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Show notes The idea of ‘paying yourself first’ is an old and common concept of responsible financial management. It’s something I’ve used in my own finances for years. Today we’re going back to basics talking about this rule.

This episode discusses topics like: What ‘paying yourself first’ means and what to look out for when you try implementing this rule in your budgeting system; * How to start paying yourself first if you’ve never done it before; and * Whether paying yourself first really works. Credits:** Producer: Gonzalo Araya * Editor: Gonzalo Araya Transcript

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Priya's Review

* Hey, friends! And welcome back to Girl on FIRE, the financial independence podcast for independent women.

My name is Priya, I’m a chartered accountant, an analyst and the creator of Paper Money Co.
I’m also a fierce financial feminist and the host of this podcast. I believe that a woman who is in control of her money is in control of her life.
This week is going to be a pretty quick episode but what I wanted to do today is talk about the idea of paying yourself first.
This is something you’ve probably heard of before and I think I might have mentioned it on this show a few times.
And it’s not a particularly difficult idea to understand or to get started implementing in your budget.
But I didn’t want to assume that because it’s common and simple, that you automatically know what it is.
And paying yourself first is a good rule. So, I wanted to make sure that we’re still covering basics even though we talk about a bunch of things on this show.
But I’ve got a few quick PSAs — Priya Service Announcements — before we get started.
I have another weekly update for my Campers. The notes and transcript for this episode, including bonus content, are already live in the members area and ready for you to download.
I’m also recording an amazing reading vlog for you! I’ve already finished our February title, so I’m recording my review for that as well, and I can’t wait to share it with you.
Some of you Campers have already started submitting titles for consideration in our 2023 book club title vote which is happening in September, and it makes me so happy.
If you want to submit a title, just open up the sidebar when you’re in the members area and it’s right there under Bonfire Bookclub.
Camp FIRE is the premier membership community helping you take control of your money and take control of your life with a ton of masterclasses, bonus content, spreadsheets, accountability and fun for just $4.99 a month.
We even have a bookclub! We read a book a month together. Campers get to suggest and vote on titles, and participate in a bookish bingo reading challenge with me.
And because I love helping you save money, you can also get two full months of Camp FIRE access for free if you pay yearly. Head on over to papermoneyco.com/campfire to start your 10-day free trial.
If you’re not a Camper, then don’t worry, I haven’t forgotten about you. I’ve put together a super helpful financial success checklist for you.
It’s a step by step checklist that’ll guide you in taking control of your finances and creating your own financial success.
It’s totally free and it’s just for my Girl on FIRE listeners. You can get your copy at papermoneyco.com/checklist.
As always, Girl on FIRE is about learning so grab your favourite notebook or journal and get ready to take some notes or draw some diagrams, write down your questions for me, you do you.
If you listen to this show while doing other stuff or you can’t find a pen then you can always find the transcript on my website at papermoneyco.com/gof49.
Or, you can become a Camper today and you’ll find the deluxe edition of the transcript waiting for you in the Camp FIRE members area.
It’s an interactive document which includes my own notes, steps to help you take action on this episode and a space to journal your notes and thoughts.
If you’re a regular listener and want a taste of what these deluxe transcripts look like, you can grab the notes for the first episode of season 2 for free at papermoneyco.com/transcript.
Okay, now that we’ve gotten that housekeeping out of the way, let’s dive in!

What is the ‘paying yourself first’ rule?* > So, what is the paying yourself rule? It’s the idea of contributing to your savings and retirement and investments before you pay anyone else — your creditors and retailers and such. * A lot of times, people get paid, they spend money on whatever they spend money on and then they save what’s left over. * Paying yourself first is just turning that around. You get paid, then you save and invest first. And then you spend what’s left over. * That’s all it is — you’re just prioritising your saving and investing by checking those things off your list first, before you start spending money elsewhere. * You’ll still need to pay your bills and meet your other financial obligations, but you’re putting your savings and investing first. * And if you realise you don’t have enough to go around, you start cutting things out and reducing your costs instead of saving less money. * So, it’s a really simple concept and it’s really easy to start implementing in your budget. * The main idea would be that the moment you get paid, you transfer some money into your savings and investments. * Or — even better — you set up a recurring payment to automatically trigger when you get paid. It’s kind of an out of sight, out of mind deal. * Your savings and investing are done with minimal effort, and then you just have to allocate the rest of your money to each of your expenses. * If you have trouble with saving money, then it’s a good trick to try. * Or if you intend to save money but then end up spending it throughout the month, then I highly recommend you give it a try.

Does the ‘pay yourself first’ rule really work?* So, now that we know what the pay yourself first rule is — does it work? * And the short answer is, yes. I think it can work really well. Not just because you’re putting money aside for your future and your goals. * But also because you’re in that mindset of prioritising your future and your goals. * And then you have to make do for the rest of the time until your next paycheck, which also forces you to be more intentional about how you spend your money. * > However, there is one thing you need to keep in mind here. Paying yourself doesn’t mean that you let your other financial obligations slide. * And what I mean by that is that you have to make sure you’re still able to pay your bills on time. * And you have to make sure you have enough money left over to cover all your variable expenses, especially your essentials like food and transport and medicine.

How to get started with paying yourself first So, if you want to get started with paying yourself first, this is what I’d recommend. * For your current budget or your next budget. Just leave it as it is. Just finish it out as you normally would. * I want you to really get a sense of how much you’re spending on your bills and expenses, especially the essential ones. * Because you need to make sure that you’re still setting aside enough money to cover those expenses. * So, this is what I want you to do the next time you set your budget. I want you to look at your previous budgets. * Not your budgets over Christmas or the holidays, just in normal everyday life times. * How much are you saving on average in each budget? It doesn’t matter if it’s $1,000 or $10. * I just want you to get a sense of how much you’re generally able to do during a normal month. * Let’s say, for example, in January you saved $250. (If you’re a Camper, you get to use my incredible Money Mastery budgeting spreadsheet by the way).* * It really does makes this entire process so much easier. If you’re budgeting on paper, you might need to do some calculating. * But let’s say you saved $250 last month, and that was normal. That’s how much you save every month on average. * Then when you budget next month, budget for saving $250. But instead of waiting until the end of the period to save that money, you’re going to transfer it from your income to your savings account as soon as you get paid. * Now, if you have extra money left over at the end of the month, lucky you — you can either save it and boost your goals even further. * Or you can spoil yourself and spend it. That’s usually what I do. I treat it as a bonus for me to do whatever I want with it. * And if there’s nothing that I feel like buying or if I want to wait for a sale, then I put it in my fun spending sinking fund.

