Category: Mentality

Is it a need or a want?

As I sit here ready to leave Fiji, I am reflecting on some of the things I’ve learned over the past couple of months, and particularly, during our final volunteering placement with IVI, which we finished up yesterday. One of which is a new perspective on the question ‘Is it a need or a want?’

I knew that we were going to a remote island school, and having had some experience in an even smaller, even more remote village in Fiji before, thought I knew what to expect. But I didn’t. The school we were placed at had very different opportunities and challenges.

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Are we speaking the same language?

Do you feel like you and your partner are talking different languages when it comes to money?

In intercultural communication research, we talk of two different ways for communication problems to occur – miscommunication, where communication occurs but is misunderstood, and communication breakdown, where communication ceases.

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What’s your money personality?

I’ve always loved reading – perhaps too much – to the extent that I would literally hide under the covers with a torch as a child in order to read past my bedtime. I think my parents must have been the only parents in my class who visited the teacher to ask how they could get their child to read less and sleep more. Recently, I have been blessed to share this love with the children at the school we are currently placed at, where I have been reading them Charlie and the Chocolate Factory – one of the stories I first fell in love with as a child.

So perhaps it comes as no surprise that I’ve read not one, but two books on the topic of money personalities – Unlock the Secrets of Your Money Personality by Greg Smith, which I picked up secondhand (but seems to have been handed out for free by the ANZ bank at some point!) and more recently, Your Money Personality by Kathleen Gurney, which was recommended to me by Ben Kingsley of Empower Wealth. The two books make an interesting pair, as Gurney focuses on the underlying traits, and Smith on the resultant behaviours (so perhaps that would have been a better order to read them in!)

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How can I help?

It is estimated that volunteers contribute about $400 billion (USD) worth of services worldwide each year (calculate your contribution according to an average rate). Chief economist of the Bank of England, Andy Haldane, is quoted in The Economist as saying that in Britain, formal volunteers each year do the work of 1.25 million ‘proper’ employees, and nearly a billion people are engaged in volunteering worldwide. Interestingly, Turkmenistan and Sri Lanka lead the charts, thanks to national days of ‘compulsory volunteering’ in Turkmenistan. Yet the economic impact of volunteering is not captured by GDP statistics as no monetary transaction takes place.

Andy Haldane talks about three types of value that volunteering creates: economic, private and social. Just as we need to consider various types of capital to evaluate our own wealth, it’s important that we consider the types of value we might contribute through volunteering – at home or abroad.

One of the joys of no longer having to work is being able to determine what you will do, and for how much. We’ve spent part of our time in Fiji volunteering through IVI. Had we not already resigned, it would be impossible for us to take time off in the middle of the year like this.

Earlier this year, we were in Fiji when Cyclone Winston struck. We were out in the Yasawa islands when the resort manager handed us two weather reports – one out of the country’s capital, Suva, and one out of the nearest city, Nadi.

Each predicted a different path for the cyclone – one heading to Nadi, one heading to the Yasawas.

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What will you do with your freedom?

What interests you about the concept of freedom? No matter what our money goals, those of us fortunate enough to earn more than is required to satisfy our basic needs are generally aiming for some kind of freedom. Freedom from working as much, or at all, the freedom of your next holiday, of finishing your study, of whatever.

For me, it was the millions of little things.

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Why should I pick up pennies?

‘Look after the pennies, and the pounds will take care of themselves’ my grandmother used to say. But perhaps you’ve heard the old story that if Bill Gates sees $100 on the ground, it will cost him more to bend down and pick it up than to keep on walking?

It’s the same kind of logic used to justify domestic services:

‘I earn $30 an hour. Why should I clean my own house when I can pay someone else $15 to do it?’

On the surface, this seems to make (financial) sense – You earn $30, give half to the cleaner or the lawn mower, and still come out with a profit.

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How can I make smarter money goals?

Words are like a set of blocks we can use to build structures.

I find this analogy useful in constructing goals – in particular, financial goals.

Having a set of well-defined goals is important. A goal that is too open or ambiguous cannot possibly be ‘SMART’ – that is, Specific, Measurable, Achievable, and Realistic within a particular Timeframe. Think of each one of these elements as a building block.

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How can I maintain my money mojo?

Saving for a huge goal – like a home deposit, or financial independence – or trying to pay off a large debt, like a mortgage or student loans – can seem impossibly enormous at times. All too often I hear people throw up their hands in defeat – ‘I’ll never pay it off anyway, so why bother?’

Quite apart from the psychological benefits of having smaller, more manageable debt even if no debt isn’t an option, there’s one very important reason – interest.

Anita Bell wrote a fantastic book called Your Mortgage: And how to pay it off in five years or less. For the new edition, she changed the title, and I think I can see why. Many people I recommended this book to were initially reluctant, believing they’d never pay their mortgage off in 5 years or less, so why try?

So maybe you can’t pay your home loan off in 5 years. But wouldn’t it be great to pay it off in 15? 25? On an average mortgage, this could save you hundreds of thousands of dollars in interest.

Even if you start out excited and motivated though, it can be difficult to keep this up.

There are a variety of tips and tricks I’ve come across over the years for maintaining my motivation when it comes to savings. I’m a very goal-oriented person, so these may work better for some people than for others, so just give the ones that appeal to you a go:

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How much is enough to be financially independent?

In the last two posts, I asked how much is enough, and what it means to be financially independent.

Now that you know how much you need, and where you sit on the financial independence scale, let’s combine the two: how much is enough to be financially independent? Continue reading “How much is enough to be financially independent?” →