The 5 simple financial principles that have brought us peace

 

 

Since moving here to New Zealand, we have adopted a more purposeful and intentional approach to our family finances. We are still a work in progress and do not claim to be experts by any means but we have come such a long way and have learned so much. We are no longer fearful of money – we are at peace with it and these are the 5 simple principles that have helped us to reach this point. My hope is that these simple principles we have learned on our journey, will help another family to find this same peace.

1. Have joint accounts

Without a doubt this been the most transformative move that we have made.

Despite my parents trying to advise me otherwise, I was convinced for a long time that separate banking was the right choice for us and that having a joint account was old- fashioned and would somehow inhibit our lives. In reality, the separate accounts stopped us being accountable to each other for our choices and did nothing to encourage teamwork and collaboration when things were tight. We each did our own thing and rarely spoke about money until it became a stress point and we didn’t have any.

We joined our finances together when we emigrated and it has become a symbol of our closeness and teamwork. Away from our extended families our unit of four has grown closer than I ever imagined we could be and our combined finances represent this perfectly. I don’t have money any more- it is all ours.

Having joint accounts means greater accountability and necessitates communication about money – two invaluable steps on the path away from fear towards peace.

2. Avoid direct debits- take back the control 

Back when we were really struggling with our separate bank accounts, all of our utility bills and insurances were paid by direct debit. We had entered into this agreement on the grounds that it seemed more efficient and was a hassle free way to manage money. In reality, we had no idea from day to day how much money (or overdraft) was available to us because so many payments were going out so we didn’t manage things at all.

What I realised after starting to pay the bills manually here in New Zealand was that I actually find the process of paying the bills manually very reassuring. I enjoy keeping on top of the payments and carefully managing our money and feel a sense of accomplishment every thursday when I access our bank account online and take care of any payments that have come in over the past week. To do that of course I now actually look at the balances on our accounts instead of just asking the ATM for cash and holding my breath.

I have learned that knowledge is power. This is our money and we have control over it. However scary it is to get real about your finances, it is time to take back the power.

3. Live within your means

I spent years living with the overdraft that had been attached to my graduate bank account. Payday meant that I got closer to zero but then very quickly spiraled back again. I would kid myself that as my overdraft balance stayed the same, it didn’t matter, but of course the unmoving overdraft balance was a sign of stagnation. We were living at our means rather than within our means and there was never enough left over to move closer to parity in the account.

Honestly we were stuck but things changed when we moved and the overdraft facility was gone. As new immigrants to New Zealand we were only able to set up basic bank accounts with no special features and it was a real blessing because it forced us to pay close attention to our spending. There was no overdraft safety net to trick us into thinking that we had more money ‘to spend’ than we actually did. When our money each fortnight was gone, it was gone, so we automatically started to live within our means and became more purposeful with our money.

Keeping track of your spending will help you to live within your means. Work out a basic budget, know how much you have coming in each pay cycle and make it your intention to spend less than that! Of course, this can be a huge challenge depending on circumstances, but it is something to strive for.The most important thing is to start heading in the right direction because that is the way towards peace.

4. Do we really need it?

Starting again in a new country is expensive but our new perspective on money has helped us enormously. The houses here are well above our price range at present so we have been renting for the past 5 years. We have been really lucky to have had stability in our rental but as we know that theoretically at any point we can be given three weeks notice to vacate the property, we are mindful that whatever we bring into our home we have to be prepared to move with us and that has helped us keep our possessions down which has had a positive impact on our finances.

There is also nothing like giving most of your ‘stuff’ away when you are emigrating to make you aware of how much you have accumulated and bought that you didn’t either need, use or value and that has helped us to see our purchasing in a totally new way. We ask ourselves the following questions when we are considering most purchases:

• Do we really need it?
• Do we really need it right now?
• Would it be something we would take with us if we moved countries again?
• Can we get it cheaper somewhere else?

We still get tempted to spend money on things we don’t really need but again, our intention is to be mindful of the choices we are making and avoid buying things just because…

5. Have a purpose

We had made many positive changes to our finances and started saving a little each month but as buying a home of our own was squarely out of reach, it was hard to get motivated for saving as we had no real target to aim for. That changed when my sister became engaged and we realised that to be able to travel back to England for the wedding, we would need to get serious about saving.

There was never a possibility that we would not meet our target as there was no way we were going to miss the wedding – this gave us a purpose and we soon realised just how much we could save with that purpose driving us. We spent 16 months saving 15-20% of our household income towards our trip every month and had a wonderful time. In the process we also realised that we can work together to achieve any goal we set ourselves when we are intentional and work together as a team and so since our trip we have continued to set realistic but challenging financial goals and intentional saving is just what we do now.

Maybe your purpose is to own your own home or renovate your existing one or maybe you would like to save for a family trip. Maybe your purpose is to clear your student loan debt or buy a new car. Whatever your purpose is –  set it as your intention and use it to inspire and motivate you every day.

When we were saving for our trip we put up a poster in the kitchen to remind us of our purpose. Physical reminders like this can be really helpful and they are a fun way to get the whole family on board, but overall just being mindful of our overarching purpose has really helped us the most to find peace and my wish is that it will do the same for you!