“The feeling of looking back at your past self with such gratitude for where you are now is one I wish I could bottle up.”
10 years ago I was stuck in what I called my financial revolving door. I was a hot mess with money, but not in an overt kind of way. I wasn’t charging designer bags to my credit card or taking flashy trips. No, my money troubles were far more subtle than that.
I was emotionally entangled with money in a way that kept me stuck. I deeply believed I just wasn’t good with money, and I couldn’t hold onto it no matter how hard I tried. I so badly wanted to be good with money, to have savings, to feel like I had control of where my money went, but I just didn’t. It always left me as quickly as it came to me, and I felt like I was always chasing my tail.
I’d always owe myself a bit of money by the time payday rolled around, thanks to having mentally spent whatever was coming in 3 days prior to it actually coming in. I’d always make a little bit of progress and then take three steps back. My favourite example of which was when I’d try to make a dent in my credit card balance (which sat at around $9,000 on and off for years) and would then immediately reward myself by putting something small back on the card. Nonsense, I know. But such is the emotional load of personal finance.
For years I just couldn’t get ahead of my own self sabotage. It became my normal. Taking control and then letting it slip through my fingers was a cycle I knew so well, but had no idea how to break.
By the title of this blog post, you’ll have guessed I did eventually figure it out. Now, 10 years later, I’ve paid off that debt, bought a home and an investment property, built up an investment portfolio of almost $70,000, and built a business that is currently allowing me to work flexibly while raising my baby daughter, who just turned a month old. I know, I know, working just one month after giving birth doesn’t exactly scream freedom. At least, not in the same way a juicy year-long corporate maternity leave does. But the choices and opportunities self employment has given me throughout pregnancy and postpartum far outweigh the downside of the little bits of work I’m doing now (or the emails I fired off 3 hours after my caesarian section!)
One of the questions I’m most commonly asked is, ‘what actually changed’? What was it that finally got me out of that revolving door and into the lobby of financial confidence? People are usually looking for a magic pill, a single one-stop solution to how I turned it around. Unfortunately as I’m sure many of you can relate to, change doesn’t really work like that – especially when it comes to money.
Changing our financial trajectory truly comes from deep within. It’s a combination of small shifts in perspective, mindset, behaviour and sometimes skill or knowledge, that really creates change.
And so in that vein, here are 5 things that took me from hot mess express to financially confident, that have become the foundation of my work in financial psychology and human behaviour.
1. I paid close attention to my financial behaviour
In fact I paid such close attention to my financial behaviour that I went back to school to undertake graduate study in Financial Psychology and Behavioural Finance.
A lot of financial content and advice speaks only to the literacy portion. Knowing what accounts to use or what compound interest is. There’s too little focus on the emotional and behavioural side of money. For me, these two elements were the catalyst for my financial awakening. I didn’t actually lack too much knowledge. I knew quite early on what an offset account was, that you could earn interest on your savings with the right account, and that adding to a pot of money over time was a good idea. What I didn’t know was how to make myself do all of those things!
Paying close attention to my financial behaviour was what helped me spot the patterns keeping me stuck. It wasn’t the things I was doing once that were going to make the difference (for example, setting a savings goal or opening an account). It was the things I was doing over and over again that were going to change things for me. When I was able to spot patterns in my behaviour, like where I spent money without thinking, where money was leaking out of my daily routine, or where I was spending money to feel a certain way, I was able to intercept those patterns and redirect that behaviour towards the outcomes I wanted.
2. I connected my emotions to my money
One of the biggest turning points for my finances was when I started seeing my transaction list as a mirror to my life. Something I always say to people I work with is ‘your transaction list will tell you a lot about what’s going on in your mind’. I learned this myself the hard way.
Throughout my late teens and twenties, money was somewhat of a vehicle for navigating the complexities of being a woman in the modern world. I’ve battled with insecurities my whole life, and often my financial decisions were driven by trying to patch up the cracks in my self confidence. In my book, Good With Money, I wrote a whole chapter on how an expensive bottle of cellulite cream became an artefact of my financial past. Buying a bottle of cellulite cream that cost three hours wages when I was 21 just proved to me how often my emotions were driving my financial decisions.
Unpacking where I was emotionally spending my money was a turning point for me, and helped me get really honest with myself about what I wanted money to do for me. Did I want it to buy me the next shred of relief from my insecurities, or did I want it to create options, choices and possibilities for me in my life?
3. I untangled what money meant to me
When you’re managing money passively like I had been for years, you miss out on the opportunity to use money as a tool to enhance your life. Money means something different to all of us, but often we go about honouring those values in the complete wrong way. We seek to honour those values through cheap thrills, rather than their deeper meaning. Let me give you an example.
For me, money means independence. It means being able to do what I want, when I want, and having choices that are my own. However, for years I’d gone about obtaining that feeling of independence by making impulsive decisions. Sure, throwing some stuff in my cart and checking out without really thinking might make me feel a sense of independence and autonomy in the moment – there’s the cheap thrill – but did nothing to honour the deeper meaning of independence. In fact, spending money on things I didn’t need took away from the independence I truly craved.
Reconnecting to my value of independence and autonomy, and rewriting what that really looks like in my life was a major driver of a healthier financial mindset. It helped me let go of my need for instant gratification and see the value in delayed gratification for a bigger pay off.
4. I explored my money story
The term ‘money story’ can be a contentious one. Some naysayers aren’t into digging into their financial past or early money memories. But believe me, there’s a lot to learn in looking back at how you’ve experienced money throughout your life.
Growing up with a single mum, experiencing my parent’s divorce and the financial fallout, and inheriting money habits as a result of that taught me a lot about why I was the way I was with money.
5. I made success the default option
Money habits are just like any other habit. You have to repeat the good ones to get the outcomes you want. In the world of finance, we focus so much on compounding from a mathematical perspective, but it pays to consider it in a habitual sense, too. Positive money habits compound over time, just like money does. And so I set out to make it as easy as possible to get the outcomes I wanted, by making the steps I needed to take easily repeatable.
I believe the recipe to success is this: create a system, and then repeat it. Over and over again, tweaking your habits, behaviour and mindset along the way, however you need to, to keep that system repeating. And that’s what I did. I set a payday routine so that every time money came into my life, whether through wages or self employment income, it was chunked up and sent off to different areas of my life and my goals. Not the stock standard wants, needs, savings type of split. Instead, I started treating my life like a business, allocating money to different departments based on what I was trying to achieve, and how I wanted to live. For me that means having multiple accounts where I send money for different ‘departments’. Some of mine are:
- Mental health
- Hotels (I love hotels more than life itself)
- Health
- Personal development
- Emergency fund
- Beauty and personal care
- Little treats
The beauty of this method is that you can tweak your departments whenever you like, to steer your life in the direction you want it to go, using money as the undercurrent.
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Hear more from Emma via her social media @the.brokegeneration, the Good With Money Podcast, or on the brand new Get Rich Slow Club: BUSINESS series alongside Tash Etschmann.
