The Conversation with Amanda de Cadenet

It’s a sad fact that many people don’t save. They don’t save for a variety of reasons. Some people simply cannot afford it, others don’t quite know what they would be saving for and feel that, today, they could better spend the money elsewhere. Others feel that today is not the right day to begin, that they’ll start next month. And many are suspicious of ‘dodgy’ financial planners, so they want to start on their own terms. All these excuses inevitably lead to their savings intentions remaining just that: Intentions. ‘Next month’ never comes!

This post is personal. It’s my story about when and how I started saving – and why financial freedom (the ‘f’ word) is important to me.

It began many years ago when I was at university. I started saving $20 per week in an automated savings account. I had a boyfriend whose parents worked in property and back then (when the world was simpler) a good deposit gave you a decent leg-up into the property market. You could buy and sell property and make money too.

That was before 2008. Since then, the world changed and buying a property to create your lifelong wealth has got a whole lot more complicated. The stock market seems even scarier and today, the odds of gaining financial freedom seem firmly stacked against us! Luckily for me, I started young. A few sensible habits then have lasted me a lifetime, despite what else is going on in the world.

When I finished my study, my $20 per week had turned into $5,000, which was enough for me to go halves with a friend on my first investment – a retail shop in a small rural town in Australia. Five years later I sold the shop and my $5,000 had turned into $50,000. Coupled with my continued savings, I had enough to buy my first apartment. Moving cities and countries, managing the apartment from afar was tricky, so I sold it – for double what I bought it for. It wasn’t all profit. I learned an enormous amount about fees and charges and stamp duty. But I now have a substantial pot, which I class as my retirement fund – not to be touched under any circumstances! I tell you this not to gloat, but to illustrate that saving just a small amount (I hardly missed that $20 a week, even as a student) can stand you in good stead. Today, I am still working, earning and SAVING, living on my terms of what I define as financially free.

So what is ‘financial freedom’? What does this mean to you?

A few searches on the Internet will show you that there are many definitions of financial freedom. In fact, most people define financial freedom as being a multi-millionaire or having a passive stream of income so you never need to work ever again. These people assume that life costs a lot of money and therefore financial freedom is about earning a lot of money too. Well I don’t exactly ‘buy’ that theory. Wealth has little to do with how much you earn, it has a lot to do with how much you save!

Obviously financial freedom is not the same for everyone. I’ve spoken to a number of women who have all had different definitions. Some wanted a property to which they could retire and a nice little income to live off while they enjoyed not working. Others were completely happy to stay in their job, but wanted some freedom in terms of working hours and place of work.

The day I truly felt financially free was when I realized that if anything happened to my husband, I would be financially okay. But it’s more than just that, I guess if I had to narrow it down, financial freedom to me is about working at a job I enjoy, it’s about having time to spend with my family and it’s about feeling safe and secure. Most of all, it’s about enjoying and celebrating what I choose to spend my money on, rather than feeling guilty about what I buy.

So the question is in what we want from our experience of life. And if it’s about feelings, who is in control of our own?

Can we say NO to the ‘90% off’ sale and the lure of the shopping mall? Or do we chase our highs in retail therapy; you know that feeling of ‘high’ we feel when we buy something new? To live financially free is to be aware, to be mindful and present in our daily lives. I am not talking about penny pinching; I am talking about living within our means and not in debt. It can be achieved but it does take work.

Today there is a new term ‘financial infidelity’ it’s the secretive act hiding money matters from your partner or ‘yourself.’ And the reality is this is so easy to do, simply ignore the credit card bill at the end of each month and you’ll quickly find yourself in a very volatile relationship with debt. (These people in debt are extremely scared of the ‘f’ word.)

There are simple ways to live financially free, for starters, cut up your credit card and use cash. Have a ‘try on’ nights to organize your wardrobe, you may even find that ‘high’ you’re after at home. Write a shopping list and only buy what’s on that list at the supermarket. Personally planning, allows me to purchase smarter for the things I truly want to buy (and feel good about buying them.)

This next financial decade will be fuelled by women, which many experts now refer to it as the “She-conomy.” While this news is flattering, the reality we have to be smart, and money wise, at every turn someone will be targeting us for a piece of our money pie. Many women, who have admitted that they are afraid of the ‘f’ word, have asked me how to prepare to be financially free. Below is a pretty comprehensive checklist. You’ll soon realize it isn’t that scary after all!

Your Financial Freedom Checklist:

PAY ATTENTION. Today there is a new term that is being talked about; ‘financial infidelity’. The secretive act hiding money matters from your partner or yourself.

BE ACTIVE. Don’t leave all the decisions to the partner who earns the most money. Play an active role.

INCOME & EXPENSES LEDGER. Complete a ledger and keep a record on your assets and liabilities.
JOINT NAMES. If you’re in a relationship, make sure all savings plans, wills and insurance policies are in joint names.

SINGLE BANK ACCOUNTS. It is important you have your own bank account. If you’re running the household agree regular contributions to a joint account even if it is a wage from your partner for housekeeping.

PROTECT YOUR FAMILY. An untimely illness, accident or death can devastate your finances. If you depend on someone else’s income make sure you carry adequate life, health and disability insurance. Even a brief period without income could deplete your savings.

CHECK YOUR EMPLOYMENT CONTRACT. Company insurance policies and health benefits are not always as comprehensive as they first appear, and many companies have been scaling back the benefits since the recession. Make sure you understand exactly what coverage you get and, if it’s not adequate, seek advice and top it up elsewhere.

WRITE IT DOWN IN A WILL. Make sure you have a legal will in place should the worst happen it will make things a whole lot easier for your beneficiaries.

RETIREMENT.Today our pensions are unlikely to be enough to last through our retirement years. We’re all living longer, so we have to make our money in our working lives. Time is our biggest ally when it comes to retirement savings, the sooner we start and the more we’ll have for that rainy day. ACT NOW!

Janelle Malone has a lot to shout about on being financially savvy in real girl terms. After 14 years in retail development, she knows all the tricks of the trade. Now she's sharing her take on living smart and financially free, talking to women all over the world about money and style on her website and blog, womenmoneyandstyle.com or on Twitter at @WomenMoneyStyle.