Minimalism

How Your Stuff Might Be Holding You Back

Posted on July 16, 2018
Have you ever considered how your stuff might be holding you back? Photo: Juan Cruz Mountford

Whenever we get a new thing: a gadget, new outfit, fresh pair of shoes or new piece of decor for the house, we quickly think of all the things it will bring to us. It will complete the outfit for Saturday night, be the perfect finishing touch on a space in our home, or we can show off with our newly updated phone. Maybe the item will provide those things, but one thing that we often don’t take into consideration is how your stuff might be holding you back. 

I’ve asked myself this question many times throughout my minimalism journey, with three pivotal times in particular coming to mind. The first being when I spent weeks decluttering my grandparents home after their passing. It was an emotionally draining period and impacted me more than ever I imagined in terms of how I wanted to live my own life. The stuff they may have been bought with the intention to bring them joy, but there was so much of it and I am sure a lot of it they had forgotten they even had.

The second was when I first discovered Minimalism about three years ago which changed my relationship with stuff on a huge scale when I started to see how my own stuff had been holding me back rather than adding value to my life.

The third was a very recent occasions, the past few weeks in fact, as I assisted family downsize their possessions, ready for a big move. I watched how weeks turned into months of packing and decluttering, up until the last minute and how much of a strain it was on everyone involved.

These three occasions drastically opened my eyes to the the ways our stuff might be holding us back. Here at 9 ways how your stuff might be holding you back. 

1. Not utilising your space how you want
When you own too much you are restricted physically by everything cluttering up your rooms and spaces. Cupboards, drawers and rooms are filled with excess stuff, most likely with things you either don’t need or don’t even know you still have. Spaces that could be better utilised for your enjoyment. When your dining table is covered with paperwork and who knows how many weeks washing that you can’t use it to eat a meal with your family. Your stuff may be holding you back when your spare room, which you would love to set up a play area for your kids or an office but you can’t because of everything currently being stored in there that you’re holding onto just in case.

When we have too much stuff we can’t be as intentional with our space. And so, by consequence we place limits on ourselves enjoying the space that we have and miss out on what the original intention of the space was.

2. Excess stuff can be detrimental to your mental well-being
You may not realise it and believe your stuff brings you immense happiness, but your stuff is most likely causing you stress and anxiety. There is the stress that hits you when you open a packed cupboard, where everything falls out in a mess. Stress when you can’t find something you need because nothing has a place and you can’t remember where you last left it. We’ve all been there. As well as stress that comes from paying for your impulse purchases and watching that debt spiral out of control. When something as simple as trying to cook dinner with clutter everywhere on your bench top is enough to add frustration on a daily basis.

Your stuff may be holding you back when with clutter, chaos, and debt.  and all  the weight that comes with those things. These are things we learn to live with over time, and can easily become the norm in our lives. We get used to our environment and don’t realise how much stress our excess stuff is causing us but over time they can impede our mental well-being.

3. We are consumed by our stuff. 

Sometimes we are distracted from what is more important in life by our stuff. Instead of doing things that add value like learning a new skill, creating or volunteering we spend time maintaining and cleaning our excess stuff – the mountain of washing, the McMansion, or just standing in our bedroom trying to find an outfit we love.

Instead of spending the day with family and friends making memories, we are trapped inside a mall looking for the next bargain or fashion score to post on Instagram. When we let our stuff consume us and take priority in our lives we let our stuff hold us back.

4. When we put our stuff before relationships 

Have you ever moved home to somewhere distant and not had the time to spend with loved ones before you leave? Did your stuff and packing consume all your free time leading up to your move date? Have you spent all your money on new outfits or something else you enjoy or maybe just bought on impulse, and had to say no to visiting family because you had no money left over. Or couldn’t pay your kids soccer registration because you didn’t plan ahead and kept spending. Do you work long hours to pay for the big house, with the fancy furniture and the latest cars but don’t have time to see your partner and kids? These are all examples of how your stuff might be holding you back from what you believe is important.

The next time you are at the shops or shopping online, ask yourself this:

‘If I spent less on _(insert you main spending vice here)_, how could I use the savings to better my life and relationships.

As minimalist blogger Courney Carver says choose love over stuff. You may find that when you focus on strengthening or building new and old relationships that there isn’t as big a void to fill with stuff anymore and most often your family would chose you over those other comforts.

5. When our stuff embarrasses us

Before I discovered minimalism I was mortified at the thought of having last minute visitors. At any given time we could have stuff all over our house and that wasn’t something I was prepared to share with anyone.

Your stuff may be holding you back too from living a full life. Maybe you have declined visitors to your home because your house was too messy and the thought of not having at least a few hours to clean, would cause you so much stress and embarrassment. So you miss out on the experience of having family or friends over. Or you might have even said no to your kids friend staying over because you are embarrassed by the clutter and want to avoid them and their parents seeing the state of your house. So your children miss out on the fun of a sleep over.

When we let our clutter dictate who we can and can’t have over we are held back by our stuff. Decluttering your home and paring down our stuff to the essentials, can make last minute tidying a breeze and unexpected visitors a joy rather than a source of embarrassment.

6. We we lose opportunities.
Our stuff can keep us from pursuing new opportunities. When we have too much stuff we can pass up life changing events. An opportunity to move interstate or overseas when a dream job opportunity comes up could be missed. If you’ve always dreamed of buying an RV so you can travel around Australia or wherever takes your fancy, you might again rule out that dream just thinking about the downsizing process that lay ahead. You’ve found the perfect apartment with amazing amenities in an ideal location but again you pass, knowing you need a 5 bedroom home to store all your stuff. Your stuff may be holding you back if you are saying no to things that you truly want to do.

Having stuff we love can add value to our lives, but when we prioritise our stuff, we can end up saying no to more important opportunities that arise and start putting our things above our happiness and dreams.

7. Wasted money
Let’s face it, looking back at what we buy a lot of it is unnecessary and wasted money. The amount being spent can go unnoticed year after year if it is not being monitored. We can often find ourselves spending money on things without intention that could have gone to more valuable pursuits such as paying off your mortgage early or investing for your retirement.

And without a plan in place to pay off debt, and plan for retirement it may seem like we have the extra cash to splash around. But unfortunately too many people realise too late how important it is to pay down debt, save and plan for the future – well before the future has arrived.

