How money matters

How money matters We take a look at how people rate their finances and provide some general tips on staying financially mindful with your spending habits.

Australians’ perception of money is changing at an ever-increasing rate, as highlighted in the newly published Choosi Dollar Report 2019.

Never before has the financial sector changed so rapidly in the space of just a couple of years, and this is creating a shift in people’s attitudes and behaviours towards money.

Having advised thousands of people on their finances over the years, more often than not, I see people overestimating what they believe they can achieve financially in one or two years and underestimating what they can achieve over 20 years.

According to The Choosi Dollar Report 2019, an in-depth study of 5,000 Australians that tackles the issue of whether or not we perceive ourselves to be a financially savvy or a stressed nation, along with our money-centric behaviours and desires, it’s clear that we’re good at overestimating our own financial knowledge. The research tells us that 69% of Australians rate their overall financial knowledge as ‘strong’. Yet, when it comes to investing experience, the report shows we’re underestimating the time and ability we have to manage our money effectively, with only 37% rating their investing experience as ‘strong’.

This disparity can often lead to financial anxiety and stress. Fortunately, there are a number of simple management techniques we can implement to alleviate stress, pressure, and anxiety related to our finances, and ultimately stay on top of all our money matters.

Applying these simple money management tips could help the 55% of us who feel anxious about our financial future or offer solace to the 25% of us who worry about money on a daily basis.

1. Kicking financial goals

Financial goals should be at the core of every money decision you make. If you don’t know what you’re trying to achieve financially, then you’ll never get there. Think about how you’d like your money to work for you over the next one, two, five and ten years and write these goals down. Even if you write them on a crumpled napkin – just do it!

2. Essentials vs habits

We all have expenses that we have to cover: rent/mortgage, groceries, electricity, water – you get the gist. But what about the things you buy but don’t necessarily need, or even want? My ‘two-minute trick’ can be a go-to for assessing whether you actually want the thing you’re planning to buy or whether the urge is simply part of a costly habit.

‘Two-minute trick’: Next time you think about wanting to buy something (it can be anything at all), hold it in your hand, set a two-minute timer on your phone, and wait until the timer ends before buying it. You’ll find that more than half the things you initially planned to purchase are things you don’t actually want. Try it – you’ll end up buying less!

3. For starters, easy wins

Far too often, I see people set off in their journey towards healthier finances by focusing on the most complicated changes first. However, this is difficult and can cause people to bury their head further into the sand.

The best way to start your personal money revolution is to tick off the ‘easy’ items first. These can include writing down your money goals (see tip #1!), reducing your grocery bill by being mindful about what you’re purchasing or shopping on a weekly rather than daily basis, or having a simple goal of saving $500, then raising it to $1,000. Before you know it, you’ll have $5,000 in your savings account! Once you’ve had a taste of the little wins (like saving $500!), the bigger money goals will seem more within your reach.

4. Money is a secret worth talking about

Focusing on and working on your financial situation involves being open and talking about it. Money is often associated with being a ‘secret’ or ‘private’, or as shown in the Choosi Dollar report – invites familiar feelings of ‘stress’. In fact, it can often be easier to not talk about the dreaded ‘m’ word, so much so, that fewer Australians today compared to 2016 feel comfortable talking about their finances (58.3% compared to 77.8% respectively).

However, it’s time to remove the stigma associated with the dollar sign! Be bold and open up the conversation with your partner, friends, and family to normalise the topic. Opening the door for others to talk about money could even reveal financial anxieties on their end that they’ve been wanting to speak to someone about, and alternatively, you might even learn a few things from them!

Money is so much more than a tool for buying goods, services and investments. It has a direct influence on our overall wellbeing and if any of the insights above have resonated with you, then perhaps now it’s your time to financially shine.

There will never be a ‘right’ time to start, so stop worrying about what you could’ve done, and focus on what you can do with your money. Take the first step in being financially smarter with your money today!

Interested in what regions across Australia consider themselves financially savvy or are feeling the pressures of money management? Take a look at our national and state-based maps that shed light on how we’re feeling as a nation.

Author Bio

Dominic Aarsen is a personal finance expert whose passion for helping Australians understand money and achieve financial success led him to launch and Moneyvest Financial Education, which offer the necessary tools to help everyday Australians take control of their financial affairs. The data cited in this article is from The Choosi Dollar Report 2019. The opinions and advice of Dominic Aarsen are general only, and don’t take into account your personal objectives, financial situation or needs, nor do they constitute financial advice.