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Budgeting

Dave Ramsey’s Financial Guidelines To Live By

Posted on April 22, 2019

Have you heard Dave Ramsey's Financial Guidelines?

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For the past couple of years I have read, listened and devoured everything of Dave Ramsey’s that I could find. I have read the Total Money Make Over, Retire Inspired and The Everyday Millionaire**, which have all helped arm me with extremely valuable financial knowledge that has given me guidelines in order to make intentional financial decisions. I’ve also spent countless hours listening to the Dave Ramsey Show to pick up on those nuggets of wisdom that weren’t in The Total Money Makeover.

If you are keen to know some of Dave Ramsey’s Financial Guidelines to Live By on making intentional money decisions and building wealth read on 🙂

Here are 13 of Dave Ramsey’s Financial Guidelines to live by!

SAVINGS

1. Sell everything you own to save up your $1000 Emergency Fund

To start your path to create wealth, the first of Dave Ramsey’s financial guidelines to live by is to sell everything you own: Some great tongue-in-cheek advice from Dave, but worthy nonetheless. You need to get your Baby Step 1 Emergency fund of $1000 saved up quick smart. In order to do this, Dave suggests you sell everything not bolted down in your home ‘:).

Sell whatever you can: your clothes, electronics, furniture, old collections, appliances, decor – whatever you’ve got to boost your Emergency Fund! You’d be surprised about how much money your clutter can make you. Let’s get it done quick! 🙂

Related reading: How I made $5000 from selling my clutter

2. Save up a 3 – 6 month of expenses Emergency Fund before buying a house

Dave Ramsey’s Financial Guidelines on buying a home always suggests you save up a 3-6 month Emergency Fund before buying a home. As Dave says, if you don’t – Murphy will move right on in. When you have a fully funded emergency fund before buying a home you are well placed to deal with emergencies as they come up. If your car breaks down, you need to replace the water heater or pay your insurance excess after a storm – there is no need to panic, you’ve already got a good buffer between you and Murphy.

By all means it will delay your dreams of home ownership by a few months but when you have that piece of mind, that if anything goes wrong you can ride it out, you’ll be glad you did!

You can read more about the Dave Ramsey Baby Steps Here 🙂

3. Don’t invest your Emergency Fund

Every time I hear about anyone talking about trying to invest their Emergency Fund I cringe! As Dave Ramsey’s Financial Guidelines say, this fund is not to be considered an investment and not there for the purpose of making you cash. It is there purely to give you liquid funds in the event of an emergency, a time when you might need cash immediately. You don’t want to go to use your emergency cash that you invested, only to find that half of it has disappeared.

The best you can do is find a good bank with a decent interest rate on savings. Keep your investing funds completely separate. One day you’ll be glad you did!

CARS/VEHICLES

4. Things with motors should add up to less than half your annual salary

Another amazing piece of advice from Dave Ramsey on vehicles. Dave’s rule is that you should never own more than half your household annual income in things with motors in them – that go down in value. This being cars, motor homes, motor cycles, boats and so on!

If you earn $80k and own a $55k truck you have too much money tied up in depreciating assets. You want your money invested in ways to grow it – not eat it up!

Combined Vehicles

Household income > 50% = TIME TO SELL!

Take an assessment of your current vehicle values and add them together. If the total of your vehicles values over your household income is more than 50% of your income it’s time to sell them!

5. Don’t spend more than your car is worth to repair it

One of the best pieces of advice Dave has given on The Dave Ramsey Show is how to know when to repair or replace a car. Dave says to research the market value of the vehicle and not to spend more on the vehicle in order to get it repaired than it’s market value is. For example; if your car is worth $2000 but needs $3000 of repairs you would just sell it.

This is just a guideline to know where to draw the line in the sand on whether to repair a vehicle or not. If you really love the car and it won’t cost much more than the market value to repair it you might be able to still fix the car and keep it but just be ready to let the car go if it is significantly more.

Of course don’t forget to shop around for repairs and get a second opinion which might save you some serious cash and allow you to keep the car after all!

Related post: How Much is Your Car Really Costing You?

HOME BUYING

6. Only buy a house at 25% of your salary or less

Dave Ramsey constantly refers to how people who win with money are debt free including their home. When you don’t have any payments in the world you can make huge steps to build wealth. This is why Dave recommends only getting a mortgage at a max of 25% of your salary.

When you spend more than 25% of your salary on your housing you are minimising what is left to cover other bills, insurances, spending money to enjoy yourself and your savings ability.

Keep your financial stress low by limiting your housing costs to below 25% of your household income.

7. Buy investment properties in cash

There are always people spruiking get rich quick ideas around real estate and borrowing yourself into oblivion.

Dave’s Real Estate approach takes patience and more time to carry out but it covers you for all market conditions. Dave’s advice on Real Estate is to save up for real estate investments in cash! As Dave says, if the market drops or you can’t find a tenant for 6 months you can weather out the storm. Unlike the investor who decided to buy multiple properties with large mortgages who won’t be smiling so much if the market drops.

DEBT

8. Avoiding Student Loans

Dave often reports these words on the Dave Ramsey Show ‘I’ve never told anyone to go into student debt’. But how do you pay for university without student loans?