Of course we all want nice things and to enjoy the fruits of our labour, but before you hit the shops with your most recent pay cheque, move some of your cash to your savings and retirement accounts and give yourself the best of both world – Fun with a side of Financial Freedom.

8. When our stuff makes us lose valuable time
We often only look at the price tag of a new item, without giving a thought to the true costs Most importantly, our time. The more we buy the more time we are giving up. Let’s break it down. There is the time spent earning the money. Time spent researching a product or finding the perfect item. Shopping in store or online. The time spent unboxing your new purchase, setting it up or assembling it, washing it… you get the idea.

And that’s just getting the item ready for use. Soon we lose more time to maintaining an item, dusting or cleaning and repairing it. When we move home we spend more time packing and unpacking all those items. Each thing we bring into our house has an additional price on it not built into the cost and it is something we can never get back.

And then on top of all that lost time, we have lost that time to more important uses. Our time opportunity cost. Less time to spend with family, less time to learn a new skill or partake in a new hobby and less down time to enjoy our weekend.

9. The stress and burden on others
We shouldn’t forget the stress on family when it comes to our stuff. As I touched on above, when I was 25 my family and I had to prepare my grandparents homes for sale. It took us many weekends and many skip bins to get through their stuff. It’s really not something I want to do again (take note parents ;)) and certainly something I don’t want to burden others with one day. Of course we all will have things, but we should do our best to minimise them so our family are not burdened and forced to spend weeks and weeks on a painfully emotional process.

If you have adult children, keep them in mind when taking on more clutter. Don’t buying things unnecessarily and leave them the burden of clearing out your excess, particularly if you live far away. It will not only be emotionally painful for your family, but a huge time commitment which is difficult for people with full-time jobs and young family’s.

Do your loved ones a favour and review your stuff as you bring new items in. Decide what is important to you and what isn’t and do it whilst you have your health. It’s not going to be any less stressful or easier when you are approaching your 70s or 80s. Not to mention your kids will feel a lot better knowing that you have minimised and taken a load off their minds.

The stress may also just be in relation to your partner or children’s stuff being everywhere. If it is in excess and unable to be maintained in a tidy fashion it can cause additional stress, particularly for people that need a clean space to relax in. When we have too much stuff it can really impact our loved ones and cause them unhappiness, and no stuff is worth that. The next time your partner gets frustrated by your stuff, do them a favour and review what you no longer need. I guarantee it will make there day 🙂

This weeks comment question: How has your stuff held you back over the years? Have you missed out on doing things financially or following dreams? Let me know in the comments 🙂 

[Photo: Juan Cruz Mountford]

If you found value in this post I would be super appreciative if you could share it with others who might also find value in it 🙂

 

Budgeting

Why you need to track your Net Worth

Posted on July 1, 2018
Do you Track Your Net Worth? If you don't you are missing out on valuable information on your finances.

About a year ago, I stumbled upon J Money’s blog Budgets Are Sexy, a now favourite finance blogger of mine who openly tracks his Net Worth on his website. I was instantly amazed at how he tracked everything and monitored his families financial progress month to month, year on year.

At the time of discovering his blog I wasn’t tracking my Net Worth and hadn’t really ever given much thought to it. I figured as long as we were ahead on paying off our mortgage and avoiding adding any other debts and had enough to cover our bills each month we were doing okay. And maybe we were, but I’d seen a whole new way of tracking finances and I wanted in!

Of course I knew our rough debt and savings balances and checked our Superannuation balances when we got our bi-annual statement, but I didn’t know month on month how much our Net Worth had increased or decreased.

Since then, May 2017 I have been recording our Net Worth figures each month, and was amazed to see that over that 12 month period our Net Worth had increased by 13%! It has been a huge motivational tool for our finances as we watch our debts slowly decrease and see that Net Worth figure slowly inching up each month.

And the most awesome part of it all is it is not a time consuming process. It takes a whole 10 minutes a month! That’s it! Which is totally worth it to know where you are at financially and how you are tracking towards each of your financial goals!

If you have been considering recording your Net Worth and weren’t sure how to get started, I am writing this post for you! Check out my Beginners Guide To Tracking Your Net Worth!

Why you should track your Net Worth

Before we start any goal we need to work out our why, that is, the reason behind the effort we need to put in. So many of us go to work for forty or more hours, week after week and have no goal or plan for the money we bring home. It just slips through our fingers, somehow every last dollar is spent, often without any idea of where it went. Month after month, there is nothing left over to save or invest for your future. Retirement is something that is put on permanent hiatus until 40 or 50. Which may not seem like a big deal but you are losing a good 2 to 3 decades of growth you will never be able to get near once you leave yourself only a decade to build your wealth. The time to start building wealth for your retirement is now, or as soon as possible.

By tracking your Net Worth your spending habits are right in front of you in black and white on the page. If you spend all your pay check you’re $0 bank balance will make it blatantly obvious that you have nothing to show for your hard work. If you are swimming in debt and your Net Worth seems to be going backwards, not forwards again you will see that you are not building wealth but doing the complete opposite. Until you see the numbers staring you in the face it can be hard to see where you are financially and what your financial goals are. Having your assets and liabilities laid out in front of you can help you identify the need to change your current spending habits and create a more secure financial future. It can help us to start being more intentional with out money and motivate us to make better choices.

Now think about your why and make a list of the top three reasons you want to track your Net Worth.

Some reasons to track your Net Worth could be:

  • To grow your wealth so you can retire comfortably in the future and not be stuck working until you are 70 or older
  • Enable you to keep track of your debt balances so you can work towards paying them off faster
  • Set targets to aim for to help motivate you save and pay down debt

Now that you know your why for tracking your Net Worth we can get started on How to Track Our Net Worth.

 

How to Track Your Net Worth

There’s nothing scary when it comes to tracking your Net Worth and you’ll soon wonder why you weren’t tracking it all along. All you need is a simple accounting rule:

Net Worth = Assets – Liabilites

That is really all you need to know to get started. When we track out Net Worth we simply need to list our assets and liabilities and the difference is our Net Worth. If your Assets are higher than your Net Worth you have a positive Net Worth, if your liabilities are higher than your assets, you have a Negative Net Worth. Now I will go into a little bit about what Assets and Liabilities are and how they differ.