Next weeks’ episode* And that’s all I have for you Girls on FIRE today! Like I said, this is a simple topic and a quick episode. * My challenge for you this week is to have a look at your past budgets and see how much you’re saving on average every month. * > It’s up to you to decide whether paying yourself first is suitable for your finances and if you want to try it out. But just start by seeing how much you’re saving on average. * Remember to head to papermoneyco.com/checklist to grab your copy of my free Financial Success Checklist exclusively for Girl on FIRE listeners. * For my Campers, the deluxe version of the transcript including action items and additional notes is up and waiting for you in the members’ area. * On next weeks’ episode, we’re talking about the toxic positivity of financial affirmations. * It’s going to be a really interesting episode, so you’re definitely not going to want to miss it.

The post What Is The ‘Paying Yourself First’ Rule & Does It Work? (Episode #49) appeared first on Paper Money Co.

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Show notes Bought it on AfterPay? You’re at risk of totally ruining your finances! AfterPay and other buy now, pay later services may seem like the answer to your money problems. But are they really that great, or are they financially toxic and predatory schemes leading you down the road to financial ruin?

This episode discusses topics like: The real reason why your favourite retailers are offering AfterPay and other buy now, pay later services; * Why shopping with AfterPay is like a kid throwing a tantrum; and * Why AfterPay and other buy now, pay later services are a gateway drug to total financial ruin. Links from this episode: Ready to finally take control of your money and build the life of your dreams? Join Camp FIRE! Camp FIRE is the premier membership community helping you get your money under control and reach your goals for a happy and fulfilling life. With tons of masterclasses, bonus content, spreadsheets, accountability and fun, get ready to say YES to a life you love. Become a Camper now for just $4.99 a month (or get 2 months of membership for free when you pay yearly) * What is AfterPay? * ASIC Study — Buy Now, Pay Later: An Industry Update Credits:* Producer: Gonzalo Araya * Editor: Gonzalo Araya Transcript

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Priya's Review

Hello, friends! And welcome back to Girl on FIRE, the financial independence podcast for independent women.

My name is Priya, I’m a chartered accountant, an analyst and the creator of Paper Money Co.

I’m also a fierce financial feminist and the host of this podcast. I believe that a woman who is in control of her money is in control of her life.

On this week’s episode we’re talking about AfterPay — or any other buy now, pay later service. But I’m just going to call them all AfterPay.

AfterPay and it’s sisters have splashed onto the scene in recent years as a good alternative to credit cards because it’s available to everyone and you don’t need credit checks or credit history to be able to use it.

And now, everyone and their mum is offering some kind of buy now, pay later service. Even the big banks.

And that’s because it’s a lucrative business and all these companies want to slice of the action.

Now you can use AfterPay online and in store all over the place.

What we’re talking about today is whether AfterPay really is the answer to your problems, or if it’s financially toxic.

But I’ve got a few quick PSAs — Priya Service Announcements — before we get started.

I’m going to start giving a little Camp FIRE update at the beginning of our episodes. It’s just a nice way for me to keep my Campers updated without having to send out a bunch of emails.

So, the notes and transcript for this episode, including bonus content, are already live in the members area and ready for you to download.

My monthly budget with me masterclass for February went live a few days ago

We’re also reading A Lot Like Adios in our book club this month if you want to read along.

It’s never too late to get started. I’m recording a reading vlog for you as well, so that will go up at the end of the month too.

And A Lot Like Adios should tick off a couple of the prompts on our 2022 reading challenge as well.

Camp FIRE is the premier membership community helping you take control of your money and take control of your life with a ton of masterclasses, bonus content, spreadsheets, accountability and fun for just $4.99 a month.

We even have a bookclub! We read a book a month together. Campers get to suggest and vote on titles, and participate in a bookish bingo reading challenge with me.

And because I love helping you save money, you can also get two full months of Camp FIRE access for free if you pay yearly. Head on over to papermoneyco.com/campfire to start your 10-day free trial.

If you’re not a Camper, then don’t worry, I haven’t forgotten about you. I’ve put together a super helpful financial success checklist for you.

It’s a step by step checklist that’ll guide you in taking control of your finances and creating your own financial success.

It’s totally free and it’s just for my Girl on FIRE listeners. You can get your copy at papermoneyco.com/checklist.

As always, Girl on FIRE is about learning so grab your favourite notebook or journal and get ready to take some notes or draw some diagrams, write down your questions for me, you do you.

If you listen to this show while doing other stuff or you can’t find a pen then you can always find the transcript on my website at papermoneyco.com/gof48.

Or, you can become a Camper today and you’ll find the deluxe edition of the transcript waiting for you in the Camp FIRE members area.

It’s an interactive document which includes my own notes, steps to help you take action on this episode and a space to journal your notes and thoughts.

If you’re a regular listener and want a taste of what these deluxe transcripts look like, you can grab the notes for the first episode of season 2 for free at papermoneyco.com/transcript.

Okay, now that we’ve gotten that housekeeping out of the way, let’s dive in!

What is AfterPay?So, first of all — what is AfterPay? If you’ve been living under a rock for the past few years and you don’t know, then this one is for you.

AfterPay and similar services work on a buy now, pay later model. It allows you to buy something now but pay for it in instalments.

There are a bunch of different buy now, pay later programs and they all work a little bit differently. Some require 4 instalments over 4 weeks, some give you 6 instalments.

They’re all a little bit different. But we’re going to stick with the example of AfterPay for this episode.

How does AfterPay work?To use AfterPay you need to be over 18 and have a valid credit or debit card. You have to show some kind of proof of identity.

When you buy something on AfterPay you pay for your stuff in 4 instalments over 6 weeks.

You make the first instalment at the time of purchase and then every 2 weeks, you make another instalment until it’s paid off.

Now, it’s different from things like lay-by or lay-away because you get your stuff now.

You don’t have to wait until you make all the instalment payments for you to take ownership of whatever you purchased.

And because of that, AfterPay is pretty similar to a using a credit card, with one major difference.

Fees & interest chargesAfterPay doesn’t charge you interest. Your instalments are interest free and that’s what makes it so attractive to a lot of people.

You get to buy something and have it right away and then pay for it in instalments and it’s all interest free.

But there is a catch. If you pay late, then you’re charged a late fee. I’ve said this before but it bears repeating.

No one is lending you money for free. This isn’t the 100 Acre Woods. The only time any company will lend you money is if they can make money off it.

It’s always a good idea to follow the money and see where it goes. Ask yourself how these companies make money and how they stay in business.

Now, AfterPay makes most of it’s revenue from the merchants that offer AfterPay as a payment solution to their customers.

They charge them a transaction fee and a 3-7% commission. And vendors are happy to pay that because they’re hoping that giving people the ability to buy with AfterPay will boost their sales.

Believe me — they wouldn’t do it if they couldn’t somehow make extra money from it.

