OUTLINE
[0:00-1:30] Introduction - Erin discusses the significance of money management and confidence for women.
[1:30-3:00] One Size Doesn't Fit All - Emphasizing the need for a personalized approach to money.
[3:00-7:55] 5 Key Areas to Assess:
* Financial Awareness and Budgeting
* Spending and Debt Problems
[7:55-12:32] Spending and Debt Problems (continued)
* Borrowing and Debt Consolidation
[12:32-15:28] Borrowing and Debt Consolidation (continued)
* Bill Management
[15:28-20:58] Bill Management (continued)
* Lifestyle and Long-Term Planning
[20:58-27:58] Lifestyle and Long-Term Planning (continued)
[27:58-32:00] Creating a Personalized Money Strategy
* Assessing current situation
* Setting emotionally-connected goals
* Developing a tailored plan
[32:00] Closing Thoughts and Encouragement
THE ERIN DAVIS SHOW
Welcome to the Erin Davis show where we talk all things money, mindset and confidence. I know that being in control of your money means that you can step into the rest of your life with confidence, because everything starts with confidence. But I also know that women carry a huge, invisible mental load when it comes to their money. Being an accountant for over 30 years, I know all the ins and outs when it comes to money, and just how heavy that emotional load can be. So while I love talking about money, for me, it goes so much deeper. While I want you to explore your relationship with money, I also want to show you how embracing connection, expansion and abundance will make you feel more centered, inspired and aligned. So are you ready? Let's get started.
Starting this week's episode with a question to you, how many times have people offered you unsolicited money, advice to help you become more confident with your money, to either help you manage it, help you grow, help you reduce your debt, whatever it is. The question I want to know is, how many times have people come to you with what works for them and told you that you need to implement it yourself. I know this question gets asked a lot, because the women that I work with, they want to create soul aligned, profitable businesses, and I know that to be able to do that, they need to get good with their money so they can become financially independent and step into the rest of their life with confidence. But in order to do that, they first need to know how to manage, grow and feel confident and comfortable with their money, so that they can make informed decisions. They can sleep at night. They can feel comfortable. And there are really some very clear signs that when you become attuned to what it is that they are, you can tell whether the way you manage money is working for you or against you.
Now, I think there are five key areas that really give you very good insight into this, this very problem, whether money is working for you or against you. And I know that money is not a one size fits all. It is really important that you become totally aware of what it is that works for you and also what doesn't work for you. Now this includes becoming in tune with those internal guidance you know that gut feeling as to what is working and what's not working, and then it's also having the courage to be able to create the change that you want. So as I said, there are really five key areas that I feel that really indicate whether you are managing your money well or it is not being managed well. And now these key areas, there is financial awareness spending and debt problems, Bill management issues, borrowing and debt consolidation. And then there's also lifestyle and long term planning issues. And what I'm going to do is go through each one of these, and I want you to focus on whether these questions and these discussions under these headings, money is working for you or it is working against you. And as we know, one size doesn't fit all, but it is about finding what is working for you and what's not working for you.
So the first part is financial awareness, and you need to be really aware where your money is going. And if you are left feeling constantly unsure or puzzled about your spending patterns, you don't know where you're spending your money. Maybe you get paid at the beginning of the week, and by the end of the week, you have absolutely no money left, and you have no idea where it's gone. That is really a sign that there is a lack of financial awareness on your part. And now I have been guilty of this as well, that we have money come in, and then all of a sudden it disappears. To become financially aware and financially confident, we need to know where our money is coming and going from. And so if you are looking for a sign as if your money isn't working well for you. It is really that lack of financial awareness around where the money is coming and going from another part is not having a budget. Now, I've spoken before on the podcast about budgets working and not working, but I don't necessarily agree with. With having something so strict that you can't be flexible and you can't be adaptable, I do think it is important to have an idea of where your funds need to be allocated, and now the actual nitty gritty of creating the budget and making that work for you is very personal, and it is something that I work very closely with my clients, to be able to find that style of budget that works for them. But I think if you're looking to decide whether money is working for you or against you, not having a very clear plan of your income and your expenses is really a fundamental issue when it comes to managing your money.