Assets:

Assets are all the things that make you money and that can be sold off for cash. They include things like savings accounts, term deposits, Superannuation or retirement accounts, property, vehicles and stocks or bonds.

Of course you may have other assets like jewellery, art, tools, furniture etc but we are going to ignore those for simplicity as their value isn’t as easily estimated or guaranteed. We just want to focus on the most liquid assets (that’s just accounting speak for assets that are easy to turn into cash!) that we can accurately estimate their current value.

Liabilities:

Liabilities are the things that cost you money and involve you paying money to someone else. These include mortgages, student loans, cars loans, personal loans, credit cards, pay day lenders, after pay, overdrafts or anyone else you owe money to.

What to Include in your Net Worth Calculation:

As described above, we are going to list any Assets and Liabilities at their current balance at the end of each month to calculate our total Net Worth. That is the balance at the 30th or 31st of the month, depending which month you are in.

ASSETS

Here is a list of Assets you might include in your Net Worth Calculation.

CASH

Bank Accounts – List all  your bank accounts and any term deposits at their current balance. This might include your Everyday transaction Account, Emergency Fund, Savings Accounts etc.

PROPERTY

House & Land – List any land or property you own at the current market value. For a more accurate estimate you can contact a real estate agent in your area for a market appraisal or you can do an estimation based on what similar homes in your area are selling for.

Vehicles – Use a car valuation website like Drive and Kelly Blue Book to get the current value of your car. Be sure to review the odometer reading of your vehicle and adjust the valuation if your vehicles odometer reading is higher than the valuation odometer reading range.

I like to be extra cautious and take the lower private sale value of my vehicle and take off a further amount of say $1000 if I know that my car is not in excellent condition. It doesn’t have to be an accurate estimation of course, but you want it to be a reasonable estimate of what you could sell the vehicle at today.

INVESTMENTS

Superannuation/Retirement Accounts – List your Superannuation or Retirement Accounts and your current balances here. 

Stocks & Bonds – Here you will again list the market value of any current stock or bond holdings you have. This is a great way to monitor how they grow over time.

LIABILITIES

Mortgages – List any mortgages on your home, land or investment properties that you have at the current balance of the loan. This will offset the value of your asset to show you what Equity you have (e.g. your current home value less what you still owe on your mortgage).

Credit Cards – List each credit card you own and the end of month balance of each. Your current balance will be listed on your online log in portal or your most recent credit card statement.

Car & Personal Loans – Check you car and personal loan account for the current balance of your loan. Don’t forget to include the vehicle’s current value in the asset section to offset the loan balance to give you your vehicles true Net Worth.

Student Loans – List your current student loan balance/s.

For any Aussies reading this, HELP-DEBT is wonderfully difficult to know what you owe month to month as you only get a statement once a year with your tax return. For our Net Worth calculation we just took the HELP debt balance to be the prior June 1st balance which you can find on your most recent HELP-DEBT statement and just carried that across for the year until we had the new updated statement.

Other Credit: List any other debts you have here. These may include After Pay balances, overdrafts, pay day lenders any money you owe to friends or family or anything else.

For help on how to minimise your debts once and for all check out: How the Debt Snowball Can Get You Debt Free Faster

Once you have all your assets and debts listed you can now calculate your total Net Worth for the month by taking away the Total Assets from the Total Liabilities.

If you want even more simplicity, this Net Worth Worksheet available in my Etsy store will take any work out of preparing your own Net Worth file. Simply enter your relevant categories and figures and the worksheet will do the rest for you!

Don’t forget to set a reminder on your phone calendar or in your planner to do this at the end of every month, or as frequently as you like so you remember to do it and build the habit!

You’ll be just as excited as I was to see how you had progressed in 12 months time. And there is nothing that will help you stay motivated to eliminate debt and grow wealth more than tracking your Net Worth!

This weeks comment questions: Do you track your Net Worth? What made you start tracking it? And do you find it helps you stay motivated with your budget and financial goals? Let me know in the comments!   

 

Budgeting

How to Say Goodbye to Financial Anxiety with Sinking Funds

Posted on June 11, 2018
Leave bill shock in the past with Sinking Funds

It’s that time of the year again, you open the mail (or email ;)) to see a bill for your car registration or insurance renewal staring you in the face. It’s due in three weeks time. What do you do now? Panic? Just chuck it on the credit card? After all, you’ll pay it off gradually over the next year, right? Uh sure… but what about the last three bills you put on that same credit card that you still need to pay off?

That, my friend, is what we call a band-aid solution to your finances and is a surefire way to end up with mounting credit card debt. It’s a quick fix that will only cause you endless stress and anxiety, and throw you into a panic every time you get a new bill. It could be a nightmare for future you. And we don’t want to screw over future you! We want a happy, debt free future you that has the flexibility to travel and go out, and cut back hours at work, doesn’t that sound great?! It sure does to me! So how about instead of continuing down the same old path of panicking every time your car breaks down or you get a new bill in the mail I explain How to Say Goodbye to Financial Anxiety with Sinking Funds. 

I was faced with a similar bill shock situation back when I was 21 that changed my approach to finances from that day forward and forced me to think about my financial future.

I had just walked down the driveway to my letter box to check the mail. I saw a letter addressed to me and quickly opened it. To my shock it was a $1200 bill for my car registration and Greenslip renewal. Frick. I had completely forgotten my registration was due. That bill that comes at the same time, every.single.year. I’d only had two of these bills before but hey, it was enough for me to know better. I couldn’t believe that it had completely slipped my mind.

Thankfully at the time I had just enough saved up in my bank account and managed to pay both bills with a little left over to cover the car inspection. However, I now had only $25 to my name to last me until pay day. It wasn’t the end of the world by any means, I still lived at home and would get paid again in a week, but it did mean the small financial safety net (what I’d later learn to be called an Emergency Fund) I had built up for myself was now gone in a split second. I now had no money for petrol, food or anything else for the next week until pay day.