Just keep playing that Hamilton song in your head — follow the money and see where it goes.

ASIC study of buy now, pay later industrySo, in the next part of this episode, I want to share some research and statistics with you. You know I like referencing studies and things like that.

Because that will make it a lot clearer to see why I think AfterPay is financially toxic.

ASIC (the Australian Securities & Investments Commission) which regulates the financial industry, published a study of the buy now, pay later industry in November 2020.

I’ll leave it linked in the show notes if you want to check it out. Super interesting if you’re a nerd like me.

Missed payments But according to their research, 21% of buy now, pay later users missed a payment in the previous 12 months.

The study also showed that in the 2018-2019 financial year, revenue from missed payments for all buy now, pay later services totalled over $43m.

And that was a growth of 38% compared to the previous financial year.

And if you remember what I said before about how AfterPay and a lot of these services work — it’s all interest-free but when you miss a payment, you pay late fees.

Now, the study did show that missed payment fees did decline in the first half of 2020, but you need to consider the context here.

We were in lockdown. Thanks to COVID, everything was shut, some retailers weren’t even online at that point.

Some people were out of work or had their wages cut and so they weren’t spending as much on non-essentials.

So, you’d expect to see that decline given the way the world was. But that’s why the pre-COVID numbers are so telling. That’s what was normal before the world fell apart.

Now, the research showed that 47% of the people who missed a payment in the last 12 months were aged 18-29.

And that makes sense because AfterPay is an easier way for younger people to get access to credit.

There are no credit checks and you don’t need credit history or anything like that.

But that doesn’t mean that people aged 30 and over are immune to missing payments. In fact more than half of the people who missed payments in that study were 30 and over.

Buy now, pay later and credit cardsHere’s another interesting one — according to the study, people who use buy now, pay later services incur interest charges on their credit cards more than people who don’t use those services.

They also use more of their credit limit — their credit utilisation rate is higher — than people who don’t use services like AfterPay.

And while AfterPay and it’s friends may not impact your credit score, interest charges on your credit card sure as hell will.

Using AfterPay can create financial stressHere’s something else that was incredibly interesting from that study but also kind of disturbing.

In the last 12 months, in order to make their buy now, pay later payments on time:

20% of consumers said they cut back on or went without essentials like food. That’s insane! — 20% of people are skipping meals to make their AfterPay payments.
Not only that but 15% of consumers said they had taken out an additional loan.
1 in 5 which is 20% also said they were missing other bills like their mortgage and credit card payment or household bills in order to make their AfterPay payments.

And again, about half of those people are aged 18-29 but half of them are over 30. So, this isn’t just a financially toxic concept for young people.

It’s financially toxic for everyone. Can you imagine — you’re saving for a house deposit and contributing to your retirement every month.

And then you start using AfterPay because you want to buy things in instalments since all your savings are going to your house deposit.

And then you lose control and you need to start skipping meals to make your AfterPay payments. Meals, not luxuries, you’re sacrificing essentials to feed your AfterPay habit.

If that’s not financially toxic then, honestly, I don’t know what is.

Creating a financial trapAnd the thing that makes it worse is that these buy now, pay later services pose themselves as some kind of saviour for the unwashed masses.

Why should nice things only be reserved for rich people, they say. You worked all week and on the weekend it’s time to have some fun, they say. Why wait when you can have it now, they say.

And people who don’t know any better are getting caught in a financial trap and it’s destroying not only their finances but their future too.

Not only that but particularly in the case of 18-29 year olds, they’re not learning how to properly manage money. And unless they consciously course correct, they potentially never will.

And for those of us over 30, you may have learned good habits and good money management skills all throughout your 20s.

But you’re at risk of undoing all of that, of undoing all your hard work. Because you wanted it now instead of waiting until you could afford it with cash.

Why is AfterPay financially toxic?Okay, so now that we know what AfterPay it is and how these services generally work, let’s get into the main issue of this episode.

What makes AfterPay and it’s buddies so financially toxic? Am I just standing here on a soapbox or is there some substance to the message I’m trying to share?

Keep in mind that a lot of the things I’m about to go through don’t exist in a vacuum.

They all play off each other and intertwine, and create a vicious cycle of financial irresponsibility and financial ruin.

Risk of defaulting on your paymentsNow, first and foremost — there is a big risk of missing payments here. And that means you start getting charged those late fees.

And as we saw in the ASIC study we talked about earlier, for a startling percentage of people, that leads to overall financial stress.

People are skipping bills and essential expenses to make their AfterPay payments. They’re taking on loans.

This has the risk of really destroying your finances in a relatively short amount of time. And it can take a while to really recover from that.

Now, there’s always the risk that you could be financially ruined by something out of your control.

Maybe the roof of your home caves in and you have to go into debt to fix it. That is what it is. It sucks, but it’s out of your control.

Going into debt and financial stress because of AfterPay payments is, entirely within your control.

Because almost all AfterPay payments will be made on consumer good that aren’t essential things. It’s a new pair of shoes, an expensive manicure.

Not only that, but having multiple instalments to manage just statistically increases the likelihood that you’ll default on a payment.

It’s easier to make 1 payment than it is to make 4 payments, or 6 payments. It’s easier to manage your finances and stay organised when you don’t have to keep track of multiple one off payments for each purchase you make.

It also creates the illusion that you have more money than you do, because you bought something, but you still have so much money in your bank account, and so you do it again.

So, that’s the first big downside of AfterPay — there’s a high risk that you could default on your payments.

And that can be the first domino that leads to incredible financial stress for you.

Teaches an entitled mentalityAnother downside to using a service like AfterPay is that is teaches an entitled mentality.

And what I mean by that is that these services are always touted as a convenient way to pay for things when you don’t have the cash available and you don’t want to wait until you do.

It teaches you that you can have anything you want right now without having to wait for it. The messaging in their advertising is literally “why wait, buy it now.”

And the reason that’s so dangerous is because it creates entitlement. And entitlement breeds more entitlement.

Think of the kid that’s causing a fuss with their parents at the dinner table because they want dessert.

Mum and dad say you can have your dessert when you finish dinner. And the child keeps fighting and fussing and tantrum-ing saying no, no I want dessert now because I want it!

That’s the kind of mentality AfterPay is creating because you don’t need to wait until you’ve paid off the item and made all your instalments before you receive it.

You just have to pay a small amount and you can have it right away whether you can afford it or not.

You don’t have to wait for months to save for it until you an actually afford it. You don’t need to prove that you’re eligible for a credit card.

And the thing about entitlement is that it breeds more entitlement, in all areas of your life and your relationships with other people.

And that leads me to my next point.

