Money Makeover

The Secret to Budgeting, Saving and Investing for Financial Success

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• Publisher: Wiley
• Year: 2010
• ISBN:
  9781742469638
• Edition: 1
• Topic: Personal Development
• Subtopic: Personal Finance

You don't have to earn megabucks or have a degree in economics to make the most of your money.

With the help of Money Makeover, you'll discover how easy it is to take stock of your finances and create the life of your dreams, without having to give up red wine or wade through finance mumbo-jumbo!

Inside this book you'll find practical information (without the boring bits) and inspiring real-life stories that will empower you to create your own financial plan.

You'll discover:

• simple strategies to work your way out of debt
• fail-proof saving techniques
• how to invest in shares, managed funds and property, step by step
• super tips to help you sort your super
• easy ways to factor in life's little curve balls -- relationships, bambinos and career changes.

Money Makeover is for women of all ages wanting to take control of their financial destiny and make their money grow.

Part I: Getting it together

So here’s where your money makeover starts.

Before you do anything else, you’ll need to get your current financial situation sorted out — you can’t become a successful investor until you have a true picture of where you stand financially and a good understanding of where you want to go.

In part I, we’ll cover everything you’ll need to know in order to put yourself in the best position possible to start investing. And while things like setting goals and putting together a savings plan can sound all too much like hard work, you should never underestimate how important they are in swinging financial fortune in your favour.

In the next four chapters you will:

$ work out what money means to you

$ learn about good and bad debt (and how to get rid of the bad)

$ pick up some budgeting tips

$ uncover a couple of nifty techniques to help you save more than you ever thought possible

$ learn the fundamentals of becoming an investor.

Go forth and conquer!

Chapter 1: Setting your goals

There once was a girl called Sheree

Who dreamt of sailing the sea

She wrote a great plan

Worked hard as one can

And now sails her yacht off Fiji.

Ah, money. We have such a complex relationship with it. On the one hand we’ve grown up being taught that ‘money makes the world go round’; and yet on the other hand, we’re taught that ‘money isn’t everything’. Confused, anyone?

Before you can jump on the path to financial success, you need to look at the way you think about money and get rid of any preconceived ideas and bad money habits that might be holding you back. Like it or not, money affects every aspect of your life from where you live to how you live, so it’s vital that you’re the one calling the shots in your relationship, not the other way around.

You also need to stop for a moment and decide on your financial goals. Life whizzes by so fast that if you don’t pause to give serious thought as to what you want to achieve financially (and why), future decisions may get made on the run without taking into account what’s really important to you.

Then, as with any good makeover, you need to commit yourself to taking action. As they say, there’s no time like the present — so giddy-up! In this chapter we’ll cover:

$ your relationship with money: taking a look at yourself in the mirror

$ money myths: 10 thoughts to banish forever

$ setting goals: working out what you want to achieve

$ taking ownership: committing to making it happen.

Your relationship with money: taking a look at yourself in the mirror

As trusty old Dr Phil will tell you, you can’t move forward until you have addressed the past. The same goes for your relationship with money. Over the years you’ve probably collected baggage that you might not even know you have.

Often the way people behave with money is not built on reason, but on emotion. For example, splashing out on an expensive dress can be more about getting swept up in the adrenaline of a shopper’s high (or perhaps caught in the grips of a very persuasive salesperson) than anything else. How you think about money can also be related to what you’ve been taught (or not been taught) growing up. Your family’s attitude towards money can have a huge influence on the way you behave. If you grew up hearing that the only chance you’ll ever have of becoming wealthy is by making it as a high-flying lawyer or a doctor, why would you think otherwise?

Nina’s story (age 39)

It was completely by accident that I became interested in investing. In fact, until my mid-20s I’d thought my only chance of becoming wealthy would be to marry someone rich or to win Tattslotto. These were notions my parents had unconsciously instilled in me, but not through any fault of their own — it’s just that no-one had ever taught them about money, either.