My stress wasn’t over yet. I crossed my fingers hoping the car would pass the inspection as I sat in the waiting area of the mechanics. I knew I didn’t have any more money for any other repairs so needed good news! I held my breath as the mechanic walked over to me to tell me the outcome of the inspection. He told me everything was fine, but he couldn’t pass me. I needed new wiper blades that were going to be an additional $40. Again, not the end of the world by any means, but I didn’t have enough. Had my car needed $1000 worth of repairs I would have been in disaster town. I told him I was down to my last $25 and pleaded for him to pass me, assuring him I’d come back the next day to get them done hoping Mum would spot me some cash, which of course she did, and I went back the next day to get them repaired.

This event was a small financial blip in my adult life but taught me a valuable lesson that changed my financial future. I never wanted to feel that financially insecure again and committed from that moment I would always plan ahead. It was a small moment in my life but made a huge impact.

Have you ever been surprised by a bill or not had the money to pay one? You’re certainly not alone. It doesn’t have to continue to be the norm. The answer to avoiding bill shock is simple and one that you can implement in a matter or minutes. We are going to prepare ahead of time. We know the bills are coming every year or quarter, so why don’t we utilise the time we have to save up in advance and plan ahead for those bills? We can! And this post is going to teach you how to do just that that using a simple budgeting system called Sinking Funds.

Don’t let that term scare you into thinking it will be too much work, or something only finance nerds can manage. It’s going to be easier then you think and I promise, like my financial defining moment, and with a little bit of effort you can say goodbye to financial anxiety too.

The awesome news is you will only have to set up your Sinking Funds once and spend a few minutes a year updating them. The even better news is that once you implement your Sinking Funds you will never have to worry about bill stress again. Yay! Let’s get into it!

Accepting the Reality of Bills

The best thing we can all do for our finances is accept that bills are part of life – the essential ones: water, electricity, health insurance, car insurance, they’ll always be there. Sure there are other, more fun things we could spend our money on but let’s be honest – isn’t having essentials like safe tyres for our car or heating for our homes in winter worth it? Instead of dreading those bills, let’s use our Sinking Funds to prepare ahead of time so they aren’t such a drain on your wallet.

What is a Sinking Fund?

A Sinking Fund is a fancy term for saving up for a future bills such as, your car insurance or your next holiday. Instead of dealing with them as they arrive and trying to cover the cost of your bill out of one or two pay cheques, you can plan ahead for your regular bills and spread the costs over 52 weeks or 12 months of the year. You can set up Sinking Funds for anything you like: Christmas and other gifts; Car insurance; clothing; an annual holiday or to save up for your next quarterly utility bill.

Sinking Funds are similar to a regular savings account but rather than adding to your savings, they are working backwards from the budget expense totals and saving up a portion of that over time. Essentially, you only put away what you need to cover your bills in your sinking fund, whereas with a savings goal your intent would be to grow that savings balance over time above and beyond your expenses.

Sinking Funds can help you plan ahead for bills

Why Do I Need Sinking Funds?

Here are some of the benefits of a sinking fund to help you understand their usefulness in your budget:

  • A sinking fund is a way to plan ahead and estimate bills that are due early on, rather then waiting for the bill and eating two minute noodles for the next month;
  • They will help you avoid paying bills on the credit card and wracking up large credit card debt at high interest rates;
  • They give you piece of mind that if a bills arrives you will have the funds to pay for it. This will reduce budget stress and anxiety;
  • They help take the guess work out of budgeting. Once you know your bills are accounted for you know what you have left over that is allowed to be spent rather then spending all your pay check, when in reality some of it should have been put aside;
  • You can use them to save up for events like Christmas or vacations to reward your family and make sure there is money put aside to enjoy yourself.

How to Set Up Your Sinking Funds

Here are some simple steps to get you started with your sinking fund:

Step 1:  Write a list of all your bills and anything else you want to add (such as a fund for Christmas) during the year. An example has been provided below for you.

Step 2: Write next to the bill a reasonable estimate of each bill or expense for the year. Take note of the bill frequency. If for example, you have a bill paid quarterly, you will need to multiply it by 4 to get the yearly total.

Step 3: Add up the bill totals for the year, write that down and divide that amount by 52 weeks or 12 months depending on your budgeting preference or pay cycle to get your weekly or monthly sinking fund total. This is the amount you will need to put away to cover these costs each period.

Refer to the below table for some category examples.

In this example there are 8 Sinking Fund Categories totaling $15,000 for the year which would require $1,250 a month or $288.46 a week to be set aside to cover the bills as they fall due. In the next step we’ll get your accounts set up.

 

Setting Up Your Bank Accounts

When setting up your sinking fund accounts there are three options:

Option 1: Keeping all the sinking fund categories in one ‘bills account’ that is exclusively for your sinking fund total

– Pros:

  • Only requires one ongoing monthly transfer to be set up to one account
  • Monitoring is easier as you can check your balance by logging into one account only
  • Can be easily tracked using the Minimise With Me Sinking Fund Worksheet

– Cons:

  • Having one bank account with all sinking funds in it means that you won’t know the balance of each individual sinking fund unless you track it in a worksheet or in a workbook

Option 2: Setting up multiple bank accounts for each individual category:

– Pros:

  • you can name each bank account according to your category e.g. Christmas, holiday, car expenses and see at a glance what you have in your account for each sinking fund. No need to calculate your balance as it will be the account balance.

– Cons: 

  • Not all banks let you have such a high number of accounts so you may need to open accounts at multiple banks and have multiple log ins
  • This option requires a transfer to be set up to each account so takes a little more work to set up initially, but less ongoing work as you can see the balance at a glance.

Option 3: Cash Envelopes

This third option is for those who prefer to work with cash in their budgets. Simply grab a few envelopes and write on each one what expense category it relates to.

– Pros: 

  • Great for people who prefer cash and seeing their money or those who want avoid budgeting worksheets

– Cons: 

  • Putting away $250 or so into a cash envelope you leave lying around at home or in your handbag can be a security risk. This method is best left for the smaller, more frequent bills to limit how much cash you have in your home. Of course you can mix and match with the bank account option and cash envelopes.

Once you have decided on one of the above two bank account set ups or cash envelopes you can open the necessary bank accounts you need.

These accounts should ideally be fee-free accounts. Shop around for your bank account/s to ensure you aren’t paying fees you don’t have to.

