By Kate McCallum and Julia Newbould

Money is complex. Women know that they need to be smart about money, but are often stopped short- they don’t know where to go, how to start, or who to trust. They feel that most material on money is skin-deep – it’s either about budgeting or investing in the share market. They want expert guidance about money that explains the detail and the big picture, which is the genesis of the Joy of Money.

The Joy of Money starts with the personal foundations – what matters most to us, our values, goals and priorities. It then covers the practical elements at the intersection of money and life- creating a system for managing money, career, family, relationships, investment, superannuation, insurance, wills and estate planning and retirement planning.

This comprehensive money guide is designed to bring money to life – to put the joy back into money. You can read it cover to cover or dip in and out of the more pertinent chapters. We can’t guarantee you instant financial freedom – we can give you financial knowledge and step-by-step guides to set you well on your way.

Here’s just five of them.

Know your destination

It’s difficult to reach a destination if you don’t know where you want to go. It’s the same with your finances – you need to have your values, goals and priorities clear.

While many people start their planning with goal-setting, “The Joy of Money” authors, Kate McCallum and Julia Newbould recommend taking a step back. “The first step when you’re preparing a money plan is to identify your values” they say. “This is the secret to being happy with how you manage and spend your money” – and even more important if you’re navigating finances with a spouse or partner.

Get conscious about cashflow

When things are good, many people can get away with not being conscious about cashflow. Now is not that time. Getting conscious about cashflow about making the most of your income, knowing how you’re spending your money, and making smarter choices. Kate and Julia recommend thinking about managing spending by using the three Ds:

  • Don’t spend: which is about not spending money if you don’t need to. It’s about avoiding impulse buys (try the authors’ 30-day rule), lazy purchases (like take-away because you don’t feel like cooking), and hidden costs like insurance cover in super that you may not need. Why waste your hard-earned funds you don’t value or need?
  • Discount: this is about shopping around, buying on sale, and always asking for a discount – whether it’s your energy bill or a new laptop. It’s also about things like checking your super fund fees which can make a significant difference over time.
  • Defer: which is simply about delaying spending – particularly if you don’t have the ready cash to buy and would need to use borrowed funds or a credit card.

Pay yourself first

Most people save what’s left after spending. Kate McCallum and Julia Newbould say this is the wrong way around.

Save first. Then you avoid falling into the trap of spending too much.

And if you’re lucky enough to receive a pay increase or bonus, then save at least half of that. Half for to treat your present self and half to treat your future self.

Automatically diverting money into a special savings account is a powerful tool. It’s much harder to spend money you can’t see.

Start now.

With sharemarkets declining sharply in recent months due to the COVID-19 pandemic, you may feel like now is not the time to be investing. Yet despite sharemarket ups and downs, to build wealth, you need to invest.

Saving is important to accumulate money. Investing is vital to grow your money. Money in a savings account will probably earn very little – and usually less than the rate of inflation. Which means it’s actually going backwards in terms of its purchasing power over time.

Investing can get your money working harder the goal of growing it over time. And the sooner you start, the more time your money has to earn and grow. Let’s say you put $10,000 in a savings account and earned 1 percent. After 30 years you’d have $13,497. If you invested $10,000 into an investment portfolio and earned average annual returns of 5 percent at the end of 30 years you’d have $44,677. No extra effort. Just allowing investment markets to do the work for you.

Don’t do debt.

Credit card debt, car loans and buy-now-pay-later schemes for spending on lifestyle expenses are a bad idea. Just don’t do it. Why? First the item that you’re purchasing is unlikely to grow your wealth – in fact, it’s probably going to drain it. For example, if you use a loan to buy a car, your new vehicle loses value as soon as you drive it out of the car yard. And second, the loan will be unsecured and so cost you a bomb. Did you know that typical interest rates for credit cards range from 10% o 30%? Paying interest on an item that is losing value is not a smart move.

The Joy of Money

The Australian Woman’s Guide to Financial Independence $24.25

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