Here are some wise suggestions from Dave Ramsey to help you avoid going into student debt:

Start your study at Community College (or TAFE in Australia). These education institutions are a lot more affordable and can give you credits for university study. I saved myself thousands of dollars in student debt by doing my Advanced Diploma in Accounting at TAFE for two years before heading to uni. By the time I got to university I had only 13 of 24 units left to complete of my BA (Accounting) thanks to my advanced standing credits. TAFE at the time I studied was $4000 for the Advanced Diploma vs $800 a subject at university which saved me approximately $6000!
Study locally so you can live at home or save on interstate fees.
Go to a less prestigious university. The bigger the name of your uni, the more you are going to have to pay to attend. Unless your parents have offered you a blank check book (and they can truly afford it) attend more affordable universities.
Save up ahead of time for your student loans. If you have kids you should be saving ahead of time to help them study at university debt free. Investing $10k when your child is born and adding just $100 a month until their 18th birthday could grow to $78,000 thanks to the magic of compound interest (with an average 7% return rate), ready to cover their education costs debt free.
Apply for scholarships to help you pay for some of the cost of university. The more you apply for, the more change you have of qualifying.

If you don’t have any financial help from your parents you can do the following to avoid student loan debt:

Save up as much as you can before you start university.
Considering getting an Internship/Cadetship that will cover your study expenses whilst also training you up in your chosen field.
Whilst you study, get a job or a side hustle to pay your fees as you go or work like a crazy person during your study breaks. Work out how much you need for the next semester and divide that by how many weeks you have to save up to give you an idea of how many hours or shifts you’ll need to take up.
Buy second hand text books and sell the prior semester to help you cover any new ones. At $100 plus a pop this can make for some huge savings!

9. Save up and make a cash settlement offer on old debt.

If you have an old debt sitting around that you haven’t make a payment on since who knows when, save up some cash and make them a cash offer on the remaining balance. Dave Ramsey suggests some you might be able to make a cash offer of 5c on the dollar. But even if they will only take 25% of the balance, you are still making a lot of headway!

Don’t forget as Dave recommends to get the offer in writing stating that this will settle the balance in full and close the account and do not give electronic access to your account to the credit company. Write them a cheque. Some very wise words from, Dave!

10. When it takes longer than 2 years to be consumer debt free

Dave Ramsey suggests that if you will take more than 2 years to pay off your remaining consumer debt that it is time to get selling. You can either hustle like a crazy person or bail yourself out by selling the car/s, boat, investment properties or your home. Do the rough math as Dave does on his show and work out a rough time line for your debt repayment. If it’s much longer than 24 months, for you sanity it’s probably time to get selling!

RAISING KIDS

11. Pay your children for chores as they are completed

Dave recommends paying your children as they compete tasks in order to show them the direct link between work and being compensated rather then waiting for the end of the week.

Make some chores family duties. Don’t pay your kids for every finger they lift. Make some chores mandatory and uncompensated, to be done for the good of the family such as, setting the table, feeding pets, washing up or making their bed.

12. Support your teenagers in making decisions about their education

Dave Ramsey’s Financial Guidelines include preparing your kids for the future. Don’t leave your teenager on their own to make huge life decisions about their future. Help them to work out what they are good at and passionate about and identify potential career paths.

Research salary averages with them based on level of education and time spent in the industry so you can see a direct link between career path and future income. Weigh up what level of education is needed to achieve that chosen career path and map out a plan with them, where they can afford to study, what course they need to get into their chosen field and how the fees will be paid.

Ensure you consider whether it is worth the investment into a uni degree. Don’t allow your teenager to go into $300k to get a Chiropractor degree if they can only earn $60k-70k. Be sure to shop around for reasonable return on your investment.

13. Teach your kids to Give, Save and Spend

As Dave always says: Live like no one so in the future you can live and give like no one. Starting to teach your kids this well before they leave the nest will help you raise “financially well rounded” kids.

You will hear these three scenarios repeat themselves on The Dave Ramsey Show with callers.

Some people are extremely generous with their money, and lend money they don’t even have and find themselves in their own financial pickle.
Others callers are avid savers and feel extreme guilt over spending anything on themselves even once they achieve financial freedom or Millionaire status.
Then there are the spenders who leave not one dollar to be saved and go beyond and find themselves in ballooning consumer debt.

None of these are ideal financial habits and all can lead you into being taken advantage of, not leading a full and happy life and being miserable and swamped with debt. You can teach your children to have a healthy relationship with money and giving, spending and savings and help them learn valuable skills for when they hit adulthood and save them the troubles that come from not having a good balance.

A great way to do this is to encourage them to split their chore money or anything else they earn into 3 jars: Give, Save and Spend.

It’s a great way to teach them to be kind and compassionate for those who are less fortunate, to teach them that not every dollar should be squirreled away – they need to enjoy some and to not whittle away every last penny either.

[Photo: Michael Longmire @ Unsplash.com]

This weeks comment question: Which of Dave Ramsey’s Financial Guidelines have help you be more intentional with your money?

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

14 Things You Should Know Before Buying Your First Home

Posted on February 12, 2019

Get the right home and mortgage for your with these tips

Buying your first home is an exciting and daunting experience. There’s the fun part, house shopping and looking for your dream home and all the excitement that comes with owning your very own place. And then there is the slightly more scary side of signing a 20 or 30 year mortgage and taking a big step into #adulting.

I remember how overwhelmed and stressed I felt when we were in the process of buying our first home. It happened to be the weekend before my last CPA exam. We had decided to hold off looking at a home until my exams were over so I could concentrate on studying. It was a well thought out, mature plan. Unfortunately that reasoning went out the window and instead of waiting we went house hunting the weekend before my exam when we found a home we liked that was having an open home (it was a hot market, yadda yadda).

Instead of studying, we hopped in the car that Saturday with my (now) In Laws and looked at 7 homes that day. The 6th being the one we put a deposit on later that afternoon. It all happened so fast. We saw the house around 3.30pm and by 5pm we were in the realtor’s office paying our $1000 deposit. It was one of the most stressful weeks of my life. I remember the sheer fear of signing my life away on the dotted line, both on the property and the mortgage documents taking away my freedom for potentially the next 30 years of my life.

