• The long road to reaching your goals

    Today marks the end of Women’s Money Week. I’m so chuffed to have made their Ultimate Blogger list – the highlight of my blogging journey to date for sure (except maybe the time I was nominated for Best International Personal Finance Blog).

    Confession: I’m currently teetering on the brink of another of my mini 20-something crises. For those of you with concrete and definite goals, though … push past the initial doubts and surge of fear. Nothing worth having comes easy, and if you really, truly want to make something happen, I promise you can.

    If you’re not happy with the life you’re leading, take a step back. Take time to reflect and articulate where you want to be, and work out how you’re going to get there. And maybe you’ll decide you’re not ready to take the next step yet – maybe the unhappiness isn’t outweighing the good right now – but if the balance tips, then you know what to do.

    Okay, I’ll bite. I’m thinking about leaving the country – either for a bit of a travel break, or to Australia for a while. I’ve talked about why I don’t think extended travel is for me before, but the itch is growing stronger. I’ve also talked about my lack of interest in a typical Kiwi OE, but if either T or I could land a decent job across the ditch (no visa requirements for NZ citizens) I think a change of scenery could do us good. Just little ideas brewing, for now…

    There’s been a bit of a backlash in the blogosphere recently against the concept of goals. I understand, and agree with, the argument against this new age where there’s a constant push for self improvement by a spate of happy shiny blogs (lifestyle design bloggers, mummy bloggers, etc) that lead us all to believe that everyone lives these magazine-spread perfect existences, when that’s simply not true. Life is hard, life is ugly – we all have relationship problems, health problems, money problems, even if we don’t broadcast them to the world on our blogs. This can be unhealthy. But blogs, like magazines, only tell part of the story. We know models get Photoshopped. And it should be obvious too, that our blogs only reflect certain aspects of our lives.

    But goals keep you moving, keep you hustling. Without a plan, it’s that much harder to get where you’re going – if you even know where that is.

    In my mind, the key is narrowing it down to the ones that really matter – zeroing in on the few priorities that really burn you up. Take it from someone who has a bunch of disparate interests: spreading yourself too thin results in burnout. If you really want to succeed, this is not the time to be a jack of all trades; this is the time to focus.

    And remember, the first step is always the toughest – but it gets easier from there on.

    This post is part of Women’s Money Week 2012. For more posts see the Goals and Taking Action Roundup

  • How I FINALLY learned to budget: The long road to budgeting bliss

    How I learned to budget

    I’ve always been good with money. I got my first job – a paper round – at 13, making something like a whopping $80 a month, and saved every dollar I earned.

    I got my first real job in Year 11 at a cafe, working weekends. Then I decided I wanted to get an electric guitar, so I got another job at a call centre working weekdays after school. I worked constantly for months until I scraped together the $600 for my Ibanez and my amp, plus other paraphernalia like cords, a case, picks and the like.

    I moved out of home the following year and got by with barely $20 a week to spare, but I made it work.

    Then I – we – lost track a bit when T and I moved in together, throwing a car into the mix, along with other things. After a few months I sat down, went through our bank statements and was shocked to see what we were spending on food. (The first step to budgeting: tracking, and knowing what you’re spending.)

    Thus began some pathetic attempts at budgeting, stymied largely by variations in numbers. Income varied every week. Rent was the same every week, but all our other expenses varied. Plus of course, there are all the irregular expenses that crop up at the least opportune times. Cue head explosion.

    I would mock up beautiful budgets with colourful bars for each category. Breathless, I would log on after pay day and see how the numbers stacked up against the plan. Almost always, I would be thwarted, and give up yet again, thinking I could never make it work.

    Until one day I realised something very simple. The numbers fluctuated. And so should the budget. A budget is a living document that evolves as necessary.

    Instead of trying to make the money match my ideal budget every week, I needed to tailor the budget to that week’s numbers.

    Amazing, right?

    So simple, so obvious. Nonetheless, this was a major epiphany that cut through the fog.

    Did some overtime? That can go into savings.

    Lean week? Time to trim and eat in all weekend.

    The next step: figuring out how to handle those irregular expenses. I sat down and calculated what power, phone and internet was costing us, as well as less frequent payments like insurance, car registration and all those other bills. I added up an annual figure and divided that by 52. Every week, I put aside that amount into a subaccount, and then draw money from it as bills come due.

