In Part 1 of 4 ways to start making money your friend, I made public an embarrassing stage of my past relationship with money. It clearly struck a chord with some of you. Thanks fro being brave enough to email and share your stories with me privately. You asked for more ways to make money your friend. Part 2 therefore, begins …
Does lifting the lid on money make you uncomfortable? Is it still a taboo topic?
Let’s be frank. At midlife, to ensure we have enough money to make our second half deliberately delicious – whatever ‘enough’ is for you – we need to be realistic about our current financial situation and, if it’s lacking in abundance, take action.
There’s a lot of financial wisdom out there (a Google search for ‘advice on money’ returned 772,000,000 in 64 seconds) so starting closer to home might be helpful!
And while I am definitely NOT purporting to be an expert, I have learned a few hard lessons along the way. Here are 4 more basic, but proven, tips:
- Be honest with yourself about your real financial situation
(a) If you are committed to making money your friend, take a deep breath and add up all of your debts, if you haven’t already. Yep, everything you owe another – be that the bank or your local café, big or small, current or incurred in the past. If you pay interest on any debt, note the rate you are being charged. Be scrupulously honest with yourself. Look that total debt squarely in the $$$ and remind yourself of your ‘why’ (Part 1, #1).
Avoidance or denial got you this far; don’t let it take you any further.
(b) Next, look at where your money goes (Part 1, #4).
Are you making regular payments to reduce your debts? They won’t go away by themselves but turning a blind eye to them will likely have you incur additional interest charges and adversely impact your credit rating which may then impact your ability to rent a home, get a mortgage, loan or even insurance in the future.
As a side note, some organisations also require a credit check as part of their recruitment process – depending on the nature and seniority of the role.
(c) Consider any opportunities you identified from your outgoings (b) to divert some of your current spending into additional debt reduction. The debt you choose to pay off first is, of course, up to you. It may be the debt with the highest interest charges or the debt you owe a friend or family member that you are avoiding, because of it. Regular payments, no matter how small, go a long way towards restoring faith, relationships and your credit rating.
- Automate recurring payments
If you repeatedly pay bills late, set up a direct debit or auto pay for anything recurring to be paid the same day as your income (wages, salary etc) goes into your bank account. This can be done through your bank (in person or online), your payroll person at work or the bill provider. You can’t spend it if the money has already disappeared from your account and take a learning from my experiences – it’s good to know your power won’t be disconnected in winter, right?
- Become financially literate
This doesn’t mean you need to become expert at understanding the Dow Jones but it does mean having an understanding of basic financial terms, interest rates and their implications. Ask people you believe have a handle on their finances what they do, what they read, how they keep current. Get interested!
- Get virtual or in-person help
No one needs to see your financial information unless you choose to share it. But if you want help to face up to your own truth, think carefully about who the right person to provide help may be. Because it’s hard to be vulnerable – especially when you have a sense that at midlife you should know better by now and are beating yourself up accordingly!
Depending on your specific situation, you could try:
- Your local Citizens Advice (in the U.K., Australia and N.Z.) to find Budget Advisors (usually free);
- Relevant Government agencies
- Online tools and websites (e.g. YNAB – You Need A Budget; whostolemymoney.com; www.daveramsay.com and his Total Money Makeover; www.mrmoneymustache.com);
- A reputable Financial Advisor or planner (make sure you get referrals from trusted sources);
- Your country’s retirement website (e.g. sorted.org.nz has excellent calculators, workbooks and information);
- Your own bank website (for online calculators and worksheet templates)
I’ve said it before – when it comes to money matters, ignorance is NOT bliss. Nor is it an excuse. Face up to your fears, get the help you need and take action to make money your friend.
Any more tips to add? Comment below or email email@example.com if you’d rather share privately.