To deal with the top five money worries, you need to learn about money, plan ahead, and use practical solutions.
Here are five ways to help yourself or someone you know who is under a lot of financial stress:
1. DEBT MANAGEMENT
◼️ Debt Consolidation: Look into your options for turning high-interest debts into loans or credit cards with lower rates.
◼️ Budgeting: If you know how to budget well, you can put money toward paying off debt in a planned way. If you do not know how to budget well, you can get help from experts who can teach you how to do it.
◼️ Financial Counseling: Talk to a financial counselor or advisor who can help you come up with a plan to deal with your debts.
2. EMERGENCY FUND BUILDING
◼️ Automated Savings: Set up automatic transfers to a separate savings account where you can build up an emergency fund.
◼️ Changes to your Budget: Look for places in your budget where you can cut back on spending you do not have in order to save money.
◼️ Side Income: Look into part-time jobs, freelancing, and the “gig economy” as ways to earn extra money to add to your emergency fund.
3. SAVING FOR FUTURE GOALS
◼️ Goal Setting: Set specific financial goals, like saving for retirement, buying a home, or paying for your child’s education.
◼️ Financial Literacy: Learning about the various investment vehicles available and the advantages of investing over the long term to build wealth.
◼️ Automated Savings: Consider setting up recurring payments to your retirement account or other investment fund to ensure regular savings.
4. JOB SECURITY AND INCOME STABILITY
◼️ Skills Development: Look for ways to improve your skills and keep learning to make yourself more employable.
◼️ Networking: Build and keep up a professional network, which can be helpful for getting job referrals and opportunities.
◼️ Backup Plan: Have a backup way to make additional income, like freelance work or a side business, as a way to supplement your current income, or, just in case you lose your job.
5. MANAGING LIVING EXPENSES
◼️ Expense Tracking: There are budgeting apps and tools that can assist with tracking your daily expenses and help identify areas where you may need to look at cutting costs.
◼️ Shop Around: Look around for the best deals on things you need, like groceries, insurance, and utilities.
◼️ Housing Options: Consider downsizing, renting a room, or getting a lower interest rate on your home loan, are all viable options for lowering monthly housing costs.
Remember that financial stress relief often requires time and persistence.
Seek professional financial advice as needed, and look for ongoing support and accountability to assist you in effectively implementing these strategies.
Also, learning about money can give you the power to make smart financial decisions and reduce money-related stress over time, that’s where the LEARNING HUB helps you gain more financial knowledge, while providing you with the support and help you need.
If you have multiple high-interest debts, such as credit card balances or payday loans, you may choose to get a personal loan to consolidate them. By doing so, you can simplify your finances and potentially secure a lower interest rate, reducing your overall debt burden.
2. FINANCING A LARGE PURCHASE
A personal loan can provide the funds you need to make a large purchase, such as buying a car, renovating your home, or paying for a wedding. Rather than depleting your savings or relying on high-interest credit cards, a personal loan provides a structured repayment plan and a potentially lower interest rate.
3. COVERING UNEXPECTED EXPENSES
Life is unpredictable, and unexpected expenses can arise, such as medical bills, home repairs, or emergency travel. In such situations, a personal loan can provide immediate funds to cover these unexpected costs without disrupting your financial stability.
4. FUNDING EDUCATIONAL EXPENSES
If you’re considering furthering your education or pursuing a degree, a personal loan can be a viable option for covering tuition fees, purchasing textbooks, or paying for other education-related expenses. Personal loans can offer more favourable terms compared to student loans, especially for non-traditional students or those attending part-time.
5. IMPROVING CREDIT SCORE
If you have a limited credit history or a low credit score, managing a personal loan responsibly can help you improve your credit profile. Making consistent, on-time payments demonstrates creditworthiness, which may improve your credit score over time. A higher credit score can help you get better interest rates on future loans.
Remember that the decision to take out a personal loan should be based on careful consideration of your financial situation, repayment ability, and the terms offered by lenders. It’s important to compare loan options, understand the associated costs and fees, and ensure that borrowing fits within your overall financial plan.
At Financial Management 101 – we are committed to providing YOU with excellent financial education, training and support so that you can live the life you truly desire. Join our LEARNING HUB today!
What business owners must do to ensure they don’t have a tax debt at the end of the financial year.
As a business owner, there are several steps you can take to manage your money effectively and minimise the risk of having a tax debt at the end of the financial year.
