20 April 2024

Are finances sucking the life out of you?

Have you secured your oxygen mask?   Imagine you're on an airplane, and the flight attendant begins the safety demonstration. Among the instructions, they emphasize the importance of securing your oxygen mask before helping others with theirs. This simple guideline carries a profound lesson applicable beyond air travel—it's also a great metaphor for prioritising your financial health before indulging in non-essential expenses. Much like ensuring your own well-being before helping others during an emergency, managing your finances responsibly sets a strong foundation for long-term stability and financial well-being. Here’s how prioritising financial management mirrors putting on your oxygen mask. Self-Preservation: Securing your oxygen mask assists you to maintain consciousness and functionality in times of risk and uncertainty. Managing your personal finances with a well balanced budget or plan that includes consistently building your savings and controlling or minimizing your debt exposure, ensures your financial well-being in times of risk and uncertainty. Clarity and Focus: Wearing your mask clears your mind to focus on assisting others. Similarly, effective personal money management provides the clarity and peace of mind needed to navigate unexpected expenses or redirecting of money to other areas when situations warrant it. Surviving extreme situations: Putting on your mask gives you the oxygen you need until the pilot can get the plane to an altitude where you can breathe without it. Likewise, a well-managed budget and financial plan provides a safety net, helping you get through extreme situations like medical emergencies, incapacity to earn an income for a period of time or worse. Influences responsible behaviour: When you live a life of prioritising your finances, you set an example for others of what is helping you succeed, much like how demonstrating the oxygen mask procedure for passengers helps them understand the benefits to them if they follow the instructions. This has the potential to influence family members, friends, workmates and others in your life to also adopt healthy financial habits. Assistance to others: Just as securing your mask allows you to assist others without compromising your own safety, managing your finances responsibly ensures you can meet any expenses of supporting others or funding things you think you need to do that are right now most likely seated in a sense of obligation rather than necessity.   The Importance of Financial Prioritisation Prioritising financial management before spending on unnecessary items is not about going without but rather about creating for yourself a solid foundation for both financial freedom and security. Here are some key benefits of this approach: Financial Stability: Budgeting and managing finances wisely creates stability for your finances, reducing stress and uncertainty with how much money you have or where it needs to go. Debt Reduction: Prioritising the continual management of your finances will often lead to better opportunities to tackling debts strategically and reduce the amount of debt you have which in turn can save you significant money in interest. Wealth Building: By saving and investing wisely, you build wealth over time. This opens doors for a more comfortable retirement, potential homeownership, funding education for yourself or your children, and other long-term goals. Emergency Management: A well-managed budget includes provisions for emergencies, ensuring you have resources to handle unexpected expenses without resorting to high-interest loans or increasing your mortgage and adding years to your indebtedness. Peace of Mind: Knowing you have control on your finances brings peace of mind and allows you to then turn your focus to other aspects of life without the constant financial stress.   In Summary If you are not prioritising financial management and budgeting before indulging in unnecessary expenses, it’s like ignoring the importance of securing your own oxygen mask before assisting others. On a plane, people matter but to help them you need to be positioned to do so effectively and you can’t do that if you run out of oxygen. In life stuff matters too, the nice holiday, the eating out with friends, the gifts you want too lavish on those important to you but if you give all your attention to these things first at the expenses of not having your finances in order, it’s only a matter of time before these distractions suck the life and its opportunities out of you.   By adopting this mindset, you not only help safeguard your own financial well-being but also better position yourself to fund the other things in life that bring satisfaction and enjoyment without the stress or risk of your bank account and resources running dry. Maybe today’s a good day to look at whether your oxygen mask is securely fitted.  

