When the dreaded ‘B’ word can be your ticket to freedom

In our September edition, we posted the question, “Would you like to live the life you desire?” and encouraged readers to stop, allow themselves to dream and actually write down their wish list.

Sitting just behind the wish list in terms of financial importance is your budget (the dreaded ‘B’ word). Completing a budget is something that most people don’t want to do. This is crunch time, as it is amazing how the dollars just seem to disappear from payday to payday , if you aren’t disciplined.

Doing a budget helps to identify and clarify if you are living above your means or if you should have surplus cash in your bank account. This is reality time – please be honest with yourself – as this is YOUR life, remember?

When I see clients face to face, I write a homework list for them. Depending on how much information they bring to the first meeting, the list varies in length. However, almost 95% of the time nobody is aware of how much they need to live on each year. It is usually a shock when they tally it up. Some people are too scared to add it up, but this is time to be real.

As a financial planner, it is not my role to tell you that you can’t afford Tim Tams (although yummy – they aren’t very health for you). However, I encourage my clients to look at areas where they may be able to cut down (yet still enjoy the journey).

For example, I met a couple earning very good incomes but it was slipping through their fingers. When they did their budget they realised they were spending $20 per day each on lunch and take-away coffee. This equates to $200 per week (assuming a 5-day working week).

Discounting for 4 weeks’ holidays, they realised they were spending $9,600 per annum. They were both heavy smokers as well and were spending over $10,000 per annum in this area.

On their wish list they both indicated that they wanted to lose weight, be fit and health. They decided to give up smoking and only buy lunch one day per week as a treat. This gave them ownership of their decisions and helped them make the choice themselves on how to make changes. With almost $20,000 per annum identified just in this area, they became excited. Within just 3 months they proved to me that they were genuine in their desire to change the direction of their life. They had saved a hug amount and were able to cross off some of their short-term goals. We then identified what was a comfortable surplus to be able to work on their medium to long-term goals (their dream of a trip to South Africa became reality).

You can download a one-page budget template (excel) below https://goalsanddreams.wpengine.com/wp-content/uploads/2020/03/3.-Budget-Template-4.xls

Kath Orman

Originally published in Holistic Bliss Magazine – Issue October 2018

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