Your Money

Money makeover - Part 1

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Apart from not being loved, our greatest fear is to be poor. For some of us, it’s our greatest worry but, rankings aside, no one wants to have money worries.

A couple of years ago, a post-New Year’s Eve survey found, for the first time ever, the number one New Year’s resolution was “to get my money life in order”. Yes, even over giving up cigarettes or losing weight!

Over the next week, I will give you 12 irrefutable laws of how to get your money house in order and show you how you can start building wealth.

A financial education
If you’re a parent, you’d hate to think your kids would be too poor to eat well, to buy a nice place to live, or be able to bring up their own kids in comfort.

Australia’s top rating radio personality, Alan Jones, once contacted me to see if I could help Jamie, a young listener, with his money troubles. He was married with two children and thought he might lose his house. He and his wife had newish cars with loans against them. He had borrowed his deposit using a personal loan his dad had borrowed for him.

So, he had two loans to pay off and the personal loan on a short payback period was crippling him.

To make matters worse, he was off work with an injury and had lost his job. He was behind in his repayments and, more bad news, the value of his home was falling under the weight of rising
interest rates.

He told Jones that he had never been taught anything about managing money and wanted to learn so that he didn’t teach his own children bad money habits.

The guy didn’t expect to save his situation but was prepared to give anything a go. He simply wanted to learn how to be responsible with money so his kids would never go through what he had gone through.

Over the next 12 steps, I will give you the assets I have collected over 35 years of money commentary and financial planning – the gift of how you can build wealth!

I thank Jamie for his guts to ask for help and dedicate these 12 steps to him.

 

How can you succeed when it comes to your money life? Make a real change when it comes to your dollars. Success is simple – CHANGE!

But that’s the hard bit. How do you change? There are seven questions you have to answer:

1. Hands up those who want to be a success?
2. Hands up those who want to be wealthier?
3. Hands up those who want great investments that work really well, are a pleasure to own and
that increase in value?
4. Hands up those who want to be happy too?
5. Hands up those who get frustrated at their lack of progress towards success?
6. Hands up those who have created a success plan?
7. Hands up those who know why they haven’t created the plan?

To embrace a new and improved attitude that will bring success, honestly answer the following questions:

• Are you a procrastinator?
• Do you doubt your ability?
• Does it seem too hard and you don’t know where to start?
• Do you really want to win?

Want to win?
Tennis great Chris Evert once said: “Deep down, I wanted to win so badly, I could actually will it to happen!”

She had a 91 per cent success rate in professional tennis – that’s extraordinary. Evert also said: “I think most of my career was based on desire.”

Here are some more questions to answer:

• Do you really want to win?
• Do you have the desire to win?
• Do you have the vision in your head? Do you have the reminder of the number one job at
hand on your screen saver? Is it on your toilet door? Is it a 24-seven goal? If not, you don’t want
it badly enough!

If you can dream it, you can do it
Richard Branson lived, breathed and kept focused on his business dream – it was a big part of how he made Virgin Music such a success.

If you want success with money, business or your career, you have to visualise the dream. Then, put a figure on it and introduce change into your life to make sure your quantified dream comes true.

So, before you progress to the next step – number three in our money makeover special – write down your goals and I will try to help you get there, especially with your wealth-building aims.

 



When it comes to reconciling your cents with your sensibilities, here are ten tricks to save you and your hip pocket.

What follows are the 10 habits of successful wealth-builders. There are more, but I think these are a nice start. If you’re not ticking off at least eight of these, then you are probably reducing your chances of maximising your richness in the future.

1. Create a plan
Just as a business needs a business plan, your (potential) wealth also needs a plan. Like making a blueprint for a new business or a new house, work out what your money goals are, see if your current ‘plan’ will make it happen and if it’s not looking promising, get cracking to create one. You can do it yourself but, if you can’t, don’t be afraid to talk to expert advisers.

2. Save every month
Set yourself a savings target that covers both your big spending plans, such as overseas holidays; crucial expenses, such as car rego; and your investments for wealth-building purposes.

3. Stay out of dumb debt
Some financial educators warn against debt completely, but that’s too restrictive. Smart debt could be for an investment property that gives good tax deductions and that jumps big time in terms of capital gain. You could borrow for shares, just like property, which rise in value and also provide tax deductions, so the real cost is reduced courtesy of the tax office.

Others borrow for positively geared properties where your rent is more than your borrowing costs. Debts for frivolous consumer items are dumber debts, especially if it stops you borrowing forsmart debt projects.

4. Shop around before buying
This is all about planning as well. Remember, every dollar saved can be earmarked for investments that give you income rather than taking income away from you.

5. Buy pre-loved goods
In the age of internet auctions, we might be becoming aware that new products are not alwaysbest value. Many car experts buy one-year old cars or demonstrator models at enormous discounts and suffer very little to no discomfort.

6. Take care of your stuff
Think of the car you never wash, the plant you don’t water, the suit you don’t get dry-cleaned – these are all cases of mismanaging your assets and, inevitably, your money.

7. Get into shares
This is not compulsory but, typically, the wealthy collect good shares like good property. They invariably hold them and reap good long-term rewards, despite the ups and downs of the stock market.

8. Become a smart property player
There are many great property plays – from investment properties to buying oldies, living in them and doing them up for capital gain with no tax.

9. Look and learn
Look for expert help or great money education sources and, especially, become a tax expert, because we pay a lot of tax and it can be legally reduced. Make sure your accountant, lawyer and property advisers are the best and listen to them. Ask
questions and get smart. You are never too old or too young to learn.

10. Face the brutal facts and get real about yourself
This will ensure you live by habits that will make you richer.

Budget planning may not hold the same appeal, as say, party planning, but it will ensure you’re on the right track when it comes to managing your money.

Steps four to six will be available in the next edition of Switzer News. You can also download the full eBook on the link below.

12 STEP MONEY MAKEOVER: DOWNLOAD THE FULL eBOOK HERE
 

Published on: Thursday, December 27, 2012

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