    Then simplify, simplify, simplify. Now that I’ve got a good system going, our expenditure in any one week is pretty predictable. Rent, groceries, petrol, bill money, and a little bit for fun – eating out, entertainment, etc. Done. It’s at the stage where I no longer budget, in fact, although I carefully track our spending every month.

    In my mind, budgeting bliss comes down to three steps:

    • Awareness – getting your head out of the sand about what you’re spending and facing up to the numbers
    • Action – doing something about it. Tackling debt, cutting back on frivolous spending, finding ways to trim your essential expenses
    • Automation – getting into a comfortable routine. Once this is second nature (I might even venture to use the term “autopilot”), you may not even feel the need to budget as such any more

    Need some more guidance? I like the 60% solution – a basic formula with suggestions for how much you should spend on various things:

    • 60% to Committed Expenses
    • 10% to Retirement.
    • 10% to Irregular Expenses
    • 10% to Long-Term Savings/Debt
    • 10% for Fun

    And if you’re after a budget spreadsheet, Budgets are Sexy has a handy list with a ton of free templates here.

    Are you a stringent budgeter, or more of a hands-off gal like me?

    This post is part of Women’s Money Week 2012. For more posts about budgeting see the Budgeting Roundup

  • The long road to financial harmony

    HOW TO FIND FINANCIAL BALANCE WITH YOUR PARTNER

    Financial nirvana. Does it it exist?

    I’m not sure, but I can tell you that no two people handle money the exact same way, and being on a different page from your partner is a recipe for teeth-gnashing and tears.

    However you handle finances – joint accounts, separate, or a mix; equally, or with one person handling the bulk of the admin – reaching some basic agreements about money management is so important. Think along the lines of:

    • how you’ll each contribute to expenses
    • how you handle debt
    • how you’ll save for big goals
    • how much is okay to spend without consulting the other person
    • how much is reasonable to spend on (fill in the blank – could be clothing, food, video games, whatever)

    T and I kind of fell in the deep end with joint finances early on in our relationship. We moved in together, he started a new job and didn’t have a bank account of his own, so organised to be paid into my account. I also started university, we bought a car, and generally had more cash than we’d ever had – but vehicle expenses, getting T set up with the basics for work and life, and letting the extra income go to our heads (mainly to food, actually) meant we struggled a lot.

    Pretty early on, our wildly different money personalities became evident. I’ll be honest, it wasn’t easy. But I don’t think it would have been any easier if we’d delayed it. Heck, it might have been even worse, if he’d been left to his own devices.

    I can’t tell you when you should have the “money talk” with your partner, or what kind of financial system you should set up. Heck, some people go all their lives without knowing how much their significant other earns. Separate finances make total sense if both parties already have a good thing going individually and don’t mind splitting everything (personally I’d get fed up with all the calculations; do I really want to be keeping track of who last bought toilet paper .. or, later down the track, diapers for our little bundle of anxiety?).

    We went all out early on, but I’ve since refined it so that T has his own separate savings account and his own allowance/spending money every week: proof that joint finances can work even when one is a saver and one a spender. Whether we’ll combine savings fully once we get married remains to be seen, but I think we’ll always maintain some kind of husband fund for him to save up for toys – a bigger motorbike, a project car, etc. (Plus of course, even if both parties have access to the joint accounts, it can be nice to have a pot of your own.)

    What if it all goes pear-shaped?

    I suppose that’s a big one in favour of separate accounts. It’s true, nothing in life or love is certain. But if you have any sense (and I know my readers do) you wouldn’t be meshing funds unless you were pretty serious. Making a personal and emotional commitment to another human being is also a financial commitment, and for some couples that lends itself to joint bank accounts.

    Caveat: if I was a celebrity, I definitely wouldn’t. Nor would I fail to get a prenup and I sure as hell would not change my surname. I know every celeb thinks their marriage will be different, but the odds are heinously against you.

    Seriously though, while I would not recommend mixing finances as early as we did, I’m happy with how it turned out. We’ve settled into a semi-blissful groove, and if we ever split, it’s decided: he takes the TV, food processor, microwave, and his motorbike; I get the bed, laptop and car.

     

    This post is part of Women’s Money Week 2012. For more posts about relationships and money, see the Relationships and Money Roundup