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7 money tips to supercharge your finances in 2020

Here's how to supercharge your finances this year. (Source: Getty)

The maths behind financial independence is incredibly simple.

So why do so few Australia’s achieve financial freedom?

It’s not for the lack of knowledge – there are so many money blogs, videos and podcasts out there.

Instead, it’s a combination of our mindset, habits and behaviours that rule our financial destiny. 

So let’s look at 7 tips that could make you rich:

1. ‘If you are born poor it’s not your fault, but if you die poor it’s your mistake.’

This quote is often attributed to Bill Gates, a self-made multi billionaire who is now helping the world through his philanthropic work.

What he’s getting at is that you have to take responsibility for your financial future. You have to become financially literate.

The problem for many is that becoming wealthy is a long journey and it’s not easy. 

But then again why should it be easy? If it were easy, then the rewards would not be so great.

2. Don’t follow the herd.

Each of us has been hardwired by evolution with a desire to be part of a herd.

In the early days of humanity, being part of a herd meant survival.

With a herd, there was always someone on guard for predators or danger and also certain herd members identified opportunities that could be beneficial to the herd.

However, that’s not the way it works with money, unless you want to be average and follow the crowd of average folk.

But if you want to achieve financial excellence, one of the best things you can do is not follow the heard. 

You need to break away from the pack, take your own path and make the best choices for you as an individual.

Successful investors know that to get to the top of the property ladder, they need to overcome the fears that hold most people back from ever stepping foot on the first rung, or of not waiting for the perfect time or the perfect investment.

And they also understand the importance of, wait for it, going against the crowd! 

Warren Buffet said it best, “Be fearful when others are greedy and greedy when others are fearful.” 

3. You should know how many months you have left in your wealth window.  

Your “wealth window” is the time from now until when you stop receiving an earned income.   

How much are you going to earn in that time?

Think about it…if you earn $100,000 a year for the next 15 years you will have $1.5 million passing through your hands. 

The big question is: how much of this will you keep?

You have two important stages in your life: a saving and investment stage - this is what I call your “wealth window” and your spending stage – your retirement. 

For many Australians their biggest asset is their income earning capacity over the rest of their “wealth window.”

Your financial future will depend on the balance between enjoying your money now and planning for “then.” 

Which leads to…

4. Practice delayed gratification.

If you want more money and freedom in life, you’re going to have to practice delayed gratification.

Successful people possess higher patience and an aptitude to postpone the enjoyment of their work.

They have an ability to work hard to accomplish a goal which isn’t achieved for a long time.

Learning to delay gratification rather than seeking immediate satisfaction is essential for success, particularly when it comes to things like investing, business and making money.

Yet it’s not easy to change ingrained habits and the approaches to life that you’ve been practicing since childhood, but once you’re aware of the importance of the concept of delayed gratification, it’s entirely do-able.

The problem is the average Australian focuses on survival and instant gratification. They don’t think beyond the moment.

However, the very rich think and plan very far into the future—five, ten, or twenty years.

I’ve found, the poor think about the moment— they can’t wait for their pay at the end of the week.

The middle class are hoping to make it through the month.

The rich are planning a year to several years into the future, and the multi-millionaires are thinking a decade or two future.

Remember, if it comes too quickly, chances are you will lose it again just as readily. All good things take time.

As Warren Buffet wisely said: “Wealth is the transfer of money from the inpatient to the patient.”

5. Don’t think you can ever make money by trading.

Whether it’s property, financial commodities, shares etc.; trading is really a form of gambling and the only people who seem to make money out of this are the trading “educators” and the “bookmakers.” 

It’s interesting how people with an ego bigger than their experience believe they can beat the odds. No they can’t. 

Instead stick to the wealth creation strategies that have always worked; either investing in income earning real estate, a business or a share portfolio.

6. Avoid credit card debt

While credit cards can be very useful at certain times of your life, don’t use them to maintain an expensive lifestyle to impress people who you barely know. 

This is a huge financial mistake. Remember the balance on your credit card isn’t your money, it’s the banks’ and they’ll charge you for the privilege of using it.

7. Insure yourself

Insure yourself against bad surprises such as cancer, a heart attack, a car accident or death.

Most people set up their insurance as a consequence of devastating news about a friend or a loved one, but if you don’t insure yourself when you don’t need it, you will find yourself uninsurable when you do need it. 

And then hope your insurance is a total waste of money.

The bottom line

Becoming financially fluent will be the best gift you can give yourself.

And getting sound impartial financial advice along the way is not a cost, it’s an investment. 

It’s interesting that all the wealthy people I know have advisors and are happy to pay for them, while the average Australian gets their financial advice from Facebook or Twitter.

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