Never have enough money? Living from one payday to the next and want it to stop? In this article, money coach and financial counsellor, RAEWYN BLOMFIELD looks into the downside of poor money management habits and explains the positive steps you can take to set yourself on a path to financial success.
The fallout from COVID-19 is the biggest financial upheaval Australia has seen since the Second World War ended in 1945, around 75 years ago.
On May 5, the ABC announced that the ABS had released statistics saying COVID 19 has cost a million Australians their jobs in the four weeks between mid March and mid April. And that’s not counting the people who went onto reduced hours or were furloughed.
All the financial and political pundits are saying the financial fallout will be around long after the health aspects have cleared; we are talking months if not years.
Have you planned how you going to weather the COVID-19 financial storm over the year ahead? And remember, your success or failure depends more on your financial habits than your income.
It’s not how much you earn that counts, but the money habits and skills you had before COVID, which will indicate how easily you sail through this crisis.
Do you have these habits and skills?
- You live within your income; you never have to use a credit card to make ends meet.
- You have an emergency fund saved to dip into when unexpected expenses crop up.
- You have insurances in place to mitigate the effect of a major emergency.
- You communicate with your partner and family about how the family money is spent, so everyone is working towards joint family goals.
If the answer is not yes, yes, yes, and yes, things might get a trifle uncomfortable in your household.
Take a minute to think of WHY you are in your current financial position.
What money choices have you made which held you back from getting your financial house in order?
‘I knew it was important, but I couldn’t afford to do that’ you say.
If that’s so, why were you not prepared to give up some of your spending choices?
Can you identify what were you not willing to give up in order to have financial security?
What drives people’s money choices?
People make decisions based on emotions then rationalise their actions with logic.
They spend their income according to their money values, which are based on their money script.
Money scripts have been defined as unconscious beliefs about money carried from childhood which shape people’s financial behaviours and financial outcomes.
Examples of money scripts
- My children deserve the best and I’m going to give it to them.
- Nothing wrong with borrowing money to show that you’ve made it.
- Life is for living, not for counting pennies.
- Money is not important, people are.
- I’ve got better things to do with my time than stress over money.
- I give it away and get rid of the responsibility.
- Never take risks with money.
- You’ve got to save for a rainy day.
- Money is hard to come buy and you have to watch every cent.
Brad Klontz developed the Klontz Money Script Inventory to show that certain attitudes about money can predict how the person will behave with money.
This inventory identifies four money personality types; one of the types is the Money Avoider.
Is your money script a money avoider?
Does this sound like you? You know what you ought to do.
You should have a budget and record your expenses, so you draft up a money plan. It’s simple. But there are always excellent reasons why you can’t follow your budget. It’s far too much of a drag to write down everything you spend.
Recognise any of these actions?
- Your credit card statement arrives and when you nerve yourself to open it, you think there’s been a mistake.
- You relax at night by browsing your favourite shopping sites.
- When doing your money plan you worked out the amount you spent on credit cards and direct debit – go you! But forgot about the boring direct debits and automatic transfers.
- You virtuously stopped using your credit cards but the various after pays are now up to $300 a week.
Karen McCall from the Financial Recovery Institute has a name for this deliberate refusal to look at your spending – living in a financial fog.
Develop the habit of Money Resilience
Money resilience is the speed with which you bounce back after a financial crisis.
One of the easiest ways to get in a financial muddle is to lose track of your money.
It’s not how much you have or earn that counts, but the habits and skills you had before a money crisis hits which will indicate whether, and if so, how, you will get through it.
The habits and skills are the same old things you have heard before:
- Write your money plan
- Track your money as you spend it to make sure you stick to your money plan
- Have an emergency fund – it’s a when not an if that you’ll need it
- Communicate to those you share your budget with so all are working together
But now, in the fallout of COVID-19, the stakes are much higher than they were before. Can you afford the consequences of your own inaction?
I would love to work with you to give you the skills you need to move forward on your financial journey and to better prepare you for the future. With your spending controlled you can then start to create for yourself and your family a better lifestyle and more secure future.
Money coach and financial counsellor, Raewyn Blomfield, is the principal of Money Health Money Wealth. Raewyn helps people to manage their money and take control of their spending and debt so they can achieve their financial dreams. If you would like to find out more about her services you can contact Raewyn by calling her on 0468 317 259 or simply send her an email.
General Advice Warning: This blog is not designed to replace professional advice. It has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice, in light of your own objectives, financial situation or needs before making any decision as to what is appropriate for you.