My personal finance journey started at eighteen, when I applied for my first personal loan to help fund fixing my teeth. Prior to this, I had worked part time for four years, with nothing to show. I have now accumulated larger amounts of debt including Credit Card, Mortgage, Car Loan and a HECS debt.
Over the past few years, I have paid debts out early, becoming aware of my finances and developed a three stage process that I continually repeat to ensure my finances don’t overwhelm me. Only recently have I embarked on the debt free journey and as a result, my previous decisions do not reflect this mindset whatsoever. However, following this process has ensured that I am conscious of my starting point.
Assessing your current situation – looking at your spending habits, your spending trends and your expenses and income overall. I make no changes at this stage. Its all about awareness. Along side a spending tracking sheet, I also take this time to look at my possessions and be grateful for all the things I already own. This is amplified by my interest in minimalism.
Planning – a budget, setting goals, and working out how I am going to spend less and earn more. I utilise SMART goals method for my finances (Specific, Measurable, Achievable, Realistic & Timely).
Action – putting these new plans into place and working towards achieving these goals. Taking note of the successes and the downfalls.
And continuously I repeat these three steps. To ensure I improve my situation. I find better ways to set goals, more motivating ways to track progress and more ways to cut down on spending.
An example of how this three stage process helped; when I first completed a tracking spreadsheet, I realised I was spending significant amounts on takeaway. As a result, I budgeted, set a SMART goal to spend less and took action on reducing this spending.
Would you like to see some of the tracking methods I use?
Disclaimer: I am not a financial adviser. Although my educational background is somewhat finance drive, my posts are only a reflection of my own decisions. I hope to inspire, motivate or help others become aware of their relationship with money. Everyone’s financial situation is very different and there is not one size that fits all.