Basic personal finance comes from mastering three fundamental skills:
- Earning — your ability to bring in money through work
- Spending — your ability to spend wisely
- Saving— your ability to produce a surplus and earn interest or dividends on it
Play to your strengths to build wealth
Some people excel at one of the three skills, but not the others (you’re good at earning money for example, but struggle to keep your costs down). Others are good at two of the skills, but fall down on the third one (you might have earning power and keep your spending down, but have a low bank balance because you lack expertise in saving). To be really successful at personal finance, you have to maximize your performance in all three areas – which means you must identify which you need to improve!
Master the art of earning
For most people, this means overcoming your mental blocks and managing your career proactively: gaining appropriate qualifications, finding a job with prospects, learning how to negotiate a raise, and avoiding being laid off. Some can also increase their income through:
- Pursuing money-making sidelines (monetise your hobbies!)
- Selling assets (and de-clutter your life!)
- Starting a businesses
Become a frugal guru
You may be one of the many people who find that keeping costs down is the toughest of the three skills to master. This can be because you confuse sensible thrift with deprivation and self-denial (that is not the Bill Butler way)! Focusing only on earnings means missing a key piece of the puzzle: your goal is to create as big a gap as possible between what you earn and what you spend.
Discovering the power of saving and investing
“Savings” are really just the difference between what you earn and what you spend. This surplus is important of course — but real skill at saving lies in what you do with your surplus. Firstly, automate, automate, automate. As Jesse Cook emphasizes over on clark.com, “by creating automatic actions, you relieve yourself of the burden of making sure that they happen each month, meaning that you are less likely to break the saving habits that you created when formulating your plan”. Contact Bill Butler now, and we’ll help you implement this automation in a quick, proven and professional way.
The three fundamentals as building blocks
These three skills are the “core” of healthy personal finance. By treating earning, spending, and saving as separate skills (building blocks that can be put together to form a solid plan) you gain the ability to identify your strong and weak points, and decide which parts of the puzzle you can outsource and automate, leaving you more energy to focus on the others.
Bill Butler is a personal financial services organisation helping busy Australians outsource the day to day of their personal finances. We are passionate about partnering with our clients to build the foundations for personal financial success. Is it time for you to get a Butler?
Jay Stephens – Lead Thought Provoker
Jay began his career in London with Rabobank, CLS bank and a Lloyd’s of London syndicate. Jay’s work has spanned corporate communications, content editing, newspaper articles, courseware, blogging, policy drafting, technical writing, and a regular crossword. He is passionate about 8-bit tunes, self-improvement, and the Oxford comma.