Do we all need a Financial Planner to help save money

Financial growth

Have you ever been insulted by your partner regarding money management? I was insulted once, when my partner suggested we see a financial planner. OMG! Here I was, Mr Frugal trying to save a few dollars at any opportunity and had brought much more wealth into the relationship than she did and yet, apparently paying money to a professional financial planner was the first logical thought on her mind when money started to get tight.

It’s unlikely that both parties in a relationship will completely suck at money management, and one is likely going to be better than the other. So why not have that talk early and decide who is going to wear the ‘Money Pants’ in the relationship. Once decided, most likely over some heated conversations or perhaps a few bottles of wine, you can start to let go and trust the ‘Money Pants’ wearer to take on the stresses of money management.

Yes, money management is stressful when you are living pay check to pay check but if you live within your means it’s achievable for everybody.

Unfortunately, living within your means is where most people start to go wrong because if you aren’t living within your means you are likely to accumulate debt and then things spiral out of control from there. Debt is money you don’t have plus the money you need to service that debt. Before going into debt you’ll need to ask yourself the tough question, like do I really NEED that.

PRIDE should not equal DEBT

A common theme I hear from people in debt is that I NEED some new furniture because my old stuff (although still functional) is out of style, or that new phone is so much better than that last years phone and I NEED it because my friends say it’s soooo much better. Of course if you buy classic furniture that doesn’t date or realise that a bigger (or smaller) phone isn’t worth going into debt, you’ll save a few dollars and those dollars will compound over time turning into more money. As they say you need to have money to make money.

If you want to live a life where you continually update your prized possessions, you can, but you should save the money upfront first. Buy things with money you have and not with borrowed money. Also, if you want to go down this path then buying quality items will let you resale at a later date and the money from the sale can contribute to the purchase of the replacement item.

Estimate resale rule of thumb:

‘As New’ – 75 % of retail cost

‘Good’ – 50 % retail cost

‘Not working’ – 10-20% retail cost

 Of course you should sell the item before it’s not resalable or out of fashion, as you’ll need to save more of the replacement value each time. Which is way harder.

DEBT is bad unless it earns you money

I don’t want to sound like all debt is bad, because debt for something that actually generates an income and will eventually pay of that debt isn’t bad at all. I bought a house that actually had cheaper monthly repayments than paying for rent of a house in the same area. Sure the quality of the house wasn’t as good, but the conditions of owning rather than renting far out weighed the poorer quality home. Buying a cheaper house meant I paid less stamp duty and as I renovate it’s becoming more valuable and homely over time. The exception to this is when you are living in the ‘wrong’ area, but generally you should  be aware of this before settling into a new area.

There is plenty of free self-help on the internet offering good sound financial advice, so maybe start there and avoid the fees associated with financial planning. Trust the person wearing the ‘Money Pants’ in your relationship and let them decide if they need help with the financial planning. What you’ll discover is a financial planner will provide good common sense ideas to organise your money and help you get back to living within your means. If you can develop these skills yourself, you’ll also save yourself professional fees.

I’ll be talking more on debt, saving money and being a little more frugal in future posts because getting on top of you money situation is essential to Leaving the Wheel. If there is something that you would like me to cover then leave a suggestion in the comments below.

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