Programs you to stop savingThis kind of entitlement then teaches you that you don’t need to put in the effort and work to save money for months before you can buy something you want.

It teaches you that you don’t need to make sacrifices or try to earn more money. It programs you to think that you don’t need to save.

It’s especially dangerous for young people who are just learning how to manage their money. Because they may never learn how to save money.

And that’s honestly a disaster. You can’t put emergencies on AfterPay. You can’t buy a car or put up a deposit for a house by putting it on AfterPay.

You can’t put a university education on AfterPay. You can’t put medical expenses on AfterPay.

Not only that, but when you save up for something, it feels good. Think about the first time you saved up for something you really wanted.

Little by little, dollar by dollar. Remember the effort it took, the sacrifices you had to make.

And remember how good it felt when you finally bought that thing. You felt a sense of pride and accomplishment.

And you deserve to, because making sacrifices to save like that, especially for a long term goal isn’t easy. And that thing you bought is like a symbol of all that hard work and sacrifice.

You appreciate it a lot more than something that came easy and without any discipline.

I remember the first kind of expensive thing I bought for myself. I bought myself a Kindle when I was about 16.

I don’t remember how much it was. Honestly, today I could buy it without having to save for very long, maybe just a month or two.

But for 16 year old Priya, that was a lot of money. And I was still also saving money to run away to Paris.

So, every dollar I saved towards my Kindle was precious — it was money I wasn’t putting in my Paris fund.

I made a sacrifice, and it had to be worth it. A few dollars here and a few dollars there until I could afford it.

I’ve long since moved on from that Kindle. I bought another Kindle a few years ago, and earlier this year I switched entirely to Apple Books instead.

But that first little Kindle of mine is still special to me. Because I remember how hard I worked to buy it. And I remember how proud I was of myself for accomplishing that goal.

When you’re buying with AfterPay, you just don’t get that because you get your item straight away before it’s been fully paid for.

Now, the big problem with this is that when you don’t have to feel that sense of pride at having made those sacrifices and put in that effort, you don’t value what you bought or the money you spent on it.

If it takes no discipline to acquire it, then it has less value. Not just what you bought, but your money too.

You didn’t have to scrimp and save it. Using it to buy something came easy, too easy.

And that makes spending more and more even easier, because you don’t know how hard it is to wait and save up for what you want.

You lose sight of how limited and precious your dollars are.

At risk of overspending & spending money you don’t haveNow, when you don’t value the hard work of saving money, it becomes too easy to spend recklessly. And you end up overspending or spending money you don’t have.

And AfterPay actually makes that worse because it makes things look cheaper then they actually are.

Four easy payments of $30 sounds cheaper and more affordable than $120 — $30 sounds affordable and attainable. But $120 makes you think twice.

There’s less internal resistance when you think you only have to pay $30 as opposed to $120. And that leads you to spending more.

Remember what I said before, the system is designed to make you overspend — vendors and merchants pay AfterPay a commission.

Vendors pay AfterPay a commission because they’re banking on customers spending more when they spend with AfterPay.

And companies aren’t stupid, they’re not going to do that if they can’t realistically expect their sales to increase because people can pay in interest-free instalments with AfterPay.

Largely unregulated industryAnother reason why AfterPay and it’s buddies are toxic is because the buy now, pay later industry has been largely unregulated.

These services are aiming to capture the portion of the market that doesn’t use or can’t use credit cards.

And they try to operate in a similar way — make your payment on time and you won’t pay any fees or interest.

But when you’re late, you pay through the nose. But, at least in Australia, the buy now, pay later industry isn’t regulated the way credit cards are.

Now, regulators are catching onto this predatory system and starting to put regulations in, not just in Australia but internationally as well.

But that stuff moves slowly and it’s not a replacement for learning how to manage your money effectively.

Your money is your responsibility, no one else’s. And as I’ve said before on this show, no one will fight for your best interests the way you can.

Also, the buy now, pay later industry has published it’s own Code of Practice.

But take that with a very large grain of pink Himalayan salt — their not going to code of practice their way out of millions of dollars of revenue.

On what planet do self-regulated industries actually do what’s best for consumers?

It’s still a loanNow, the last reason I wanted to call out AfterPay for being financially toxic is that it’s still a loan.

You may not need a credit check or good credit history, but your’e still borrowing money from someone.

And a lot of people like AfterPay because they think it doesn’t affect their credit score.

And it might not directly impact your credit score but the statistics of the ASIC study showed that people who use AfterPay have a higher credit utilisation rate and pay more interest on their credit cards.

And that does impact your credit score.

And here’s another thing — your credit score might be holding you accountable.

And when your spending habits don’t impact your credit score, it encourages risky behaviour because you feel like you’re not being monitored.

And that’s not a personal dig — it’s a psychological thing. It’s called the Hawthorne effect.

Without realising it or without meaning to, we change our behaviour when we know we’re being monitored. That’s why having a community like Camp FIRE to hold you accountable works so well.

But when you know that no one is watching, you don’t have that kind of accountability and that can lead to you making more risky choices with your money.

Is using AfterPay ever okay?Now, having said all of that comes the big question. Is using AfterPay ever okay?

And this is probably going to be controversial — but in my opinion, no it isn’t.

If you’re super disciplined and you don’t spend above your means and you make all your payments on time so you never pay the late fees, then that’s great.

And that’s honestly a really responsible way to use AfterPay. But you’re still not learning and flexing your savings muscles.

You’re still at risk of that entitlement mentality where you don’t have to work towards saving up for anything and you can have it right now.

And you’re still at risk of overspending because the system is designed to make you overspend.

The one and only time I think it’s acceptable is in cases of real emergencies.

Not a fake “I need to have it now or I’m going to die” emergency. Like a genuine life or death, issue of health and safety emergency.

But even then, AfterPay would only be a super temporary solution and your financial priority should be to build your emergency fund.

AfterPay or credit cards, for that matter, aren’t replacements for a solid emergency fund.

I talked about this in episode 13 — I shared the three rules for using a credit card. And those same rules apply here to AfterPay and other buy now, pay later services as well.

But if we’re talking about regular situations that aren’t life or death, then no, I don’t think it’s okay to use AfterPay for all the reasons we just talked about.

And if you disagree with me then let’s have a conversation. I love hearing your thoughts and Insights, send me an email and let me know what you think.

For my Campers, you can leave comments on this episode inside the Camp FIRE members area.

Next weeks’ episodeAnd that’s all I have for you Girls on FIRE today!

My challenge for you this week is to save up for what you want! Start a sinking fund and put even just a few dollars in it. Every dollar counts.

If you want some extra credit, check out that study by ASIC I referenced in this episode, it really is fascinating stuff.

The whole time I was reading it, I just got angrier and angrier. I think if good financial management was something they taught us in school, this wouldn’t be such a huge problem.

