Last year when I turned 30, I decided it was time to get my act into gear and wrote a list of goals I wanted to accomplish in my 30’s. My main goals was to focus more on my finances as I wanted to become more aware of how I can start managing my finances appropriately. All with the intention of gaining more financial autonomy and knowledge. I guess this fascination with counting and potentially saving each penny began when entering the workforce in my mid-teens.

With my job, I learnt having a position of independence and power came with adult-like responsibilities. These included paying rent and board, putting money towards the household bills and buying groceries for my home economics class. From the moment I received my first pay, it was expected I put away a small portion into a savings account and pretend like it didn’t exist. Call it a rainy day trust fund or something exhilarating like, ‘Manolo Blahnik’. I’ll leave my lust for a particular pair of shoes there and I thought it might be worth putting fingertips to keyboard and write a post about how I organise and manage my money while gaining financial autonomy. Maybe these steps below are helpful and insightful and maybe they won’t be. But hopefully, you’ll gain some financial knowledge from this post.

How I organise my finances

01. Make a yearly estimate of income. This one can be a little bit tricky and it has taken me a few years to somewhat perfect this. Now, I’m somewhat able to work with a rough estimate as to what my yearly income may be. What I do when calculating my income is take into account previous past years earnings have been, any future pay rises as my organisation gives us a yearly raise with each year we spend with the company and try to pinpoint any patterns. This allows me to create a very rough and dry estimate of what my yearly income for the next financial year may be. Even though I often find myself stressed and challenged. I have also learnt when it comes to my bank account, it’s better to be somewhat realistic and cautious. 

02. Follow the 20-80 rule. When it comes to managing any sort of finance, my first suggestion is finding a bank that believes in saving percentage investments and what I mean by this is: each month, you receive an investment percentage for having deposited money into your account and not withdrawing any. I call it a win win situation. Prime example is I’ve been with my bank for 12 years, have several saving accounts and each month, I receive a small percentage of interest gained due to depositing money into each account and not withdrawing anything. It’s rewarding in all senses as I’m investing in my savings, I have a beautifully growing little nest egg and my bank is contributing a small portion to me gaining financial autonomy.
Now, when it comes to depositing my own finances/money into my various accounts, I follow the 20-80 percent rule. The concept is quite simple and it is: I calculate 20% of my pay and having this direct debited into my savings from my main bank account. I work on the knowledge of what I don’t see, it never existed in the first place and my savings grows rapidly. The other 80% is to be spent on whatever and this method allows you to not only save. But also enjoy life without any stresses of arising emergencies and fallbacks.  

03. Make budgets. Budgeting shouldn’t be hard nor complicated in any sense and this can be manifested by investing in a simple step. This step encourages you to create a system based on your needs and wants and allows you to have a clear vision of any spending and adult priorities. Once you’ve made the decision as to what your priorities and must-haves are, than your budget should reflect upon them. Following from the tip above, the 80% dedicated to spending should be broken down into easily manageable percentages and the next few tips relate to this. 

04. Set money aside for bills. One thing I have been able to accurately guestimate is how much money I need to cover my monthly occurring bills and any annual bills relating to car insurance/registration, my nursing registration and union fees as well as my blog annual payments. When it comes to the home mortgage repayments, Mr. Darcy and I collectively discuss how much the monthly repayment shall be and I put a smaller portion of repayment into the account. However, when it comes to major expenses like water and council rates, electricity and telephone/internet bills, we both put a certain amount into our account to pay everything off. 

As to how you pay this amount into what ‘bill account’ you’ve got is going to depend on how often you get paid. Whether it be monthly bills, certain invoices arrive quarterly and you get paid weekly/fortnightly or monthly, it’s best to sit down and work out roughly any due dates for bills. Then when you get paid, I would recommend sending the money immediately across into that account for that particular bill if possible. Merely so, you don’t receive any nasty surprise late fees being applied and you know, it can be accounted for. 

One thing I have learnt from my broke student days is that when it comes to paying my bills, I always make sure to either round the sum up to nearest dollar or I double the dollar. For example, if the bill is $56.12 than I pay $60.00 or $120.00 (if I can afford it or I want to pay off the next month’s bill in advance). Also, when paying any bill: always write down any receipt number, the date you paid the bill and time so if you need to dispute it… you’ve got evidence! 

05. Set aside money for tax. Speaking of yearly financial expenses, this is an important step! There’s been times where I’ve heard of people skipping this step and live to regret it when it comes time to lodging their tax return and instead of laughing, they’re weeping as they have to pay back a large debt to the government. Like any expenses, I would suggest a really good Accountant as they’ll help you keep tabs on your tax return in being tip top shape at the end of the financial year, what deductions are available within your category of career and how to go about saving.

Being an Australian citizen and having my tax deducted immediately from any earnings, I always make sure to do a quick math calculation when I get paid and put a certain percentage of income into my savings account. This money then gets used to pay my Accountant tax bill at tax time and I don’t have to worry about it being deducted from my annual tax return. Ultimately, it means more money in my accounts at the end of the financial year and less money in debits/the government’s pocket.