Once they are set up, ensure that you use them exclusively for your sinking fund. Do not go and withdraw money for anything that is not included in your sinking fund or you will leave yourself short when they are due.

Take the Work Out of Saving and Automate

Now that your accounts are set up you will need to set up your automatic savings transfers. You need to schedule a regular transfer from your regular transaction account where your pay/s is deposited to your sinking fund account/s for the relevant totals you have listed. Set it to come out the same day every week or month and for the same amount until you cancel it or revise it. Set it for the day after your pay day every week or month. That way the money comes out the day after you are paid, before you can accidentally spend it.

Once these automated transfers are set up you will only need to review them every so often. A quick glance every quarter and adjustment at the end of the year to account for any increases or changes would be ideal.

If you have an irregular income, but are sure that your earnings will cover the total of your transfer each pay period you can go ahead and set it up as an automatic transfer as well. But please note, if your pay is extremely erratic you may want to opt to do this manually instead so your automated payments don’t bounce. A simpler method is just to budget off the minimum you earn so you know you will always have enough coming into the account and save yourself from the manual work. Automated finances are much more convenient.

Build a Buffer

When you first start your fund you are going to be a bit short for some of your sinking fund categories. If for example, you are starting your sinking fund in January and have an annual bill due in March, you are not going to have 12 months to save up for that bill so you will either need to save more for those three months to cover that bill amount e.g. The bill divided by three months or you can start off your sinking fund with a bit of a buffer. A $1000-$2000 Sinking Fund buffer should cover you for any bills you are short for in the first 12 months until you can build up your payments to cover each bill as it is due.

A good tip to get this buffer built up quick is to walk around your house and grab anything you no longer want or use and list it online to sell and get some quick cash that you can pad out your sinking fund account/s with.

Keeping Track of Your Sinking Funds

If you  you didn’t opt to have separate accounts for each sinking fund goal and want to keep track of your Sinking Funds in the one account, you can do so by using the Sinking Fund Worksheet  which will help you plan out your sinking fund goals, monthly deposits and withdrawals and keep track of each individual sinking fund balance within the one account. It comes with some pre-filled categories to get you started and has plenty of space for you to add your own to suit your lifestyle and budget needs. Simply update the worksheet each month and reconcile it to your Sinking Fund account balance. And that’s it, you now know what your Sinking Fund balances are at any given moment!

If you are finding that you are relying on credit cards or overdrafts to pay your bills, or are in arrears, give the Sinking Fund budgeting method a go and in time your bill woes will be a thing of the past!

This week’s question: Do you use sinking funds in your budget? What happened that made you realise that you needed them? Please share your experience in the comments below 🙂 

If you found value in this post I would be super appreciative if you could share it with others who might also find value in it 🙂

[Photos: J Kelly Brito & Raw Pixel]

Minimalism

Lessons From My First No Spend Challenge

Posted on June 3, 2018
Check out what I learnt from my First No Spend Challenge

Since discovering Minimalism I have always been enthralled with this idea of a No Spend Challenge. To consciously decide not to spend money on certain things for a set time sounded like a challenge. Something a minimalist like myself needs to try at least one. I was certainly curious about whether I could survive a month without any impulse shopping.

After reading Cait Flanders My Year of Less last month I figured now was as good a time as any to give this new challenge a shot. As April 30th rolled around I grabbed my notepad and scribbled (literally as you can see below hehe) down a few rules on what I was allowed and not allowed to spend on during the month of May on my No Spend Challenge. I wanted to challenge myself to go without the things I knew I would try in the moment, to convince myself I needed.

Setting the Rules of my No Spend Challenge

Allowed Purchases:

This list consisted of pretty much anything consumable like food or grocery items as they needed to be replaced.

  • Groceries
  • Petrol
  • Medicine
  • Budgeted Outings
  • Approved List of Items (anything I had already noted on my wish list)
  • Bills
  • Current Subscriptions
  • Experiences
  • Gifts

Non-Allowed Purchases

This list was mostly focused on anything outside the budget or impulsive. If I hadn’t thought to write it down on my approved list, or grocery shop each week than I knew that I should be able to do without it.

  • Clothing, unless urgent to replace something
  • Non-budgeted Outings
  • Unapproved Shopping not on wish-list
  • Groceries not on our shopping list

As you can see, there were no extreme limits imposed for my No Spend Challenge, I wanted to keep my goals realistic. I figured if I wanted to, I could always make things a bit stricter next time I attempted the challenge. I wasn’t trying to deprive myself of things that I enjoy or that add value to my life, so there was no ban on dining out or any pausing of current expenses like my Spotify Subscription. The main aim of this No Spend Challenge experiment was to work on achieving my goals of being a more mindful consumer and see how I would ‘survive’ a month with small limitations placed on my actions and spendings. Not to curb all spending, but to focus on curbing any impulse spending.

Approved List of Items

As listed in the Allowed Purchased list I did allow myself to buy some pre-approved items during the No Spend Challenge period but they had to be on the Approved List of Items. They key was not to add any once the 1st of the month had ticked over.

These are the items I decided I was allowed to purchase during the No Spend Challenge. Most of these were items I had had on my list for a few months that I hadn’t found quite what I was looking for or hadn’t had a chance to shop for leading up to the Challenge. I certainly didn’t have to buy these items during the No Spend Month but if I did that was okay.

My List of Approved Items was as follows:

Approved Item

Reason for purchase
4 x new plants, bowl & succulents

To replace dead plants outside and table feature

Prescription glasses

 New prescription needed

2 x Sunglasses

To invest in quality sunglasses
Artificial plant x 2

For front entry way to replace dead plant & eucalyptus for dining area

Dining Setting

 To replace sold dining table and chairs
Office Chair

Replace current chair with something more suitable for long hours

TV Tray

 For car (over wearing my lunch)

Two guitar leads

To replace broken and misplaced lead
Two storage boxes

To store studio gear in

What I bought during the challenge:

Out of the 9 pre-approved items I ended up buying 4. I found during the challenge, I was pretty happy to wait another month to buy items to do more research, particularly when it came to the higher value items like the dining setting. I even challenged myself with an IKEA visit looking for a new dining table and walked out with three approved purchases and nothing more.