Another thing that I see is expenses being underestimated. I think sometimes we live in this bubble that all our expenses are at this minimum level, and we think that we're going to be better than what we actually are, or we lie to ourselves by saying, No, we don't really spend that much, maybe on takeaway or coffee or gym memberships or subscriptions or whatever it is, and we underestimate what those expenses actually are. So then that leaves us coming up short when we need to fund our weekly expenses. So those couple of areas in relation to financial awareness are really strong indicators that your money management system is not working for you. So you don't know where your money goes. You don't have a very clear plan of your income and expenses, and you underestimate your expenses. So if you are feeling any of those then it's pretty much a given that what you're doing with your money and how you're managing your money is not really serving you in the best way possible.
So the next part is spending and debt problems. So if your money is not really working for you, you are needing to cut back on your necessities to fund your luxuries. That is, you are prioritizing those non essential purchases over the basic things that you need because you've got misaligned financial priorities. Now, this is a really big one, and it feels like a bit of the Keeping Up with the Joneses to be able to maintain that exterior lifestyle and the luxuries. However, if you are finding yourself having to cut back on those necessary items, maybe it's groceries, you know, car petrol, repairs, on your house, anything like that and spending instead on the luxuries like going out holidays, new clothes, new shoes, whatever that luxury is for you, then I think you really need to take a look at what your financial priorities are, because there is a misalignment. Another thing when you can say that your money isn't working well for you is that you've got a maxed out credit card, or maybe multiple maxed out credit cards. Now this is really a clear sign that you are overspending, or you have overspent in the past, and you have a real debt issue, it also means that you're potentially living beyond your means, and you're constantly spending more than you earn, and we all know that that's not sustainable in the long run. There really needs to be some change, otherwise you're going to get yourself into a hole, and trying to get out of that is really, really challenging. There is something afterpay has put out recently, saying that people are spending their weekly shopping on afterpay, and they have to keep using afterpay in a cycle, the whole pay is pretty much gone to after pay payments. Now that, to me, is pretty scary, because we are not getting ahead. We are paying for those essential everyday items on credit cards or buy now pay later cards, and we're in this constant cycle, and we're never going to be able to get ahead. This can really lead to mounting credit card debt or buy now pay later debt, and it can be a very, very clear indication that the way you're managing your money is not working. Now it may have worked in the past, and I get that it is hard to break that cycle.
However, the first part is really becoming aware of what it is that's happening and recognizing that this can't continue, because this would be causing so much stress and overwhelm and worry, because your pay all your money, your weekly allowance, whatever it is, however you do it is being allocated to make these repayments. Now that is a very clear sign that the way you're managing your money isn't working for you. So looking at the debt scenario you have, are you cutting back on your necessary items and prioritizing luxury items? Do you have a maxed out credit card or more? More than one? Are you living beyond your means, and that means you're spending more than you're earning, and you're using your credit cards or buy now pay later to pay for everyday expenses. These are really clear indications that the way that you're managing your money is not working for you. Now, it may feel convenient at the time, and I get that it's really hard and challenging and very uncomfortable and very messy in the middle when you're trying to get out of this space. However, as I've said, the first step is really recognizing where you are drawing a line in the sand and going this can't continue. But with financial education, financial planning, whether that's a budget or just improving your financial literacy, you can turn these things around, but it comes back to those financial priorities, and having misaligned financial priorities will keep you stuck in this same debt spending problem.
Another indication that your money isn't working for you is that you don't have any emergency funds now. That can be a lack of savings for those unexpected expenses, and it really leaves you feeling financially vulnerable. The washing machine breaks, the car breaks down, the fridge breaks, whatever it is that is a big outlay and will require a large capital amount to be paid, can cause financial distress if you haven't planned for it. You know, another scenario is that maybe you have an accident and you can't work for six months. How are you going to manage to continue to pay your mortgage, your rent, your groceries, all of those everyday expenses if you don't have an emergency fund available, another thing is not saving for retirement. And now, while I am an accountant, not a financial planner, to get financial advice, you need to see a planner. It is also very important to make sure that you are planning for retirement. It seems like a long way off, but the compounding effect of investing now will make so much difference for you in the long run.
I wish I had been told when I first started working, just start to put a little bit aside each week and grow my wealth and savings. And I am actually providing this advice to my daughter at the moment, and she is in a much stronger financial position already compared to where I was at 20, because she is prioritizing her long term financial goals and priorities. These ones that she's saving for at the moment are not necessarily retirement. However, she is planning for that financial stability in the future. Another situation is that you are feeling completely broke after paying all your bills. You have no money left for spending or spending on discretionary things. And you know, just covering those essentials is really problematic for you, these things, a lack of an emergency fund, not looking forward to that longer term financial stability, and feeling completely broke or being broke after all of your necessary items are covered and there's nothing left for the discretionary spending.
