The one thing everybody should do to be financially free

As with the start of any new year, it usually is a time when we decide to start thinking what we want from 2016. We all have personal goals we want to achieve and they could be based on your work, health, community, personal development, family, friends, travel, experiences, relationships, business, volunteering, new skills, spiritual, new ways of thinking and who knows what other areas.

There usually however are financial ones that sit high on the list and a lot of them are usually based around either building wealth, paying off debt or becoming better financially educated.

The goal may be as simple as being debt free, to save $50,000 or to buy my first investment property by January 1, 2017.

Without going in to the detail around the challenges we all have in achieving goals, I want to congratulate you if you have actually written down a solid financial goal on a piece of paper and put it somewhere where you will be reminded of it almost daily.

It is undoubtable that the phycology about how to achieve your goals begins at clearly defining and being reminded of them. On my bathroom mirror, I have a list of my goals and while I don’t look at them everyday – I do see them when I am brushing my teeth and subconsciously they are doing something. What I do not know daily, but over time I will look back and hopefully go I did that.

I have written about this before and the longer I give advice, the more I believe that the single most important thing and the one thing every family should do is track their spending - every dollar that goes in and out.

It is undoubtable that the ones I have seen to be the most financially free, confident, in control and secure are the ones who know what is happening every month. It may sound negative, feel like you are losing your freedom to spend and painful, but if you flick this switch from negative to positive it actually will become the most empowering financial decision you can do in your life.

The biggest changes I have seen in the financial satisfaction in my clients lives come when they know exactly how much money they are spending each month and exactly where it is going.

The fear most clients have with tracking their spending is that it cleans out all the cobwebs, uncovers skeletons, leaves no stone unturned and is very confronting. Sadly, however these are generally considered all negative emotions.  The fair thing to is to think through the positive things in return and believe me there are more than just a few. 

But before I begin to try to convince you to do this, it really is one of those things that you need to see, feel and experience to believe. This is not about understanding whether you are saving $900 or over spending by $50. Sure that is an outcome but really it is the beginning of creating a new belief, habit and therefore behaviour towards money. 

Decision making.

Understanding where you are at any given point in time in a month and over a year is very powerful. The finger to the air to the check the wind direction decision making we all do when deciding whether to purchase a new fridge or go on a holiday, really begins to become an empowering one. One where you have a true basis to say yes, no or not now.

 Freedom to spend.

It may sound counter intuitive but by actually tracking your spending you are  giving yourself the mental relief to spend guilt free. We all feel guilt after spending money and it’s actually even more so on material possessions. I won’t touch on experiences vs material possessions today but if you have accounted for, know you are tracking along nicely and can afford to spend – why not?

We only have one life and as long as what we are spending money on things that align with our values than go ahead - spend away and enjoy.


By tracking there is also the feeling of true progress and acceptance. When you are travelling from a to b, getting a promotion at work or losing weight at the gym, it is clear that you need to see progress to continue to have a belief of achieving your goals. Sadly, however when you are not tracking your spending it is hard to know what progress you are truly making and if you are whether it is good or bad. With no progress, it's easy to slip it to old habits and never make change.  

Investment decisions. 

I find it very hard to help clients consider making decisions for their future when they do not understand where they are today. It is also hard for clients to make decisions when they do not understand where they are today. If however, it is clear that for the last 12 months they have put $60,000 in to their mortgage and saved an additional $10,000 in a savings account and all expenses have been accounted for it’s easier for us to see if it is wise to consider to use this invest for their future. This simple process creates better investors and better investors are ones who are more comfortable with the risks they are taking because they know they can afford them. 


The next thing I see is cobwebs. Those expenses that you are paying now that you either a) have forgotten about, b) have been a little slack in stopping or c) keep on building up. We all have these and a clean out will undoubtably uncover money you are either wasting or not getting the value the money requires. 


Depending on your nature and personality, some people love a challenge. By tracking your spending you can actually do it a number of ways – 1) Limit your spending and focus on an end savings amount or 2) look at things could substitute - still do what you want to do but track how much you saved by not making the usual decision and making another. 

So are you sold yet? Or should I keep on listing out more?


The biggest challenge this approach has had in the past is the tireless hours and days we spent painfully recording every transaction. Whether that was putting it on a spreadsheet, keeping every receipt and trying to add it up. The good news is that technology (like it will do to everything) is making life easier, better and more efficient. We now have hundreds of millions of dollars being invested all over the world to make this automatic and effortless.  Some applications I recommend is Money Brilliant (and it is brilliant), Moneysoft, Pocketbook, Xero and ANZ money manager. There are many more, but these can all do the job.

Once you get the application, stick with it and give it six months at least. I cannot make this clearer and stress this enough. It really is pointless logging in once.


If I can recommend you to do one thing financially in 2016, it would be to do this. You may need to setup new habits, systems, processes and ways of spending money but in the electronic payment world we live in today that is not a bad thing.

The end result is not a financial one and it is mental one. The goal in most of our lives is to obtain happiness and a big part of happiness is being free from financial stress, worry or regret.

If you would like to discuss this further, or have any comments you would like to share, I would love to continue the discussion.

My very best wishes to an inspiring 2016