We all work hard for our money. We all want what we work hard for to go towards something significant and beneficial in our lives.
But frequently, many of us look at our bank accounts with our jaws dropped wondering, “where did all of my hard earned money go?”
According to a new report by the Financial Resilience in Australia (a report funded by the National Australian bank), 2 million Australians are experiencing some sort of high financial stress.
This report shows that one in two adults have limited to no savings and have only got a “basic understanding” of financial strategies or investment opportunities.
It begs the question, what exactly are the reasons why so many Australians are financially unstable?
Well, we’ve done some digging and the following nine reasons will help us to understand why and also, what we can do to change this…
9 Reasons Why You Aren’t Financially Stable Yet!
1) You Put All Of Your Earnings Into One Bank Account
If you’ve been putting all of your weekly, fortnightly or monthly earnings into one transaction account (an account where you can withdraw and deposit money), then you’re probably not on the right path to staying on top of your money goals.
To fix this, you can set up automatic deposits (either yourself or via your employer) straight from your pay check into a minimum of 2 various savings accounts. These days web savings accounts are simple to set up and you cannot sabotage these savings by withdrawing from an ATM or EFTPOS facility.
Business owner Carolyn West, 22, says that having a separate bank account with long terms savings incentives helps her in budgeting how much she wants to save and how much she’ll spend each week.
“Not being able to easily access that money means that it’s easier to keep my savings in my account,” Miss West says.
“It helps me with budgeting my money and keeps me on track with my financial goals.
As a guide, we suggest a minimum of 20% of your income should be automatically transfer to a secure savings account. Of course more would be great. But let’s not get ahead of ourselves just yet :-)
2) You Spend Money on Stupid Stuff
Yep, that’s right… STUPID STUFF!!
Professor Lorrin Koran, Director of the Psychiatry and Obsessive-Compulsive Disorder Clinic at Stanford University Medical Centre says that many people can’t control their impulse purchases.
“These items are often stored and not used. They are wanted at the time of purchase, but often not seen as useful or valued, a short time after the purchase.”
Quite often the need to purchase something on impulse is exactly the same desire that a smoker gets when they want a cigarette or a chocolate lover NEEDS chocolate. It’s the short term need to feel pleasure – but we all know it never lasts.
Soon after our purchase, our smoke or our block of chocolate we immediately feel less pleasurable. In fact within seconds many of us feel regret. Learn from this! Next time you are challenged with an impulse spending opportunity, imagine how you will feel after the transaction has taken place. Think about how you felt last time you bought something on impulse that you simply didn’t need. Your long term success is counting on your ability to show courage in these moments.
After while it becomes quite simple. Only spend money on things that you need… Not things you want. All the things you want can be purchase once you have achieved some financial milestones. Play for the long game… not the short fix.
3) You’re reliving you childhood
We get a lot of beliefs and behavious about money from our parents (whether we like it or not.)
Ask yourself questions that relate to your experience growing up with your parents… Such as:
- Are you a compulsive saver like your mum or dad?
- Do you avoid dealing with your finances like your mum or dad?
- Do you feel like your life problems would be solved if only you were rich?
- Do you bag rich people and say that they are lucky because they were born with money?
- Do you shout people drinks at the bar to pretend to look financially stable?
- Do you buy extravegant gifts knowing that you have an electricity bill due?
- Do you come up with more reasons not to invest than reasons to invest?
It’s interesting when you think about the stories we tell ourselves and how we became that way. Well, the good news is that they are only stories, and we can now start to create new stories.
- I must save 20% per week no matter what
- “I cannot afford that this week.”
- She must have worked really hard at saving young to be able to drive a car like that
- Money wont fix everything, but if its taken care of, I can focus my attention on the things I’m passionate about.
- It’s time I looked at investing so I can be in a position to help my children out when they are older
- It’s time that my money started working for me – rather than me always working for my money.
- Saving is tough, but i undertsand what I need to do change my life for the better. For some peace of mind.
4) You don’t have any goals
Not setting a goal is one of the main reasons that Australian’s aren’t financially stable. To help with this, create a vision board with everything that you wish to achieve.
It could be a new family home, an exotic holiday away, a new car, an investment property, taking your parents out for a meal and really being able to afford the bill, sending your kids to a better school, owning a nice watch or jacket…
Literally, put everything and anything on their. The law of attraction will kick into gear immediately.
Miss West said that she made a goal to save a certain amount of money for her recent holiday to Hawaii by putting away a small amount of her savings each week. By having this goal, it made her more determined to save and not spend her money.
“As a result of setting this goal, I was able to go on a holiday that I’ll remember for the rest of my life.”
It sounds simple, but how many of you reading this post fail to do this.?
5) You’re gullible
New music, bulk bargains and smaller packaging are just some of the many tricks retailers use to try and seduce us in to buying more. Don’t be a sucker! See through the marketing tactics and carry on with your awesome life!
According to Marketing Professor Wendy Liu at UC San Diego, getting interrupted while we are shopping makes you less sensitive to the price. In order to not be fooled by these sneaky tactics, try and become more aware of the tricks that retailers use while you’re shopping in store.
By knowing what you are at the shops to buy, before you get there, you can stay focused and not get distracted. Get in, stay focused, get out…
6) You’re scared of your own power
You have the ability to grow your own money! Yes that’s right, you do!
Investing is intimidating for many people, but you’d be silly not to get involved.
Start out with mutual funds or exchange traded funds to make sure you have the most balanced portfolio to fit your goals. From there you can look into property strategies and a diverse share portfolio.
Remember its not what you invest in, its how and when you invest in it.
Doing the right thing at the wrong time, could cost you dearly.
Doing the right thing at the right time, could be incredible. So don’t jump into anything unless you are taking advice from people who are where you want to be and who are doing the same thing that they are telling you to do.
7) You’re paying your debts wrong
Even if you’re responsibly paying off your debts, you could be paying them in the wrong order. Don’t divide your payments equally among all debts. According to the Australian Securities and Investment Commission (ASIC), Australians on the whole owe more than $52 billion dollars in credit card debt.
A handy tip is to focus on those with the highest interest rate, so focus on the most toxic ones (like your credit card) first.
Oh. And cut up those hight interest cards so that once you’ve paid them down – you don’t sabotage your hard work by spending on the again. We don’t have time to keep starting over again :-)
8) You don’t value yourself enough
Learn how to stand up for yourself in the work place. Many experts believe that women tend to ask for less pay than their male counterparts or they simply accept what is given to them. While men tend to fight for what they believe they should be earning.
Become more confident by adopting measures that make you feel powerful, more confident and remember to keep your head held high during workplace stress.
By continuing to add enormous value to your workplace, you will get what you are worth and you will reduce any risk of being made redundant.
9) You’re a defeatist
You’ve made a small mistake by spending just that little bit too much, which therefore makes you think that you’ve screwed up so you keep on spending. It’s a common thought that many people fall in the trap of following. Learn how to encourage positive spending habits and refrain from dwelling on any negativity around spending.
You need to learn from the lessons your life has already taught you.
“If you do what you’ve always done, you’ll get what you’ve always gotten. ” – Tony Robbins