A year and a half ago me and my better half bought a larger, if still modest, house to fit our growing family in. The last place was tiny and we were going mad in it so when we saw a really great house that we loved hit the local real estate market we jumped at it. We haven’t regretted it for a moment – it’s a lovely place and that extra bit of room has made all the difference.
However, with the bigger house came the mortgage. Our previous situation had been pretty easy to manage, so we had grown a bit complacent with our finances. We previously seemed to always save money just by being sensible, so we didn’t bother watch every cent. But one year into the new place, and rising (electricity, water, etc.) prices here in Australia, the writing was on the wall: we were going backwards quite rapidly. It was unsustainable and hard to fathom because we were living relatively modestly. We buy our clothes and cars secondhand. We don’t eat out much. We haven’t had an overseas holiday in 5 years.
Just five months later I am glad to say that we have totally turned our situation around and we are now saving a healthy little packet of dosh every month without fail. That’s been the case for four months now, and we barely changed anything. Here’s how we did it.
1. We Recorded Everything We Spent Money On
Using an app called YNAB we use our phones to track every cent we spend. After one month, this gave us a really great idea of what we roughly spend every month and on what. What was amazing to me was how much all those little expenses add up. It truly was death by a thousand cuts. The first month this was all we did different, just recorded our expenses in detail.
2. We Set A Budget
Oh God, I know, how boring. I have never been able to do this, but the YNAB app and accompanying desktop program, makes it so easy, and they have a really realistic, flexible philosophy which makes it simple to deal with reality not exactly matching the plan. (No, they are not paying me to write this.)
3. We Stuck To The Budget
More or less. As I said, it’s a flexible philosophy, but as long as everybody involved more or less sticks to the plan, and you adjust the budget when *ahem* sudden “accidental purchases” occur, it’s not too hard to do, especially if you continue to record your outgoings, which is important.
4. We Paid Close Attention To The Money
A man called Andrew Carnegie, long dead but once the richest man in the world, once said that the secret to success is to “put all your eggs in one basket and then watch the basket”. It’s not just that we track our spending and work to a budget, but I truly believe just paying attention the the money in a general sense, instead of being blase about it, makes a difference on a level that is harder to pinpoint. I guess it’s just hard for nasty surprises to derail your month when you’re paying such close attention.
5. I Worked Harder To Increase My Income
I’m not Bill Gates yet, don’t get me wrong, but I realised that I had been a little casual with regards to my business output and this was (unsurprisingly) affecting my income. So I worked out my cost base, what I had been earning, and what I would need to be able to pay myself each month to make our budget work. Because even the tightest budget doesn’t help if there just isn’t enough cash to live comfortably. Having said that, you shouldn’t think that this was all there was to it. It is so easy to just spend more if you earn a bit more, and still end up going backwards. So it cuts both ways.
By setting goals that were a stretch but not unrealistic, I didn’t have to overhaul my work life to achieve the income targets, I just had to keep my eye on the ball, check reality off against that and then hustle to make sure I brought the extra money in. I was amazed how easy it was actually, by simply focusing attention on what I wanted, I swear it just all kind of happened without me really doing anything much all that different. Well, maybe fifty-fifty: I have been definitely been working in a more focused way and taking action to bring in the extra income, but also jobs just seemed to materialise out of nowhere.
I reckon that’s the thing about the whole Law of Attraction thing. Yes, you need to put it out there, the things you want, but then you need to get moving and meet the Universe on the road.
So now we’re going on an overseas holiday this summer, paid for out of our savings. (To Tasmania – that’s overseas, right?)