Is it time for a money detox?
Is it time for a money detox?
1. Do a financial detox.
If you need a break from someone you need space and time apart. This may mean unfollowing them on social media and separating your life from theirs. It is no different with money. In order to have a break from money I recommend you begin with a financial detox. This will enable you to realise how you use money and your money mindset, just like emotional eating we can often emotionally spend. A detox doesn’t have to be anything fancy but simply a month of buying nothing new or non-essential. Doing this can give you the mental space to see where money may control you (plus the benefit of the savings you might see in that month). You never know, you may enjoy your financial detox so much, you keep going!
2. Understand your values.
Try making a list of what you value in life. Maybe it is security, family, freedom, achievement or loyalty. Once you have worked out what your values are you can look at your goals and decide whether they fit with your values. Often when asked about goals people say what they think should be their goals, even if they are not truly their goals. ‘I want to own my own home’ is a common goal — but is it really true for you? Or is it just what you think you should want, or what your parents want for you? If one of your values is the freedom to travel, then sure you may want to own property (such as an investment property), but owning your own home might not be right for you now. If your values and goals are not aligned, the motivation is never going to be there to achieve those goals.
3. Work out your goals.
Now that you have done your financial detox and understand your core values, you are ready to start thinking about what your new relationship with money might look like. This is where it is important to work out what your goals in life really are. I find for many of my clients it can be tough to look too far ahead but having some short-term goals is essential – one year to three years can be a good start. We can help you look at the best way to do this and to make sure that you are making goals you will actually be excited about.
4. Work out a plan.
Sometimes goals and values can seem so far removed from your current situation that it is easier to turn on Netflix and continue as you are. You have got to stop procrastinating and work out how much money it will take to put in place the plan you have set, and how long it will take to achieve it. So, if your goal means you need $10,000 in twelve months’ time, that means you need to save $200 per week. Financial plans based on values and goals are attractive to us because they are personal and meaningful. At this stage you are ready to look at different ways you can save money and different ways to invest your money. You may have a goal but absolutely no idea of the best way to get there. This is where planning and strategy kicks in and often the need to seek professional guidance.
5. Understand how you are spending.
It can be confronting to finally admit to exactly what has been going on and why it’s not working for you - feelings of despair and guilt can make you want to crawl back under the covers. Now you have done your financial detox it is time to understand where your money is going. This can be done by tracking your spending using one of the many solutions available, some free, some paid – but ultimately finding a way that suits you, your personality and the time you have available. By doing this you can start to recognise your spending patterns and decisions that may be causing problems so you can do something about them. We are not talking about a strict budget, or restricting your lifestyle, but about becoming aware of how you are spending your money and knowing exactly where it is going.
6. Become a conscious consumer.
Okay, so working out a plan is great, but even the best plans won’t work unless you are monitoring it regularly - it’s too easy to go off track. It’s important to work out a time (potentially every month) to check in on how you are going, see if you are heading in the right direction and make any necessary adjustments. This can be something you can DIY or it may be that you need to get some help. By monitoring your money regularly, you will be able to keep your eye on it and make the required tweaks to ensure you are always moving forward.
8. Remove yourself from temptation.
I try not to have potato chips in the house because I have absolutely no willpower to not eat them. I could decide I will have the motivation to avoid them and keep a packet or two in the cupboard, but I would be beating myself up daily because I know I’d eat them. It’s the same with money. If you know you never window-shop but always window-buy, then do not window-shop. In this step we are going to look at removing temptation now that you know what you want by working on your spending priorities.
9. Seek help from a money expert.
Sometimes it doesn’t matter how much you want something you just can’t make it work without help. You might have a go at all of the steps above and don’t see anything changing — or you might know yourself well enough to know you need help from the start. We can help you work out who you may need to help you sort out your relationship with money. This can be about finding some money mentors, supporters and a money coach to make the going easier on your journey to financial success.
10. Consistently monitor, assess, tweak and track.
Establishing a healthy relationship with money is a great thing to do, for you and your family. But just doing it once and then getting back into the same old habits won’t get you anywhere. So that you don’t end up back in the same place you started (or worse), you have to figure out how to make this a lifetime mission to not only keep your money under control, but also create an amazing relationship with it so that it gives you more freedom, security, empowerment and options in your life.
Disclaimer: This advice is general and does not take into account your objectives, financial situation or needs. Before applying for any products mentioned, please read the product terms and conditions and consider whether that product is right for you.