We did have a couple of unplanned purchases, a set of wall plugs that we needed for our smoke alarm and a set of three foldable chairs for guests in the interim until we picked out our dining setting.

What we ended up buying:

  • 4 x new plants, bowl & succulents
  • Artificial plant x 2 
  • TV Tray
  • Two storage boxes

Not on the approved list:

  • 3 foldable chairs
  • wall plugs

The rest of the items we do still need and will look at getting them over the coming weeks, but feels good to know that we didn’t rush and just buy everything on our list, even though they were pre-approved.

>> If you like this you may enjoy reading: How to Change Your Spendaholic Ways and Be More Intentional With Your Money

5 Lessons From My First No Spend Challenge

I’ve enjoyed my No Spend Challenge experiment and hope to do more of them in the future. These are the lessons I’ve had over the past month from the experience:

    1. 1.

It’s not as hard as I thought

I considered the idea of doing a No Spend Challenge some time ago, but never went ahead with one as I didn’t know if I had the will power to get through a month or longer period of spending restrictions. Even as someone who strives to be a mindful consumer, I wasn’t sure if I could resist buying anything for that long. The No Spend Challenge has shown me that I can set myself spending limitations and stick to them. It is something I can implement in the future when I feel the need to reset my spending habits or save a bit of extra cash.

2. The importance of making the No Spend Challenge your own

I knew that I was never going to go on a No Spend Challenge where I couldn’t spend $1 the entire month or had to eat at home 24/7. Those restrictions were just not conducive to my lifestyle as we can’t always be at home at meal times and I didn’t want to turn my life upside down in order to trial the experiment. Those restrictions certainly made me think I couldn’t try a challenge of my own.

Instead of attempting a challenge I would have failed miserably or skipping the No Spend Challenge all together, I made it my own. A Challenge that matched the goals I had for myself to be more mindful and stick within our budget. It wasn’t about depriving myself every day but to be more conscious of my spending choices.

3. It made me feel more grateful for what I have

The No Spend Challenge helped me realise that I don’t really need that much to be happy. I found myself thinking often of how I have everything I could ever need. Whether it was my throw blanket, warm socks or my newly repaired beanie. I had enough. I had clothes, candles, food and water, my Netflix subscription, blankets, a phone and laptop. I really didn’t NEED anything. The one thing I didn’t have was a dining table and chairs and although it was inconvenient at times we managed without it.

4. You need to communicate your goals 

Although I did my best to resist impulse purchases when grocery shopping, I couldn’t really stop my husband from grabbing extra items he wanted (luckily they were mostly extra vegetables so I wasn’t too upset ;)). I mentioned the challenge to my husband before I started it, but never discussed how it might impact him, or what I would need him to do to help me stick to my goals. Something as simple as discussing grocery shopping and how I wanted to resist impulse buys. So next time I would definitely discuss that in more detail before jumping into it. But that’s what these Challenges are about learning how to make them better and more successful next time.

If you are planning to do your own No Spend Challenge establish whether your partner and family are on board, or if not, make an approved purchases items list for things that are in your control.

5. I learnt what my spending impulses are

The No Spend Challenge highlighted my impulse habits. With the challenge there was no where to hide, I knew what was approved and what was not. The Challenge taught me that my main impulse was not clothing, decor or make up (though, at one point it would have been!) it was impulsively buying snacks!

I found myself a handful of times grabbing a chocolate from the office or servo and realising halfway through it’s tasty contents that I had just broken my commitment to not make impulse grocery decisions. Although this is still a work in progress, I at least became more aware of it and tried to set myself a goal of only buying one snack in our grocery shop but that is something this confectionery addict will need to work on 😉

How you can start your own No Spend Challenge

You don’t have to wait for a new month to start your own No Spend Challenge or ban yourself from buying anything non-essential. Try these tips to create your own No Spend Challenge:

      • Work out your why – be clear on what your goals are for the challenge. Are you aiming to curb drinking or shopping for clothes you don’t need? Maybe you simply need to save some money for your emergency fund. Identify your why to help you stay focused at achieving your No Spend Challenge goals.
      • Keep things flexible – don’t feel the need to wait for the 1st of the month to come around, start whenever you like.
      • Pick a time frame for the No Spend Challenge that suits you – Maybe you want to try a No Spend Challenge for one day a week, or attempt a No Spend Week rather than a whole month version of the challenge. Pick any time frame that suits you. You can always challenge yourself next time by making the challenge longer.
      • Utilise focus areas – Don’t feel the need to be too restrictive with your No Spend Challenge if that is a barrier to you trialling your own. You don’t have to limit all spending. The No Spend Challenge can be used to reduce one area of expenditure you want to focus on. You could set yourself a goal of not buying coffee for the rest of the month, or focus on keeping within your grocery budget rather than worrying about banning all spending. If clothes is your problem spending area maybe that can be your spending ban for the period or pick something else that you know you could use a little help cutting back on.
      • Grab a friend to join you – having a friend can help you both stay accountable and have someone to check in with on you on your No Spend Challenge.

This weeks comment Question: Have you done your own No Spending Challenge? What lessons did you get out of it? Please share them in the comments below 🙂  

[Photo: STIL on Unsplash]

Budgeting

How to Change Your Spendaholic Ways and Be More Intentional With Your Money

Posted on May 17, 2018
Do you want to change your spendaholic ways? Take the Spending Questionaire and find out how intentional a spender you are.

Have you ever found yourself browsing the mall out of boredom and walking out with more bags than you can carry? You get home and soon cringe at the pile of stuff thrown across your bed. You hang everything up in your wardrobe or fold it neatly in your drawers with the best intentions, not realising that you might not ever wear any of it.

Maybe you just love a good sale and can’t resist a buy one get one free offer. You walk out with two pairs of whatever you just bought thinking to yourself how great a deal it was even if though you know you didn’t need either of them.

You reach for your credit card, and with a quick tap, you’ve bought a new lipstick to add to the 20 others you have at home in your bathroom drawers.

Your once new car is now seven years old and you might have finally paid it off. You have a spare $300 a month freed up to do whatever you want with it… Maybe you’ll save it up for a rainy day fund or put it towards that holiday you’ve been wanting to take the family on. But some of you will quickly go out and buy another new car with a new repayment to go with it. After all, you’ve grown used to having a car payment so what’s the difference right?