Here are some tips on how to do this:
1. MAINTAIN ACCURATE FINANCIAL RECORDS
Keep detailed records of all your business transactions, including sales, expenses, invoices, receipts, and bank statements. Accurate record-keeping is crucial for preparing your tax returns correctly and minimising errors.
2. SEPARATE PERSONAL AND BUSINESS FINANCES
Establish separate bank accounts for your personal and business finances. This separation will help you track your business income and expenses more effectively, making it easier to calculate your tax obligations accurately.
3. TRACK AND CATEGORISE EXPENSES
Categorise your business expenses properly to ensure you claim all eligible deductions. Common expense categories include office supplies, rent, utilities, travel, marketing, and employee salaries. Consider using accounting software or tools to streamline expense tracking and categorisation.
4. PLAN FOR ESTIMATED TAX PAYMENTS
Depending on your jurisdiction, you may be required to make estimated tax payments throughout the year. Estimate your tax liability and make timely payments to avoid penalties and interest charges. Consult with a tax professional or accountant to determine the appropriate amount to set aside for estimated taxes.
5. UNDERSTAND DEDUCTIBLE EXPENSES
Familiarise yourself with the tax deductions and credits available to your business. Deductible expenses can include equipment purchases, professional services fees, training costs, and business-related travel expenses. Keep receipts and documentation to support your deductions.
6. SEEK PROFESSIONAL ADVICE
Consult with a tax professional or accountant who specialises in small business taxation. They can help you understand the tax laws specific to your industry and provide guidance on maximising deductions while staying compliant.
7. USE TAX PLANNING STRATEGIES
Explore tax planning strategies that can help you minimise your tax liability. For example, you may consider deferring income or accelerating expenses into the current financial year, where appropriate. Again, it’s essential to work with a tax professional to ensure you’re utilising these strategies correctly and legally.
8. BUDGET AND SAVE FOR TAXES
Create a budget that includes setting aside funds specifically for taxes. By saving for taxes throughout the year, you’ll have the necessary funds available when it’s time to make payments, reducing the risk of a tax debt.
Remember, while these steps can help you manage your money and minimise tax debt, it’s crucial to consult with a qualified tax professional who can provide personalised advice based on your specific circumstances and the tax laws applicable to your jurisdiction.
At Financial Management 101 – we are committed to providing YOU with excellent financial education, training and support so that you can live the life you truly desire. Join our LEARNING HUB today!
This blog is dedicated to my mentor and serial entrepreneur Mr Harry Bozin, who has taught me everything I know about paying down the biggest debt one will ever have THE MORTGAGE and in the quickest way possible.
Whenever I share anything about how to pay your mortgage down as quickly as possible, take note and put into action the strategies and tips I share that truly work.
So, one of the major purchases individuals and couples in their lifetime take on, is when they decide to put a deposit down to buy their very own piece of paradise.
Having a mortgage is one of the biggest debts most people embark on when owning a home.
It can be one of the most stressful and worrying times in their life, often concerned how they’ll make the monthly mortgage repayments when unexpected events come up.
What a lot of people aren’t aware of when borrowing the money to buy their home, is the overall cost for paying down this debt if they don’t pay it down as quickly as possible.
Because the first 10 years of the term of the loan whether it be a 25 or 30 year loan, is paid in interest payments to their banking institution. During this time there isn’t a lot of principal paid off (the original amount borrowed) as most of it goes to paying interest payments, unless the new home owner is consciously paying extra into their home loan.
Do you know what the total cost of your mortgage is if you do not pay it down well before the end of the term of the loan?
Well, I do and it may shock you to know that on a 25 year home loan borrowing an amount of say $350,000 not paid before the 25 year mark, will end up seeing you pay an additional $236,624 for the privilege of having a home loan.
Now that’s $236,624 better in your pocket earning you money, not the banks.
Let’s look at some rough numbers on how you could grow this money of $236,624 where it would compound over the next 15 years (because that’s the time period you saved on your mortgage by paying it down in 10 years).
You could put an additional $263,529 into your pocket seeing you at the end of 15 years your initial $236,624 growing to an enormous amount of $500,153.
Now that’s how having your money work for you and not your banking institutions benefit!
So what are some of the ways you can pay this debt down as quickly as possible and be mortgage free in 10 year or less?
There are 5 steps to becoming mortgage free faster and they are:
1 SET YOUR GOAL
It’s sounds crazy for some people to set a goal for this given they generally feel overwhelmed at the amount of money to be paid back, but it can be done.