If you are feeling like these are where you're at at the moment, then the way you're managing your money is not working for you. Now that's not to say that every aspect of the way you manage money is not working for you. Maybe you just need to tweak up a few things to be able to. To really put you in a good position financially so you are not feeling financially vulnerable.
The next part is borrowing and debt consolidation. Oh yeah, debt consolidation. You've borrowed money from your friends or family. You're relying on personal loans, you're in this constant cycle of consolidating debt, and you know there is interest free credit cards, and I have fallen into the trap of this in the past that I do a transfer balance clear the credit card with all very good intentions that I won't be using the old credit card once the balance is cleared, and I will just pay off the new credit card. There's an interest free period. It allows me to get on top of making those repayments, getting the debt down. However, I slip into that bad habit of having that credit card in my wallet, and there's those essentials that I just need to pay for, like I'm paying for groceries with a credit card, and that is a clear indication that the way I was managing my money was not working. It would just get us into a bigger hole, and it actually felt completely overwhelming and feeling like I couldn't get out of it. And now you add on top of that, the guilt and the shame of being an accountant thinking I should know better. I should be able to manage my money better yet, here I am using these balance transfers as a way to try and break the cycle and get on top of it. And while part of it is working to break the cycle. The next part just puts me into more debt because I use the old credit card.
Now I am very pleased to say that I have broken that cycle, but I was stuck in that pattern for a long time, and I think the guilt and the shame of feeling like I should know better and do more and be better. Really kept me in that holding pattern for such a long time because I was too embarrassed to ask for help, draw that line in the sand, do what I needed to do in order to be able to really break free of that pattern and the cycle to be able to step into the that debt free credit card free zone, another part of you know this borrowing and debt consolidation is really just, where are you getting your money from. Are you borrowing money from different people, feeling like you have loans owed to different people, feeling like you're under this weight and cloud of robbing Peter to pay Paul all the time, like you are just having money going around in circles, but not actually getting very far. So there are two things in relation to borrowing and debt consolidation that are really good indicators that the way you're managing your money isn't happening very well.
Now I want to ask you, how do you manage paying your bills? Do you pay them on time, or are you constantly paying late fees? You know late fees and paying bills late can lead to a damaged credit score, which can then impact your borrowing capacity later on, and it really does just carry with it such a heaviness and again, robbing Peter to pay Paul, of that continuous cycle, and never feeling like you can get on top of it. Do you intentionally delay paying bills this month because you don't have the cash flow, but you get some money next month and you're all right, always trying to play catch up. So this is the ineffective management of cash flow, money coming in, less money going out. And again, it is about recognizing what's working for you and not and what's not working for you. So if you are delaying paying your bills, or you pay them late and you're constantly paying late fees. You're incurring fees and charges which are unnecessary, and it can suggest that there's poor financial planning and cash management of what it is that you need to pay for. So if you are experiencing those then that's probably a pretty good indication that the way you're managing your money is not serving you. It's not working for you. And you know, there's an opportunity there for you to change.
The last part of determining whether you're the way you manage money is working for you or not is those lifestyles and long term planning issues to see where you’re at and so do you defer doing any maintenance on your home or your car? Are you neglecting the upkeep? Because this can really lead to very expensive problems later on. It's hard when you don't feel like you have the cash flow right now to be able to outlay to do the maintenance, but we all know that if we delay things, it is going to cost us more in the long run. Again, if we are avoiding important, major purchases and we are not replacing essential items because we just don't have the cash flow, then it's going to put strain on your mental load. It's also going to put you into financial strain, which then impacts every other relationship that you have. Another area to look at is, does your lifestyle actually match your income? You know, we are living in a very materialistic world, and though there is a push for that simple life, however we are, if we want to go minimalist, and we have to then start again, like we we need to clear our wardrobe and only buy these things that are going to be minimalist. And we have a small wardrobe, yet we've had to outlay all of this money in order to get that wardrobe in the first place. It's also about looking at what you have, those material positions, you know, other things that you have bought, maybe big items, camper trailers, boats, motorbikes, big items that you thought that you would use, but you're not actually using. Are they just costing you money by having them rather than using that money elsewhere. So it's all again about looking at the overspending, and if you need to borrow so you have debt in order to make those purchases, another area is not involving your whole family in making financial decisions. There's a real lack of communication about money, and particularly between spouses and partners. You're not communicating, and that then leads to different financial goals, misaligned goals, different spending habits. We know that money is a huge cause of arguments, and financial abuse is awful, yet it is so common.