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8 April 2024

How your brain helps you save money

Now that’s sounds like a click-bait title if ever I have seen one but don’t disconnect from reading just yet. As a money coach if there is one thing I have come to understand about money, it’s this: It is not about the numbers but how you do money that counts When you start the process of saving money there are several changes that begin to occur in your brain both neurological and psychological. It’s why I love my role as a money coach, it is really satisfying seeing how clients who have never been able to save money are saving money within four weeks. What is even more fascinating is how their thinking and creativity changes so rapidly too.   It’s like they have just given their brain a massive jump start. There are several things that change, and I won’t go into them all here but below I have listed the five top benefits I believe occur, both mentally and monetary.   Increased sense of achievement   Dopamine is a chemical that gets released and commonly associated with reward and pleasure. Saving money regularly and seeing your savings grow is a practical activity which can quickly help you feel good about money, particularly if you haven’t been saving previously. This feeling of achievement releases dopamine and that feel good feeling triggers the subconscious encouragement to keep going. Establishing for yourself the right amount to start saving regularly is important. If you set yourself a savings level too high for your current situation the opposite occurs. The moment you can’t put aside the money, your brain associates this with failure and releases cortisol which contributes to a feeling of disappointment. That’s why you will often hear people say “Just start small with a few dollars a week” Here’s a link to a calculator you can use if you want to work out your achievable minimum savings capacity.   Establishment of good habits   Every time you add to your savings you are reinforcing a loop in your brain. While it might feel hard at the beginning and need a lot of focus, over time this looping effect is triggering activity in the basal ganglia, the area in your brain that is involved in the development of motor skills and habit formation. Just like anything you do that is new, start working out at the gym, learning to drive, it gets easier over time the more frequently you repeat it.   Stress and anxiety levels reduce   Remember that hormone I mentioned earlier, cortisol. Research suggests that saving regularly and having a savings buffer reduces the level of cortisol that gets released. The lowering of cortisol and the increase in dopamine and endorphins from saving makes an excellent combination for improving your cognitive abilities and decision making. Making better decisions with your finances and becoming less reactive to financial pressures because of now having a savings buffer then reduces the feelings of stress and anxiety. Like I mentioned earlier, it’s not about how much money you have but how you do money that makes the difference.   The impossible becomes possible   If you don’t have savings or aren’t contributing to building regular savings, then chances are you don’t have too much expectation or direction for the future. Life is possibly more about existence, getting from one pay-check to the next. Saving money regularly starts to provide direction and opportunities. There is no point saving for the sake of saving but until you get the process into momentum it is impossible to see a brighter future. That idea of owning a home, taking a family vacation or whatever it might look like for you just can’t be seen as reality. Saving causes you to become more mindful of what the future could look like. As you start thinking differently your prefrontal cortex kicks into action which is the part of the brain that works on planning and execution, helps with your decision making process and also starts to make positive changes towards impulsive decisions. For anyone who considers themselves impulsive when it comes to finances, saving money regularly I believe is the key to overcoming this not determination or will power. These days when I coach clients, I refer to this process as ‘Training the brain’   Knowledge becomes action   We live in a world of information overload. You can google how to be better with money or any other topic you desire and instantly become drowned in opinion and information. It is only when that knowledge is put into action that change occurs however like I mentioned earlier, you are going to flood you brain with cortisol becoming increasingly disillusioned and demotivated if that knowledge isn’t applicable for your situation and fails. However, if you start saving and allow yourself to go through the process of change, you can avoid that risk as you become more knowledgeable about money, finances, budgeting, investing and planning and increase your financial literacy through learning as you save. Again, your brain actively involved, this time your hippocampus. This is the area responsible for learning and memory and as you retain what you are learning without being impulsive or reactive to your financial situation, you become more discerning about what might be the right action for you to take. I term this as 'Making smarter money decisions'   Are you using your brain to it's fullest potential? So as you can see, anyone with a brain can save money and do it consistently, and saving money is a foundation stone in the process of rewiring the brain to influence not how much you earn but how you do money.   How you do money is the key.   If you have read this far, don’t stop here, you read this far because you’re interested in a brighter future financially.   If you want to explore how I can help you retrain your brain and enjoy a brighter future I am just a phone call away or perhaps start with grabbing a copy of my book.   The key to a brighter future just needs you to take one step at a time.

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