Remember that episode from Friends where Joey, Phoebe and Rachel can’t afford Ross’ birthday present? Then Monica adds insult to injury by wanting to go for a fancy dinner to celebrate her promotion and Phoebe, Rachel and Joey have a hard time making the others understand their financial situation. While the sitcom smashed the interactions it also highlighted a very real financial struggle.
It showed that it’s easy to feel overwhelmed and like you’re behind the proverbial financial eight-ball; especially with age.
You wake up in your 40s or 50s, look around and it seems like everyone has their act together. From your peers owning property and driving nice cars to youngsters, barely adults in your eyes, living lavish lifestyles and spending cash freely.
You wonder:
"How are they doing so much better than me?"
They’re likely not! As I covered in a previous article, the outward-facing financial facade is one thing, but the reality is probably another.
Just like with anything in life though, you have to forget about the rest and focus on your own race. Or better yet, surround yourself with people running the same race as you at just a little faster pace. Maybe their pace will encourage you to run faster.
The question still begs:
How do you run that race when you’re fashionably late to the starting line?
The starting gun sounds at different times
The first thing to realise is that you’re never too late to take control of your finances. The only thing that separates your financial freedom from that of the younger generation? Time.
By embracing the concept of budgeting on borrowed time, you accept that you’ll be playing catch up and that the biggest change will have to be your mindset.
Why? Because you simply cannot afford to wait any longer.
Small Steps, Big Impact
Just like when you’re in a race, one step at a time will get you over the finish line. You don’t need a complete financial overhaul overnight to get things done.
Small changes, implemented with urgency, will make a significant difference.
Track Your Expenses, Yesterday: First things first you need to stop wondering where your money goes and start knowing where it goes. Download an app or grab a pen and notebook. By uncovering money leaks (think forgotten subscriptions) you’ll free up so much extra cash by plugging the holes in your financial boat.
Trim the Fat, Ruthlessly: When you know where you’re haemorrhaging money, you can do something about it. Cancel subscriptions, cut back on take-out, limit spending on make-up, shoes, sports equipment - basically anything you just “want”. Only spend money on needs.
Save Before you Spend: Save what you need to hit your goals as soon as your income drops. Your budget will then empower you to waste less and find extra money to add to your savings at the end of the month.
Delete Bad Debt: Line up your bad debts, from smallest to largest and pay them off aggressively. If you don’t prioritise ridding yourself of credit card debt with a 20% interest, no amount of saving or investing will make you financially free.
Invest Now: Compound interest has to be your new best friend, but it only works with time. Even starting with minimal investment amounts, compound interest will work wonders over 10, 15, 20 years. Take advantage of this and invest a set percentage of your income every month. When you’ve got your necessary savings, increase this percentage over time.
Consistency is Key: Remember that habits make heroes and once you start taking small steps, you’ll gain momentum and see real progress.
Sounds simple?
It’s because it kind of is. It’s just hard to get started.
Want to hear the good news?
You’re not alone.
A 2024 savings statistic carried out in the UK showed that 1 in 6 adults have no savings at all and that 46% have less than £1,000 in their accounts. (More on this another time!) And, average savings by age group? See below.
All this is to say. Start now, but you might not be as late to the race as you think you are.
What do I do?
It took a while and it wasn’t easy but I’ve learned to not compare myself to others. Remove finance from the equation and consider other things - you’ll see what I mean.
For example.
I have friends with better physiques than me. That’s easy to understand because they spend more time in the gym than I do. (Any time spent in a gym would be more than me!)
People have come further in their careers than me. Well, they’ve stayed with the same company for years and/or in the same location.
Others are on the property ladder while I’m not! It’s OK - some I know had help to secure a deposit while others are just incredible savers! I spent my money travelling which is a win for me.
Once you realise that everyone is different, comparing yourself to others becomes pointless.
What do I recommend?
This is simply a newsletter about The Financial Struggles we face and not The Dave Ramsey Show. But, focus on the small things:
Cut costs: If you’re worried about retiring, you can’t afford 3 streaming platforms and YouTube Premium.
Save towards specific goals: You won’t succeed by just saving. Have a target like $500 for a new phone, or $4,000 in an emergency fund.
Invest now: Understand ETFs, learn about online brokerages and start investing a percentage of your income.
I know personal finance can be scary, but so is not being able to retire.
You can do it!
Like it, love it, hate it? Drop me a comment or a question!