All in Budgeting
In a recent blog post, I rebalanced our investment portfolio; this time, I’m rebalancing my life. I resigned from my PAYE job. I’m another step closer to early retirement, and I’m VERY excited about it! I always looked forward to working on Wednesday and Thursday each week, and deciding to leave a job I enjoy, plus giving up $20,000 a year, has been challenging.
My latest bright idea was for our whānau of three to spend the month of July earning more money while spending less of it. Call it a Financial Reset. Why? When the general societal vibe is that we are all in a rough state economically, it is easy for an individual to feel powerless. Although optimistic by nature, I’m not immune to this feeling of gloom. But instead of accepting that we are in a financial crisis, I’d prefer to take the bull by the horns and own our situation.
Congratulations, you have made it to the final blog post in this series of six: INVESTING. Investing can be incredibly complex, but I found a way to simplify it. I used to feel overwhelmed by the options available, but now I don't. I’m hoping to help you feel the same way. But still, this is one of the most challenging blog posts I have EVER written. Condensing “investing” into a single document is no easy feat. The Happy Saver was born out of my search for information about what I could invest our money in. It took me years to arrive at our current strategy, which combines KiwiSaver and ETF investments. Ultimately, I finally found THE perfect information, which I want to share today.
I think of debt as a phase of life I moved through. That period has passed, and I’ve moved on. Jonny and I have now been entirely debt-free since our early 30s, and I encourage you to head down the debt-free path as well. Debt has always had an ‘ick’ factor for me, a feeling I am grateful for. I like earning interest, but I hate paying it. Despite our bank trying to lure us back into debt to buy a rental property, there has never been a day that I/we regretted becoming permanently debt-free. We never have to seek the bank's opinion about our financial decisions again.
The fourth part of this six-part series is one of the easier topics to cover, KiwiSaver. Joining KiwiSaver is a no-brainer, and it still surprises me when I meet people who are not in it. I’m always looking ahead and doing my best to determine what I might need money for and how much I might need. I keep my ear to the ground about how affordable retirement is for New Zealanders. I talk to people over 65 and ask them what advice they would give me about financially preparing for retirement. Then I ask myself if, on my current trajectory, I’m heading in the right direction.
The best thing I ever did was set some cash into a bank account, which we could instantly access in a financial emergency. It is an amount of money set aside in a specific bank account to be used for bailing myself out if something happens that I didn’t otherwise plan for but I need money to pay for. It takes me less than one minute to log into my banking and move money from my emergency account to my spending account.
Budgeting is simply making a plan for your pūtea (money). Although I meet hundreds of people who are keen, motivated and willing to do better with their money, I meet few who are “Oh yay, let’s track our spending and earning each month”. I know. I understand your reluctance, but if you want to grow your wealth, you must do what wealthy people do. And they know how much they earn and spend. So, I’m sorry, there are no shortcuts here; you’ve just got to suck it up and budget anyway. Most will come to enjoy it as I do, simply because it gives me a feeling of control over my life and removes any anxiety around my pūtea. But for some of you, it will always be a chore. So be it! Do it anyway.
Welcome to the first post in a short six-part blog series. I’m crafting a collection of posts to cover critical areas that will set you on the right path with your pūtea. Part 1 focuses on ‘Net Worth’. How much wealth do you have right now? If you added it all up and subtracted what you owe, what are you worth? This can be daunting if you’ve never thought about it. However, the objective is not to objectify wealth; it’s to create a level of wealth that makes you feel comfortable and in control of your present and future.
In my last blog post, where I was giving away a bunch of books on personal finance, I gave you two ways to enter. You could either just click enter and get on with your day, or you could take a moment to answer my wide-open question, “Tell me in 100 words or less how you have improved your financial situation”. I honestly thought most people would just enter to win the books without taking the time to write a response. Gosh, was I wrong! My inbox quickly filled up with over 260 fantastic responses, and I’m sharing all of them below. Yep, all of them.
