As a financial adviser working with a handful of new clients each week, I see hundreds of different ways Gen Y & Gen X live with their money. Over the years I’ve surveyed everyone I work with, and of those coming to see me, the most frequent cause of anxiety is… surprisingly, in managing personal bills and expenses. This is closely followed by physical health concerns and then mental health concerns.
It makes sense to me that health concerns might be one of the more prevalent issues we face, because they’re often so hard to fix. And it’s sad, but understandable that mental health issues are the next most prevalent in our increasingly emotionally challenged society. But I’m most upset by the fact that sorting out someones bills and budget are such a source of anxiety, when I know this is so simple to sort out!
I have to qualify that I am one of those guys who loves sitting in front of an Excel spreadsheet for 4 hours turning my expenses into a visual orchestra of budgeting diagrams and charts. BUT you don’t even need to know what Excel is these days to be great at budgeting. We all have access to powerful and free tools for getting clear on where your money is going and making a budget that work.
De-stressing your Budget
The simplest way to de-stress your financial life is to get clear on what your lifestyle costs – how much you’re currently spending. More than 80% of the people I work with don’t have a clue how much their lifestyle costs before we sit down together the first time. But after a simple 30min conversation, their confidence levels shoot right up (even if the number shock and disappoint them) when they come up with a figure for how much they spend each year (or month or week).
You don’t need Excel
I still use excel as a first step with clients, partly because I love it, but also because it’s a good first step to try estimate how much you think you spend. But there’s an even more powerful way to get clear on your spending and it’s sitting in your pocket right now (or maybe even in your hands). AI is our friend when it comes to understanding our spending. A few of the big banks are starting to give us some useful information about how we spend money, as users of the CommBank app will have noticed. But there’s even better tools available. There are a growing number of powerful, free apps that will automate the analysis of your spending and start teaching you how you’re spending! And my favourite two apps are:
MoneyBrilliant: Founded by Aussie Peter Lord, and now owned by AMP, MoneyBrilliant is my favourite free tool for clients to get a snapshot of their expenses and of their whole financial life. Their notification system, bill watch feature and budget tool are really helpful, once you get them set up. The team at MoneyBrilliant produce regular updates, improvements and new features, they work alongside advisers, integrate with lots of other platforms and they have a highly responsive support team. Your bank data can flow into MoneyBrilliant from pretty much any bank in Australia through the data-scraping provider “Yodlee”. Be sure to have a read through their data security information before you decide to sign up and have fun with it.
Pocketbook: Pocketbook was one of the first digital money management tools in Australia and is still one of the best. It was always the most simple, automated and minimalist design, still with lots of customisation, and last year got a major upgrade to make the phone app experience beautiful, fun and much more intuitive. My biggest concerns with Pocketbook are it’s vague ownership structure and revenue model, and lack of clarity about what they do with your data. Still, for a completely free service, it’s an amazing tool for getting clear on where your money is going and for tracking those individual items you want to cut back on.
So is it really possible to get stress-free finances? I believe it is. For the past 4 years, since implementing a number of systems, software and habits, I’ve been able to simplify my personal money management to just 30-60min a month, and my wife and I have begun to have fun talking about a topic that always used to lead to conflict and disagreement. Our plan is simple and really needs to be done before you become acutely unwell if you have a mental illness and also include plans if you do become unwell:
Get clear on your numbers– know your income and the cost of your lifestyle – we like to think about it on a weekly basis.
Build a budget that works– this can take a little while the first time around, but then is really easy to keep updated if you do it every 3 months or so. Using tools like MoneyBrilliant or Pocketbook are some great hacks to get it done simpler and sooner.
Track your budget each month– this is where we lean on technology a lot. We take just a few minutes at the end of each month to make sure we’re not overspending on the usual suspects and to stay in the loop with what’s going on.
Automate payments and account notifications– using regular direct debits and automated transfers is my secret weapon to saving time and stress on my bills. Automate everything you can! It’s so doable these days. And couple this with a clever set of notifications which alert you when an account balance drops to a certain level or gets too high. Then you only need to be bothered when it’s important, and it’s clear to know what you need to do.
Save up an emergency fund– Once you have a plan for your money, you need a safety blanket to catch you when the wheels invariably fall off the apple cart. A good rule of thumb is 2 months of expenses, or 3 months if your income is volatile or contract based. It can take even longer than that to get on a Disability Support Pension (DSP) but Newstart starts at least 21 days after making a claim but is barely enough to live on.
These 5 simple steps won’t solve every problem for everyone, but they’ll get most of us most of the way. I always encourage people seek out a good money coach to help them set up a system that works for them, and make the most of free courses, books and workshops run to help educate you on how to make your own money work stress free.
Managing a Fluctuating Income
One of the niche reasons I see people struggle with their bills and expenses is because of seasonal work, contract work or multiple smaller jobs with unpredictable hours. There’s no kidding that this is tough to manage especially if you also have mental I’ll health. In these situations, a love for Excel is a really useful thing. But there’s also a simple approach. You just need to work out how much of your income is both consistent and reliable, and only budget your life around that. Anything else becomes a bonus, that you can save, or allocate to wants like extra nice holidays or your pocketmoney account. For some people this means they need to get a new job, and often this is the best solution. It’s not healthy to live on a financial knife edge, always looking for the next dollar to cover the next bill!
A Bad Relationship with Money
An even more niche issue, but a BIG cause of anxiety for those who it affects is poor beliefs about money. Believing that you’re not worth spending money on, or always feeling as if you’re behind and missing out, even when you’re saving money. My wife grew up with a form of these anxious beliefs, and few of my clients have too. These beliefs can cripple your joy, limit your opportunities and can take years to unravel. The best thing to do if you experience this is to take on counselling and/or coaching support to help you gradually unearth the roots of the issue, bolster your self-worth and to replace these beliefs with a more a rational understanding of what’s going on with your money.
Bottom-line:if you’re experiencing stress with your money, you don’t need to! Something can be done about it and there are people who can help.Whether you’re on the DSP and hoping for placement onto the NDIS, or still able to earn a reasonable income, you would do well to lock in some solid planning whilst you’re in a good place, or get your carer to work with a financial adviser or money coach to get your money in order!
About the Author
Tristan (a.k.a. Caring Griffin) has been serving up financial advice since 2013 and in Feb 2018 launched a business called Purpose Advisory.