I'm a prepared person in many aspects, things still come out of nowhere and hit me, but I have a lot covered through prior preparation and that brings a high level of confidence...not arrogance, there's a difference. My financial situation is one of the areas I prepare for. I know bills are coming, and that that'll keep doing so, so being prepared for them seems prudent.
An example is a recent service I had on my V8 Landcruiser, four wheel drive.
It was the manufacturers log book 80,000 kilometre service, even though the vehicle has only done 35,000 kilometres - they do it on time or kilometres. I knew it would be a little more than usual as the front and rear differential's are drained and replaced with new oils and a few other items that are not usually included in the smaller services are also done. I picked up the vehicle that afternoon...but not after paying out $1,116 Australian dollars for the service. Ouch.
In the same week I paid for another year of vehicle registration on the Landcruiser...Goodbye $943. Ouch again.
In all, that's $2,059 out of pocket in a single week, on a vehicle I use only for off-roading and long trips. It doesn't end there though, as by mid-year I'll put a new set of off-road tyres on...another $2,500 for the B.F. Goodrich Ko2 off-road tyres I usually use. Here's the thing though...it's all good.
My sister says, it's all good, a lot...and when she does I know, it's not all good. However, in my case yep, it's all good! You see, I went down the road of planning my finances forward , meaning I know what's coming and save the money ahead of time so when it arrives...paid in full.
Many years ago, I was eighteen, I decided I'd like to be prepared financially and thought about how I could make it work easily and with a minimum of fuss.
I decided to work out what each expense cost me fortnightly over an annual period and wrote the figure and the name of the expense, [there wasn't as many back then], onto the front of DL-sized envelopes - $1116 / 26 = $42.92/fortnight. I'd round up to the nearest $5 to make it easier for me and each pay fortnight I'd put the appropriate amount in their respective envelopes. It was easy and brought confidence.
Of course, it took me a while to get a year in advance of my expenses; I would put extra in, [I'd go without things to have that extra], to get ahead by a year and I stayed there, a year or more in advance...since I was eighteen...that's thirty four years now. There were times I got caught out, no plan survives contact with the enemy, but the habit of rounding up always accounted for those times as I was able to pinch a little here and add to there as required.
I get it, that's not a very high-tech way of managing one's finances by today's standards, but 1988 wasn't a very high-tech year, and neither was I. It worked for me and I have to say, those bloody envelopes saved me a lot of trouble, stress and heartache.
Back then I'd get a fortnightly pay packet, in cash, which made things easy for my envelope-year-in-advance-expenses-savings-system but that changed eventually to electronic bank transfer pay and that meant going to the bank to get the cash; I did it too, but eventually I went to a different system which is basically what I use today. I put everything on a VISA card and pay that off, in full, totally, unequivocally and without fail in full at the end of each month. The card is linked to a frequent flier program so I earn points which I exchange for gift cards to spend at my local supermarket for weekly shopping - I earn about $1,500 - $2,000 a year of gift cards which all helps towards reducing the cost of my weekly shopping bills.
However, even with that system, I still have those envelopes...not the same ones, just the same concept. That's right, the envelope-year-in-advance-expenses-savings-system is still in use!
I use it for annual things like vehicle servicing, [I have three of them], tyres, ammunition and gun purchases, holidays, major works around my houses and that sort of thing. Basically, anything I can pay cash for and that isn't a regular payment thing. Yep, it's old-school folks, but it works...and means I have literally zero stress about those expenses when they come in.
I'm not suggesting that the envelope-year-in-advance-expenses-savings-system is for everyone.
It means holding cash and not everyone has the security to do so. Not everyone deals in cash either; it works for me as I have some cash income so it's easy to stack the notes away. Not everyone has the discipline to do it either I guess. But for me it works and works very well. I round up to the nearest $50 these days and always have an excess; it's nice to have that moment of determining what I'll do with the overrun. Usually it goes in an envelope...called overrun. Yeah, I am a basic man huh?
I know there's offset accounts and small amounts of interest to be had in banks but there's a certain confidence one feels when there's a sum of money in the safe ready to be deployed on expenses over the next year and it also brings the opportunity to have fast money in the advent of an emergency arising. Confidence and comfort is what those envelopes bring me, basic though the system is.
I stack metals on a regular basis, gold and silver, and that's another, [very good] way to hold cash but having the folding stuff forms most of my strategy. How about you? Do you have a system for managing your expenses or do you do the, I'll worry about it when I see the bill, strategy? Do you have a simple system or a complicated series of bank accounts? You don't have to get personal about your finances, but if you're keen to share something, or just comment about something you've read here, then do so below.
Design and create your ideal life, don't live it by default - Tomorrow isn't promised so be humble and kind.
The images were photographed by me
