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How to free yourself from a common financial trap

Posted April 18, 2018 by MoneyLink

You definitely know what you earn, but do you know what you actually spend?
… Or do you just have a sort of ‘vague idea?’

There’s a big difference between the two, and the only way to take control of your money is to know what’s coming in, and what’s going out of your bank account.

The common financial trap most of us have fallen into is that we aren’t really mindful of our spending. So Julie Nipperess from MoneyLink Financial Planning invites you to take part in her ‘Blow your Socks Off’ Challenge!

“Most of us ‘live by the card’ and we have no real relationship with our money,” explains Julie Nipperess.

“Society is changing – there was a time when we all used cash more frequently and then it was much simpler to see what you had, and what you spent … And once the money was gone, that was it.

“But that’s not the case any longer, swiping, tapping, punching pins – even paying by smartphone is becoming more prolific, and these payment options allow us to spend pretty mindlessly. Similarly, in many ways, it’s easier for us to get the things we want by accessing finance options like personal loans, car finance, rent-to-own and credit. Many of the big stores offer ‘interest-free’ periods when they’re having a sale and a lot of people make use of them … but the fees and charges and high interest rates can be deadly financial traps to fall into,” says Julie.

Her number one tip for getting ahead financially is to know what you’re spending.

“It’s really that simple,” she says. “It’s nearly impossible to control the amount of money coming in. It’s pretty unlikely you’ll get a massive pay rise or some major financial windfall … but you can control what’s going out.”

The ‘Blow your Socks Off’ exercise is a real eye-opener.
If you sit down and write out what you think you’re spending and then sit with your bank statements and carefully work out exactly what you’re really spending, without a doubt, you’ll find some surprises.

“Most people are amazed,” says Julie. “And yet this is often the real turning point – suddenly there’s an emphasis on how much the daily coffees are costing, or the trashy mags, or the two or three take-aways each week, after you’ve filled up the fridge with groceries.

“Whether you earn $20,000 or $200,000 – then if you spend a thousand dollars a year more than that, you’re as broke as someone on welfare. And unless you change your spending habits, it’s likely the situation will get worse.

Setting yourself up for a secure future and enjoying a comfortable life now is as straightforward as understanding how you spend your money.

And if you’re serious about saving, and making your money work for you, then a financial planner can help you put some strategies in place that will ensure you can meet all your obligations and goals no matter what they are – buying a house, paying off the mortgage, travelling, starting your own business. Anything is possible once you have a plan in place.

Julie Nipperess is an Authorised Representative of MoneyLink Financial Planning Pty Ltd, an AFSL holder.

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