Make your money with new spending habits

In today’s world we are led to believe that you make your money with property or investments. The property people swear by their formula of building your riches through building a property portfolio. The investment bankers and financial planners will tell you that you can’t go wrong with investing in the stock market, provided you take a long term view. Common sense will tell you the truth is somewhere in the middle.

It’s true that you can make money through these investment avenues if you have the right amount of capital to start with, buy into the market at the right time, and have enough money so you can take some losses. The experience of the global financial crisis which started in 2007 was a wake-up call for many self-funded retirees and Mum & Dad investors, who took a serious hit to their nest egg when the crisis was unfolding. I won’t forget the look of pain and despair in people’s faces who lost all of their retirement income because they got caught in the net of companies who were operating unethically.

My passion as a Financial Planner is to help you understand what options you have to make your money and better your financial situation, regardless of the level of income you are producing at the moment. I like to help people to become more financially literate so that they can have much more informed conversations when they are ready to talk to a Financial Planner or Investment Banker.

Having options is one thing, but it also means that you have to make decisions about which options you want to pursue to fulfill your desire for a particular lifestyle. So let’s get down to the pointy end… how can you make money with new spending habits?

In my recent article “7 Tips to create a budget that works for you” you  received the tools necessary to develop your  Budget & Savings Planner. I hope you have started on your plan, and if not, will start now, because there is never a better time than now to make changes, especially changes to your spending.

When you have a Budget & Savings Plan, you can start monitoring and tracking your spending against the goals and targets that you have set as part of the plan… and because they are what you have decided is what you really want, you will find it easy to stay on track. After a couple of months, review your plan and pick five expense items that you think you can reduce, for example credit card, phone calls or personal loan.

One way that’s often overlooked on the road to financial independence is the option to reduce debt or consolidate debt, so that you don’t spend all your income paying interest which you could save to spend on investing into your financial future. The less you need to spend from your income to service debt repayments, the more options you have to make your money work for you in other areas. A good “rule of thumb” for saving is to allocate between 10% and 30% of your current income for any future investment. Make your money work for your goals, not somebody else’s.

Copyright © 2011 Robert Bauman

Disclaimer: This information (including taxation) is general in nature and is for Australian residents only. It does not consider your individual circumstances or needs. Do not act until you seek professional advice and consider a Product Disclosure Statement. To find out more about services provided by Foundation Financial Services Pty Ltd please visit my website.