Looking back there were some things we did right and a lot of things we did wrong. Of course at the time, filled with excitement and the impending doom of not being able to find a house in our price range and the FOMO we jumped at the chance of getting a home in our budget.

Thankfully it all worked out – I passed my final CPA exam and we managed to buy our home before house prices in Sydney sky rocketed not long after. But we were lucky. With no Emergency Fund in place we could have opened ourselves to a visit from Mr Murphy.

Your home is most likely going to be the biggest purchase of your life so it’s not a decision to take lightly. Your best bet is to prepared and plan ahead! Here are 14 Things To Know Before Buying Your First Home.

1. You should aim to have an Emergency Fund of 3 months expenses saved
Before buying your first home it is important to have a sizable Emergency Fund, ideally 3 months of expenses or more (Dave Ramsey would be proud :)). This will ensure that when your car dies, your hot water system goes or if you have an unexpected job loss that you are prepared financially to weather those storms as they come up relatively stress free.

Life is stressful enough without having to worry about every little thing that breaks or needs to be repaired or replaced. And as a soon to be home owner you should get ready for things to break and need replacing 😉

Of course you might not know exactly what your expenses are if you are moving out for the first time but a reasonable estimate tweaked as you go is better than nothing!

2. Shop around for mortgage rates and low fees
Before you apply for any mortgage shop around for the best rates. Don’t forget to check if there are any establishment fees or monthly fees. Ideally pick one that has no monthly fees, I personally refuse to pay for the privilege of paying a mortgage. To get you started Canstar offers a comparison tool for over 100 lenders.

Related Post: Check out My Top 5 Personal Finance books for what books you need to read to get your finances in order!

3. Get a home loan with a 100% Offset Account
Offset accounts are a great way to reduce your mortgage interest bill without having to actually pay the money on your mortgage. When you are picking a home loan make sure to find one that has a 100% offset account to save you on your monthly interest bill. This will save you some serious cash so don’t glaze over this tip.

The way it works is, any money you have in the offset account linked to your mortgage will offset the interest you pay on your mortgage. So if you had a $200,000 mortgage and you had $10,000 of savings in your offset account, the interest on your mortgage would only be applied to $190,000 of the mortgage not the full balance.

With saving accounts interest rates around the 2.8% mark versus mortgage rates around 4% it is a great way to get more bang for your buck. An added bonus, as the interest savings on your mortgage are not income, they’re tax free savings!

4. Aim for a 20% deposit to avoid LMI
Having a 20% deposit does two things when buying your first home.
a. It allows you to borrow less money and pay less interest over the life of the mortgage. This alone adds up to tens of thousands of dollars saved.
b. It allows you to avoid paying Lenders Mortgage Insurance (LMI) which is insurance that covers your bank from you defaulting on repayments (it does not cover you!) – and it is not cheap! LMI on a $650,000 home with a deposit of 10% would set you back $14508. This is often added to the mortgage balance unless you have the money upfront and will end up costing you $24,918 over a 30 year loan term. The more you can save ahead of buying a home to avoid paying LMI the better!

5. Do your research
Before buying your home you need to do your research. Learn about the area, is there anything you don’t like? Think about why you want to live in that area and if it is suitable for your lifestyle. Look at online listings months ahead of buying to get an idea of what is out there and what you can get for your money, you don’t want to over pay. By looking at a lot of listings you will get an idea of what you do and don’t love in your home.

6. Renting is not dead money
I previously considered rent money as dead money but have since learned that this is not always the case. Renting and saving up for a home deposit is preferable to buying a home you can’t afford and potentially losing it. Saving up for a home and your Emergency Fund takes time and determination and if that means you have to rent a little longer – so be it.

Renting can also help you make more intentional purchasing decisions. Consider renting for 6 months in the area you’d to buy in before you actually buy to get a real feel for if this is an area you want to live for the next 5 + years. Learn what you do and don’t want in a home so you can buy the right house for you. Buying a house is expensive, as is selling one so you want to make sure you are making the right long term decision for you!

Don’t think of rent money as dead money but as money well spent to make sure you are making an informed, intentional decision for your biggest asset. Of course whilst you are renting save any extra that you can on top so you can afford to buy a home one day in the not too distant future 🙂

For more tips on your mortgage check out 14 Realistic Tips to Pay off Your Mortgage Faster

7. Don’t spend more than 25% of your combined gross income on your mortgage repayment
Buying a home with a repayment that is more than 25% of your gross salary (that is after tax) can put a huge financial strain on your budget. By keeping it to 25% of your after tax salary, or as close to that as possible, you give yourself room to cover unexpected costs, and changes in life. Things such as a new baby, a child starting school, a partner wanting to go back to school or needing to upgrade a car are much more affordable when you have room in your budget that isn’t eaten up by a huge mortgage repayment.

8. Know your budget
Before you even look at home or mortgages and what you can afford do a budget. You need to know how much is going in and how much is going out before you can know what mortgage you can afford. Speak to friends and family if you need advice on how much to budget for things like utilities and groceries.

Make sure you add in for those often forgotten budget expenses that might not come up every month like clothing, dental, gifts and car expenses. And don’t forget to make sure you still can save money after paying for all your expenses and mortgage. Ideally you want to still have 10% of each pay check to put into saving or investing. When you know what you can put towards your mortgage, staying close to that 25% goal or less you can look at what you can afford to borrow.

