Freedom

I’m not sure what prompted me to ask my friend if I could borrow her book, Scott Pape’s The Barefoot Investor, about taking control over your household budget, but I did. I read it, and then I read its companion book about good money habits for children, The Barefoot Investor for Families, and then I started applying the advice. It is transforming not just my spending, but hopefully having a wider impact as well.

Investments and money management, who wants to think about it? I haven’t in the past. Who wants to shop around for insurance, or compare interest rates, or change from one company to another? But money is necessary for security, holidays, and good food, and it pays for experiences that can be life-changing. We have power in the bank we use and in the choices we make about where our money is invested, because collectively the banks invest in both things that benefit our world and things that don’t. I have known this for a long time but couldn’t face the hassle of changing banks to one that better aligns with my values, but I decided this year that I would, and I’m transitioning from ANZ to Bank Australia.

As part of this, I took the advice to phase out my credit card. I’m gradually paying it off and have divided my new everyday account into buckets: necessities, emergencies, holidays and treats. It’s so liberating! Such a lot of the world’s ‘stuff’ ends up in landfill, and the buzz you get from buying something can quickly wear off and be insatiable and unrewarding, so I think that drawing treats from a separate bucket which is finite rather than open-ended, like a credit card, is a smart and satisfying strategy.

The approach also involves fostering good saving and spending habits in children using a similar approach but a little more simplified to a spending, giving and saving regime linked to doing jobs for pocket money. I think this is a great balance, teaching kids to enjoy some independence, feel how good it is to give to others, and the discipline and delayed gratification of saving for a goal. Rhea chose to feed Lotus every night, bring in the Saturday newspapers and clean the bathroom mirror. Lara chose to help with the vacuuming, take out the bin on Friday night, and clean a window once a week. So far, mostly so good, the girls are motivated and engaged.

I took the opportunity to compare interest rates in the money I’m saving for the girls’ future and I estimate that I will save many hundreds of extra dollars every year by moving that money to a managed fund instead of a term deposit. And my ‘to do’ list for the rest of the year includes comparing prices on one or two of our big purchases too – I’ve already moved my phone carrier, saving $30 per month.

The transition to this system is a process as I divert my regular payments to my new bank, set up new direct debits and pay off my credit card. It has taken several days of effort altogether, achieved in little pockets of time. It’s been such a worthwhile investment though, as I’ve come to realise the power of money as a vehicle to build the life I want, and to have control over my life rather than having that disempowered feeling that it’s in charge of me.

We had to draw on spare money recently, having the experiences within the space of a few weeks of being burgled (with a loss of around $1,000, including lock and window repairs and needing to have my car re-keyed as my car keys were also stolen); the washing machine dying; my phone getting smashed; the vacuum cleaner malfunctioning and the chimney being occupied by an animal needing to be removed. We had savings to resolve these problems, so the stress was shortlived. The experiences made me all the more aware of the importance of money, and also (because I was without my phone for a day while it was getting fixed) what a lifeline a mobile phone is.