We began the first part of our #FeelGood with your money series with Inward, where we explored the importance of establishing our “why” when looking into our financial wellness and raising awareness about our internal beliefs and how they may affect our attitude toward money.
As with preparing for a marathon, gaining clarity on why we are entering into the race in the first place can help us navigate doubts about whether we will actually cross the finish line! And we all know that it’s all about the training – the race prep, the building blocks in a marathon training programme that will set ourselves up for success – think small steps like consistent mileage, nutrition and recovery routines that benefit absolutely everyone.
Just like running, there are a couple of important first steps to look at when wanting to build a strong foundation for financial success. Before you get overwhelmed in thinking about all the work that you need to do to get there, time out! Keep the bigger picture in mind; celebrate the small wins and simply focus on what you can do now.
In this article, we highlight the smaller steps that will help you achieve the desired outcomes for your money. Sustainable success is built upon foundations. Remember, one step at a time. There is power in the process!
1. Face the facts 🤓
First things first, get clear on the current state of your finances. We all know how tough facing the facts can be! But, taking stock of your current finances is an important first step before setting any plan in motion.
Simply put, it involves looking at your income, projecting expenses that tend to go out on a monthly basis and looking out for any trends or habits to understand how best to optimise your cashflow.
For example, if owning a family home is important, are you prioritising saving for that downpayment, can you optimise your mortgage payments, or are you spending way more than you thought on eating out and buying clothes?
This isn’t about feeling guilty about your lifestyle preferences but rather, taking a closer look at how you earn and spend helps in establishing your starting point today so you can achieve your lifestyle tomorrow!
2. Create a spending plan 📝
As much as it’s tempting to avoid it, responsible money management is part of adulting. Creating a budget is an important life skill – not just for your personal life but it’s also good business practice, particularly if you dream of becoming an entrepreneur or starting your own side hustle.
When used properly, a budget allows you to spend money the way you want while giving you the confidence that you’re still on track to reach your goals. It helps you spend within your means in a way that aligns with your current values and lifestyle whilst working towards your longer term goals.
Like with many other things, it’s all about finding a way to budget that works for you and knowing that you will keep to it!
3. Prepare for the unknown (ie. an emergency fund) 💰
There is no doubt that the last few years have taught us that “The only certainty in life is uncertainty”. Being able to prepare ourselves as much as we can financially for the unknowns in our lives, like having an emergency fund in place, can really make a difference to good financial planning.
An emergency fund is an account where you set aside an amount of money for potential rainy days. A good place to start is by first starting to set aside a few months’ pay to cover say, six months of living expenses.
Of course, if that seems too much right now, start small and expand it over time. The most important thing is to start building that “cash buffer” that will give you some peace of mind should there be a change in your employment status, personal life, or health situation.
4. Deal with debt 🧾
When it comes to a marathon, dealing with debt is like improving your diet. It might not be the first place you want to start, but it is one of the most important aspects as you prepare to become financially well.
Debt can come in many forms and high interest debt (anything with a rate of 4% or higher) can easily spiral out of control – the longer you take to pay debt off, the more interest you’ll owe and the more costly it will become. This can become extremely stressful and not only will it have a negative impact on your finances, it can put a toll on your mental wellbeing too.
Managing debt is a key part of planning for a healthy financial future!
5. Protect your lifestyle 👮♀️
Family, property, travel, and health are some of the things that rank top in the list of priorities amongst our users. We work hard to achieve our goals and many of us trade our precious time for that summer vacation, our dream home, or to provide the very best for our loved ones.
Let’s face it. No matter how much we plan, there is always the chance that we will get thrown off course. Being prepared for the unexpected will ensure that you can still reach your goals after facing a financial crisis.
Protecting your life or your lifestyle with insurance will keep you from emptying that emergency fund!
Building a strong financial foundation takes practice and consistency but it’ll become worth it once your money becomes a source of strength (rather than source of stress).
And while it may seem overwhelming to start, remember that a marathon begins with a single step. Just take that first one, even if you don’t feel 100% ready. At Autumn, we’ve got you covered. Let’s go!
This article is a part of our #FeelGood with your money series – Autumn’s financial literacy movement.
To get started on your financial literacy journey, download the latest version of Autumn on the App Store or Google Play!
This does not constitute as advice or a recommendation by Autumn.
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