9. Allow for repairs in your budget
A good rule of thumb I learnt from Mr J Money at Budgets are Sexy is to allow for repairs on your home annually at 1% of your homes value. So if your home is valued at $600,000 you should be putting away $6000 annually for any repairs, maintenance or upgrades. That’s $500 a month!

Even at a minimum, you should be allowing $100 a month just to cover costs like small repairs, pest sprays, cleaning, gardening costs and that excludes any upgrades you might want or need.

10. Budget in a buffer for potential rate rises
What your interest rate is today isn’t necessarily what you will be paying next month or in 10 years from now – 30 years is a long time! Know that your rate could go up or down.

This graph below from Trading Economics shows the Australia interest rates all the way back to 1995. Just 10 years ago in 2008 they hit 8%. Ouch!

source: tradingeconomics.com

When I first got my home rates were around 5.4%, they are now at 3.9% thankfully my repayments went down over that time period by more than $100 a week, but can you imagine if they had gone up $100 a week in that same period?

A good rule of thumb when calculating your home budget is to make sure you factor in an increase of 2% on your home loan interest rate. So if you are looking at a mortgage at 4% make sure you can still afford to pay it if it increased to 6% on your current income level. And as mentioned above, ideally at only 25% of your total combined after tax household income.

11. This may not be your forever home
A lot of people get stuck on the concept that this is their forever home which can lead them to hold onto a home that is financially crippling them. By all means houses come with attachments and emotions, I am not immune to that I love our humble abode, but be prepared to downsize or sell up completely and rent for a small period if the need ever arises.

12. You CAN pay your mortgage off sooner than 30 years
Just because your loan term says 30 years doesn’t mean that you need to drag it out that long. Aim to pay off your home within 15-20 years. At least by the time you are 50, giving yourself 15 years to focus on your retirement – but of course, the earlier the better. Check out some tips on how you can pay off your mortgage faster here.

13. Think about the true cost of space
It’s amazing how many people will go out of their way to tack on a $100 a week repayment for the next 20 to 30 years to accommodate once-a-year guests. Or get a more expensive house for the extra storage space rather than just decluttering and having a garage sale. The costs of these do add a lot onto your mortgage so really consider how much you are willing to pay for them. You could be paying an additional $5000 a year, every year to house clutter that you don’t need.

14. Consider the hidden costs
When buying a home there are hidden costs. Sometimes it is something you missed when you were looking at it. For us it was a leaking shower and the space behind the fridge that had not been plastered fully. There are always surprises which may not have been identified at the initial inspection or the building inspection and can end up costing you more than you were expecting.

Then there are the other costs that might just cost you not only money but your time. If you buy the home with the huge back yard are you going to be willing to spend 2 hours every fortnight mowing it? Or are you willing to pay someone $50 to do it for you? Three and a half bathrooms may sounds like a luxury but will you have the time each week to clean an additional set of bathrooms? Will you be able to afford the cost of hiring a cleaner to help out? Can you afford the cost of replacing carpet, or tiling or paying a painter for all that extra space when it comes time for renos? And consider if you are willing to pay the higher utilities bills to have extra space to heat and cool.

The mortgage is by no means the only cost you need to consider so it is important to think of the bigger picture before running with your heart at a home.

[Photo: Dan Gold @ unsplash.com]

This weeks Comment question: Do you have any tips to add when buying your first home? Let us know in the comments!

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

How to Plan a Debt Free Christmas

Posted on November 27, 2018

Check out these 8 Ways you can Plan a Debt Free Christmas this year!

Christmas is a time to be with loved ones and make memories together. But often before you know it, the end of the year has crept up again, and you are facing the stress of thinking about how you are going to afford to buy everyone gifts.

With pay options like After Pay and Zip Pay on the radar, it’s even more tempting to just ignore the impending budget hit and charge those gifts and leave the worrying about paying them later. Or not worrying at all and ignoring your growing credit card debt until it becomes a bigger problem.

According to a new forecast of Reserve Bank of Australia (RBA) data analysed by finder, Aussies borrowed a combined $29 billion on credit cards in December 2017. That breaks down to an equivalent of $1,727 in purchases per card. This is up from the $1,666 the average cardholder owed in credit card debt after the Christmas period in 2017.

These are pretty worrying statistics with 5% of Australians admitting to taking more than 12 months to pay off their Christmas credit splurges! Think of the interest! An average $1727 spent per person at a 22% interest rate paid off over two years adds an additional $375 in interest payments.

Table above shows Total payable inclusive of interest on $1727 borrowed at 22% over 4 and 2 years, respectively.

Christmas shouldn’t and doesn’t need to be a time of financial stress or an excuse to go into more debt. With a little planning we can take the stress and financial sting out of Christmas and plan a Debt Free Christmas. And a little planning and effort can go a long way!

How You Can Plan a Debt Free Christmas

1. Make a promise to yourself that you won’t be going into debt for ANY gifts
Let’s all take a moment and think about this. If you don’t have the money in cash to buy gifts and are going into debt to buy them, you can’t afford it. This goes the same for if you don’t have an Emergency Fund of at least $2000 saved up. Until you acknowledge this you will continue in a debt cycle and never catch up.

Family may be upset at your lack of generosity, but it’s important to stop digging your financial hole more into the ground in order to keep others happy. And besides, family and friends should always want to support you in achieving your goals! And as Dave Ramsey says, Live like no one else, so you can live AND GIVE like no one else 🙂

It may take having a year off buying anyone gifts to get onto your feet and build up a small Emergency Fund and pay down some debt but it’s a necessary step in order to change your financial situation. And don’t fret I will give you some tips on how to still give gifts below 🙂

2. Save ahead of time with Sinking Funds
The number one thing you can do to have a debt free Christmas is to save ahead of time with Sinking Funds. This means saving up a little each month rather then trying to scrounge dollars at the 11th hour. The best time to start is January. This will give you 11 months to save and you will have your total budget by Dec 1st.

