We all know the saying "money makes the world go around", but have you ever stopped to ask why?
In this episode, our hosts pose hard-hitting questions about Western society's relationship with money. Why does it take such high priority in our thoughts? Why do we sacrifice so much time to make money? Do we spend money to fill a deeper emptiness inside ourselves?
Lianne & Corey wrap up season 1 by comparing good debt vs bad debt and sharing some thoughts about when it's okay to enter debt (like to buy a house) and when it's not (to buy clothes just because they are on sale or upgrading the latest tech gadgets). They share their favorite tips for saving money while traveling, and interview Kel Galavan, AKA Mrs. Smart Money, a money-saving expert, and financial coach.
Kel shares her inspiring story of reducing her annual household expenditure by €27,500 after leaving a 16-year career to spend a year, the No Spend Year, home with her kids. For those who have experienced failed budgeting or saving plans, Kel advises the key is to know your values and motivations and to be mindful of what and how much you actually need.
By the end of the episode, you'll be equipped with new tools to make your money stretch further and to mindfully work towards financial freedom.
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Get To The Point
0:25 What to Expect Summary of episode 14
1:18 Quick Quote By George Lorimer
1:44 Focus On… Money. Why do we give it such high priority in our thoughts?
6:33 Let’s Unpack That Tips to save money while you travel
10:39 Interview Introduction Background on Kel Galavan AKA Mrs. Smart Money
11:12 Interview Kel Galavan's inspiring story + how to budget mindfully
41:16 Interview Digestion Key takeaways from interview
43:12 Under the Magnifying Glass Different outlooks on wealth in the east and west. Which one is better for you?
45:33 Take it Further Recommended resources
Understand why you send yourself to work every day, and put so much time and effort into your job, and what result you hope to achieve. It's important to understand your own motivations, and not just do what society tells you.
Often, we spend to overcompensate for an unresolved inner struggle. If we don't feel valued or fulfilled within ourselves, we may go on a spending spree to fill that hole, then often feel guilty and miserable shortly after due to the extra debt now on our credit cards. Filling the hole inside permanently is a far better solution.
Understand the difference between good debt and bad debt. Good debt, like a mortgage on a house, pushes you ahead towards your life goals and the asset goes up in value, while bad debt digs you deeper into debt. Examples of bad debt include using your credit card for clothing or tech gadgets or even a holiday (without being able to pay it back before the due date).
Think about the things you really need. Ladies, do you need to wear designer brand makeup every day? And guys, do you need every type of tech gadget and video game console? If you do need it, do you need it right now?
Watch out for the mental trap of buying sale items. If you by something on sale for $400 instead of $500, have you actually saved $100, or have you just spent $400 you didn't need to?
Think about whether purchases will truly make you happy, or will you feel more weighed down by the extra debt?
Travel Budgeting Tips
- Take advantage of temporary work visas and work as you travel. Look for seasonal or contractual work to balance earning an income and sightseeing.
- Save money on flights and accommodation by being flexible on dates and locations. Use Skyscanner and set the destination to 'anywhere' to find the cheapest places to visit. Select 'whole month' as the date range to see the cheapest dates. Check the price of accommodation is cheaper too, there's no point saving money on flights if you spend what you've saved on accommodation.
- Travel off-season to avoid crowds and save money on accommodation and tours.
- Stay in an apartment and cook at home instead of eating out every night.
Leisure & Home Budgeting Tips
- Eat more plant-based meals to save on expensive items like meat and dairy.
- Drink pre-game to save on expensive cocktails at upmarket venues and bars.
- Ladies, stretch the life of your cosmetics and beauty products by having makeup-free days.
Banks to Help Better Manage Your Money
- Monzo travel card (UK citizens) provides an online bank account with high visibility of what you are spending on with no exchange rate fees or requirement for prior notice of travel.
- Charles Schwab (US citizens) refund ATM fees worldwide.
- Wise (formerly TransferWise) offers a free bank account with support for multiple currencies.
Key Interview Takeaways
- Reducing spending requires cutting out a combination of big and little things, from having 1 car instead of 2, to eating out less and reducing food waste.
- It's easy to fall into spending habits you don't need or that aren't even good for you.
- Look for free activities like hikes, playgrounds, camping, libraries, free community events and festivals, beaches, and picnics.
- Unsubscribe from newsletters prompting you to buy sale items or new seasons of clothing.
- Budgeting isn't as time-consuming as you may expect, especially if you have well-defined spending rules in place already.
- Avoid fast fashion. Buy higher quality items that last longer.
- If you're having trouble sticking to your budget, understand your core values. If budgeting or reducing spending allows you to meet your core values, you'll stick to it.
- You don't need fancy budgeting software you can even use Google Docs (free).
- For more tips and inspiration, visit mrssmartmoney.com and keep an eye out for Kel's new book, The No Spend Year, which will be available through Orpen Press.
Connect With Kel Galavan
Mrs Smart Money
Kel stepped back from her 16-year career as she felt that her children's childhood was passing her by. As her household dropped back to one income, she embarked on a mission to make that remaining income work as hard as it could. This resulted in the "No Spend Year" in 2019. During that year she succeeded in reducing her family's outgoings by €27,500.
Her new book, "The No Spend Year", will be released in 2020.