They say money can’t buy happiness, but Julia Newbould believes it can certainly lead you to your ideal lifestyle and goals.
There are many emotions that arise in people when it comes to money – fear, anxiety, confusion and panic, just to name a few.
But author of The Joy of Money and Money Magazine editor-at-large Julia Newbould has the tips and processes to help you embrace your money matters with open arms.
She spoke to KnowHow founder Bushy Martin on the Get Invested podcast about how to create your own happiness in life with the right choices and ‘conscious spending’.
“Money isn’t everything, but it does give you the ability to make choices and the choices that allow you to live your best life,” Julia said.
“And whatever that is, you take stock of what you have, what you want, then look at your money, your abilities, and try and make the most of both of those to give you greater choices to live the life you want,” Julia said.
“We don’t try and tell people to stick to a strict budget, but we tell people to think about what you’re spending, and if it’s not giving you pleasure, then why are you doing it? Could you get more pleasure by doing something else with your money?”
Negative feelings towards money often come from the risks involved, which is why Julia said you need to make decisions based on your personal tolerance.
“Everybody’s a bit different with how much they can risk and sleep at night. If you feel that whatever you’ve invested in or whatever your savings are makes you uncomfortable and you can’t sleep at night, then that’s not right for you. And something has to change,” she said.
“Some people are able to have a lot of debt and be okay with it, and that’s fine for them. But other people will find that a lot less debt will change the way that they feel about the risk that they’re taking.”
Julia expanded on a key framework for money management and being in control of your finances, which firstly includes looking at your spending.
“You’ve got to figure out what your position is and be honest. What is your current spending and how does your cash flow work? The most basic question that people ask me is ‘what’s the most valuable investment lesson?’ And I think it’s actually spend less than you earn. But not everybody manages to do that,” she said.
“It’s not those on the highest incomes that have the most investments or are doing the best. It’s those who can save and be disciplined, because unless you can do that, you’ve got nothing to invest. So everybody’s got the ability to put something aside and spend less than you earn.
“I think [COVID] has highlighted the importance of actually having savings. I think a lot of people don’t have any savings at all, and if you’re maybe 30 or under, you might never have had any hard times that you would have needed the savings for, and I think it’s important to have those savings because, again, it gives you some sort of choice.”
The next step is evaluating your assets and liabilities, and defining your financial structure.
“Assess what your net wealth is and create whatever the target is that you’re aiming towards. Then, you’ve got to put some structure in place. How are you going to get to where you want to get? Is it by creating different kinds of buckets and different kinds of investments?” Julia said.
“You’ve got to set rules and define triggers. What are you prepared to go into debt for, for instance? What are the triggers that are going to pull you back from investing? And then you’ve really got to have a yearly review just to keep on track. Where are you going? Have you managed to be where you thought you’d be? Why or why not? How are you going to make it up?”
Julia also emphasised the importance of communication and collaboration, especially for couples.
“You need to figure out the rules in your relationship. A lot of people who seem to have good money relationships as couples, they maybe pick a date where the credit card bill comes in or something like that to sit down and see how they’re tracking and what they want to do with the money that they’ve saved or how they’re going to manage to pay the bills that they’ve accrued,” she said.
For those slowly approaching retirement, Julia explained that research and seeking advice is critical to ensure you’re well set up for the future.
“It’s a common thing that when you get to that (retirement) age, you start panicking. It’s not far away, and you ask, what can you do? And it’s not always a good idea going into a higher risk investment or moving overseas,” she said.
“You’ve got to still do the research and find out how you would be taxed and how your medical bills would be paid and so on.”
Listen to Bushy Martin’s full interview with Julia Newbould here.
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