Every January I want you to set your Christmas budget. How many people do you have to buy for? What are you going to spend? What do you need for Christmas meals/entertainment? Divide that total number by 11 and put this away every month. Check out this Christmas Gift List to help you get started. When Christmas rolls around you will have the cash ready to go without any temptation to reach for that credit card.

3. Shop early
Don’t leave your Christmas shopping for a week or two out. Take advantage of earlier sales like Toy sales or Black Friday deals in late November. When you leave it to the last minute you don’t allow yourself time to shop around for the best deals, which can save you serious cash! Shopping early also gives you ample time to check reviews and ask around for other people’s recommendations to make sure you are buying a good quality item.

4. Shop second hand
Before buying brand new check for second hand items that can save you money. I just bought a second hand Wii game in very good condition for $26 and saved myself $20. Sometimes you can find second hand items for half the price or less that are brand new with tags attached or like new.

5. Have a Cris-Cringle
A great way to save money is to set up a Cris-Cringle and buy one gift rather than a gift for each person. Not only can this save you money, and allow you to buy a more quality gift but it will save you time shopping for multiple gifts. A friend of mine’s family has a $75 budget and each person makes a list of three items within the budget they would like which means that you can by a gift that will truly add value to your loved ones life!

6. Gift frugally

If you are really short on cash and considering going into debt to buy gifts STOP. Just because you don’t have much money doesn’t mean you have to resort to going into more debt. Get creative and think about what home-made gifts you can make or consider gifting your time!

Can you draw a portrait for your loved one?
Are you handy and can offer them some of your time to help with repairs?
Can you offer free babysitting?
Are you a good baker and can bake some cookies or put together a yummy hot chocolate pack?
Or make some DIY beauty products?

Think outside the box. Gifting a hand-made gift can be more appreciated than the store bought one.

7. Get Hustlin’
If you are short of cash spend the month leading up to Christmas hustling for some extra cash.
Here are some ideas to help you bring in some extra cash to put into your Christmas budget:
• Start dog walking
• Babysit for cash
• Check our Air Tasker for some odd jobs you can do
• Sell your unwanted clutter on eBay, Facebook Marketplace or Gumtree. Read how I made $5000 selling mine here
• Rent out a room on Air BNB for the weekend
• Ask for extra hours at work for the holidays
• Cut your expenses: review your mobile phone plan, lower your grocery budget and start Meal Planning, find frugal ways to have fun to save on entertainment, check your mortgage rate and ask your bank for a better deal

8. Aim to save when it comes to food
Christmas isn’t just about the gifts, the food can add up especially if you are hosting. Here are some tips to plan a debt free Christmas and save money on food:

• Shop at Aldi. I’m a massive fan of a lot of Aldi’s range it’s a great way to save.
• Take advantage of specials. In the lead up to Christmas browse the supermarket catalogues and buy non-fresh items on special that you will need for Christmas.
• Ask everyone to bring one dish to help share the cost of food on the day. Make a list of what you need and ask around who can help make something. Every year I make a pavlova to bring along to Christmas lunch and dinner.
• Rotate Christmas with your family. Spread the cost of Christmas by rotating who hosts it each year. It also means instead of hosting Christmas every year you might only need to host it once every 3-4 years. Think of the reduction in stress levels 🙂
• Spend time estimating food as best as you can. Try not to go crazy and buy food for 50 when you are only having 30 guests. Take note each year or how much food was left verses what you bought for an indication of what you will need next time.
• These tips on How to Save on Your Grocery Budget will help your dollar go further too!

And there you have it Minimisers, 8 tips to Plan a Debt Free Christmas!

This weeks comment question:What are your tips to save money at Christmas and celebrate Christmas Debt Free? Let me know in the comments

[Photo: Tyler Delgado @ Unsplash.com]

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

My Top 5 Personal Finance Books

Posted on November 6, 2018

Today I wanted to share with you my My Top 5 Personal Financie Books. I am a huge fan of reading and although I don’t get a lot of time to catch up on my wish list of books to read I do try and get around to reading one book every month. It’s not a huge number and nothing to brag about (I’ve seen some people on Insta do 12 a month… WHAAAAT) but I do make an effort to learn and grow and one of the best ways I have found to do that is to read a lot of different books.

Over the past handful of years and as I discovered new passions like Simple Living and the F.I.R.E movement, I have come across many amazingly educational and helpful books across many topics ares: Minimalism, Finance, Consumerism, Millionaires and Simple Living to name a few of my favourite subject areas. As an Accountant and CPA it wouldn’t come across all that strange for me to love reading about Personal Finance but I think there are so many amazing books out there now that anyone can learn from and enjoy and I promise you they will not put you to sleep. Far from it, I think they will do wonders to motivate you to pay down debt, develop new spending behaviours and learn about the big world of personal finance without having to take a three or more year degree.

And so here I will share My Top 5 Personal Finance Books with you in the hope that they will add value to your life and inspire new habits and help you on a path to financial freedom and building wealth!

My Top Five Personal Finance Books

5. I Will Teach You to Be Rich, Remit Sethi

I am a huge fan of Remit’s after a friend recommended me his material and loved his in your face attitude and unapologetic views on spending in his Book I Will Teach You To Be Rich. He goes as far as having a Stupid Mistakes Fund for unexpected expenses like fines and explains how you can prepare for big life expenses like weddings by thinking well ahead and saving up over the longer-term. He delves into his investment choices and why he believes index funds outperform their higher fee counterparts. And gives valuable advice on how to haggle on cars and other big purchases ‘like an Indian’ without wasting your time. If you’re someone who prefers a less prescriptive finance guru who doesn’t spout cut up your credit cards and count every last cent and someone who has a bigger picture approach to finances that won’t make you cut out your daily coffee, this book is for you.

