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Skipping Lattes Won't Make You Rich

Posted on 28 Aug 2015 by Shammika Munugoda

Skipping Lattes Won

Whenever we hear the words "saving money”, our very first instinct is to think about economizing on daily lunches, skipping breakfast or even not buying that favourite caffè latte you always have in the morning. But does it have to be this extreme? We've all heard those financial advice that are so cliché - "spend less than you earn", "first save, then spend", but are they practical enough for us to follow and most importantly, how effective are they? We asked five professionals about their take on saving money.

Peter Horsfield - an experienced CFP from PeterHorsfield.com.au

  1. Know what is important to you. If you don't have a good enough reason, then when the going gets tough (as everyone who is successful will tell you) you chance of failure increase. Failure only happened when you decide to give up on your goal before reaching it.
  2. Clearly identify your goals. This requires naming the goal, amount required (finish line), dates, and visualisation of how you will feel once you have achieved you goal. Goals need to be SMART (Specific, Measurable, Aspirational, Realistic & Time Bound).
  3. Have a Game Plan. Know where you are and have a list of activities you need to do on a regular basis. Check in along the way (monthly/quarterly/semi annual and annual) to see your progress, or not and make appropriate changes. Regardless of doing something or nothing time will march on. 

Leann Middlemass - a wellness expert from MyDestiny.net.au

  1. To get a better understanding of your money habits, track what you spend for a week. By noting your purchases you will get a better feel for what is a want in your life and what is a need. The objective is to eliminate too many wants.
  2. Then work out your weekly spending for lunches, petrol and incidentals then take this amount out in cash each Monday. It's odd how you'll hate to break a $50 for incidentals and you'll be surprised at the different conscious choices you'll make just by using cash. If you run short for the week you'll then have the opportunity to be more creative in what you can and can't do on the weekends.
  3. Keep a track of all your monthly income and expenses via a lifestyle planner. In the months when you have additional income you may want to look at buying birthday and Xmas presents for family and friends. Not only will you have the right gift on hand when you need it but it will give you the chance to look for bargains along the way.

Stacey Price - a financial coach from HealthyBusinessFinances.com.au

  1. Creating a budget and sticking to it. It is amazing what you can do without when you tell yourself you physically can't go to the bank to get any more money.
  2. I apply the 3 day rule for all spending - so if I think I need something - I wait a day. Day 2 comes around and if I remember what is was I was going to buy I tell myself I have to wait until tomorrow - which will be day 3. Usually by the time day 3 comes around I don't even remember what it is - or I realise that I have survived 3 days without it so I don't really need it.
  3. I have 4 bank accounts setup. Business Bank account, personal Account, GST account and Tax account. Every month I move money out of my business bank account and split it accordingly so that the temptation is not there to spend all my money. Cash in the bank is not always money to splurge on things - I want to build a nest egg with that money.

Edward Wall - an investor who already has a portfolio of 7 properties by the age of 25 - EdwardWall.com.au

  1. Think 'value' not 'money' - Stop thinking 'how can I get more' and start thinking about 'how can I give more' to other people, by adding value to them. Value is like a money magnet. How can you possibly expect to attract money when you are not giving anything of value in exchange for it? When it comes to money the last thing you should be thinking about is how you can 'get' more. You need to be focussed on how you can 'give' more value to more people. Money will be a bi product of doing so.
  2. Focus on asset building - Many of the most financially successful people in the world today will tell you that working for money is a very slow path to riches. If you want to be financially successful, you need to learn to stand on your own two feet through investing. This could be property, stocks, business or another alternative investment. Use your income to build your own assets.
  3. Find a mentor - All too often people are out to tell you what you 'should' be doing with your money. This often leads to making misinformed decisions about where you will put your money. Your best bet is to find a mentor who will not tell you what to do but help guide you to make wiser decisions for yourself. Education equals success so look for guidance, not instructions. 

Esther Lyndon-Jones - Marketing Executive for Move Out Mates

  1. Cash In on Your Finds - Have you ever found some hidden money in the pockets of your summer clothes or between the sofa cushions during a spring clean? Most times, though, one can find other goodies too - food stamps, discount vouchers, points, miles and other rewards that can also be cashed in, or used instead of money. If you have gift cards from Christmas that you don't want to use, for instance, someone bought you $100 worth of spa procedures and massages, but you are not a fan, look up for websites that will buy your unused gift cards. With the money you can actually buy yourself something you need. This way you can also free up some cash and use to invest in something small or to pay an instalment towards your loan.
  2. Don't Forget To Remember - In 2012, it has been estimated by ASIC (the Australian Securities and Investments Commission), that there are more than $670 million in forgotten funds, waiting to be claimed in Australia alone. If you think you may have forgotten funds you can check the Money Smart Website: https://www.moneysmart.gov.au/tools-and-resources/find-unclaimed-money and type your name and a few details. Now would be a good time to clean the spider webs covering your accounts and find your forgotten money!
  3. Sew Up The Financial Holes - It has been said: "A stitch in time saves nine!", I'd say: 'A stitch in time, saves a dime!' How to identify holes in your finances? Keep a log and for a full month keep track of every cent. Identify problem areas and brainstorm ways to "sew up the hole". Keep receipts and compare prices at different stores, ask yourself: "Did I need two of these, or could I've gone with just one". Make simple small changes in your life: instead of packed branded cereal, buy oatmeals and fruits. Make meal plans and make sure no food gets thrown away, skip on the restaurants for now. Also make extra servings so you can pack lunch next day.
Shammika Munugoda

Shammika Munugoda

Founder and CEO

Software engineer Shammika Munugoda is the founder and CEO of Boomeringo.  In 2005 Shammika arrived in Melbourne as an international student from Sri Lanka. Being an international student meant Shammika was only allowed to work a maximum of 20 hours per week. His years as a financially strapped student were an influencing force in the development of Boomeringo. Shammika’s vision is to make financial management simple, easy and accessible to everyone in Australia.