Lost con­trol of your fi­nances? With sac­ri­fice and smart plan­ning, all of us can grow our nest eggs, writes savvy saver Meg­gie Palmer.

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Lost con­trol of your fi­nances? With sac­ri­fice and smart plan­ning, all of us can grow our nest eggs.

Rick Morton re­cently pub­lished a book about grow­ing up on the poverty line. An ex­tra­or­di­nary piece of so­cial commentary, One Hun­dred Years Of Dirt opened my eyes, chal­leng­ing me to think dif­fer­ently. He writes of wealth: “For all the pa­tro­n­is­ing ax­ioms about money never buy­ing hap­pi­ness, it does al­low for other things that help. It buys time to spend with fam­i­lies, mo­bil­ity, the uniquely preser­va­tive state of hav­ing a home to sleep in and know­ing that you al­ways will.”

For me, the free­dom and choice that comes with fi­nan­cial se­cu­rity is some­thing I crave deeply.

Rather than wor­ry­ing my whole life about money, I set a goal: to be fi­nan­cially se­cure when I turn 40 in six years’ time. I’m not a highly paid in­vest­ment banker and I don’t come from fam­ily money. On a jour­nal­ist’s wage, I had to get cre­ative when I de­cided on this goal. I tripled my money on a marijuana stock but then, cocky from my lucky gain, lost $30,000 in one day in­vest­ing in a spec­u­la­tive health com­pany. I’ve done some things right, though: au­tomat­ing my sav­ings and low-cost in­vest­ing. So now I’m on track to have al­most a mil­lion dol­lars in cash and shares by my 40th birth­day. Here are the lessons I’ve learnt so far.

LES­SON 1: Friends first

In my ex­pe­ri­ence, con­ver­sa­tions about money flow bet­ter over wine and cheese (or kom­bucha – choose your poi­son). And sort­ing your fi­nan­cial shit out once and for all is eas­ier when your friends join you. So­phie McNaught, founder of Women and Money (which or­gan­ises fo­rums for women to learn about money), has a the­ory: “Women don’t talk about money be­cause there is no so­cial set­ting in which it’s ac­cept­able to do so.” So, cre­ate your own safe space. Mes­sage your sis­ter or your best friend or both and get set for a big night in with your money-ac­count­abil­ity bud­dies.

Then dream big. What op­por­tu­ni­ties would wealth cre­ate? The abil­ity to quit the job you hate? Less con­flict in your re­la­tion­ship? A down pay­ment on a house? Write down your dream and its price tag and put it some­where you’ll see – an ev­ery­day re­minder of the new di­rec­tion you are head­ing to­wards.

LES­SON 2: Health check

Ex­penses, in­come, credit card debt, mort­gage, sav­ings … it’s time for a money au­dit. Cool apps like Pock­et­book can help you eas­ily gauge your fi­nan­cial pulse.

Tonya Rap­ley runs My Fab Fi­nance, which spe­cialises in help­ing women build their fi­nan­cial fu­ture. “Women say to me all the time: ‘I’m a fi­nan­cial wreck!’ Of­ten you get un­der the hood and re­alise they’re not as bad off as they think,” she says.

Un­der­stand­ing where your money is go­ing will give you more con­fi­dence to take fi­nan­cial charge. If you are a latte-twice-a-day type, you might not re­alise that you are spend­ing about $2,900 a year on cof­fee. Nei­ther did my fi­ancé un­til he went through this con­sol­i­da­tion process. Af­ter­wards, he bought a cof­fee ma­chine to make his morn­ing espresso at home.

Sub­scribe to Net­flix and Stan? Be bru­tal: cull where you can. Save your­self thou­sands in fees by com­bin­ing your su­per­an­nu­a­tion. The myGov web­site helps make this easy by show­ing de­tails of all your su­per ac­counts, in­clud­ing those you have lost track of.

