One of the hardest things to do is to back yourself. Backing yourself asks you to ignore all of those niggling self-doubts and plump-up your self worth.
Women like Manuri Gunawardena who just raised $18 million for her company HealthMatch that matches people with clinical trials — know all about backing yourself. In the last year, her company has grown from five to twenty and has attracted investment from the likes of Lucy Turnbull.
“I’ve never wanted to give up, but I’ve definitely had some challenges… and days where I’ve woken up going ‘wow this is massive, how am I going to take it on?’ But at the end of the day, the thing that’s gotten me through this is knowing that the end outcome is something that’s going to help a lot of people.”
Effectively, to back yourself is to possess a deep rooted sense that you have what it takes to achieve your ultimate ambitions. Believing in yourself is easier when you have a plan and start taking action, that’s why, as a new year dawns, we’re suggesting this 6-step guide to recalibrate your finances as one way to back yourself in 2021.
Step 1: Redefine your financial goals
Backing yourself starts with knowing where you’re headed. The best way to define your path is to set goals or intentions — goals that are SMART (specific, measurable, achievable, relevant and time-bound.) ‘Spend less’ is a great idea for a goal, but if you take a moment to think about what you’re actually trying to achieve it’ll make completing the goal more likely.
Instead, you could go with: ‘Spend $800 less on clothes this year by shopping second hand and waiting until the end of the month before I buy anything.’ This goal is specific — it tells you exactly what to do. It’s measurable — there’s a dollar value placed on it. It’s achievable. It’s relevant. And it’s time bound to this year.
Psychologist Dr Gail Matthews from the Domincan University of California found people are much more likely to achieve a goal if it’s written down. Dr Matthew’s research also indicated that social accountability greatly shapes whether a goal gets realised. So consider sitting down with a friend to talk about your goals or setting up monthly check-ins.
Step 2: Tackle your debts
Almost 2 million Australians are struggling to pay off debt. It’s a leading cause of stress in a relationship, with studies indicating financial stress and money worries are key issues for separating couples. But with focus, support and a plan, it is possible to make a significant dent in your debts. You could make one of your SMART goals: ‘Pay off $2000 from my credit card by the end of the year.’ Back yourself — you can do it. Step two of Verve’s Money & Mindset Program includes an additional debt busting video and worksheet to help manage the process of paying down debt. For further support on managing debt please contact the National Debt Hotline on 1800 007 007 to access free financial counseling.
Step 3: Track your spending
We’ve all heard the adage: it’s not what you earn, it’s what you spend — and it’s not untrue. We don’t necessarily need a larger income to start saving, we need awareness, a plan and commitment. Tracking your spending will make you more engaged with your money and where it’s going, which will ultimately help you make better financial decisions.
There are plenty of apps to help track your spending. A few we use include Pocketbook, which is free and Money Brilliant and Spendee which both have free basic plans. Some banks have a built in spending tracker that helps to categories your purchases.
Make sure you set time aside to engage with the app, it could take less than a minute a day to keep an eye on where your money is going. Pocketbook for example asks you to categorise your spending, so plugging this information in is important.
Tracking where your money is going gives you insights into your money behaviours. With this knowledge, you can back yourself by continuing the behaviours that serve you and ditching those that don’t. Once you know which habits are costing you, it makes it easier to make more conscious decisions about how you spend.
Step 4: Build an emergency buffer
If there was ever a time we collectively needed a savings buffer it was the onslaught of a global pandemic. The unexpected does happen and when it does, the last thing you want to worry about is whether or not you can pay your bills.
An emergency buffer can also help you end a professional or personal relationship without fearing the financial consequences. It’ll help protect your heart, your mental health and the roof over your head. This is why it’s considered one of the most important steps to take control of your finances and build peace of mind.
Research from Finder revealed 57% of Australians couldn’t cover a $5,000 expense if it popped up. That’s 11 million people who couldn’t afford an emergency medical bill if they needed to.
According to another study by BT Financial Group, 1 in 5 Australians have no savings to fall back on and would struggle to pay an unexpected $500 expense without selling something or needing to borrow money.
In Australia, almost 14% of people live below the poverty line, and globally women are more likely to live in poverty than men. Part of this is down to the gendered expectations put on women to raise children, which compromises their employment opportunities. Let’s not forget the gender pay gap or the fact women provide the bulk of the unpaid caring support. So saving is a luxury many don’t have — particularly women.
For those who are in a position to build a buffer, somewhere between 3-6 months worth of living expenses might be a good starting point. That is, 3 – 6 X what it costs you to live each month. The exact amount you need to put aside for an emergency should be based on your personal circumstances. You may need more, you may need less. It depends on what kind of support you have, other sources of income or insurances. We’ve written a guide on building an emergency fund, including steps to build one.
Step 5: Sort your taxes early
Some people love doing their taxes, some people will do anything to avoid it. Whatever your feelings are toward doing your tax return, firstly the more you procrastinate, the longer it might take you and secondly, properly engaging with your tax ensures what you’re entitled to stays firmly in your pocket.
First step is to work out what kinds of receipts or records you need to keep. The ATO website is a good place to start. You could shove all your receipts in a paper folder and keep adding to them throughout the financial year or you can do yourself a solid and go digital with the ATO’s MyDeducations app.
Step 6: Consider automating your personal super contributions
Putting extra into your super may just be the ultimate way to back yourself. There are lots of benefits. Firstly, investing in future you, will probably feel pretty damn great and secondly — depending on your circumstances, there could be tax benefits. When it comes to personal super contributions, you can make a one off lump sum payment or opt for a recurring transfer. We’ve written everything you need to know about personal contributions here, including how to capitalise on compound interest.
Backing yourself by engaging with your finances, re-evaluating and executing your financial goals will help you create a future you’re proud of. These 6-steps will help you feel in control and improve your overall sense of security.
Remember, the sharper your financial knowledge, the larger your feminist toolkit.