So there's that miscommunication and when we don't communicate with our partner about where we're spending, maybe we're hiding money, it really creates that disconnect. The other thing is making very emotional or impulsive financial decisions. Money is very emotional, and we know that the emotions that we feel drive our behaviors and can often lead to poor choices, maybe choices that we regret later on. However, when you're making decisions based on emotion we're bringing into account all those money stories, the beliefs, the experiences that we've had in the past that really influence our current purchasing decisions. Maybe there's overspending or emotional spending. Maybe you spend when you're upset or you spend when you celebrate, rather than spending intentionally. We're spending based on the emotion.
And so these are some other areas that if you feel like you resonate with, there may be the way you're managing your money is not working as well as what you thought. Now it's important to remember that one size doesn't fit all. So the way we manage our money, there is not one particular way that is better than the other. What is important, though, is creating your own money strategy, and it is creating a system that works for you. And so I have a free download for you; it's at www.erindavis.com.au/moneystrategy. That is the first step that you can start to. To recognize where you're at, where you need support, where you need some help, and that awareness will then determine whether the way you're managing your money, as well as answering the questions that we've spoken about today, will then decide whether you're managing your money well or not.
So once you decide where you are, and you know, look, maybe there are a couple of areas that need some help, or maybe there are a lot of areas that need help, but the first step is really assessing your current situation. And that free download www.erindavis.com.au/moneystrategy strategy will help you to assess your current situation. You can start to look at tracking your income and expenses. You can look to start to set some very clear money goals, short term and long term.
But I would suggest starting small. Look at what's happening. Do an audit of what you've spent in the last month. Look at whether that is unexpected. You know, it leaves some really strong clues as to what your current financial position is and the way you manage your money. And then I want you to set some goals, but goals that are connected to emotion. So before I said, the way we spend our money is very emotional, and it is important not to have that emotion when we're spending. We really need to create the disconnect.
However, I do feel that when you're setting your goals, you need to connect the emotion. The emotion is the driver, and it is the thing that is going to really keep you on track. When the road gets bumpy, there's going to be ups and downs, and there's going to be weeks where it works and where it doesn't work. However, if you can connect that goal into an emotion and how it is going to make you feel, what are you going to do when you achieve the goal? That is the real driver. And so I want you to get really clear on that emotional connection to the goal, because, as I said, that that is the thing that is going to keep you on track when you are creating this new money strategy, once you know where you're at, it's been developing a plan that is right for you now that may be a very strategic spreadsheet type of thing that is a budget. It may be quite loose in the way that you know you allocate your money, but I think what's important is creating a strategy that works for you, and now, if you struggle to create the strategy that is where you need to get some help, and talking to your accountant or a money coach will really help you to nail what it is that you want to do and come up with that plan.
This whole process is putting yourself first, and it is developing a financial plan that prioritizes financial stability, financial independence, so that you can really step into that rest of your life with confidence. Because I know that when you become good with money and you become financially independent, you can make decisions. You can sleep at night. You can go to the bank without checking the bank account balance. You can have open conversations without the shame and without the guilt and without the heaviness and the mental load that money struggles really carry with it.
So I want you to remember that improving your financial situation is really a process, and it requires you to be kind to yourself. It requires patience, but it also requires persistence. You need to create this as a long term goal of getting better with your money, and it's by taking small, consistent actions, applying good money management practices, developing great habits and feeling like you're empowered comes from putting all of these things in place. And so developing the systems and the strategy and the processes is really a key element in order for you to create a good financial plan. And it is then your one size fits all. It is your plan. It is your way that you manage your money. And so it's not about what everybody else is doing. It is about creating a system and a strategy for money to work for you. So I hope you found this episode helpful, go back over this, re-listen to it, and really just take some time to think about where you are in those financial awareness issues, whether you have spending or debt problems, whether you have borrowing or debt consolidation issues. Maybe you’re struggling with paying your bills and management of those bills, or maybe there's some lifestyle and really long term planning issues that you've identified, because when you are to identify what's going on, you can then create the plan to create the change, and everything changes when you can become confident with your money.
Thanks for tuning in today. I really hope you enjoyed the show. If you did, head over and subscribe and also leave me a review while you're there, I would love to read it. Don't forget to share this episode with your audience and tag me on Instagram at Erin Davis. Underscore, transform. If you need any more info from today's show, head over to Erin davis.com.au, forward slash podcast, where you'll find all of today's show notes and links. See you next week on the Erin Davis show.