But instead of teaching us how to budget and pay taxes and apply for jobs, they taught us how to find limits and solve quadratic equations and graph polynomials.

So, it’s up to us to educate ourselves and each other and I really hope this episode has given you some delicious food for thought.

If any of your friends are falling into the AfterPay trap, share this episode with them, get them to join Camp FIRE and turn their finances around.

For my Campers, the deluxe version of the transcript including action items and additional notes is up and waiting for you in the members’ area.

On next weeks’ episode, we’re talking about the “paying yourself first” rule — what is it, does it work and how can you incorporate it into your financial plan?

It’s going to be a really interesting episode, so you’re definitely not going to want to miss it.

Sources* What is AfterPay? * ASIC Study — Buy Now, Pay Later: An Industry Update

The post Why AfterPay Is Financially Toxic (Episode #48) appeared first on Paper Money Co.

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Show notes Having a bad day? Need some retail therapy to perk you up? You’re not alone. We all need to treat ourselves from time to time. Retail therapy can be good for you, but it can also be super detrimental to your finances if you’re not careful. That doesn’t mean you should stop spending, it just means you need to keep it under control. But how?

This episode discusses topics like:

Why you turn towards retail therapy when you’re having a bad day;
When retail therapy can be damaging to your finances and your life goals; and
How to keep your spending under control (without giving it up altogether).

Links from this episode: * Ready to finally take control of your money and build the life of your dreams? Join Camp FIRE! Camp FIRE is the premier membership community helping you get your money under control and reach your goals for a happy and fulfilling life. With tons of masterclasses, bonus content, spreadsheets, accountability and fun, get ready to say YES to a life you love. Become a Camper now for just $4.99 a month (or get 2 months of membership for free when you pay yearly). * Psychology Today: Why “Retail Therapy” Works * Healthline: Retail Therapy: Bad Habit or Mood Booster? * Cleveland Clinic: Why Retail “Therapy” Makes You Feel Happier

Credits: * Producer: Gonzalo Araya * Editor: Gonzalo Araya

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Priya's Review

Hey there, friends! And welcome back to Girl on FIRE, the financial independence podcast for independent women.
My name is Priya, I’m a chartered accountant, an analyst and the creator of Paper Money Co.
I’m also a fierce financial feminist and the host of this podcast. I believe that a woman who is in control of her money is in control of her life.
On this week’s episode of Girl on FIRE, we’re talking about retail therapy or emotional spending — what it is, why it’s a danger to your financial and life goals and how you can get your emotional spending under control.
But before we get started, I wanted to let you know that I’ve put together a super helpful financial success checklist for you.
It’s a step by step guide that’ll guide you in taking control of your finances and creating your own financial success.
It’s totally free and it’s just for my Girl on FIRE listeners. You can get your copy at papermoneyco.com/checklist.
You just need to enter in your email address and I’ll send it straight to your inbox.
If you want to spend money and enjoy life while still saving money and preparing for retirement, then this checklist gives you a step by step plan to follow to get there.
It’s the closest thing to having all my secrets in one place and I can’t wait to share it with you. That URL once again is papermoneyco.com/checklist.
As always, Girl on FIRE is about learning so grab your favourite notebook or journal and get ready to take some notes or draw some diagrams, write down your questions for me, you do you.
If you listen to this show while doing other stuff or you can’t find a pen then you can always find the transcript on my website at papermoneyco.com/gof47.
For my Campers, you’ll find the deluxe edition of the transcript in the Camp FIRE members area.
It’s an interactive document which includes my own notes, steps to help you take action on this episode and a space to journal your notes and thoughts.
Camp FIRE is the premier membership community helping you take control of your money and take control of your life with a ton of masterclasses, bonus content, spreadsheets, accountability and fun for just $4.99 a month.
And because I love helping you save money, you can also get two full months of Camp FIRE access for free if you pay yearly. Head on over to papermoneyco.com/campfire to join.
Okay, let’s dive in!

What is emotional spending? * First of all, what is emotional spending? Emotional spending is retail therapy. * > It’s spending money and buying things to make yourself feel better when you’re feeling sad or you had a bad day.

Retail therapy is something we’ve all done from time to time. Some of us engage in retail therapy a lot more than others.

And there’s no judgement here. I do it, too. I’m an emotional spender and an emotional eater. I spend and eat out of my emotions.

Now, something I want to make clear here is that in this episode, we’re talking about run of the mill retail therapy.

I’m not talking about an actual compulsive shopping addiction. That kind of addiction has a lot in common with other impulse control conditions like gambling.

And you’d more than likely need to enlist the help of a therapist to deal with that.

Having said that, though, you don’t need an impulse control disorder to destroy your finances and your goals with overspending.

So, I’m just talking about the retail therapy that everyone deals with from time to time that isn’t a compulsive shopping addiction.

Does retail therapy work & is it really that bad? Visualising a happy future with your new purchases * Now that we know what emotional spending or retail therapy is, let’s take a look at whether it actually works. * We spend money and go shopping, whether in store or online, to feel better. But does it work? Does it actually make us feel better? * According to a few studies, yes! It actually does. And I’ll leave those articles linked in the show notes if you want to check them out. * > But according to one research study, buying new things — and even window shopping — is like an exercise in visualisation.

Looking for new things to buy forces your brain to start visualising your new life with your new purchase.

So, for example, if you’re browsing online for a new dress, your brain starts visualising a future where you’re wearing that dress and doing something fabulous in it.

And those types of visualisations have been shown to not only boost your mood when you’re feeling low but it can alleviate anxiety as well.

Personal control and autonomy over your life * Following on from that, according to the Cleveland Clinic making shopping decisions restores a sense of personal control and autonomy. * And having that sense of control combats sadness because sadness is generally associated with situations and outcomes that are outside of our control. * So, that’s one way that retail therapy not only makes us feel better but can also be good for us.

Shopping makes you feel good * Here’s another interesting fact from the Cleveland Clinic — your brain gets a rush of feel-good dopamine even before you make a purchase and when you’re anxiously stalking the postman waiting for your package to arrive. * Dopamine is a hormonal neurotransmitter in your brain that makes you feel good and makes you feel motivated. * It increases your desire to continue seeking out things that make you feel good. * So, you know when you have those moments when you’re feeling motivated to work out and have brunch with your friends and go to a movie with your spouse after work? * Or when you feel like engaging in your hobbies and trying new recipes or signing up for a marathon? * When you feel motivated to do things that you enjoy and that make you feel good, the levels of dopamine in your brain are higher. * > And dopamine levels in your brain increase in anticipation of a reward. So, when you’re shopping and waiting for your package to arrive, your dopamine levels increase.

