Question:

I am struggling with living paycheque to paycheque and not having enough savings. The thought of not being able to afford to have a family keeps me awake at night.

Answer:

I see this as a cash flow problem. You are probably unaware of how much money you spend every week or month. And you don’t know how much you need to save to enable you to live the life you’d like to live.

Life is full of options and compromises, and sometimes the choices we make on a daily basis are the things that prevent us from achieving our goals. When you’re not sure how much money you need to live from day to day, it’s easy to get confused between what you ‘need’ and what you ‘want’. Without understanding your finances and creating boundaries, there is no reason to budget or curb your spending – so it’s very easy to spend too much.

When you know the big picture – which is exactly what you need to live on per day, week, month and year - it helps to you to stop bad habits, reduce overspending and reach your goals.

Consistency is the key to helping you achieve your goals. I’m going to give you a couple of steps that will help you on your way.

1. Understand your spending patterns.

o Go through your credit card or bank statements and work out how much you spend on necessities and how much on discretionary items (the things you want rather than need).

o Or use online cash flow management tools and apps, your bank might even have it’s own one. They will let you analyse your expenses and categorise them into ‘buckets’ such as food, entertainment, clothing, utilities, petrol, mortgage repayments etc.

2. Learn to save.

o If you’re spending more than you’re earning, work out what needs to be cut out so you can break even. Look for things like online subscriptions to a service or gym membership you don’t use

o Once you are in the black (your outgoing expenses are less than your incoming), gradually increase your saving capacity. One trick is to open a separate bank account and ask your employer to pay a certain amount into it each pay run. Do not touch this money and keep it totally separate - it might even help to not have online viewing of that account.

o If you are planning to start a family, consider your finances in the short and long term so you are as prepared as possible and can reduce the stress.

- Work out how much you need to have saved up and your future earning capacity.

- Check how much your employer and government will pay for maternity leave.

- Work out cost of having a baby.

- Plan how long you will have to be on maternity leave.

- Start planning child care costs.