How to be Proactive, not reactive with your finances.
In our work as financial advisors, we often talk to people who feel that they are being controlled by their finances rather than the other way around. This is said to us across economic circumstance which leads us to believe that more money does not lead to better money management.
Money management is not something we learn in school. It is a gaping hole in the education system which teaches kids to learn and work, but not how to control the funds that they will eventually earn.
Usually we learn money management from our parents. We either copy them, or do the exact opposite!
Here at BGN Financial Management, we have constructed a system that we believe will help people take the steps necessary to take to become proactive rather than reactive to their finances. You can see an outline of this above.
What do I mean by reactive? Have you ever been in a situation where you feel like you are barely holding your finances together and then something happens? A car breakdown, a huge bill arrives, the dishwasher blows up? Small emergencies like these can throw a huge spanner in the works of a family budget. So we react. We might resort to using credit cards to fix whatever it is, which throws us into a deeper hole. We might have to live without something to pay for the other. Either way, we are not in control of that situation or our finances.
Being proactive involves changing the way that you think about money. It involves putting in some work to make sure you have safety nets in place, to make sure that small emergencies like these don’t put you into debt and throw your family budget in the trash.
Our system involves 9 simple steps that you can take to get control over your finances. From budgeting to super, savings and debt, we believe that following these steps are a great way to become proactive rather than reactive.
On May the 25th 2019 we will be holding an intensive workshop to go through these steps with anyone who wants to learn. In the meantime, let’s discuss one of the earliest and most important. Building an emergency fund.
An emergency fund is an amount of money that is sitting in a safe cash account waiting for your car to break down, or an unexpected dental bill or a blown up washing machine.
You get the point.
We encourage the figure of $3000 to start. This amount will cover off on most of these types of situations. Although long term, wouldn’t it be great to have 1-3 months of living expenses put aside?
By having $3000 available to you for emergencies you allow yourself the freedom to stay in control should something happen. You are not scrounging around looking for cash, it is already there and waiting. You will not turn to a credit card which will make things worse in the long term.
This simple step is a proactive way that you can be prepared for what life will throw at you.
Stay tuned for more details about our simple step system and the upcoming workshop, I hope you will join us there.
Until next time, have a great day.
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Ben Graham-Nellor is an advisor, coach, blogger and speaker who has worked in the financial services industry for over 15 years. He believes that by educating and advising people today, they can improve their tomorrow.
BGN Financial Management Pty Ltd is a Corporate Authorised Representative 468796 of Professional Investment Services Pty Ltd AFSL 234951 ABN 11 074 608 558 www.centrepointalliance.com.au
The information in this communication has been prepared on a general advice basis only. The advice has been prepared without taking account of your specific objectives, financial situation or needs. Accordingly, you should, before acting on the advice, consider the appropriateness of the advice having regard to your objectives, financial situation and needs. In cases where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a Product Disclosure Statement (or other relevant information statement) and consider such document before you make any decision about whether or not to acquire the product. For these reasons, it is imperative that you seek advice from your financial adviser before making any investment decisions.