Now, on the flip side of that, when you feel meh and you don’t feel like doing anything, even the things that you enjoy, your dopamine levels are lower.

I describe that feeling as being like Mr Potato Head from Toy Story, but when he’s face and arms and legs are in a tortilla and not in his normal potato body.

And he’s all floppy and can’t hold himself up very well. That’s how I feel when I feel meh and I don’t want to do the things I normally enjoy.

That’s how I describe my low-dopamine state.

So, the point of that little science lesson was just to point out that your brain reacts positively to retail therapy. It does make you feel better.

No negative effects * Other studies have shown that unplanned shopping not only boosts a low mood but retail therapy apparently doesn’t have negative effects that are commonly associated with impulse buying. * There’s no guilt or buyers remorse after you engage in retail therapy. * And also, the mood improvement you get from retail therapy can last weeks past the actual purchase. * So, according to that study, retail therapy is a good thing as long as it’s done in moderation like practically everything else in life.

Is retail therapy that bad? * Now, given all the stuff that we’ve just talked about, is retail therapy bad for you? * In my opinion, which is also something one of the studies I mentioned touched on — it’s fine in moderation. * I personally think that retail therapy is perfectly fine, and that’s not just because I’m trying to justify my own spending habits. * I’ve said this a few times on this show but it bears repeating — money isn’t about numbers and dollars. * It’s about human behaviour and human psychology which is really complex. * > Our spending is about how our brains are wired and where we fall on the spectrum of normal human behaviour and compulsive behavioural addictions.

My point is that something that happens in your brain isn’t necessarily your fault. You can’t help the way the human brain has evolved.

So, I don’t want you to sit there beating yourself up over the fact that you like a bit of retail therapy.

Why emotional spending / retail therapy can be dangerous to your finances * Now, the reason I made this episode, though, is because retail therapy can be damaging to your finances and the dream life you’re trying to create. * > It’s fine and even helpful in moderation, but it can lead to overspending or impulse spending that’s damaging to your financial wellbeing.

Because, if retail therapy genuinely makes you feel better, it can be very easy to get caught in a trap where you’re constantly seeking out that feeling.

I’ll use myself here as an example. Just like retail therapy, I like chocolate therapy as well. I’m an emotional eater. I eat to make myself feel better.

And when I was trapped in that super toxic job I’ve mentioned in multiple episodes at this point, I felt like the only way I could feel better was by eating.

And I didn’t stop. Even now that I’m in a great job that I love, I still do it. I still want to eat when I’m feeling sad or upset.

And that wiring in my brain is very hard to re-route. I’m trying to replace the urge to binge on sugar with the desire to do a Zumba workout.

But years of that emotional eating behaviour, has been super damaging to my health.

And the same thing can happen when you’re constantly turning to retail therapy. It can be useful from time to time, but if you start to use it like a drug, you can get yourself into trouble.

Overspending * So, what kind of trouble am I talking about here? First and foremost, you can easily land yourself in overspending territory. * You start spending more and more or buying more expensive things as a quote/unquote “bigger treat” for a bigger sadness. * And sometimes that means you’re using a credit card and going into consumer debt to make yourself feel better.

Impulse spending * It can also lead to more impulse shopping. It’s one thing to make yourself feel better by treating yourself to something you’ve wanted for months. * But it’s another thing entirely to just grab something of convenience when you want to feel better. * > Impulse spending is almost like a reflex that’s set off by a negative emotion. Before you know it, you’ve bought something you didn’t know you wanted until you saw it.

You’re not doing research on the item or comparing prices or different brands. You’re not even waiting to see if you really want it or if you just want to feel better.

And for those reasons, impulse spending is more likely to carry negative effects like buyers remorse and guilt.

And you’re more likely to be left with things you don’t really want that are just gathering dust around your home.

Less money for your goals * Excessive spending is also going to make it harder for you to reach your goals. You’re going to have less money leftover to save. * And yes, that means retail therapy can be a danger to grown up financial goals like your emergency fund. * But it can also be a danger to the life goals you have and the life you want to live. * The more you spend on shopping, the less you have to put towards a European vacation or a painting class or salsa dancing lessons. * > And I personally feel like missing out on those life goals is going to make me feel much more depressed in the long term than whatever daily situation I’m dealing with.

Now, of course, that’s harder to see in the moment. But it makes sense, doesn’t it?

Less money to invest * By that same token, spending more means you have less to invest. And for Girls on FIRE, that means you have to wait longer to retire. * That means delaying financial freedom. That means working for an additional 5 years. * Now all of these dangers I’ve just talked about relate to living the life you’re daydreaming about. It’s all been about how your overspending can rip that dream life out of your hands.

Shirking financial responsibilities * But retail therapy becomes super dangerous when you start overspending so much that you’re not meeting your financial responsibilities or going into debt. * So, for example, when you’re spending money instead of putting it in your emergency fund. * Or when you’re wracking up credit card or AfterPay debt. Or maybe you’re unable to pay some bills because you’re spending all your money shopping. * Those things are super detrimental to your financial wellbeing. So, I just want to make clear that the point of this episode isn’t me sitting here telling you not to spend money, even if it makes you happy. * You know me, that’s not who I am or what I teach. And I’m a spender myself. If you told me to stop spending, I’d tell you to piss off but I’d use much more colourful language to do it. * > The point of this episode is to show you that retail therapy can turn sour. Your spending has the potential to damage your finances.

And in turn, it has the potential to destroy the dream life you’re trying to build. But being armed about the dangers and how to handle them can make all the difference.

Girls on FIRE don’t leave things to fate or chance, not when we can help it. We take control. We don’t sit around waiting for our dreams to materialise, we go out there and make it happen.

How to spot emotional spending * In the next part of this episode, let’s take a look at how you can identify whether you’re an emotional spender or whether you’re at risk of the dangers of retail therapy. * Now, I know this can sound a little bit redundant. We’ve all engaged in retail therapy before. We’ve all bought something to treat ourselves before. * So, it seems silly for me to sit here and say here’s how to spot your emotional spending. * > But here’s the thing — if you want to control or overcome your emotional spending tendencies, you need to know exactly what it looks like and where it comes from.

Even if you just want to understand yourself better so you can plan and budget for your retail therapy like I do, then learning more about how and why you spend is a good place to start.

Now, as I said before, money is about behaviour and psychology. And what we need to do here is understand why you spend money the way you do.

Identify your triggers * And a great way to do that is to pay attention to how you’re feeling when you’re browsing, when you’re checking out, when you’re shopping, when you’re waiting for your package. * But also pay attention to how you’re feeling when you open your package and how you’re feeling after you’ve opened your package. * If you want to be super nerdy like me, keep a spending journal where you take note of all these feelings. * The idea here is that you want to try to identify patterns and trends in your behaviour. * > Look for your triggers — what made you feel like spending money? Maybe you had a fight with your parents.