4. The Millionaire Next Door, William D. Danko

Like most people, I am fairly fascinated by millionaires so when Mr J. Money at Budgetsaresexy.com recommended this one I had to satisfy my curiosity – How do Millionaire’s live (do they know things let’s find out – Bojack Horseman anyone ;))? Don’t we all want to know that?

This book was based around research conducted over 20 years about the spending habits of millionaires from their car buying habits, where they live, how they invest, what they wear and so on. It also delves into ‘entitlement syndrome’ and how to raise self-sufficient kids who don’t expect everything handed to them on a platter from the bank of Mum and Dad. Great for any Mum’s and Dad’s out there!

It also details the spending habits of PAWS and UAWs (Underaccumulators of Wealth) and the difference in their spending behaviour. If you are keen to achieve millionaire status, or just are a little curious about how your undercover millionaire lives their life check out The Millionaire Next Door.

3. Your Money Or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Fully Revised and Updated for 2018, Vicki Robin and Joe Dominguez

This was the book I was looking for my whole life, and I only just finished listening to it THIS MORNING. I heard Mr Money Moustache mention it as a top recommendation a few years back but it took me this long to get a copy and read it. But it was well worth the wait.

Your Money or Your Life was originally published in 1992 but was re-released in 2008 and 2018 with the addition of a foreward by none other than Mr Money Moustache himself, to be more relevant to today’s financial climate. If you are a finance nerd who loves spread sheeting, tracking every dollar and aspire to F.I.R.E. (Financial Independence, Retire Early) this is a book that can give you a thorough plan.

It’s based around the 9 steps Vicki and Joe used to become financially independent and the concept of trading your life energy for money. And has some amazing crossover if you love topics on Minimalism, Side Hustling and Frugality. This book touches on everything you can think of: how to invest your money, aligning your values with career and investing, ways to save money and live a more meaningful life and earning more. It provides you with the tools to track your income vs expenditure and your passive income as well as calculating your Net Worth.

If you are keen to make your money work for you and get your time back and want to get even nerdier with your budgeting approach and learn about investing this book is a great place to start.

2. The Total Money Makeover, Dave Ramsey

I first heard of this book about three years ago now and was the first personal finance book I read on my finance book binge. As I read it something just clicked inside of me, as if Dave was saying the words I had been thinking all along – I hate debt and I want out! His reference to #gazelleintensity just described my attitude to debt in a matter of two words – RUN FOR YOUR LIFE.

The Total Money Make Over is based on the 7 Baby Steps and give a clear cut plan on how to get out of consumer and mortgage debt and build wealth. If you are sick of living week to week and can’t take the stress of another financial emergency this book could seriously change your life.

Dave has some amazing principles on spending and approaching debt that can unwind you from even the most stressful financial situations without the need for bankruptcy but definitely with a bit of sacrifice – on a rice and beans level. If you are sick of debt please read this book today, you won’t be able to put it down.

1. The Barefoot Investor, Scott Pape

As an Aussie lover of finance, there was no way I could look past our own homegrown finance guru Scott Pape with his recent book The Barefoot Investor The Only Money Guide You Will Ever Need. If you want a finance book which won’t bore you and that can get your partner involved in the conversation this is it! The Barefoot Investor is based around Date Nights with your partner where you tackle different financial areas from Health Insurance, Superannuation, your Mortgage, growing your Wealth and Retirement.

A great one for people who get the chills thinking about budgeting, Scott’s bucket system is simple and easily implemented by even the most novice people. If you are an Aussie as well you can’t go past a recent book that focuses on the Australian related finance space and there is not one 401k or Roth IRA section for you to skip over 😉

And there you have it guys My Top Five Personal Finance Books to get you started on your #debtfreejourney and path to building wealth!

What are your favourite Personal Finance Books? Let me know in the comments, I am always keen for new recommendations! 🙂

[Photo: Sharon Mccutcheon @ Unsplash.com]

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 Communicate With Your Partner About Finances

Posted on February 20, 2018

Have you ever felt overwhelmed by the financial stresses in your relationship and struggled to effectively communicate with your partner about budgeting and finances? *Raises hand*. Financial discussions with your loved one can cause stress and anxiety, but if left unresolved can cause more serious financial woes and long term unhappiness in your relationship.

Maybe you are the one who carries the bulk of the financial stress on your shoulders because you feel your partner has enough to worry about? Perhaps your partner doesn’t want to hear about financial issues or they don’t even know there are issues as they assumed you have everything under control? By being open an honest with each other you can remove the guesswork out of your financial security and get the reality of your finances out in the open so you can both start working together on a plan of attack.

Money can be one of the biggest make or break things in a relationship. Relationships Australia 2015 survey found that 7 out of 10 couple report relationship tension as a result of financial woes and stress. Finances are not something that should be pushed under the rug or left alone to cause endless stress in your relationship. Ignoring them will not make the bills disappear but make them harder to deal with when the time comes to pay them… and it will come.

Even though at first, it may be a difficult and awkward subject to discuss in the beginning, you will have more of a chance to achieve your financial goals when you are both on the same page working as a team. Don’t struggle alone when you can both be working together tackling your debts and achieving your savings goals head on. Just like having a gym buddy to hold you accountable for going to the gym and finishing a set, having your partner on your team will help keep you accountable to your financial goals.

