It’s the time of year when we whip ourselves into frenzies of self-improvement, and I vow to quit biting my nails, read more books by New Zealand authors, and ring my gran regularly.
The first days of 2019 have also been primetime to take a cold, hard look at my finances, work out what my goals are for this year, and instigate the mechanisms and behaviours required to achieve them. Here’s what I’ve come up with.
Decrease credit card limit to its minimum, and aim to keep it that way
As far as debt goes, I’m probably more responsible than I give myself credit for (no pun intended). I don’t have a student loan (thanks to parents who saved for my uni fees since I was practically in the womb). I make sure I don’t have an overdraft if I can at all help it – the fees and interest sting worse than credit cards, which aren’t so easy to get rid of.
They’re handy for travel, ID and credit ratings, and of course, unforeseen costs. I have a “low fees” one and an airpoints one, and I know it’s not sustainable with my current salary to maintain both without spiralling into sticky debt.
The temptation to buy cheap Scandi-looking furniture and yet another plain white t-shirt is too strong. So I’ll be getting rid of one of them, and prioritising paying off the other one.
I’ll be lowering its limit, deleting it from shopping websites where it’s stored, and disallowing Google to autofill my details in online payment forms. I know it’ll make me think twice before buying something else I don’t need, and enable me to pay off my credit card every month.
Come up with pain-free ways to save
The main reason I find it hard to save is because I don’t particularly have long-term financial goals.
I’m routinely told by news reports that buying a house is out of the question for my demographic, and I get to travel reasonably regularly to interesting places for my job, so an OE isn’t as appealing as if I was chained to my desk 24/7. Saving 10 per cent of my pay cheque, let alone 20 – seemingly the recommended amount – feels like it would really dent my quality of life.
If I’m being brutally honest here, I’m not willing to compromise my lifestyle. It’s not exactly Wolf of Wall Street but I don’t have a budget I stick to, either.
However, I know there are things I can cut out of my life that I won’t notice, that’ll add up over time. Better yet, these decisions all have benefits that go beyond just more money in my bank account.
This year, I’m going to stop buying bottled water (and stop feeling existential dread about my contribution to ocean degradation), stop drinking alcohol alone (it’s less tragic/more fun with friends), bring a packed lunch to work unless I’ve got a lunch date, and force myself to wear all of the clothes I already own, rather than buying new ones.
If there’s a genuine gap in my closet (i.e. I need a new raincoat) or clothes like undies or shoes have worn out, then I’ll give myself permission to replace them. Otherwise, I’m going to acquaint myself with the far reaches of my wardrobe, and refresh my look by wearing pieces in different combinations.
Other ideas I’m mulling over include having breakfast at work and using that milk on my cereal, and drinking the free machine coffee rather than paying for barista-made stuff. I’m not lactose intolerant or a coffee aficionado, so these won’t feel like sacrifices.
Look for pots of gold hiding in plain sight
The paragraph above was about cutting stuff out. This one’s about adding stuff in.
Last year, I had a few side hustles that increased my after-tax annual income by almost 25 per cent on top of my salary. This year, I’m hoping to keep that going. If you’re keen on upping your funds this way, think about what you’re good at – and it doesn’t need to be what you do for a job – and work out how to monetise it. Ask friends who’ve done this for their advice, and spitball your ideas with them.
Don’t be afraid to put your spare room on Airbnb, sign up to freelance registers, or cold call people with, say, websites, you know you could help improve for a fee. Your income might end up being secondarily taxed, but you’ll be able to get some of it back with an end-of-year tax return. You’ll also be able to claim business-related expenses against tax.
While we’re on the topic, if you give to charity, start claiming the tax credits you’re probably owed for your donations.
It’s also worth reacquainting yourself with your employment contract for any perks you might have missed. For example, my job offers health insurance (cheap GP visits ahoy!), and financial contributions to spectacles, but the higher ups don’t exactly shout this from the rooftops, and it requires a bit of leg work to get that money over the line.
While you’re looking at said contract, have a squiz to see if there’s anything about meeting criteria for a more senior (and better paid) position. There might not be, but either way, make a case to your boss for why you deserve more money. Or, make this the year that you apply for a job that pays you what you’re worth.
Talk to cash-savvy friends about their money habits
We all have mates who don’t have the fanciest clothes, car or flat, but somehow manage to swan off on lengthy exotic holidays with regularity and acquire modest property portfolios.
In my experience, these people often have qualities in common. They value experiences over things. They write down every one of their expenses, scrutinising the data on the reg. Some of them track their net worth with spreadsheets, and invest small amounts in index funds, waiting for compound interest to work its magic.
For reasons I genuinely do not understand, talking about money is considered a un-PC by some. But chances are, your stingy friends will delight in the opportunity to give you a blow-by-blow of their financial hacks. Some of their advice won’t be appropriate for your situation, and some of it will.
Whatever the case, it’ll energise and inspire you to implement some changes.