About 12 years ago, I was in the city one Saturday afternoon when it started to rain, so I ran into a bookshop to escape. Walking down the aisles a book called The Wealthy Barber caught my eye and I picked it up and started to flick through. I’d never read a book about money before, but this one sounded interesting and seemed accessible so I paid for it and left. Reading it later that night was a revelation. For the first time in my life, I realised that I wouldn’t ever have to worry about money again if I took a few simple steps. I understood that my financial future was firmly in my hands.

Luckily, I didn’t have any credit card debt — that was one thing my parents had taught me about money: to always pay my credit card balance off in full every month. So the first thing I did was to open a managed fund with $2000, after which I committed to monthly direct debits of $200 straight out of my bank account. In the space of three years, the balance had grown to around $20 000. I’d also saved enough for a deposit on a little apartment in the inner city. It was the start of my life as an investor.

It’s time to air your dirty laundry

Do you have any long-held notions about money that aren’t doing you any favours? Have a good think about your attitude towards money. For example, do you think you’re just not one of ‘the lucky ones’ and that you’ll never be well off? Or are you waiting for that big pay rise or Tattslotto windfall to head your way before you start investing? Consider the way you behave with money and look at your habits closely — try to be as honest as you can. By understanding your attitude towards money and committing to changing those beliefs and behaviours you’re taking your first step towards financial success.

Examples of bad habits

Just like biting your nails, there are plenty of bad money habits that hold women back when it comes to taking control of their finances. Do any of these sound a little too familiar?

$ Pay Cheque Patty lives from pay cheque to pay cheque, finding herself with no savings and no cash left over at the end of each month.

$ Spendy Sasha finds it hard to resist a sale and easily gets caught up in buying frenzies, purchasing things she doesn’t really need, only to regret it later.

$ Generous Georgie shouts dinner and drinks for her partner, friends and family way too frequently. She spends too much on gifts, and often finds that she doesn’t have enough money to pay for essential living costs and bills for herself later. Generous Georgie has been spotted ‘loaning’ money to family members and friends who she knows are unlikely to pay it back.

$ No-Responsibility Nicki knows she’s bad with money, but takes little action to change. Nicki knows that she can call on her friends, family and partner for a loan whenever she needs help — so she does.

$ Credit-Happy Chrissie views the money she has on her credit card as her own, and is all too happy to whip out the plastic to buy things she knows deep down she can’t afford. Chrissie usually finds herself unable to pay off her credit card balance each month.

$ Bad-Deal Belinda doesn’t shop around for a good deal on anything — bank interest rates, mobile phone deals, a new fridge, you name it. She never asks for a pay rise or promotion although she knows she deserves it.

Try this

Confession time

Grab yourself a notebook. At the top of the first page write: ‘Money habits I want to change’. Think of at least three things you recognise as bad money habits you want to change and jot them in your book. Writing things down can really help as it makes them ‘real’ and will give you a reference point to come back to later on.

Money myths: 10 thoughts to banish forever

We’re a nation of list lovers — rich lists, best (and worst) dressed lists, the Triple J Hottest 100 list, we love them all. So we thought we’d join the ranks of list builders and come up with our very own. Without further ado we present the ‘Top 10 myths about money that you must banish from your mind’ list:

1. Money is dirty. While accumulating riches for the sake of it or aspiring to have three sports cars sitting in your garage could be considered questionable pursuits, having money can give you the power to do good by supporting the causes you believe in. I...

Table of contents

• Cover
• Table of Contents
• Title Page
• Introduction
• Chapter 1: Setting your goals
• Chapter 2: Getting out of debt and to ground zero
• Chapter 3: Moving forward - saving is a girl's best friend
• Chapter 4: Becoming an investor
• Chapter 5: Shares
• Chapter 6: Managed funds
• Chapter 7: Superannuation
• Chapter 8: Property
• Chapter 9: Responsible investment
• Chapter 10: Insurance
• Chapter 11: Love and money
• Chapter 12: What life throws at you
• Chapter 13: The secret revealed
• Help when you need it