If you can relate to any of the above occasions these could indicate that you may be spending your money without intention.

Of course, when we are bombarded with advertisements wherever we look, it can be hard to recognise problem spending patterns until you stop and consider your spending habits and their impact on your finances and maybe even those close to you.

If you appreciate a new handbag or new camera lens, there is absolutely nothing wrong with that. We all work hard and deserve something we love or enjoy every now and then – of course, as long as we can afford it. That is, we can pay for it in cash or at least pay off the credit card in full when the payment is due.

But that’s usually not the case.

We can all so easily pull out our credit cards to get that must-have new item today rather than waiting until we save up for it. We justify our spending because we can afford the repayments, but this might not always be the case. Our unintentional spending can overtime blow up into much bigger financial problems.

A new subscription or pair of shoes here and there is manageable, but when spending becomes a regular, impulsive, and unintentional habit we can find ourselves in a financial situation that can be very difficult to get out of.

Take the Minimise With Me Spending Questionaire to see if you might need to get more intentional with your spending habits.

Take the Minimise With Me Spending Questionaire to see if you might need to get more intentional with your spending habits.

take the spending questionnaire

Some tell tale signs you could be a spendaholic 

These are some signs that you may need to adjust your spending habits and curb your spendaholic behaviour:

  • you earn good money but have nothing to show for it
  • you often find yourself at the mall or shopping online in your spare time or to alleviate boredom
  • you list shopping as a main hobby of yours
  • you shop socially, with your friends regularly
  • you have mounting credit card debt
  • you don’t remember what your credit card debt was for
  • you’re running out of space in your home, potentially looking into additional storage or upsizing your home
  • you often find yourself buying things on sale just because it was cheap but have no idea where you will store it or if you even need it
  • you feel guilt after a big shopping spree
  • you hide what you are buying from your loved ones
  • your spending causes arguments with your spouse, children or other loved ones.

If the above examples sound like you it may be time to reassess your shopping habits and curb your excess spending. It’s important to acknowledge that it’s not just yourself that you are harming. You may not realise it, but your shopping or spending addiction could be harming those around you such as:

  • causing a partner or family stress via clutter or increasing debt. Maybe your children are aware of your lack of financial self-discipline and they spend their days worrying about your quality of life in retirement or your parents worry about your ability to pay your day to day bills when you move out of home.
  • depriving yourself and loved ones of things that add value like experiences and a family vacation when all your money goes on stuff and to ever increasing debt repayments. Or even depriving them of the basic necessities like power because you couldn’t pay the bill.
  • finding it harder to make ends meet because you’re outspending your earnings and in turn having to work more and more to keep up.
  • setting your children up with the expectation of a life of instant gratification and the financial woes and unhappiness that come with that.
  • hurting yourself in terms of looking for fulfillment in your shopping trips rather than in more meaningful pursuits like following your passions, personal growth and achievement and strengthening your close relationships.

Change Your Spendaholic Ways

If you identify with any of the above scenarios and feel that you could minimise your spending and be a more mindful spender, here are 10 Ways to Change Your Spendaholic Ways and Be More Intentional With Your Money.  

1. Shop with a grocery list and meal plan
One of the biggest budget leaks and opportunities to change your spendaholic ways can be your grocery budget. It can easily add up to $500 or more a month and we all love our food! Instead of feeling guilty again at all the random stuff you threw into your trolley, go prepared. Writing your shopping list and meal plan before you have even stepped foot in the store is a great way to cut down on impulse buys and go over your shopping budget. Make a game of it and set yourself a challenge to try and stay under a certain weekly dollar amount with your grocery shop each week. And don’t be afraid to try the discounted home brand ranges. They can often be as good as the regular brands and save you lots week to week.

2. Avoid the shops 
Create new habits and stop shopping every time you think you want or need something. You’re not going to stop breathing if you don’t have what you want right now. Slowly build up a list of items that you need or want and give yourself time to truly consider if you really do want those items before you hit buy. You might find the next morning or week you have completely forgotten what you even had in your cart.

Only go to the shop once to get those items. You’ll be so busy getting everything off your list that you won’t have time to spend browsing the aisles. Eventually, you will develop a habit of running in, grabbing your list and running out. Once you see how much time and money it will save you. you’ll change your spendaholic ways in no time!

3. Try a no-spend challenge
A great way to reprogram old spending habits is to take on a no spend month challenge. Make a list of any approved purchases for the month ahead and commit to only buying those or consumables and food. Anything else you want will have to wait a few weeks. Do it with a friend for moral support. Make it a little more fun by seeing who can spend the least amount of money that month.

4. Pause and research before you buy
Have you ever bought something in a rush only to realise that it was cheaper somewhere else? Or regretting that you even bought it because you knew you didn’t really need it? In order to change your spendaholic ways you need to recognise when you are buying on impulse and put the brakes on.

Think of how much you could save over the next year if you just waited 24 hours before making each purchase. If that’s too much of an ask, take a walk or go and have some lunch. If you really want that item you will make the effort to go back to the store. It’s a small barrier to your impulse buying for something you probably don’t need.

Before you hit the Buy it Now button take a day to think over what you are buying and give yourself time to consider if that item is the best fit for you. Don’t forget to do your research and look into product reviews to make sure it is a quality product and ask these 7 questions to make sure you are making an informed decision before you part with your hard-earned cash.

5. Find a new hobby 
Too often we can find ourselves shopping as a form of entertainment. We go out with our best friends looking for a new outfit and shoes to match, it’s what we’ve always done. Or we wind up at the shops on our lunch breaks spending money as we have nothing better to do. If you are heading to the shops looking for entertainment or freedom from boredom it’s probably time you got yourself a new hobby.

Think of all the things you could be doing with that time and money. Instead of spending all your money at the mall find your passion. It might even be something that costs money but will at least be something you are spending intentionally on. Try reading more, catching up with friends in the outdoors, learn to sew, or sign up for a new class. Fill your time with things that add value to you like exercise, volunteering, or learning. There are many things you could be doing that are more fun than being locked away in some change room for the day.

6. Learn to value yourself and experiences over things
So many of us have been stuck in a mindset where we derive our self-worth from what we own or wear. The brands on our shirts, the luxury car, and McMansion we live in are now deemed so necessary that we will go into tens of thousands of debt or more in order to have them to show off to others and fit in.