Even if you aren’t married and have separate finances that doesn’t mean that you can’t both be on the same page when it comes to money and will certainly give you a head start if you relationship does progress to something more down the line.

Here are they are: 9 Tips On How You Can Communicate With Your Partner About Finances.

How to Communicate With Your Partner About Finances

1. Set a time to meet and discuss finances
Avoid leaving financial discussions with your partner to what you can yell over the TV ad or what discussion you can get in before you are interrupted by the kids. The best way to communicate with your partner about finances is to plan some time to get together and talk about your future goals and current finances in a quiet place so you can both focus and not be under other pressures or distractions. It can be be a over a home cooked meal when the kids are out for the night or morning (if you have kids) or out on a date night over dinner, it doesn’t matter just find a spare hour somewhere in your schedule to chat about your finances.

Don’t forget to let your partner know in advance that the purpose of meeting is to discuss about finances so they aren’t blind sided. After the first one, make it a regular gig. Set a monthly reminder to sit down for half an hour to talk about your budget each month and how you are progressing towards your goals.

2. Approach the conversation from an understanding and non-judgmental zone
When you try to open a dialogue and communicate with your partner about finances, don’t assume the worst or treat the meeting as an opportunity to bring up every unacceptable expense (in your eyes) that you have been bothered by in the past. You may find that your partner actually agrees with you on getting your finances in better shape and completely acknowledges what your financial problems are. They might have even been thinking the same thing and weren’t sure how they were going to bring it up with you!

Sometimes they are even aware of their own spending problems but don’t know how to change their spending habits and need a plan and your support in order to help keep them on track. Approach any conversations calmly and with the intention to work as a team, not go on the attack and lay blame on your partner. Acknowledge that you might even have your own over-spending areas that you need to work on and be honest about these to your partner. Leave the mistakes in the past, and focus on what changes you can make in the future to reach your financial goals.

3. Know your why
Get on the same page with your goals. Budgeting isn’t meant to be about torturing yourselves indefinitely and saying no to anything and everything that is non-essential expenditure. It is about making your goals and dreams come to life. How far away that is will depend on your current state of finances. If you are swimming in credit card debt and other loans with little in the savings account it may take a while for you to see that you are making progress on your debts but you will get there with a little bit of determination. And there is nothing more motivating that having future plans written down and at the forefront of your mind. These goals are what are going to keep you on track during those times when you want to quit.

Write down your joint future goals:-

Do you want to go on a family holiday next year?
Be debt free so you or your partner can cut back hours at work or for you to spend more time with the kids?
Are you wanting to stop living week to week?
Or remove the anxiety you feel about your finances and get an emergency fund built up?If you are both on the same page you will have more motivation to stick to your financial plan for the long haul. Put your goals somewhere where you can see them such as a Financial Vision Board or on the fridge so they are there to remind you of why you are doing this.

4. Acknowledge the finance problem areas
Now that you’ve got your financial goals written down and you’re excited to take the next step in your financial freedom journey, it’s time to acknowledge the problem areas. If you are hiding debt, bills or anything from your partner, now is the time to come clean. A genuinely honest relationship includes being open an honest about any debts that you may have or spending habits that you know are not helping you achieve your financial goals. If there are any pressing financial issues bring them up and be ready to hear them. Take a deep breath and appreciate that your partner is being honest with you and starting to communicate.

Acknowledge that your budget issues are not going to be something that you can fix in a night or a week, or possibly even a year. This is going to be a long-term process that will take time to work at. Be patient with each other as you slowly replace your less-than-ideal spending habits with more intentional ones.

A good place to start is reigning in the expenditure that won’t hurt so much. Cancel unwanted gym memberships or subscriptions to services that you are no longer using, make more of a conscious effort to save electricity where possible, renegotiate your mortgage to a lower rate and commit to only shopping once a week to reduce the amount of times you are stocking up on groceries. None of these measures leaves you feeling any extreme budget pain but the savings will give you a super helpful boost to paying off those debts and speeding up the debt repayment process.

As you progress in your financial journey you can move on to tackling those not so easy spending problem areas. Consider how you can reduce any excessive spending on areas such as:

Overspending on clothing, shoes, accessories
Regular costly dinner outings
Car repayments that you cannot afford
Spending on hobbies that is costing large sums of money
Buying coffee multiple times a day, every day

Don’t try to tackle the problem expenditure all at once. Pick one and go from there. Maybe this month instead of buying coffee each day you could bring your own from home or make one at work. Next month you can limit your expensive dinners to once or twice a week and cook at home more. The following month you could adopt shopping at thrift stores instead of buying everything brand new. These small changes may seem unimpressive on their own, but when you add all those savings together it can really add up! Over time you will build your budgeting muscles and find new ways to save.

5. Plan your budget
Your budget needs to be something your partner and you both agree on. Think of it like taking on a new commitment, you both have to sign on the dotted line. By leaving your partner in the dark about finances they may think things are rosier than they are and that is not going to work now that you are a team! With the numbers in black and white you can both be on the same page and work together to dodge any budget pressures that come up.

Don’t misconstrue that being on a budget will suck the joy out of life. It is a tool to make your life easier, with the end goal being what you want it to be! More time, regular holidays or an emergency fund, whatever your financial goals are. Be sure to allow individual and joint fun money in the budget (we’ll go into that below) to ensure your budget is realistic and that you will not set unrealistic expectations and fail before you start.

