MORE ABOUT
MONEY
'Money can't buy happiness, but
neither can poverty.' Leo Rosten
The subject of money raises a whole range of conflicting emotions
and beliefs for my clients. Many believe that money doesn't make you
happy, a large percentage feel a bit squeamish about the way they
manage their money, nearly all spend a little more than they earn
and most would say that it isn't their most favourite topic of
conversation.
In January last year, I made it my project to get our personal
finances in order (if you didn't get a chance to read this
newsletter, you'll find a copy here
http://www.totalbalance.com.au/jan06.htm). It's been one of
those 'one step forward, two steps backwards' projects but we're
finally beginning to feel as thought we're making headway. And
something interesting has begun to emerge.
Since getting the simple issues like budgeting sorted out, we've
seen a positive impact on the bigger things, like our income and our
savings. This in turn, has made us more confident and we now have
very clear long term financial goals that are well beyond what we'd
ever imagined possible.
One of the things we've learned more about is the simple rule of
compounding interest. (For more information about how compounding
interest works, see the links at the end of this section.) All you
really need to know for now is that time is your greatest friend
when it comes to building financial independence. The most important
thing you can do is to start sorting out your finances today. Don't
waste another month or year telling yourself your finances are in
such a mess that it's no use. You might need a bit of courage to
tackle this task - be willing to face the reality, as awful as it
may be. If you start by making small changes today, you can make a
significant impact on your financial future.
Here are some examples of how compounding interest might work for
you:
- Take your lunch to work least twice a week. Saving - $15 a
week or $780 a year. Over 5 years with compounding interest -
that could amount to over $4,500.
- Go out to dinner one night less a month. Saving - $100 a
month or $1,200 a year. 5 years - over $7,000.
- Have two less coffees each week. Saving - $300 a year. 5
years - over $1,780.
- Transfer $200 each month to a savings account via direct
debit. 5 years - over $14,000.
- Implement all of the above savings and transfer that money
to your investment account - total at the end of 5 years nearly
$28,000 (based on interest rate of 6%).
- Make an additional $100 payment per month off a $250,000
mortgage and save up to $50,000 in interest and reduce your loan
term by nearly three and a half years (based on interest rate of
7.5% and 25 year original term).
(Please note: We are not financial advisers and the above figures
are examples only. We recommend you seek independent professional
financial advice.)
Interesting links to help you with
your finances:
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ON A PERSONAL NOTE Now that I've got my finances in
order, I've been spending some time on projects that are much more
fun!
One of these is a book that was recently published by the Office
for Women in conjunction with the Office for Small Business. The
book is 'Women Entrepreneurs' and it features the stories of
eighteen women small business owners, including myself.
I attended the launch of the book at the Ian Potter Museum of Art
at University of Melbourne last month and was pleasantly surprised
at the quality of the publication.
If you are a woman considering the option of starting your own
business, get a copy of the book and enjoy these stories of everyday
women who have succeeded in their own small business ventures. Some
of the stories are truly inspiring.
Hardcopies of the book are available by contacting the Office for
Women on 1800 808 863 or visit the website for more information
http://www.ofw.facsia.gov.au/downloads/pdfs/Women
Entrepreneurs_factsheet.PDF.
We are happy for you to reproduce our articles as long as they
remain intact and contain the author's details as follows:
'Kate James is a work life balance coach, writer and speaker. She
works with professional people who want to enhance their quality of
life by making the right career and life choices. You can find Kate
at
www.totalbalance.com.au.' |
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