Putting your debt on a diet

iStock 000001667800MediumSomeone once said you can never be too thin or too rich. That’s probably not an outlook on life too many people would endorse, but managing money and managing weight do have a few things in common. The key to both is discipline and goal setting.
Snacking on fast food or treats between meals is the dietary equivalent of pulling out your EFT-POS card every time you see a shop or café, i.e. lack of self-control. Sticking to a cash management plan or budget is not just about how and when you buy large items, it’s also about the unplanned and often-forgotten smaller items that have a nasty habit of adding up and surprising you – just like the calories in lattes, muffins, peanuts, etc.

Successful money management means setting a strategy, sticking to it and then reviewing it from time to time. And you don’t have to totally deprive yourself. By making sure you reach your goals, you can then afford the ‘treats’ that really matter to you, such as being able to replace your car when you want to, taking an overseas holiday, and – the big one – enjoying the kind of lifestyle you want in retirement.

A key step is to set yourself some achievable milestones along the way to ensure you don’t give up because it’s all too hard. Essentially, you are trying to develop some sensible and long-term habits.

Although counting calories can be a useful exercise for a brief period at the outset of a diet, it’s not something you want to do all the time. Recording every item of expenditure is just the same. You should do it for long enough to get an accurate picture of just what your spending habits are. Once you’ve discovered that, it’s easier to work out an action plan that will target the areas you most need to work on.

Money may not buy you happiness, but having fewer money problems and smaller monthly credit card bills will very likely reduce your stress levels.

Cash and debt management is one of the three key components of the financial planning process. The other two are risk management and investment management. If you’d like your money to go further, don’t forget this is something your financial adviser is specifically qualified to help you with.