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Bruce Brammall, The West Australian, 31 August, 2020
Life’s big personal priorities rarely change day to day. What’s important to you one year is, usually, still important to you the next year.
But, sometimes, something will karate kick you in the guts. And Covid-19 will have done that, globally, more than any other event of recent decades.
If your priorities haven’t changed somewhat this year, wow, I’d like to see your list of priorities. This virus thing has been so much more encompassing, even in states (like WA) that are doing comparatively well, than anyone could have imagined. Even as late as March.
For me, those personal priorities have included international travel. Gone. Last year’s trip was to to have been Sri Lanka. I’m not sure when we’ll be travelling overseas again.
Just travelling outside the state seems like it’s a long way away – there are no concrete plans to reopen WA’s border. Victorians can’t venture further than 5km from home. Geographically, I’m tipping none of them live within 5km of a tropical beach resort!
The “reward” of overseas travel meant other lifestyle sacrifices needed to be made along the way. How often we go to restaurants, the cars we drive, what treats the kids get, how much gets sunk into investments.
International travel isn’t the only priority that has changed this year. More time spent with the family finally got moved from the “to do” list.
Valuing our “castle” has become more important. So, the long-dreamed plans of home improvements have been moved forward.
With shifting priorities comes the necessity of a change to the way money is spent. This occasionally leads to disagreements between Mrs DebtMan and myself. And neither of us win as many of those as we’d like.
What are YOUR big priorities? Write them down.
Have they changed since last Christmas?
I’d like to say that some of them don’t cost anything, like more family time.
But that’s simply not true. Family time does come at the cost of not earning as much money. For most, if you’re able to spend more time at work, you’ll either make more money immediately, or be putting yourself forward for a payrise or promotion earlier.
So, how much are those priorities going to cost? And how are you going to fund them?
Is it buying a home, or paying off the home loan sooner? Having the kids at a particular school? Building an investment portfolio, or hitting a target with your superannuation balance that will allow you to retire comfortably.
(Sure, it might also be for consumer goods, such as cars, electronics or clothes. But they’re all depreciating lifestyle assets and are more on the expenses side of your life.)
Or are they professional priorities? Hitting a certain level in your occupation, growing your business to a particular size, or being able to afford the right staff to give you some of your time back?
Most likely, those priorities are going to be two sets of costs – a time cost and a monetary cost. Can you quantify the cost of each?
If the financial cost is, say, $300 a week, can you do that?
In fact, scratch that. The question isn’t “can you do that”? It’s actually “how will you do that?” If this is a priority, start with this and work backwards.
Open a notepad or an Excel spreadsheet. List your income, then your unavoidable expenses, such as rent/mortgage, groceries, fuel, utilities, insurances, etc.
Put in how much you need for your big priorities as an important expense now also.
Then your lifestyle expenses – restaurant meals, drinking and general entertainment.
Now, do the math. Is there still money left over? Fantastic for you if there is.
But for most people, the answer will be no. But if your dream is going to turn into reality, obviously something has got to give.
If it’s the first time you’ve ever really tried to budget, then this might be the hard part. Cutting back on expenses rarely seems like fun. But that pain will fade as you start to see the results of, initially, your savings growing, then later, being in a position to achieve the goal you’ve set yourself.
While things are slowly “returning to normal”, take the time to understand what, if any, of your priorities have changed. And enact your plan.
Bruce Brammall is the author of Mortgages Made Easy and is both a financial adviser and mortgage broker. E: bruce@brucebrammallfinancial.com.au.