We could all stand to worry less about what people think of the car we drive or how much our handbag costs and focus on what really matters. When we derive our value from the things that truly matter – our relationships, passions, growth, and experiences, not just what we can buy, we can break the cycle of keeping up with the Jones and change our spendaholic ways. In turn, we can learn to be more mindful of what we are buying and redirect our money towards things that truly add value to us such as a class we enjoy or saving up for a trip on our bucket list.

7. Adopt a minimalist lifestyle
Minimalism is the pursuit of what is meaningful and removing what is not. It is a tool that can help you identify what truly makes you happy, which may be less than you think. I’ve personally sold, donated, and recycled 70% of our possessions over the past two years and this has shown us how little we need to be happy. Two years later and I am still finding things we can do without. By truly asking yourself what adds value to your life you can eliminate wasteful spending and better utilise your time and money on what is important to you.

Maybe you don’t need an overflowing wardrobe to feel stylish and put together and a smaller capsule wardrobe would be enough. Maybe you don’t need every single book you see in the bookstore with an interesting plot and instead, you can order it on your eReader when you have the time to read it. Minimalism can help you focus on the essential and eliminate the excess without depriving you of what you enjoy or need.

8. Identify one problem expense area in your life and start cutting it
Small changes can go a long way. Rather than trying to cut all expenditure at once, ask yourself what your biggest problem spending area is? The one that makes you feel the most guilt every time you blow your savings on it. Once you have identified that one area, work on reducing your expenditure. Don’t worry about the others for now, you’ll get to those in time, for now, we are just tackling the big fish.

Set yourself a new budget for that cost whether it’s coffee, clothing, weekend drinks, books, or whatever your vice is, and try and stick to your budget. It might be difficult for the first and second month but after a while, you will start to form new spending habits, and spending less on that area will feel less difficult. Once you have developed the habit of sticking to your budget set a new one for your next problem area and work on that. Over time you will gradually change your shopaholic ways and adapt to your new budget goals.

9. Limit your exposure to ads
If there’s anything that unravels your attempts to change your spendaholic ways it’s the constant subjection of advertising. Whether it’s on the radio, TV, YouTube, in your favourite magazines or online there are thousands of new products trying to nab your wallet contents. Within 15 seconds you are considering buying something you didn’t even know you needed. To reduce the chances of you stumbling upon something you probably don’t need, try and reduce exposure to as many advertisements as you can. Of course, it’s not easy to do as we are bombarded with these everywhere we turn but there are some helpful tips to reduce what you do see:

  • swap out cable and free to air TV for a subscription like Netflix that doesn’t have advertising
  • Unsubscribe from email newsletters that will tempt you with their sales updates and latest products
  • Stay out of the malls – if you can’t see a sale sign you won’t know it’s on
  • Limit reading of magazines that contain hundreds of advertisements and reach for a book or blog instead

10. Consider the opportunity cost
Every time we buy something we are using a resource, our money, that could be utilised elsewhere. Consider the opportunity cost if you really wanted to buy a new car. You could buy it for $30k or you could instead, buy one for $10k and invest the $20k. In 30 years that car will be long gone but had you invested the money at age 30 until age 60, at an 8% growth rate without adding a single dollar that money would now be worth $218k. Which one do you think future you would pick?

Maybe buying more stuff means you have to work longer hours in order to earn more money to keep up with your spending. The opportunity cost here is the lost time you have when you have to work more to bring in more money to cover those extra debt repayments or spending habits. When we spend money we lose out on time or future growth opportunities.

If you want to change your spendaholic ways consider when making those bigger purchases in particular, if that really is the best use of your money. If it is something that will really add value to your life and bring you joy then it’s okay to go ahead with the purchase if you can afford it, but if it’s something that won’t really make a lasting benefit to you think again before you hand your card over.

Want more help?

For extra resources to see if you might need to reevaluate your spending habits Take my Spending Questionaire, a list of 30 Questions to help you know if you are Spending Intentionally or have room for improvement.

You may also like to check out 17 Ways to Reduce Mindless Consumption in Your Life for some additional tips on how to minimise any excessive spending and spend your money more intentionally.

This week’s comment question: What have you found has been the most helpful way to Reduce Your Spendaholic Ways and allowed You to Spend Your Money More Intentionally. Share your tips and what you have found worked for you in the comments below 🙂

If you found value in this post I would be super appreciative if you could share it with others who might also find value in it 🙂

[Photo: Tristan Colangelo, Unsplash.com]

[Photo: Robin-Spielmann, Unsplash.com]

Freebies

Three Item Task List

Posted on April 24, 2018

Do you find yourself constantly getting overwhelmed by your to-do list and getting nowhere? If you’re stressed out looking at your list of To Dos that never seems to end you’re not alone. I’ve sure been there before many times. When we get overwhelmed it’s important to pause and ask ourselves what is truly important and prioritise.

Here is a system I first heard about from Joshua Becker at Becoming Minimalist to help keep you productive whilst taking out the stress of your to do list. Instead of writing a huge to do list with no structure or real plan, give this Three Item Task List Planner a go. See how to use this worksheet to manage your time and achieve your goals without the overwhelm.

How to Use the Three Item Task List

Simply save a copy of the file and print a copy of your Three Item Task List.

Pick up to three tasks that you need to do for each day of the week. The most important tasks that if you did them you would feel like you got ahead today and feel slightly less under the thumb. Write in what week you are in at the top and fill in the three tasks you need to do each day for the week ahead. You can mark in a rough time to get them done in the box to help you spread them out over the course of the day.

Of course if you get your three tasks done that day and feel like you could tackle more go ahead, the idea of this worksheet is to help you prioritise your task and tackle a small number each day so over time you make progress.

Grab your Free Three Item Task List Printable below!

And that’s it. Nice and easy, hey 🙂

Let me know in the comments below, if this system helps you to get on top of your to do list and what other organisational tolls help you to stay organised?

For more tips on how to get organised check out 4 Tips to a More Organised Life and 13 Time Management Tips to Get Organised

If you found value in this post I would be super appreciative if you could share it with others who might also find value in it 🙂