LES­SON 3: Be­com­ing rich is not all about what you earn

I hit the salary jack­pot in my first full-time job earn­ing $28,600 a year. I could cover my $110-a-week share-house rent and still af­ford to go to the lo­cal Thai restau­rant once a fort­night for the $10 din­ner spe­cial. Liv­ing the dream! In the back of my mind, though, was my mum’s money mantra: “Al­ways fun­nel part of your wage straight into sav­ings, no mat­ter what your in­come.” So, du­ti­ful daugh­ter that I am, I set up a weekly di­rect debit of $90 into a high-in­ter­est on­line sav­ings ac­count.

Let’s crunch the num­bers: imag­ine at my age of 34, you start putting aside $90 a week, ev­ery week. By the time you’re 60, as­sum­ing an av­er­age in­vest­ment re­turn of seven per cent, you’ll have $321,000. Let’s take this same sce­nario, but start younger. Aged 21, sav­ing $90 a week means by the age of 60, you’ll have al­most $869,000. Google ‘com­pound cal­cu­la­tor’ and play around with the fig­ures. It will feel like magic but it’s just maths – ex­po­nen­tial maths.

Casey Halliley, founder of Wealthol­ogy 101, which pro­vides fi­nan­cial ad­vice and sup­port to clients, ex­plained it to me like this: “Be­com­ing rich is not re­ally about what you earn, it’s about what you do. Tak­ing ad­van­tage of the power of com­pound­ing in­ter­est as early as pos­si­ble is the smartest de­ci­sion you can make.”

LES­SON 4: Show me the money!

Ask for a raise: I can hear the ex­cuses al­ready: “I don’t earn much and never will.” “My com­pany works in strict salary bands; there’s no ne­go­ti­a­tion.” But there is al­most al­ways room to ne­go­ti­ate for val­ued em­ploy­ees. If your su­per­vi­sor rules out a mone­tary in­crease, think lat­er­ally. Can you ask for an ex­tra week of an­nual leave? A car park? If you do get a pay rise – awe­some! Now let’s pre­tend it never hap­pened …

“When I got my first huge raise, I acted like I didn’t: I fun­nelled all the ex­tra into a dif­fer­ent bank ac­count. Be­fore I knew it, I had a de­posit and bought my first house at 31. I was earn­ing $67,000 at the time,” says en­tre­pre­neur Kelly Le­gends, who kept up that dis­ci­pline, and now, aged 40, owns two houses.

Side hus­tles: Air­lie Walsh is a news re­porter at Par­lia­ment House in Canberra. A pas­sion­ate pho­tog­ra­pher, she has built a pho­tog­ra­phy print busi­ness on the side that is loved by celebri­ties and in­te­rior de­sign­ers. “Squares­pace made build­ing my web­site and sell­ing on­line re­ally sim­ple. Since I started a few years ago, we’ve shipped my lim­it­ededi­tion prints all over the world.” Pas­sion plus profit equals win-win. What skills do you have that oth­ers would pay for?

Rent a room: Do you have a spare room where you live? You could be sit­ting on a gold mine. When I moved over­seas, I sup­ported my­self by putting a sin­gle bed into my tiny study and rent­ing it out on Airbnb.

Closet cull: Own a few de­signer hand­bags that are col­lect­ing dust in the back of the wardrobe? Take a leaf out of my house­mate’s book and list them on eBay. She earnt al­most $3,000 sell­ing (some­what re­luc­tantly) her Louis Vuitton Lockit. As Marie Condo preaches, if some­thing doesn’t give you joy, get rid of it. Or, even bet­ter, sell it on­line.

LES­SON 5: Au­to­mate

I love Tim Tams, es­pe­cially the dark cho­co­late ones, but need to hide them on the top shelf oth­er­wise they are too tempt­ing. In the same way, ev­ery month I au­to­mate a per­cent­age of my in­come to go to an on­li­neonly in­vest­ment ac­count so I can’t touch or spend it.

Once you’ve ac­counted for your ex­penses and some play money, work out how much you can save. Let your fi­nan­cial-ac­count­abil­ity team know and com­mit to an au­to­mated trans­fer into a sav­ings or in­vest­ment ac­count.

I’m not a mil­lion­aire yet, but with my nest egg com­pound­ing, I may just get there. Six years to go.

Meg­gie Palmer is the founder of PepTalkHer, a tech start-up on a mis­sion to close the gen­der pay gap. Go to peptalkher.com.

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