After a bit of a wake-up call we managed to change our money habits… here’s how we did it.
Before I start I’d better explain our attitude towards money. We were having dinner with friends the other day and they were regaling us with tales of getting stuck into their spreadsheets on Saturday nights. It’s what they do for kicks, apparently. When they left, we were all ‘Gee, what are they like? That’s so weird!’
But then I got to thinking…maybe we’re the weird ones.
You see my partner and I don’t stick to a weekly budget. We’re invariably at least a year behind with the tax return. And we definitely…definitely do not do spreadsheets.
Maybe it comes from being relatively conservative with the bigger items (modest mortgage, avoiding loans for things like cars etc), but we’ve never felt the need. The last thing I want to do after a punishing week pounding the keyboard is to start filling in a spreadsheet detailing how much I spent on milk.
And of course it helps that we’re lucky enough to still both have our jobs after the COVID-inspired economic turmoil of the past 12 months.
But we did have a bit of a wake-up call recently that sparked a change in how we deal with our personal finances.
After spending so much of the year locked down in Melbourne we went a bit crazy when we were finally able to get away after Christmas.
We got back (just!) to Victoria to be hit by a financial double whammy.
Our eldest son was starting high school and we were about to sign on the dotted line for long-awaited home renovations that have been about six years in the making.
So after going on a bit of a post-lockdown (or as it turned out, in-between-lockdowns) holiday splurge, reality threatened to bite.
The temptation was to throw our hands in the air, double down on the redraw to get us through any sticky patches and carry on spending regardless. But the money tree wouldn’t keep on raining cash….and we didn’t fancy the idea of working until we were 105.
OK, I was pretty convinced we needed to change but I needed a final push. So I took a quick saving test to find out what sort of saver I am. Apparently I’m ‘distracted’. That’s a polite way of saying I’m a bit rubbish when it comes to organising my personal finances.
So now I was convinced. But where to start? How could we change our entrenched money habits and turn from spenders into savers?
Instead of getting bogged down looking at what seemed like a vast forest of debt and financial commitments, we decided to tackle one small tree at a time. I had a vague idea we’d let our spending get a bit out of hand and whenever I glanced at our online banking there always seemed to be a payment here or a payment there coming out of our account. It was pretty small stuff but it was all starting to mount up.
So what if we cut back on the little things? Would the big things suddenly seem a little less…big?
We took our pruning shears and set to work, starting with the low-lying fruit.
And this is just a sample of the savings we made.
We found there were plenty of things we weren’t using that we could get rid of without any changes to our lifestyle.
And there were plenty of other things we could quite happily do without, while discovering the sweet joy of delayed gratification.
All up I worked out we’d save around $4K a quarter. That would go a long way towards helping pay off the higher mortgage and cover some of the education costs.
So the moral of the story? We’re still not spreadsheet fiends. But we are converted to the idea of a simpler spending life. And we feel much more comfortable about the next few years.
Of course, over the course of time we might find we can indulge a bit. After all, life’s not all sackcloth and ashes. There has to be time for a bit of fun. Now where’s that takeaway menu again…
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Source: AMP April 2021
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