When it comes to budgeting and financial planning, there is often a misconception that it is about imposing restrictions on your lifestyle. The reality couldn’t be more different; financial planning and budgeting should be about aligning your spending habits with your values so that you can actually do more of what you love.
It’s often said that money can’t buy happiness, but that’s not entirely true. Money invested and spent in the right areas can help you live a happier existence; achieving meaningful life goals and ensuring you leave a lasting legacy. So if you are ready to make more of your money in 2021, here are a few simple steps to get you started.
#1 Understand what actually makes you happy
It might sound simple, but the first step is really to understand what is important to you. When asked about their personal values many people struggle to articulate them – but one way you can think about it is to ask yourself what you want people to say about you at milestone birthdays or even at the end of your life.
It can also be helpful to reflect on the purchases that made you happy in the longer-term – and those that didn’t. The ones that made you happy and still make you happy today are most likely those that align with your values.
The great thing about this exercise is that there are no wrong answers, what makes you happy is unique to you. For some, this might be about spending on equipment for a hobby, for others it might be about travel – it’s not about holding yourself to anyone’s values but your own.
#2 Review your spending habits
Take a look at where you are spending money in a regular month – not necessarily the big-ticket purchases, but the everyday ones that can really add up.
Many of us find that we are spending a lot of money on convenience purchases, rather than valuable ones. Think the takeaway coffee, the expensive counter lunch during the work week – these things probably don’t bring you joy, but they can eat up sizeable chunks of your money every month.
Drill down on the things that really did make you happy – what was it about them? What did they make you feel? Why did it make you feel that way? Most people find that the things that made them happy are about people, time and experiences, whether directly or indirectly. It probably wasn’t the dinner and drinks that made you happy, but the time spent with good friends. Or it might be spending that enabled you to spend more time on something else, for example, paying a cleaner so you could do more of what you love.
#3 Commit to a month of purposeful spending
Make a commitment to yourself that you will only spend your money on things that make you happy. Of course, you still have to pay the bills, rent or mortgage – but when making discretionary purchases, ask yourself whether it will make you happy.
It can be helpful to keep a diary to review later. A purchase might make you happy at the time, but it can be interesting to look back even a month later and see how long that happiness lasted.
#4 Set a happiness budget
You can use the learnings from your month of purposeful spending to create a realistic budget that supports your happiness. This is the best way to create a budget – one that is focused on bringing you joy rather than restricting your lifestyle. Many people find that by simply cutting the things that didn’t make them happy, they are able to save and enjoy life more, simultaneously.
#5 Live for today while planning for tomorrow
Of course, you need to think about your long-term financial goals so that you can create a happier future too. Your investment choices should support your long-term happiness and support you to continue to do what you love into the future. This is where the right financial planner can really help.
At Apt, we start by understanding your values and then work with you to create a personal financial plan that helps you live the life you want, today and into the future. So, if you are ready to start living for today while planning for tomorrow, get in touch to get started.
General Advice warning
The information provided in this blog does not constitute ﬁnancial product advice. The information is of a general nature only and does not take into account your individual objectives, ﬁnancial situation or needs. It should not be used, relied upon, or treated as a substitute for speciﬁc professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.