How your personal finances can step into growth mode: FAST!

The FAST-GROWTH formula for your household finances is a way for you to make easy decisions about your finances. It can be on a single decision model, or a whole of finances model.
In this example, I am going to go through a scenario that a lot of people in Australia might be familiar with – the summer heat vs our air conditioner.

Do we spend the extra dollars going ahead and turning on the air con and cool down our living areas? Or do we suffer through the heat? Or do we leave the house, knowing that we might spend more money when we leave the house than the cost of running the air-con?

So many choices! But which is the right one for you? Run your decisions through this framework to see how it lands for you:

Step 1: FOCUS

What do you really want? If you are all about comfort, then the aircon being on in the middle of a scorching day is worth every dollar, but for other people, it might be worth it to save on electricity in order to go on a bigger and better holiday. You are happy to choose comfort later, so sitting in a warmer room now is OK for you. However, you might decide that shutting the house up, and escaping to a cooler destination (like the shopping centre) might be more preferential to sweating everywhere.

Step 2: AWARENESS

What are you really spending? What does your normal electricity bill cost you? How much does it actually fluctuate in Summer? Are you being a genuine scrooge, saving $5, or is it really beneficial to save $250 by cutting your power bill? Some times you "think" it's one thing, but once you calculate the numbers, it's completely different to your assumptions. Do you have a plan where it costs more to run your appliances at certain times of the day? What's the true cost of turning that air con on versus leaving?

Step 3: SPENDING PLAN

How much can your household budget afford? Can you do both, at minimal cost? Running the air cons at around 25 degrees is better for the electricity bill than blasting them at 18 degrees. And going to the shops to intentionally window shop and soak in their air conditioning (maybe with a $20 note for a cold drink or snack) can be achievable on both ends.

Step 4: TRACK & TWEAK

It's only when you are paying attention that you make decisions that are right for you. Look at what you last few years of bills for electricity are. Determine if you can change them - either by changing use, changing plan, or changing supplier. If you can't change it, then allow it. Build the full price into your household spending plan (and allow for next years increase in rates), and make sure that you have enough money to always pay those bills when they come in.

Step 5: GROWTH

Whenever you get a chance to save money, then it's time to invest it into your future growth. Whether this is a savings account, investing in shares or ETFs, or putting it into your super fund is up to you (and with help from your financial adviser). If you can save $100 per month on electricity, what would you do with that money? Investing in your future is the key to financial freedom, and the earlier you can start investing, the more growth you will experience.

Now, I'm not a financial adviser, so I can't tell you where to put your money or what to invest in, but I can help you set up your personal finances so that you are ready for growth! Join me for a complimentary 15 minute chat to see how you can start to use the framework to make better money decisions.