January brings renewed energy and many Australians turn their attention to their money goals and resolutions. More than four in five Australian girlfriends (83%) say they have already set financial goals for 2024, according to a recent Finder survey.
Getting your finances in order isn't easy, but it helps to know that others have been in the same situation as you. Being inspired by the successes of others can freshen your perspective and may motivate you to make changes to your own bottom line this year.
We asked three Australians who have turned their finances around to find out how they did it.
Emma, 32, tackled a mountain of credit card debt and took back control of her spending
When her 2020 trip to Europe was canceled and Emma, 32, was stuck at home, she finally decided to confront her credit card debt and lack of savings. Then, by opening up to her partner, she finally freed herself from her past financial problems.
“I’ve always been bad with money,” she said. “I had a terrible habit of spending all my money and even prepaying my paycheck before it was in my account. I had a loan, no emergency fund, and I always had to book trips so I had something to look forward to.”
Emma didn't grow up with a lot of money, so her financial perspective was limited.
“I didn't have a good experience with saving money and understanding my potential if I didn't spend it all at once.”
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When the coronavirus pandemic scuppered her plans to celebrate her 30th birthday in Europe, Emma decided to confront her financial situation during lockdown. She bought her popular book, The Barefoot Investor, which she says helped her realize “how confused I was.”
“For the rest of that year, I doubled down on my credit cards and confided in my now husband how bad my financial situation really was,” she says, adding that opening up to her partner helped her financially. He added that he was able to continue making progress.
“He inspired me to improve so we could have a better life,” she said. “We decided to participate in the household finances, giving us $100 every two weeks to spend on whatever we wanted. The rest went toward rent, debt, and savings.”
Emma found it difficult to adjust $100 a fortnight, saying she went from “spending whatever I wanted” to “in my mind doing absolutely nothing.”
Since deciding to rebuild her finances, Emma has paid off her credit cards, saved up $10,000 for a low-budget wedding, bought an apartment with her partner, and paid for her first vacation entirely in cash. By working with her current husband in a so-called buddy system, they were able to achieve their financial goals together.
“together [we] It's about understanding what our goals are, when we want to get there, and how we can make them happen. ”
Emma's advice for people trying to get their finances back on track is to understand what money is all about. [your] Calculate a year's worth of bills, debt, and living expenses and set aside that amount each pay cycle. Then allocate the remaining amount between your spending and savings goals.
“Knowing where your money is going and how it's being spent is a very powerful thing.”
Natasha, 33, a single mother from Queensland, paid off $16,000 in debt after an unexpected awakening.
When a credit card fraud attempt failed because the card was already maxed out, Natasha knew something needed to change. She was lucky to escape her scam, but it made her realize just how dire her financial situation was.
“While I was waiting for a new card, I struggled without one,” she said. “That was the catalyst for turning things around for me.”
Natasha explained that she had no idea how to manage money or save. And research shows she's not alone. According to research from Compare the Market, 15% of Australians have no emergency savings.
“I lived paycheck to paycheck for years, and I would often put groceries on my card in time for payday,” she said. She just said to herself, “Enough is enough, I'm sick of it.'' ”
Natasha started reading personal finance books and joining the #DebtFreeCommunity on Instagram. There, others share their experiences paying off debt and increasing their savings for the first time. She cut back on discretionary spending, found a side hustle, and did online research to raise the extra money she needed to pay off her debt. But ultimately, her progress came from focusing on and being intentional about how she spent her money.
“[Previously] “They write a budget, but they don’t actually track their spending or try to stick to it,” she said.
Natasha's advice to anyone looking to rebuild their finances this year is to start small and be patient with yourself for long-term results.
“Don't limit yourself too much, as this will lead to failure. Still, give yourself a little money relative to your income that you can spend without feeling guilty.”
Natasha is currently saving money for a house deposit and plans to increase her investment portfolio and start saving for her son's future. She shares her own financial journey on her Instagram (@tashagetsfrugal).
Elle, 38, broke the 'feast and famine' cycle she had lived in for 10 years.
Elle had no system for money. When she had money, she squandered it, and when it ran out, she struggled. But then a series of life events forced her to reevaluate everything.
“When the economy was good, I was fine, but when the economy was bad, I was behind on my bills.” [and] I racked up debt. My only system was to try harder when I fell behind,” Elle said.
She explained that due to the lack of a system, there is no way to prioritize spending.
“You end up spending money on takeout and taking the kids somewhere and you end up running out of groceries.”
In 2021, Elle experienced a breakdown in relationships, burnout from working 60 to 80 hours a week, and her health hit an all-time low. “
The wheels fell off,” she said. “I had bills here and there that I couldn't pay, like my kids' school and electricity. I ended up falling behind on my rent and had unpaid business debt.”
Having to take time away from my business to recover meant that while I had enough income to pay rent for a year, that was all I had to do, and everything else was put on hold. To do.
“I finally got tired of stress that I couldn’t control,” she said.
Elle said that in order to bring the situation under control, she determined the actual situation and added everything up. She was taking it one step at a time, calling her creditors and coming up with payment plans, a situation she had previously described as “hanging over her head.” It was far from it.
Now she has a system for money. No longer having to play with all the money and take it back from savings again before the next paycheck, Elle can now cover the essentials first before spending on non-essentials and spend money on bills and necessities. I keep it separate from my money.
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