Pattie Lovett-Reid: Using the three Rs to get back financial basics
Regardless of your age or financial situation, every once in a while it’s important to check in with your financial reality. There are financial basics we should all adhere to throughout our lives to help us achieve what I call the three Rs: goals you can revisit, re-establish and revitalize.
Begin by setting goals that matter to you. Set goals that get you excited about saving. It is important to set small stretchy goals – goals that will challenge not destroy your self-confidence. No doubt your goals will change over time as does life, and ideally should be adjusted and prioritized accordingly.
Open a savings account. Kick up your savings strategy and cut out your spending addiction. You do not create wealth based on your salary, you create wealth based on how little you spend. Pay yourself first with money coming right out of your account every paycheque. When you receive a raise or maybe a bonus consider the 75/25 rule. Regardless of the amount, save 75 per cent and spend 25 per cent. The amounts will clearly vary throughout your life; however, this isn’t about the amount it is about the discipline.
Automate your way to millionaire status. While you are looking at savings consider reducing fees. These can include banking fees, medical fees, housing costs, education, insurance, technology, and the list goes on. Bottom line: save more and spend less = net worth growth.
Manage your cash flow better. Have razor-sharp focus on how much money you have coming in and what it is you are spending your money on. Your financial institution likely has an online budget tool. Seek out opportunities to improve the picture such as cutting out discretionary spending and that means anything that doesn’t have a legal contract tied to it. Consider a side hustle to bring more money in by turning a hobby, skill or passion into a revenue generating opportunity.
This all sounds so simple but it isn’t simplistic – it’s actually harder than you think.
As we approach the summer months, get the family involved so you have a better second half of the year.