Maybe your spouse had to cancel date night and work late. Or maybe your boss was being a grade-A dirtbag.

Maybe you made a mistake in your work and it rocked your confidence. Perhaps you’re having a bad day, or you got some bad news.

You need to find what triggers you to spend money, whatever that looks like for you.

What are you spending money on? * Next, I want you to look over your transaction history and figure out what it is that you like to spend money on. And then ask yourself why. * Are you spending money on material things because you like to collect them, the way I collect planners and notebooks? * Or do you like to spoil yourself with new clothes, or fancy dining experiences? Or facials at a spa? * How do you like to spoil yourself? What are you spending money on that makes you feel better? * When you know what makes you happy, those things can become like self care practices that you try to incorporate into your daily life. * We’re not trying to stamp out your spending here. We’re trying to make it as meaningful and impactful and as intentional as possible.

How to overcome emotional overspending * Okay, so now that you know what triggers your emotional spending and what you like to spend money on, how do you control it? * And remember, we’re not talking about eliminating your spending altogether. We’re talking about being able to control it. * > You should control your money and your spending, not the other way around. So, that’s what we’re aiming for here.

We know that retail therapy is totally okay if it’s done in moderation and doesn’t sacrifice your long term life goals and financial wellbeing.

And that means we need a way to control it so it doesn’t get out of hand, and we need a way to make sure we’re allowing for spending in our budgets.

Controlling your spending — retail therapy without spending money * So, if you want to avoid spending money, the best thing you can do is find other ways of dealing with the negative emotions that make you want to spend. * As I said in my own personal example, I’m trying to replace comfort eating with doing a Zumba workout instead. * I love Zumba, I have fun and I enjoy it so much that I’m getting my official Zumba instructor licence. * It’s a much healthier habit than stuffing my face with ice cream sandwiches and Tim Tams. * I’m still going to eat those things, but I’m going to eat them when I’m able to control myself instead of feeling like I need more to make myself feel better. * This is why I wanted you to figure out why you spend money on the things you do. * > Once you know what makes you feel better, you can start finding alternatives that don’t cost any money to get the same boost.

For example, let’s say you really like pretty clothes to help you feel better because they boost your confidence.

Maybe instead of buying new clothes in the moment, you can plan to build a capsule wardrobe of clothes that make you feel great and wear those when you need a boost to your confidence.

You can get really creative here, there are a lot of ways you can get the same positive effects from other things in your life.

Some common things that are known to make us feel good are things like working out and listening to music.

Those things increase our dopamine levels. And they don’t have to cost you a lot of extra money.

Budgeting for retail therapy * Now, we’re not trying to stop our retail therapy, we’re just trying to control it. And that means we need to budget for it. * You can’t just expect yourself not to spend money if you’re a spender, especially if you’re an emotional spender. * Instead of trying to live up to some idealised budget where you never spend money on yourself, be realistic and budget for the life you have and the goals you’re aiming for. * Your budget shouldn’t be based on what you or some financial expert thinks your life should be like, it should be based on what your life is actually like. * That’s why I was pretty brutal against Dave Ramsey’s percentage based budget way back in episode 9. * Those percentages don’t necessarily reflect the way you live your life, it doesn’t reflect your values and your behaviour. * It reflects the way Dave Ramsey thinks you should live. It reflects his values and his goals and his behaviour. * That’s not what we’re about. So, we’re going to budget for retail therapy and spending so that we’re not blindsided by a failed budget. * Now, I have 3 quick tips that’ll help you budget for your spending, and this is what I do in my own budget as well which Campers get to see in our masterclasses:

Create a wishlist of the things you really want to buy. And when you want to treat yourself in order to feel better, buy something that’s on that list.

This trick works because it ensures that you’re buying something you really want instead of impulse shopping and just buying something because it’s there.
You’re being a lot more intentional about how you spend your money. Now, tip #2 will take this a step further.

Create a sinking fund for your fun spending.

I have one in my budget, it’s the best. It allows you to save up and buy those things on your wishlist when you’re having a bad day.
And that means you won’t fall victim to AfterPay or credit card debt. So, with just these two tips, you’re being intentional about your spending and buying something you really want.
And you’re saving up for it so that one bad day doesn’t land you in debt.

And the last great tip I have for you is the idea of paying yourself first.

Retail therapy can be really dangerous if you spend first and then save or invest what’s left over, if there’s anything left over.
By paying yourself first, you swap that around. You send money to your savings and investments first. You pay your bills and your essential expenses. And then you spend what’s left over.
This is probably a less structured way of spending freely than having a wishlist and creating a sinking fund based on that wishlist.
But you’re still left with money that you can freely spend while still taking care of your responsibilities and your goals.

Next weeks’ episode * And that’s all I have for you Girls on FIRE today! * My challenge for you this week is to keep a spending journal for a few weeks just like we talked about in this episode. * You don’t need a new notebook or anything like that. Just make it as easy as possible — even just on the notes app on your phone is enough. * The point here is to try and identify what triggers your spending and how your spending makes you feel. * Once you understand that, you can start to consciously make changes that impact your spending behaviour. * For my Campers, the deluxe version of the transcript including action items and additional notes is up and waiting for you in the members’ area. * On next weeks’ episode, we’re talking about AfterPay — is it a convenient way to pay for the things you want or is it financially toxic? * It’s going to be a really interesting episode, so you’re definitely not going to want to miss it.

Rate, review, share and subscribe * Don’t forget to rate and review this podcast at papermoneyco.com/podcastreview. It really helps me figure out whether you’re enjoying this content and learning from it. * Your feedback helps me improve my content so that the episodes get better and better. * It’s also the best way you can support this show and it’s totally free. Leaving reviews helps others find us, as well. * As always, if you enjoyed this episode or found it interesting, then spread the love and share it with your friends. * And remember — when you’re in control of your money, you’re in control of your life. * Bye for now - I’ll see you next week!

Sources * Psychology Today: Why “Retail Therapy” Works * Healthline: Retail Therapy: Bad Habit or Mood Booster? * Cleveland Clinic: Why Retail “Therapy” Makes You Feel Happier

The post Why Retail Therapy Is Keeping You Broke & How to Get It Under Control (Episode #47) appeared first on Paper Money Co.

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Show notes If you set New Year’s Resolutions for your life and your money this year, chances are, you might have already given up on them or you’re close to quitting. In this weeks’ episode, we’re talking about how to stay motivated and keep on track with your goals, whether they’re goals for your money or your life. How can you make 2022 your best year yet?