06. Set a savings/money goal. Having separated a chunk of your income into paying your monthly/quarterly bills and tax, it’s now time to do another chunk and it’s for your savings. While it’s easy to sit there and tell yourself that you’re going to save 10 thousand dollars in 6 months and its totally achievable… you need to be realistic. The number of savings you are aiming for is going to fluctuate and shift, depending on bills/expenses and your personal determination to save is going to be. For example: when I found out I was pregnant with my daughter and I’d have a slight wage increase as I’d been with my organisation for a whileI decided in order to be financially independent and have financial autonomy while on maternity leave, I’d have to save a certain amount per fortnight. 

I also chose to increase my shifts by one per fortnight as I had calculated with the additional shift that I would have $300 dollars extra in my pocket, more hours for personal and annual leave and paid parental leave due to the number of hours worked per fortnight. While it was difficult in the beginning as it meant I spent less time with my family on the weekends, it meant I received double pay and loading benefits for the shifts I worked in the evenings. Each fortnight and with my 20:80 rule, I was able to put away a minimum of a thousand dollars. While paying all of my bills before their due dates and in advance.

07. Keep note of your income and spending. Although this may seem quite an overwhelming task initially at the beginning, you will soon discover keeping note of your income and spending is the key to mastering any money management skill. Keeping note of all transactions and incoming payments – whether it be a paper based journal or app on your phone/computer – will keep you on track with all incoming and outgoing expenses. This highlights any frequent and most expensive purchases each week/month and therefore, keeps you accountable for any unnecessary expenses. It will also pinpoint areas of where you may spend large sums of money. For example: take away iced lattes which in my weakness.

By keeping tab of how much I spend and on what, this process encourages me to keep a clear mind of any and all financial decisions. It’s also one of the most easiest money management tips that can be undertaken by a beginner. Only thing I’ve found initially at the beginning is it can be difficult to stay consistent with documenting all expenses. But as things further continue progressing, it becomes easier to take note and allows you to have a better insight of all spending. While being able to formulate a spending pattern. 

08. The leftovers. After making sure your bills have been paid up to date and your savings account is looking a little bit more plush around the edges, the next question to ask yourself is: what am I going to do with the leftovers? 
This amount is left hanging around in my account and aside from food, it pays for any luxury items I’ve been dreaming of for myself. Whether it’s a new facemask I’ve been eyeing up or skincare product, a decent coffee at a café or a sneaky little getaway featuring ice cream and a recipe book, I turn to this account.

I always work on the basis that once this money is gone….. it’s gone permanently. This means, I don’t take anything out of my savings account unless it is a necessity and I have to do it because it’s a life or death situation. However, if there’s anything left over at the end of fortnight then I immediately send it straight into my savings as an additional savings and I start back at the beginning.

09. Limit your credit card purchases. In a world of where we love to ‘tap and go’ with our credit cards or any form of card, it can rack up any form of debt quite quickly as we’re less likely to pay attention to how much we are spending. Merely for the fact, ‘tapping and going’ is convenient, quick and we’re not having to realistically think about how much we’re spending. However, there is a way we can keep the extra dollars in our account and that’s by having cash on us at all times.

Although its highly tempting to transfer funds from one account to another when the dollar amount has dropped and your transaction has been declined; by keeping cash allows us to be limited to whatever is in our wallet. We are being cash and savings savvy as wel as psychologically aware as to how much we can spend in any one transaction. Plus, multiple studies conducted have shown we are least likely to spend a large amount of money when using cash. Think 10-15% less money.

If you’re not quite convinced, credit cards allow us to spend a large sum of money without a second thought and as a result, can provide you with a somewhat unlimited amount of purchasing power. With this power though, comes an ultimatum and that being, the interest that gets charged on top of the money spent and considering some credit cards can charge up to 26% interest. That’s a lot of money spent on something like a nice casual daywear dress. 
If you do need to purchase something grand in the scheme of things such as a new lounge suite for your home or oven, use your credit card for these large items and immediately try to pay off the interest and purchase amount. However, if it’s for smaller everyday purchases that won’t need a credit card, than use cash.

10. Be aware while spending. One thing I consider when purchasing something online is to avoid compulsive shopping purchases. Although there has been times where I’ve been tempted to buy a beautiful and expensive pair of shoes or a dress that I know I’ll never wear because of the colour, I often pause and take a few moments. Often the giddiness felt over the particular object disappears and I realise how close I was to purchasing something I wouldn’t wear or really wanted.

If finding yourself in this situation, the first step before putting an item into the shopping cart is to ask yourself, ‘will I use this item?’ and give yourself 3 solid answers as to why you really need this item. If you cannot provide an answer or its incredibly difficult to answer this question because it’s based upon a want and not a need (like I need food to feed my family this week. I want that dress because it’ll make me feel good for a hot minute), give yourself a few days/weeks to reflect upon the potential purchase and if you really and truly need it, than purchase it.

However, if it’s purely a want and will only bring you satisfaction for a few minutes prior to growing bored and it being thrown away, I’d recommend returning to tip #6 and think about your long term money goals.

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