“That’s the same with a lot of my clients, they’ve had these belief systems for the whole of their adult life, and they’re just getting these epiphanies because they’re finally realising that they’ve been the ones blocking themselves all along.”
She taught her client, the stylist, what the rest of us could benefit from hearing.
“Everybody has skills that they’re good at that other people aren’t; they can create value by charging a lot for that,” says Scott. She told her client: “‘Do you know how hard it is to break into that market? You’ve got all these connections already, and don’t even see [that]’ … A lot of people underestimate that. They assume everyone is as good at something as they are.” (Her client launched a profitable online course for stylists to show them the ropes.)
Understand your impulse triggers
Getting to the root of why you make impulse purchases can also help you adopt a leaner budget.
“It’s a lot of behavioural economics; do you spend because you think you deserve it, if you’ve had a hard week?” says Effie Zahos, the editor-at-large at financial comparison site Canstar, of money decisions that derail people’s financial security. “For a lot of us, spending is triggered by something. It’s a case of understanding that behaviour and changing it.”
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Adopting a more general “growth mindset” rather than a “scarcity mindset” can also help us attain more financial security, says Scott.
“If you keep telling yourself there’s not enough money to go around, that’s what you’ll get more of,” says Scott. But if you believe there are financial opportunities around every corner, you will find those opportunities, she adds.
“That’s actually true,” says Peggy Kern, associate professor at The University of Melbourne’s Centre for Wellbeing Science. “It’s sort of like where your focus goes, things grow.”
If we focus on economic scarcity, says Kern, all we’ll see is what we don’t have. If we focus on abundance, we’ll feel more grateful for what we do have. And when we do that, it has flow-on effects that can positively impact our finances.
Are you more of a scarcity or abundance kind of person?Credit:istock
“We do see that people who do generally experience more positive emotions tend to be more successful in careers, in getting jobs and whatnot, than those who are generally more negative,” says Kern. “[Because] people can feel it.”
And this is crucial now because economic anxiety is on the rise, says Kern.
Break old patterns
But what about those who are living pay cheque to pay cheque, and need an immediate financial boost?
First, stop making the banking mistake that most people make.
“You should never be saving [your money] in a transaction account [as they] typically pay next to nothing [interest-wise],” says Zahos, author of A Real Girl’s Guide To Money. Whereas savings accounts can attract interest rates as high as five per cent, transaction accounts often only offer 0.5 per cent interest. (Beware, though, of banks that offer accounts with high interest for only a few months, before reverting to a low rate.)
Next, establish a budget and a concrete financial plan.
“One of the things with [economic anxiety] is it feels very much out of control,” says Kern. “And we go to the extreme; we’re like, ‘everything is out of control’. And we start to catastrophise things. Our minds easily do this, ‘if I don’t get this pay cheque, then my family’s not going to eat, we’re going to end up on the street’.”
A good first step is to visit the Australian government’s financial help website, Moneysmart, to access free financial counselling, says Zahos. “They’re trained, and can actually help suggest what you should do, help you with budgets,” she says.
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Begin scanning websites and apps that compare the cost of utilities, bank interest rates and the price of groceries, such as Canstar, iSelect and Frugl, respectively, to find better deals. At the supermarket, make smart swaps that can save you money, like choosing whole vegetables over packaged ones, frozen vegetables over fresh, and home-brand products over name-brand ones.
Review your regular subscriptions every six months to see if you’re still getting value, says Zahos.
And consider using cash instead of credit for non-essential purchases.
“Then it’s actually tangible,” says Kern, who advises people to put the cash they have to spend on entertainment and splurges, for instance, in separate envelopes. “[Then] you know how much you have [to spend].”
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