Illustration by Gary Clement for The National
As the year draws to an end, I’ve been thinking back over what issues resonated most with people from what I’ve written in this column, and it turns out that they mirror what our cashy.me community hones in on too.
The things that bring about the biggest reaction and requests have to do with what I call how-to information.
For example, how to save money, how to work out what reserves we need when we retire and how to figure out what our pensions should cover.
What this means is that people are saying: “Stop telling me what I should do and help me do it. Show me the way.” They want financial empowerment rather than financial literacy.
By far the most common question is: “how can I save money?” We get emails from people divulging intimate details of life, expenses and incomes, with that basic request.
If only things were that simple.
The only true way of helping or guiding anyone when it comes to financial issues is not just knowing the stuff of how many children they have, whether they are supporting their in-laws, the lump sum they spend on their food or how much their car loan costs them. The only real way to get a handle on our outgoings is have detailed knowledge of what they do with their money every single day. In other words, it’s about how they behave:
Where you eat, what you eat, why you’re not packing your lunches and snacks. What brands you buy, where from, why. What it means to kick back and have downtime. In other words, how you choose to live.
Without that, there is no getting a grip on your finances, and by extension your life.
And the only way to do this is to keep a detailed record of every single purchase. This is no mean feat – it’s boring, boring, boring – but it’s incredibly important.
And it doesn’t end there. Someone recently proudly showed me the budgeting software he uses to keep track of his expenses. He told me he’s been doing it for three years. And that’s impressive.
But he has done nothing with the information.
It’s fantastic that he has that backlog of data, but without delving into it, finding out what’s spent where and then zoning in on whether that’s the best thing for his phase of life and where he wants to head, it’s dead information.
Still, this guy’s ahead of the game because he’s trained himself to do what most shun: keeping a track of all his spending.
You see, the idea is to do it long enough for it to become habit. You need to stick with it rigorously for at least six months, I would say – and have happy thoughts while you do it instead of resisting and resenting it.
Gathering the information should be accompanied by analysing it. Then comes changing how you do things so that you can save money, get rid of debt, go on that trip, buy a house or whatever else your aim is.
But here’s another thought: The real deal is that you do all this long enough until a point in time when you don’t need to do it anymore. You become so financially empowered and secure that you no longer need the micro level of detail I describe.
By that point though, this habit of mindful spending and living will be so ingrained that you will continue to live mindfully while being financially independent. Congratulations.
The original article was first published in The National
