How to manage your finances like a grown-up and avoid money worries

You are an adult now. Stop relying on friends and family to bail you out; stop drawing on the bank of mum and dad; stop blaming others, or circumstances, for your situation in life. Get your finances in order and do the basics right. You’re all grown up now; time to act like it!

Good money habits and successfully managing your finances are a foundational element of being a responsible and smart grown-up.

This means living within your means and budgeting. It means doing the right things regularly and without fail, like paying bills on time. It means making smart decisions like avoiding unnecessary debt. It means also keeping one eye on the future by saving and investing.

Whether you are aiming to get out of debt, saving to buy a house, putting money aside for your retirement or striving for financial independence, you should also plan for, and make provisions for, life’s unfortunate events which are outside of your control. These could otherwise easily derail your family’s financial security and any future ambitions and dreams.

Handling your finances like an adult isn’t necessarily always fun. In the long run though it can be liberating and gives you choice and freedom. Managing money like a grown-up is the only way to alleviate money worries permanently and unlock a bright financial future.

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Goodbye money worries – Financial Independence, the impossible to lose bet

Do you constantly worry about credit card debt, that you aren’t putting away enough money for retirement, that you won’t be able to pay the bills, that you could lose your job, that the car might need repairs or that you won’t be able to afford health insurance? Financial stress is common and endemic.

“Success is having to worry about every damn thing in the world, except money”

Johnny Cash

What if I told you there was a solution? That there was a way to address money worries, throw off the shackles of debt and eliminate the routine and pressure of a job you don’t like. A way to not only eliminate financial stress, but also have the time and freedom to pursue your passions and ambitions.

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The paradox of thrift – what if everyone became more frugal?

Having recently watched the Playing with FIRE documentary and contemplating the increased media attention around the Financial Independence movement, I started asking myself – What if this idea really took off? What if a lot of people embraced a more frugal lifestyle? What if everyone started saving more and Financial Independence became mainstream? What if a large percentage of the working age population didn’t need to work?

This is probably nothing more than a fun thought experiment, given the unfortunately high level of financial illiteracy, societal pressure to keep up with Joneses and the rampant consumerism now embedded deeply in our social conscious.

But what if…..

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Lifestyle inflation – the silent assassin!

I’ve written previously about the millions of people living paycheck-to-paycheck. It doesn’t matter how much you earn but rather how much you spend. According to a recent Nielson survey, 25% of American families earning more than $150,000 per year still live paycheck-to-paycheck, so even the wealthy aren’t immune. Apart from poor financial habits, a key reason for this ongoing money stress, for many people, is lifestyle inflation.

It is a gradual, subtle and common problem that’s killing our collective finances. The harmful effects occur over time and in a way that often goes unnoticed.

Like the fable of the boiling frog, who didn’t perceive the danger of the increasingly hot water and was slowly cooked to death, many of us have been unwittingly turning up the financial heat in our own lives by trying to keep up with the Joneses or “upgrading” our lifestyles when we get a payrise.

Most of us have been victims to the silent assassin of lifestyle inflation. Our spending inches up year-on-year, and what was once something you considered a luxury item is now a must have “need”.

Lifestyle inflation, a silent assassin

Those moments when you convinced yourself that you deserved it because you work hard, or that a “one-off” treat won’t hurt, have added up over time. The aggregate impact of decisions to get a nicer couch, second car or bigger house increase our monthly spend commitments and raise the bar of what we need to earn.

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Embarking on a No New Stuff year-long challenge to keep me motivated on the journey towards longer term goals

Regular readers of my blog will recognize a number of repeating themes appearing in posts over recent months:

  • A desire for “freedom” from the weight of personal possessions and from the need for paid work (especially in an unfulfilling corporate job).
  • Acknowledgment of the value and importance of time, that we normally trade for things of little true value.
  • The lack of sustainable balance in most of our lives and in society at large. At a personal level, recalibration is needed around things like technology and social media use, TV, diet, exercise and consumerism. The bigger picture is equally out of equilibrium, with ever increasing social inequity and a willful ignorance about the ongoing damage we are inflicting on our planet and home.
  • Recognition of the need for challenge and voluntary discomfort to drive personal growth and lighten my ecological footprint.

Intellectual understanding and knowing are not enough. For change to occur, we need to take positive action and do something!

The journey towards Financial Independence can be a long, disciplined grind and we’ve set in place processes to hit our targets. We’ve also made great progress downsizing our possessions and housing. I’m still researching what effective mitigants I can put in place to reduce my personal contribution to global warming. Things are moving in the right direction but it’s a marathon, not a sprint. So how to keep motivated in the short term?

In the spirit of consuming less, spending less and hopefully learning to live with less, I’ve decided to undertake a year long challenge of No New Stuff!

The shopping ban will require avoiding sales, special offers, amazing discounts and other marketing gimmicks encouraging us to buy, buy, buy!
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