This goal is just like any other you would set.
Let’s say for example that you have a $350,000 mortgage and would like to pay this off around the 10 year mark not 25 years as per the term of your loan agreement.
Then what you would do is look at ways you could do this by looking at your spending habits and talking to your mortgage specialist to find out whether your home loan is one that will enable you to pay it down without any penalties.
2 GET A COACH
There are two coaches you will need to ensure you stay on track and on target of paying your mortgage down within 10 years and the first is a financial coach like me.
A FINANCIAL COACH is critical to keeping you focussed on your goal and guide you in making sure you’re staying on track to paying your home loan goal down in the 10 year time frame you’ve set.
The goal of the financial coach is to ensure that every bit of extra money you have, goes towards paying this debt down as fast as possible.
A financial coach is not only there for financial encouragement, but is also there for your emotional wellbeing, when at times you may feel overwhelmed and stray off course thinking you’re never going to pay this down.
The second coach is A MORTGAGE COACH. Now the major benefit of a mortgage coach is to ensure that you have the most effective home loan for you that’s working in meeting your goal of becoming debt-free in 10 years or less.
A good mortgage coach would meet with you once or twice a year to ensure that your loan meets your current life circumstances, because as we know home loans change.
A mortgage coach will be able to advise whether you are best taking advantages of lower interest rates and whether you could fix that interest rate to maximise your debt reduction strategy.
3 LEARN HOW AND WHAT YOU CAN DO TO ACHIEVE YOUR GOAL OF BECOMING DEBT-FREE SOONER.
There are many strategies about how to pay your home loan down faster and I’m afraid to say that it’s not in the banking institutions’ best interests to share with you how to pay your debt down faster.
Why, because they have forecasted what they are going to do with your extra repayments right up to the 25-year mark. So you see they want you to keep paying so they can use your hard-earned money on other investment opportunities to help grow shareholder dividend returns.
This is why working with both your financial coach and mortgage coach will see you taking advantage of strategies that you may not be aware of yet.
4 CREATE A PLAN AND STICK TO IT!
With anything in life, when you have a plan and stick to it, you have a better chance of achieving what you’ve set out.
This is where your financial coach can help create a plan that meets your requirements and lifestyle. You see we all have different priorities in life so the plan needs to be tailored to suit our own circumstances.
5 TAKE ACTION. DO WHAT OTHERS WON’T DO AND YOU WILL SEE THE BENEFITS OF BECOMING DEBT FREE SOONER.
One of the best ways to become mortgage free is do what others aren’t prepared to do.
So often we follow the herd mentality and that sees us continuing to be poor and broke.
It’s about stepping out of our comfort zone for a short period of time while the adjustments are being made and then reaping the benefits long term.
When someone has the courage to step out and become their own person and do the things others aren’t prepared to do, then they soon become the ones who are debt free, happier and living life the way they’ve always dreamed.
So let’s recap what it may costing you by not getting a coach.
Firstly, you’ve seen that you are paying out good money that you’ve worked long and hard to the banking institutions for longer than you need to.
And secondly, your hard-earned money could be working for you and not your banks, as you’ve seen in the illustration above on the benefits of compound interest, making you richer not them.
Also, you’ve read about the benefits of getting yourself both a financial and mortgage coach and this enables you to become mortgage-free sooner
** As your financial coach, I’m one that works with you regularly to help you stay focussed and on track to achieving your financial goals. As your coach, I am also here to ensure that when life suddenly throws you a curveball as it often does – you have the tools and resources necessary to stay motivated and on track.
** The mortgage coach is the one that ensures your home loan is structured and set up correctly. Utilising the latest strategies available to maximise the full debt reduction potential. The mortgage coach’s responsibility is to ensure they are working with you to understand your home loan so you can work towards paying it down as quickly as possible.
NEXT STEPS:
Financial Coach – get in touch with me today to see how I can show you how to pay your mortgage down in half the time while supporting you in achieving your financial goals sooner.
I talk a lot about building financial muscle and for good reason.
Why? Because some people today still don’t have their money working for them and they’re making dumb decisions when it comes to managing it effectively.
My concern is that when these people decide around 65 – 70 years of age that they would like to retire – they’re going to struggle!
Why, because they’re going to have nothing to enjoy their retirement years with, as they’ve spent everything they’ve earned along the way.