Over time you will get better at finding frugal ways to have fun such as going for a long walk or bike ride together, inviting your family over for breakfast, going to the beach or inviting friends over for a night of board games. If you think you can’t have fun without spending money you have tried hard enough 🙂

To help you get started, you can download my Budget Worksheet here. Don’t forget to include those often missed budget expenses like your Spotify and Netflix membership, house repairs or beauty treatments!

6. Set an allowance for you and your partner.
This is a great tool and bound to save you lots of arguments over spending by yourself and your partner that you both probably will never agree on (I am a non-coffee drinker, the hub loves his daily coffee, I’ve come to terms with it ‘;)). We are all individuals, with our own interests, hobbies and wants, use this allowance avoid explaining to your partner every purchasing decision you make.>

Having $0 for ‘free spending’ to do as you wish is not going to work, nor is questioning every dollar your partner spends. Set an allowance based on what your budget will allow. It could be $50 or $100 a week to spend each, whatever you both agree on and stick to it. This gives you and your partner the autonomy to spend it as you see fit. If you have kids you can add in a small allowance for them, it will be a great start to teach them about budgeting and saving!

It also takes some of the guesswork out of budgeting and makes it easier to stick to your goal. Withdraw your weekly allowance in cash or keep it in a separate account for each of you so it is easy to keep track of. Simply check your wallet or bank balance and you will know what is left. Great for those who aren’t that great at keeping track of their spendings or remembering to enter them into an app or notebook. Of course if you don’t spend it all you can save it up to buy something you really want down the line!

At the same time set up a joint spending account and allowance so you have some money each week to go out on a date night or day, or to catch up with friends. After a while you will get into the routine of what you can and can’t afford and sticking to your budget will become less of a struggle.

What about expensive hobbies?
If you or your partner have some big spending categories, this might also be a good time to set other budget allowances for those expenses to keep them in check. If you love shopping for new outfits, maybe you can set yourself an annual allowance on what you are allowed to spend on clothing. This can work for any expense; concerts, hobbies, beauty, new tools etc. This gives you the permission to spend guilt free on those items when they are in budget and helps to keep you conscious of when you are overspending on those categories.

7. Be considerate and honest
I’ve heard horror stories of partners going out and buying new cars without speaking to their spouse first. This kind of thing makes me cringe. Agree to avoid making large spending decisions without consulting with your spouse first. If you have shared finances and even shared debt, you should both be on the same page with spending. It can be helpful to agree on a threshold as to what you need to discuss together before buying something.

You don’t have to ask permission to buy every single item, how exhausting would that get! I’m suggesting to consulting your partner before buying those more expensive items. Such as a new appliance, phone or piece of furniture for the home. Even ignoring the financial aspect, it can’t hurt to ask for their opinion on something you want or need they made have some great advice or suggestions to offer, and it is particularly handy if it is something for your home (I’ve certainly unknowingly bought some things home that were deemed “ugly”).

8. Get Educated
Open your mind to new budgeting tricks and tips and financial strategies. If you are short on time listen to an audiobook on your commute to work or on your next shopping trip – wherever you can. I recommend listening to (or reading) Scott Pape’s Barefoot Investor and Dave Ramsey’s Total Money Makeover which have some great strategies to get your started on your new financial journal.

It’s something that might get you more open to talking about finances with your partner and get you both excited about your new financial path! If your partner wouldn’t date touch a finance book, don’t push the issue. You can sometimes effectively communicate with your partner the message of what you are reading just by discussing your favourite parts of the book with them.

If you sign up for my mailing list you can also get your free copy of my eBook “101 Ways to Save Money Whilst Still Living Awesomely!”. Reading about finances might not be the most enjoyable thing for everyone but listening to a few financial gurus will open your eyes and ears to things that may make achieving your financial goals that much quicker!

9. Be patient
You might not be on the same page at day one or day 100. Sometimes people need more time to grasp new ideas and lifestyles and long-term support in order to do so. I’ve listened to many Dave Ramsey Debt Free Scream stories where people had read the Total Money Makeover books years earlier and yet only started to change their habits after years of thinking about. Or it took their partner longer to get on board but once they were they were a strong team.

It might not happen as quickly as you would like but over time you will learn how to effectively communicate with your partner. In the meantime you can always lead by example and start making changes to your own spendings such as reigning in grocery spending, skipping the drink at lunch and just bringing your water along with you and finding more frugal ways to catch up with friends such as skipping lunch and going for a walk instead.

Find what your partners passion is and what they will be willing to change their financial habits for. Go back to your why and find out theirs. Sometimes the only thing they need to hear is that it would make your family more financially secure and both of you happier to get them motivated to start on the financial journey with you.

Don’t forget to be a little flexible. Maybe your loved one won’t give up their monthly gym membership for the budget, their Audible membership or their daily coffee but hopefully they will be willing to make other changes to get you to their goal and be more proactive in reducing expenditure such as taking more notice and filling up on cheaper fuel days or cancelling their unwanted memberships.

When the above measures aren’t helping

Of course there are instances where no amount of discussion or understanding can get your partner on board with your financial goals. If your efforts to budget and get ahead are met with constant resistance you may need to consider other issues that are present. If your partner is facing issues with addiction e.g. drugs, alcoholism or gambling, attempting to adjust your budget may not be met with encouragement and make your efforts come undone.

I won’t go into that situation in too much detail as this is a finance blog and I am no psychologist, but I will mention that if you partner is constantly resisting and attempting to tear down your efforts to get ahead, that it may be time for them to seek help with those issues, or for you to reassess the relationship and whether it is in line with your long-term values. This article written by The Minimalists may help you with how to approach a relationship with deteriorating communication.

Do you have any tips for how to effectively communicate with your partner and approach budget and finance conversations? Please share them 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 🙂

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