One life-changing class you never took

I want to ask you two different questions.


First, has anyone in your life ever taught you the fundamentals of personal finance? If so, how many of those lessons do you live by on a daily basis? For most of us our answers would be, “What the heck is personal finance?”

In this 11-minute talk, Alexa von Tobel explores why over 75% of Americans feel out of control with their money and why so many people in this country worry about money every day. As it turns out, we aren’t as poor as we think we are; we’re just bad at managing our money. This is likely the same for Kiwis.




So how do we fix that? She recommends three lifestyle changes that will help alleviate most of your financial worries as long as you stick to them diligently.

First, make a budget. Don’t be afraid! Budgeting sounds scary, but it’s really not. All you have to do is track all of the money you spend in a month, subtract it from your income, and look for areas where you could improve. This is extremely easy with budgeting on www.sorted.org.nz

Second, build an emergency fund. Take a portion of every paycheck and store it in a savings account. Think about it: if you had a backup account with six months of expenses, wouldn’t you feel more secure? When unexpected troubles come your way, having this fund to dip into can be a lifesaver.

Third, pay all of your debts. Treat debt as an emergency. You’re losing thousands of dollars every year on interest payments. But more importantly, each debt that you clear provides you with more monthly cashflow because you won’t have payments to make. Wouldn’t that be nice to have?