“Shock” yourself into being financially savvy


Bruce Brammall, The West Australian, 16 September, 2019


Why are there such huge mental issues – so many of us act like complete whack jobs – around our personal finances?

We’ve all seen friends do some truly psycho stuff with their money. True best friends would have locked them in a padded cell with a straight-jacket to stop themselves doing major harm to their finances.

It goes beyond simply being dumb with dollars. For many, the craziness also contains big dollops of laziness, greed and a lack of self-control.

Let’s work with the financially mentally challenged.

I could give you the normal spiel. “Spend less than you earn”, “pay yourself first” and “buy one less coffee a day”. You’ve heard all that before. You ignored it then. And you’ll do so again.

So, something different. Some electro-shock treatment to fry the wiring in your brain.

If nothing else has worked, try these five twists on more “sensible” advice to see if they can shock you into thinking more clearly about your future.

One: Steal from yourself

If you earn a salary, the tax man just takes – he never asks – from you every payday, before you get to see it.

It’s a winning formula you should adopt. Start stealing from yourself. Have money from your salary taken out of your main bank account the day it arrives.

Have it automatically stolen, by direct debits. Don’t rely on yourself to remember, or being strong enough to go through with moving it. You can’t trust yourself, remember? You’re crazy and unreliable.

How much should you pickpocket from yourself? Well, at the start, I don’t really care. It’s more important just to get the heist started. If you start by stealing just a little bit from yourself, perhaps you won’t notice much and won’t get too upset. Let’s stay, start with 5-10 per cent of your salary.

Now, what are you going to do with this “hot” money?

Two: Fake it until you make it

What do all financially successful people have in common? They are all investors. Every. Single. One.

Are you an investor? You’re not? Right, unless you really should be committed to an asylum, I’m sure you can figure out the problem here.

Just. Do. It.

Do whatever it takes to get yourself started. Sign yourself up for automatic investments into an index fund, every pay day, or get an adviser to help get you kickstarted.

True wealth requires investment. Even if you’re investing $100 each and every month (I hope it’s way more), then at least you can say “yes, I’m an investor”, even if it might feel a little fake at first.

Starting small is fine. But it’s got got to hurt a bit. Pain, then pleasure. Sounds a little masochistic, sure.

Three: Love your super

Yeah, that seems insane. Especially for anyone under 45, most of whom actively avoid even accidentally getting acquainted with their super fund.

They don’t even open the half-yearly mail.

However, paying 15 minutes of attention to your super now could double your super by retirement. If you’re 30 and sitting in a default “balanced” fund, moving your super to an “aggressive” investment option, has the potential to double your super by 65.

You would be moving from having 60 per cent of your super in growth assets (shares and property) to 90-100 per cent in growth assets.

Growth assets, long term, are likely to grow faster.

Does that seem a little unbalanced? Good. You’re learning.

Step four: Hour of power

Gimme some time. Just one hour a week.

Is it so demented to think that if you thought through your finances for one hour a week, that you couldn’t find something that you could improve?

No. You would find a bit of saving here (insurance policy switch, phone bill, spending behaviour), or a bit of investing there (get that investment paperwork done, fill in a salary sacrifice form).

Step five: Don’t fear the gear

Many people have a pathological fear of debt. But debt is not the devil. Used wisely, to buy quality assets, it can be a powerful force for positive (mental) financial well being.

Warning: borrowing to invest is not for everyone. It is right for some people. You need to have time on your side (probably don’t start in your 60s) and an ability to ride the bumps, without going insane.

Bruce Brammall is the author of Mortgages Made Easy and is both a financial advisor and mortgage broker.

E: bruce@brucebrammallfinancial.com.au.

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