It’s nearly Christmas …. cue Money management tips for the festive season.
Same messages, different year. All sensible tips about setting a budget, set up a Christmas club account for next year, paying off credit cards quickly and so on.
But Christmas time is hardly the best time to talk about budgeting.
First, it implies that good money management is seasonal which it isn’t.
Second, it runs counter to the spirit of the festive season which is about spending time with family and friends more than it is about spending money.
With that said, we’ll share some thoughts here on a more perennial approach to better financial management.
Before reading on, if you are one of those people that already has a household budget and sticks to it with military precision (not that we are advocating this), you can stop reading now.
For the rest of us, take a moment now to imagine that you are completely in control of your finances. Pause to think about what that feels like.
If it feels like something you really want, deep down, and you aren’t there yet, then you won’t be wasting your time to keep reading.
If you don’t feel any sense of urgency or real desire to gain control over your finances, this is the point where you can sign off – because knowing what to do doesn’t cut it. We all know what it takes to lose weight, right? How’s that working out?
So, if you really want a better financially secured future and you are determined to manage your money more effectively, you are ready to hear this.
Good financial management begins with good cash flow management.
To be completely organised and in control, you need to know where your money is going. But that has always been a painfully time-consuming task. Fortunately, technology is now there to help, so you don’t have to go back over bank statements to review your spending.
As a NAB customer, one such technology tool with which I am familiar is the NAB Money tracker which already has all your transaction information and has automatically categorised your expenditure. This works very well for a retrospective look over household income and expenses. The downside I have encountered with NAB’s Money tracker is that there is a lag of a few days between when the transaction occurs and when it appears in Money tracker and so if you want to use it as a daily or weekly monitoring tool, it is deficient in this regard. It also only tracks NAB accounts so if you have accounts with more than one bank, it won’t be a complete solution for you.
St George have something similar which I heard advertised on the radio over the weekend and if the other banks don’t have something like it already, they won’t be far behind.
Another non-bank popular tech tool to keep track of expenses is the free app Pocketbook. This allows you to link up your bank accounts, enabling Pocketbook to pull through all your transactions and auto-categorise them for you which is particularly useful if you have bank accounts with more than one bank.
Once activated, future bank transactions continue to automatically sync and you can also prompt a manual sync for a quick update. Having tested Pocketbook, I have found that transactions are loaded very quickly which helps with up-to-the-moment income v’s expenses management. There are other clever features of Pocketbook such as the ability to set safe spend limits, with the app sending notifications including progress updates and warnings if you are nearing your self-determined safe spend limit.
With these technology tools, the task of finding out what and where you are spending your money is made easy. It is quick to re-categorise transactions and you have a clear picture of your spending patterns in no time.
Perhaps for the first time ever, you will be able to see where your money is being spent.
Now that you have this information, you will have identified trends and perhaps areas of expenditure that you feel you could change. Choose one or two expense categories that you want to begin with, focusing first on some easy wins.
It is important to recognise that this is not an all-at-once exercise. Don’t try to change too much, too quickly. Incremental progress is the name of the game here so start small and then build on the momentum with other categories.
You are now fully informed and well placed to make more intentional decisions about where you spend your money, now and into the future, and not just at Christmas time.