra to help us achieve our financial aspirations.
Most of us stress about our finances or wished we had funds for some major ticket item like a new car or a holiday. We think that only a Lotto win will solve our issues but here’s the thing - chances of you winning enough to solve your financial woes and provide you with the financial freedom are almost zero. Stop relying on luck and start working for it. There are 3 basic principles that can help you achieve your financial goals.
Spend less than what you Earn. We see something and we want it now. We don’t want to wait until we have the cash to pay for it so we take on a debt eg hire purchase or Credit card to buy it. If you don’t have the cash don’t buy it. A comprehensive budget with regular and irregular expenses can help identify where we are spending money and more importantly where it can be saved. It may also identify if we need to take some action to reduce expenses or earn more money – eg increasing hours of employment. It can also identify how much you are able to set aside for savings.
Clear external debt. While some Debt can help us towards our financial goals such as a mortgage to purchase a new home most debt that Kiwis have is external and short term eg hire purchases (including car loans) or credit cards. The more debt you have the less options you have and the less likely you will achieve your financial goals. It will also mean major stress if some catastrophic event like losing your job happens. You can clear your debts quicker but you have to make the commitment to do so. Our generation needs to get over the fact that instant gratification is often short lived and the best reward is something that we’ve worked hard for and takes time.
Save. Savings should be considered as important as paying your mortgage. Savings means that we can have access to cash for those big ticket items or emergencies. A budget will show us what amount we can set aside for savings and we suggest that the first payment to come out of your pay goes towards savings no matter how small the amount is. Build this as income increases and expenses decrease.
We all know these basic concepts will allow us to achieve our financial goals yet most of us just don’t do it. We’ll “get around to it” or we delay it with “I’ll just wait until I get Christmas out of the way”. Stop mucking around - this stuff is important. Financial stress can be a catalyst for failed relationshipl or cause ill health or just stop you from doing the things that you really want to do before you leave this earth. Make 2015 the year for you to “Just Do It” and in 2016 you’ll be reaping the rewards of your hard work.
