Money can be a tricky part of adulthood to navigate. And though you are armed with the best of intentions to be frugal, save, and not buy that reading chair you’ve long been lusting after, it can be hard to actually keep track of your bank account with so many financial responsibilities hitting us left, right and centre. If like us, you are looking for easy ways to practice fiscal responsibility while also looking to form a long-term plan, we sat with finance expert, Canna Campbell who also goes by the stage name, SugarMammaTV, to pick her brain on the finance questions that come up regularly around our office.
To say her advice was inspiring is an understatement. In fact, arguably more important than feeling inspired, after the interview, we walked away empowered and hungry for more knowledge about investing. Describing healthy finances as an"act of self-love and self-respect" Campbell believes that learning to feel comfortable with your finances is also a way of controlling your destiny. Below, we outline some of the key pointers we learnt, from healthy mindsets, to clearing your debt, and other forms of investment that don’t necessarily need to involve buying a home.
Read on for Campbell's advice, and watch the interview below.
SAVING EFFECTIVELY STARTS WITH YOUR MINDSET
Campbell suggests that getting out of debt, and saving starts letting go of your past decisions and starting on a fresh slate, "Stop telling yourself you are bad with money. That is just going to keep you trapped in that situation. You need to understand, that your past is your past, and you can move on from that. So what you need to do is quarantine what's going on in your finances: Who do you own money to, and how much? You then need to start a payment plan and start paying those people off. Pay them a minimum repayment, but then try and find ways of manifesting and earning and saving extra money that you can then use to pay those debts off.
Building financial independence and wealth is like building a house, you need to build it on a rock-solid foundation, because when storms come through, your house will still remaining strong and in tact. Sure there'll be damage but at least it's not too expensive to fix. And that's by doing it on a foundation of no toxic debt, no credit card debt, no car loans, no personal loans."
BUDGETING COMES DOWN TO BEING ORGANISED
When it come to actually saving some of your pay cheque, Campbell suggests looking at when your money comes out. "The key to budgeting is to match your living expenses and see how much you really spend, so you can see whether you are spending more than you earn, otherwise you will go deeper into debt. But the next thing, (and this is where so many people go wrong), is they need to match their spending habits to their diary. Not every pay cheque is the same. So, say you are paid on a monthly basis.
You may have a quiet month where you don't have many expenses—you don't have a wedding to go to, you don't have a car rego come through. But you may have forgot that your car rego is due next month, but it's also your mothers birthday and you have a parking fine. And so many people have to then get themselves out of short-term trouble and lean for a credit card to use. But then they end up creating long-term pain because then that debt never ends up getting paid down. So, this is where my budgeting app helps, because this is where you put in your calendar what expenses are coming in.
And it helps you direct your cash flow into the right accounts.
PRACTICE PAYING MORTGAGE REPAYMENTS WHILE RENTING TO SEE IF YOUR READY TO OWN A HOME
Knowing your ready for a mortgage is hard to decipher. Campbell suggests taking a low-risk approach, and pretending you have a mortgage before you really do. "You know, wealth creation isn't necessarily about buying a home. But if you really have this burning desire and passion to buy your own home and you want to make it your nest and decorate it, then that's absolutely fine, but you do need to have a good sized deposit. I would say as an absolute minimum have a 20 percent deposit. And I would also recommend practicing your mortgage repayment.
Find out what your borrowing capability is, and practice seeing if you can actually afford that mortgage. Because while not everyone likes renting, they aren't quite ready on the cash flow [side of things] to handle what a mortgage really is. Obviously do you research, and pick agents brains. Ask them what's good value at the moment? What are the best areas? Where are people buying properties?
there are other ways to invest other than property
If you're wanting to invest, but don't have the significant cash required for a home, Campbell encourages to think outside the traditional box, and look at other, less stressful forms of investment. "It's not like buy a house or do nothing. We don't live in that world. There are so many things out there you can do. Property is like one percent of all the options out there. Another great option is something I'm really passionate about and talk about a lot in my book: And it is investing into a portfolio of Australian shares.
I'm talking about blue-chip, industrial companies that we see everyday that have been around for 30-40 years and they regularly pay dividends. The great part about that is that number one, you don't pay stamp duty, you only pay brokerage which depending one the size of your trade is normally between $20 to $75, and you can start with as little as $500. I personally recommend starting with $1000. But it's quick and easy. If you have a spare $1000 you can have a share portfolio started by tomorrow.
Why I love buying shares is even though I live in my own home and own my home, with a wonderful mortgage I can still feel like i'm progressing in the right direction because I have my share portfolio that I can add to whenever I can.
Watch the full interview below.