John and Gina* were a young couple in their early 30s and when we met they were struggling with one of the most common money challenges: they couldn’t seem to find a way to keep up today and get ahead for the future.
They had a bit of random credit card debt they just couldn’t seem to shake. It seemed like every time they started making any progress in saving, something unexpected would come up that would throw off their plans and set them back.
Over the next few years, John and Gina went on to not only sort out their savings, but also buy their first property, get married, have two epic overseas adventures, and start a family.
And they did it all while saving thousands of dollars each year and while earning an income lower than the Australian average.
I wanted to share some of the lessons they learned so you can shortcut your own progress with money.
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Building habits to help you in the long run
In the early days of our work together, the first thing we needed to focus on was making it easier for them to save money.
Looking at their financial position at the time, when we added up all their savings and took away their debt, their net position (excluding super) was less than $1,000.
Saving for John and Gina wasn’t easy.
Money is easy to spend, and hard to save.
When we first started our work together they felt like it didn’t matter what they did, there was never enough money.
The first thing we did was lay out all of the money they had coming in, and the expenses they had going out to see what was leftover.
At the time, their incomes were around $60,000 and $70,000 p.a., and living in Sydney and paying rent meant that after bills and necessities there wasn’t a lot left over.
But there should have been enough to chip away at their debt, and at the same time start building up some savings for the future. ‘
The challenge for John and Gina was that every time they started making some progress, something would come up that would require them to dip into savings and they’d be back at square one.
What John and Gina came to realise is that their first big job was to create better habits and a better approach to how they were spending and saving their money.
We put in place a bucket system for their banking, where we had different bank accounts that helped to ensure we had the right money in the right places at the right time.
This helped John and Gina create clarity on how much money they could spend while still sticking to their budget and targets.
This in turn helped them to shift their spending habits and allowed them to save more money with less stress.
It didn’t happen overnight.
It took some time, focus, and a few challenging conversations, but step-by-step they started making progress, slow and first, but their momentum was building. This set the platform for what came next.
Get invested
John and Gina had never invested money before.
They didn’t come from money and share investing seemed like a black box to them – they didn’t understand it, didn’t trust it, and didn’t even know how it actually worked in practice.
But they recognised that with the goals they had for the future, they needed to do something to grow their money.
I still vividly remember the conversation where we used a compound interest calculator and to show John and Gina how their money would grow based on the long term sharemarket return, something they could get from a basic index fund.
We looked at the fact that starting with $0 today and investing just $20 daily they could grow their money to over $2.19 million dollars by the time they reached age 65.
They were blown away by the possibilities, and got started investing.
This is where the real shift happened.
John and Gina’s progress wasn’t earth shattering in the short term – but it was meaningful, and consistent.
They could see their money growing, and this gave them the motivation to crank things up a notch.
Within a matter of months they had increased how much they were investing, and this set up their next big money move.
Onto the property ladder
Property affordability is at all time lows in Australia, and it’s not getting any easier.
For John and Gina, they found this more than a little bit daunting, and it seemed like something that would take them forever to achieve.
But when we sat down to set some targets around getting into the property market, they realised that with the progress they’d made building up their investments, and their increased savings rate based on a couple of pay rises, this was a lot closer than they thought.
We set some clear targets and tagged in the help of a mortgage broker to get things lined up.
In the meantime, John and Gina got married and took an epic honeymoon, both of which were funded from cash savings they’d built up on the side while keeping their investing going – meaning they did this without relying on debt or taking a huge chunk out of their savings.
They built up their property deposit, found a great first property, and got into the market shortly after.
Although they had put in the hard work to get there, John and Gina got a bit lucky with the timing of their property purchase and saw some good growth on the property value almost immediately.
By this point, their net position after taking away their mortgage debt was over $235,000 – a big uplift from the $1,000 position only a few years earlier. They were stoked.
The wrap
The progress John and Gina made was significant.
And even more than getting into the property market, funding their wedding and travel, and creating the foundations to make their future money success easier, the most powerful thing for John and Gina was the fact they were able to do it all with more confidence and less stress than they’d ever thought possible.
From the outside looking in, the biggest thing that made the difference for John and Gina was the habits they’d created around their money.
Spending and saving was one important part of this, but the real progress came from the fact they set up good rituals around how they planned with their money, how they reviewed their progress, and how they took the lessons when things weren’t going as expected.
This allowed them to course correct and stay on the front financial foot – and the results flowed from there.
*Names changed to protect identity
Ben Nash is a finance expert commentator, podcaster, financial adviser and founder of Pivot Wealth. Ben’s new book, Virgin Millionaire; the step-by-step guide to your first million and beyond is out now on Amazon | Audiobook.
If you want to chat about getting some help with your money, you can book a call with Pivot Wealth here.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.
