How to manage your money (without a financial adviser)

How to manage your money (without a financial adviser)

It’s true, everyone can manage their own finances without a financial advisor, despite what the financial services industry has to say about it.

That’s a big statement I realise and one that would probably get a lot of people offside (but they’d have to be reading this first to be offended right?)

Confusing terminology and conflicting advice about it being too hard vs too easy to manage your own money leaves you wondering which it is.

Is it so hard that you could never possibly understand what’s required or so easy that you start wondering what you’re missing?

To understand you first need to know the role that is played by a financial adviser.

What does a financial adviser do??

Don’t they just invest your money and pop bottles of Moet at Friday work drinks?

There are some big misconceptions about what financial advisors actually do; and rightly so because they all do and advise on different things.

Some offer specific advice on investments or insurance and some take a more holistic approach to your financial affairs tackling your finances as a whole.

If you and your neighbour were to seek investment advice from two different financial advisers, you’d most likely come out with completely different recommendations.

So who got the right advice then? Hopefully you both did. Let me explain.

See, when it comes to your financial affairs, there’s more than one way to skin a cat. There is no one magic recipe for success that a financial advisor is going to let you in on once you sign on the dotted line.

Financial success is about treading your own path. Now that is not to say that there aren’t basic financial fundamentals to be followed along the way – because there are.

But it’s important to realise that there is more than one way to manage your finances that will ultimately get you to where you want to go.

A good financial adviser is worth their weight in gold for two reasons only: one, they educate you and two, they keep you on track.

But guess what, if you’re willing to put the time in, you can do both of those things for yourself, minus the fees.

Here’s how.

How to manage your money yourself

You need to focus your attention on these areas:

  • Budgeting & Cashflow
  • Managing your debt levels
  • Life Insurances
  • Investing
  • Taxes
  • Superannuation
  • Estate planning

Now that seems like a lot – and I’m not going to lie – it is. But if it was easy, we’d all be millionaires three times over right?

It’s easy to get overwhelmed by everything you’re expected to know and do and that is where most people come unstuck and either do nothing or end up paying someone to handle it for them.

But just like reaching a goal to lose weight requires discipline, persistence and some self-education on dietary and exercise requirements – reaching your financial goals (to spend less, buy a bigger house, fund a round the world trip or retire early) requires the same.

To properly DIY your financial affairs you need:

[E] Education

[D] Discipline

[P] Persistence

How to build your own financial plan

To tackle the overwhelm and get yourself a plan, I suggest the following:

Learn the basics

Teach yourself the fundamentals of personal finance. Learn about budgeting, saving, paying off debt, investing and superannuation.

The key is to bring your knowledge up to the point at which you can comfortably take action on your own affairs. Approach this as you would anything else you are learning for the first time in your life. Read, listen, write, and discuss – whatever helps you learn best.

Start small and build on what you learn consistently and thoughtfully. Remember discipline & persistence? Apply them here.

The trick is then to keep learning so you can improve on the decisions you make as you move throughout your life and cluey (is that a word?) enough to recognize a financial opportunity.

Take action

Don’t be the eternal student. You will never know everything there is to know – not even industry professionals can claim to know everything.

The best place to start is always with a budget.

Think about this – a financial plan is about taking yourself from where you are now to where you want to be in the future – and mapping out the steps necessary to get there.

How can you improve your financial future if you’re going backwards or continually treading water with your cashflow?

You need a surplus month to month to pay down debt, build super and invest for the future – all the things that help you achieve what you want out of life.

Once you’ve got the budget under control, then things start to get a little more complicated and personal. You need to be able to work out and answer questions like:

  • How much money you should have in savings as an emergency fund?
  • How much life insurance you need?
  • How much money do you need to retire?

These are all things that you can work out, you simply need to be able to apply the appropriate strategies and calculations to your own individual circumstances.

Start by playing with and getting comfortable with the numbers. Utilise the readily available & free calculators available on the internet to help. The Moneysmart website is a great resource but there are a number of other great free calculators put out by the banks as well as financial services institutions like AMP.

Play with the numbers to determine what variables will impact your outcomes so that you understand how this affects your decision making.  Do this multiple times until you start to see the relationship between cause and effect.

Manage your behaviour

This is a big one. What good is the best advice in the world if you walk out the door and go back to old habits?

If learning the basics and taking action wasn’t hard enough – controlling your mindset, habits and behaviours certainly is.

Good financial management is all about having a plan and financial success is borne of sticking to that plan.

Stress, family life, work, relationships – the list of what can interfere with your best monetary intentions is endless.

Create a one page ‘plan’ document that you refer to – a list of goals if you like that you can refer to easily when necessary (when you start to lose sight of why and what you’re doing).

Make sure you check in regularly with what you’ve mapped out for yourself as a way of holding yourself accountable. The easiest way to do this is to make a habit of it. Set up check-in points periodically throughout the year so that you can see how far you’ve come and whether you’re still heading in the right direction.

Pick your own timeframes but as a starting point you could revisit your budget monthly, any investments and superannuation accounts every quarter, and your overall financial picture (net worth etc.) annually.

Now if numbers just aren’t your thing then maybe you do need to bring someone on board or defer to a trusted adviser, but if it’s simply a lack in direction that is holding you back – heed this advice and employ your divine skills as a mother to ‘work it out’.

And remember always that you are a woman and a mother and are skilled in the art of juggling multiple priorities – don’t let the financial services industry, the media or anyone else tell you that your financial priorities NEED the interference of anyone else.

You be the judge & remember, as Warren Buffet famously said, “the best investment you can make is in yourself.”


2017-06-10T04:20:09+00:00May 30th, 2016|

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