Financial muscle as I bang on about constantly, is making sure firstly that you’re hard earned money is working for you and not your bank’s.
And secondly, it’s about having something put away for “just in case” which “just in case” comes up a fair bit during our lifetime.
So how nice would it be to know that you’ve got money and it’s working to your advantage when you need it.
Here are 7 steps you need to know when it comes to building financial muscle and they are:
1 Looking at your spending habits. What are you spending your money on each and every payday? Are you spending it on things that are worthless and while short term makes you feel good initially but then when it comes to paying your bills you haven’t anything left to pay for them?
My guess is, this is when you start to feel stressed out and your life becomes very overwhelming.
The quickest and easiest way to get a handle on what you’re spending is to look at doing a budget. For the first month, you write down everything you spend and then deduct what you earn by what you’ve spent for the month.
More often than not, you’ve used credit to help get you out of a bind, but it’s not working and you’re getting further and further into debt.
2 Next, once you’ve worked out if there’s any surplus, you’ll want to make some adjustments in your spending to put away a small percentage around 10% of what you earn into a savings account.
Now 10% is not a lot of money, but you’ll need to do this first at payday before you pay any bills or use some of your income on other expenditure.
Once you’ve put away 10% or even $20 or $30 into a savings account then put on autopilot, where every payday money goes from your pay into this account. I guarantee you’ll start to think about your money a little differently.
Something magical happens when you know you have some money saved and you start to feel a little more confident and less stressed and it gives you a greater sense of security.
3 Ok the third area where you’ve got to be strict with yourself is to open another savings account, one that is too hard to get access to and start building on your emergency fund.
You’ll need to get your emergency fund up to at least $2000 as quickly as possible.
There are many ways to get this account up to $2000 and the first is to look around your home. What could you sell online that’s sitting around in your garage or shed that’s gathering dust?
The emergency fund is the 3rd most critical aspect to building financial muscle because it takes the pressure off you and your money when those unexpected things arise like your hot water goes on the blink or your fridge packs up.
The emergency fund is for exactly that emergencies that make life very difficult if they’re not fixed or replaced.
Ideally, the emergency fund needs to be at a balance where if you lost your job or you couldn’t work for 6 months, you would have enough money to be able to pay your bills until you get back to working again.
4 The major stress for most people is their ever-increasing debt, whether it be from overspending on credit or the mortgage on your home.
I can’t stress enough that when you finally become debt-free life is going to be a whole lot more fun. Things that used to stress you out are suddenly gone and all the pressure of working at a job that you probably don’t like now gives you the power and choice to look at whether you continue working there.
If you’re not working to pay down all your debts as fast as you can – you’re just throwing away good money to the banking institutions that are funding your poor money habits and making them richer while you become poorer.
Map out who you owe, how much you owe and then start with one debt at a time and pay that down until it’s gone. Once the first debt has been eliminated, then use the money that you paid the debt down with to double up on the next debt.
5 Ok, so the next step in building financial muscle is to stop and do a quick financial health check.
A financial health check will look at quite simply if there are any areas within your money that you need to work on, or get more information on, to get you back on track and retiring comfortably.
I have a 5 min financial health check that you can download HERE to get you started.
6 Now you’ve got money being saved, your debts are being paid off, it’s now time to look at your wealth-building strategies.
Your wealth-building will consist of two parts:
Investing and
Protecting
Let’s talk about investing first.
Investing is about growing your money through facilities like superannuation and other investment options.
Superannuation is a way of saving for retirement.
Essentially your employer in Australia is putting away a percentage of your salary into a fund of your choice that invests the money until you retire.
It’s a forced type of saving but brilliant to help those in particular that are not good at saving and will see you have some money at the end of your working life.
This is a big topic that’s too big to cover off in this post, so I will write a post on this and explain in more detail shortly, so keep an eye out for it.
Other investment options for wealth building during your working years could consist of investing in shares, managed funds or property to name a few.
I would encourage anyone looking into wealth building to seek a financial adviser who is qualified to provide advice on what assets or which investment vehicle is best for you and your personal circumstances.
There are many out there so be careful and take the time to ensure they have your best interest at the forefront of their advice giving.
Next, I want to talk about protecting your money. This is a very important topic. Today, I’ll give you a brief summary but like the topic on superannuation, I’ll be writing more about this in another post.
But for now, let me explain why it’s important to have a Will or good Estate Plan.
A Will and Estate Plan are there to make sure your wishes at the end of your life are carried out and distributed properly.
