The big problem for twenty first century households, I now know, is chronic over-commitment which leads to never enough time and nowhere near enough energy. To cope, we give priority to the most urgent elements in our lives – work, family, health, household, whichever is more demanding on the day – and we juggle them.
We’re running, we’re juggling, we’re half dead on our feet and we’re hoping we haven’t missed anything critical like meetings, bill payments or providing food, and then we join a gym to which we never go.
I kind of knew this when I began writing What To Do About Everything but now I know it for sure because householders have told me. Juggling is OK. Sometimes it’s better than OK; it’s vital. But it’s risky because it doesn’t always accommodate best practice and when this fails in two essential areas, money and food, we can find ourselves in real difficulties.
With food, the risk is eating badly (too much fast food, too many meals out, so too much salt, fat, sugar and additives) and then health issues. With money the risk is spending more than we earn, ignoring the consequences and finding ourselves with sliding debt and not enough money to live on now, let alone when we stop earning.
Most of us are rubbish with money, if it’s any consolation, because it’s just so hard to look at in the eye. We’re comfortable with everyday transactions: want something, buy it. But we struggle with the overview, as in ‘here’s my income, here are my outgoings’ and ‘oh look, there’s my future’. It’s just too scary and/or too complicated to address. Our internal dialogue on the matter is more likely to be: ‘had money, now I don’t, where’d it go?’ or ‘borrowed too much, repayments awful, I hate being broke’.
Our attitude to money, I increasingly think, is like our attitude to food. We understand the principle but when we’re tired and stressed we’re not really up for self analysis or sacrifice. I’d argue that at least as many of us are morbidly indebted as we are obese (and one in four of us are obese) because, with money as with food, the problem arises in very small increments and doesn’t seem worth confronting until it’s very frightening.
But here’s the madness and/or joy. Getting a grip isn’t so hard. You just need to make finances a priority for the time it takes to understand your precise circumstances and to form a plan. The basis of your plan is a household budget which is no more than an honest appraisal of income and outgoings then a sensible allocation.
You get a notebook and, for a month, you note every little outlay – fares, coffees, petrol, gifts, drycleaning – and at the end of each month, you cross-check against bank statements, credit card statements (for direct debits and standing orders), cash withdrawals and bill payments. At the same time, you note your income from payment slips and any other source.
Once you have a a monthly income figure and a monthly outgoing figure, you prioritise. You give yourself an amount to spend and when it runs out, you make do.
There are some excellent online budget templates that help (and see chapter 13 of What To Do About Everything for Budgets and Chapter 14 for Saving.) If you’re in dire straits (out of control debt, future black) seek urgent help from Centrelink or the Salvation Army. If you can’t see how to provide for your future or you have money but don’t know how to make it work for you, consult a properly licenced financial planner.
See? Not scary at all.