A Will is a legal document that states what you would like to happen with your assets when you die and forms part of your Estate Plan.
An Estate Plan, on the other hand, records exactly what you would like to happen with your assets upon death and includes documents such as your Will, a testamentary trust, superannuation assets and may contain powers of attorney or other such documents that in the event of you being unable to make decisions, someone appointed by you will act on your behalf.
So as you can see from the brief descriptions above it is extremely important to make sure you are protecting what you’ve worked long and hard to build.
If you die without making a Will it means you die intestate and this causes a lot of heartache and headache for your loved ones left behind.
What actually happens here is that your estate is left to deal with either from the Supreme or Highest Court, depending on which state you live in Australia, who will appoint an administrator.
The administrator’s job is to arrange the funeral and distribute any leftover assets after paying any debts and taxes. Sometimes there are fees associated with an administrator taking care of your details which means your loved ones may not receive the full inheritance you had planned on leaving them.
So make sure you have a current Will your priority today because nobody knows when our time is up.
7 And lastly, the 7th step to building financial muscle is to get yourself ongoing financial education and support.
Just like a sporting team, they all use coaches to help them and guide them to their sporting greatness.
Financial coaching is much the same, an experienced coach who knows sound financial education can make the difference between living with financial stress or living your life the way you’ve always desired – happy and stress-free.
If you’ve read to the bottom of this and you’ve followed the steps outlined above then congratulations as you are one who is committed to living a financially comfortable life.
Why not continue with your financial education by working with me on a monthly basis.
I offer several options, but the first is the most preferred as it’s inexpensive and extremely supportive towards you achieving awesome financial health.
When life suddenly throws you a curveball whether the signs were there or not and you haven’t prepared yourself for what’s about to come, it can send you into a spin and see you experience massive stress and anxiety.
Financial & Relationship stress go hand in hand and it’s still the number one trigger point for most.
When a relationship breaks down and you’re left to sort out where to go and what to do – money stress is ever-present.
Not only are you dealing with the emotional stress of the relationship breakdown, but you’re now having to deal with where to live, how to survive and then there’s the issue about money which is about to get very messy.
Then if children are involved a whole other issue about custody arrangements and financial support start coming into play.
It’s like you’re in the middle of a soap opera and left emotionally drained.
When an event like this is triggered a person will feel a whole bunch of overwhelming feelings like sadness, anxiety, or even experience panic attacks.
What happens next is that our body goes into one of the “fight, flight or freeze modes” and our heart beats faster and our senses go on high alert. Also our brain stops some of its normal functions to deal with the threat we may be feeling or experiencing.
If this has happened to you or you can see life is about to dramatically change then get some help.
Firstly, find someone who is unbiased and independent and someone who doesn’t know you or the situation that you’re about to experience.
When people are feeling overwhelmed and stressed out they sometimes don’t make decisions that are in their best interests or health.
If you know of someone or you yourself, are feeling any form of stress then get some help. You don’t have to do this alone. There are people and organisations that can help.
Be on the lookout for the SYMPTOMS that stress can produce:
PHYSICALLY
Tiredness, headaches, accidents, tightness in neck and shoulders, restlessness, ulcers, hypertension, respiratory problems, diarrhoea or constipation, chest pain, back pain, upset stomach, skin problems, weight loss or gain.
If stress is experienced for long periods of time it can result in physical, mental and emotional exhaustion or ‘burnout’.
STAY CONNECTED
We need to look out for one another, stay connected and ask if we’re ok.
If your gut is telling you that you’re not ok or that someone close to you is not, then make sure you’re there for them. More often than not they’ll say they’re ok and will remain silent while living with their pain.
SUPPORT
Here in Australia, we have an organisation called Lifeline which is a national charity that has been providing assistance to Australians experiencing difficulties for over 55 years.
If you’re reading this and not in Australia then seek out your country’s support network to ensure you get help and are not dealing with this alone.
In Australia, you can call Lifeline on 13 11 14 anytime as they’re available 24 hours a day.
WHAT TO DO NEXT
I have created a tool kit to help you identify when you’re feeling overwhelmed about what to do.
Other resources I have available is my monthly coaching program which is a fraction of the cost than other coaching programs at $37 per month and with no lock-in contracts. You can exit whenever you choose.
Also, courses teaching you money management skills and how you can build financial muscle. You can check out what’s available HERE.
In the meantime, here’s to your financial health, wealth & happiness.