This episode discusses topics like:

Why most resolutions and changes you make in your life and finances don’t last more than a few weeks;
Why your personality might be holding you back from achieving your goals and living the life you want; and
How to deal with obstacles that are standing between you and your dream life.

Links from this episode: * Ready to finally take control of your money and build the life of your dreams? Join Camp FIRE! Camp FIRE is the premier membership community helping you get your money under control and reach your goals for a happy and fulfilling life. With tons of masterclasses, bonus content, spreadsheets, accountability and fun, get ready to say YES to a life you love. Become a Camper now for just $4.99 a month (or get 2 months of membership for free when you pay yearly). * Psychology Today: Why Most New Year’s Resolutions Fail * Gretchen Rubin’s Four Tendencies Quiz

Credits: * Producer: Gonzalo Araya * Editor: Gonzalo Araya

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Priya's Review

Hey, friends! And welcome back to Girl on FIRE, the financial independence podcast for independent women.
My name is Priya, I’m a chartered accountant, an analyst and the creator of Paper Money Co.
I’m also a fierce financial feminist and the host of this podcast. I believe that a woman who is in control of her money is in control of her life.
On this week’s episode of Girl on FIRE, we’re talking about how to stay motivated on your financial journey.
A lot of us like to make resolutions for the new year and that often includes financial goals.
But everyone knows that those resolutions don’t often last. In fact, we’re coming up fast on the date when most of those resolutions fall to pieces.
I read an article by Psychology Today about why most New Year’s Resolutions fail.
And they mentioned a study that found that most people abandon their resolutions by mid-January.
So, if that sounds like you, don’t worry. We’re past mid-January now so you’ve had some time to wallow in the shattered remnants of your resolutions.
But now it’s time to roll up your sleeves and get back to it. Girls on FIRE don’t sit around waiting for joy and fulfilment to walk in the door. We go out and find it or create it for ourselves.
Life is too short to sit around waiting for things to happen, you’ve gotta be brave, get out there and make it happen for yourself, right?
So, today we’re talking about how to keep motivation high while you’re working on your finances and I’m going to share with you a few tips to help you stick to your goals.
But before we get started, I wanted to let you know that I’ve put together a super helpful financial success checklist for you.
It’s a step by step guide that’ll guide you in taking control of your finances and creating your own financial success.
It’s totally free and it’s just for my Girl on FIRE listeners. You can get your copy at papermoneyco.com/checklist.
You just need to enter in your email address and I’ll send it straight to your inbox.
If you want to spend money and enjoy life while still saving money and preparing for retirement, then this checklist gives you a step by step plan to follow to get there.
It’s the closest thing to having all my secrets in one place and I can’t wait to share it with you. That URL once again is papermoneyco.com/checklist.
As always, Girl on FIRE is about learning so grab your favourite notebook or journal and get ready to take some notes or draw some diagrams, write down your questions for me, you do you.
If you listen to this show while doing other stuff or you can’t find a pen then you can always find the transcript on my website at papermoneyco.com/gof46.
For my Campers, you’ll find the deluxe edition of the transcript in the Camp FIRE members area.
It’s an interactive document which includes my own notes, steps to help you take action on this episode and a space to journal your notes and thoughts.
Camp FIRE is the premier membership community helping you take control of your money and take control of your life with a ton of masterclasses, bonus content, spreadsheets, accountability and fun for just $4.99 a month.
And because I love helping you save money, you can also get two full months of Camp FIRE access for free if you pay yearly. Head on over to papermoneyco.com/campfire to join.
Okay, let’s dive in!

There’s nothing magical about January 1st * Now, full disclaimer here — I actually don’t set new year’s resolutions, not really. * I don’t believe that anything profound changes in my life or my person on January 1st. It’s just a day off work, which is great, not gonna lie — but it doesn’t mean anything to me. * That’s why — and I think I’ve mentioned this before on this show — I set personal goals, or resolutions, if you prefer, on November 1st, because that’s my birthday. * I change on that day. I level up, I get a little older and a little wiser. That day means something to me, it’s magical to me. * > Now, why am I telling you this? I’m telling you this because I don’t want you to feel like you have to wait until another year ends to make a new years’ resolution and make changes in your life or set goals.

You can do that any time of the year. You can do it for your birthday like I do. Or you can do it this weekend.

The point is that it’s never to late to set a goal or make a change and it’s always the right time.

Yes, get clear on your “why”, but… * So, how do you stay motivated to keep working towards your goals and stick with your resolutions? * The first thing I want you to do is super cliché — I want you to get really clear on your “why”. * Why are you doing this? Why are you aiming for this goal or making this change? Why does it matter to you? * If you’re looking for motivation, remind yourself of what motivated you to embark on this journey in the first place. * > And once you figure it out, I want you to bombard yourself with it. Put reminders on your phone, on your digital wallpapers, a mood board, pictures in your planner.

Anything that will help you remember why this goal matters to you.

For example, I’m a spender at heart. I can easily spend a lot of money and then wonder where it all went.

But when I get paid every month, I force myself not to spend it all. I take about 50% of my income and I either save it or invest it.

And it’s hard to make that decision sometimes. To give up what I want now for what I want in 20 years.

But it gets easier when I remind myself why I’m doing this, why it matters to me.

I remind myself that I don’t want to be working until I’m 67 years old. I want my life back. I want my time on Earth to be under my control, not my employers.

And that’s something that’s so important to me that it motivates me to keep going. Keep saving, keep investing.

For every goal you set, you must have a reason for it and you need to find out what that is.

Is your motivation strong enough? * And another reason why this exercise is a good one is because it’ll really highlight to you whether your goals are really important to you — whether they really matter to you. * Are you aiming for that goal because it’s what you want or because it’s a standard goal that you should have? * Does this goal get you closer to living the life you want or is it just a goal for the sake of having a goal. * Do you really want to work out 5 times a week or is that just what you’re quote/unquote “supposed” to set goals for? * Are you on a year-long spending freeze to save money for your dream home or are you doing it because people think you spend too much money? * If your motivation is weak sauce then your goals are doomed from the beginning. * > If you don’t have a strong enough reason to follow through then don’t expect yourself to make the necessary changes and sacrifices to achieve this goal.

Achieving goals and changing your life isn’t easy. You don’t just set a goal, wait 6 months and then enjoy the achievement.

Life isn’t FarmVille. Achieving goals, no matter what they are is hard work.

It takes effort, it takes commitment, it takes dedication, it takes sacrifice. And if you’re going to put yourself through all of that then it has to be worth it, right?

You need to be highly motivated to achieve each goal you set for yourself. So, you need to find that motivation and hold on to it.

Motivation isn’t always enough * Now, in this episode I was going to share 3 hacks with you and — spoiler alert — this one about finding your “why” isn’t one of them. * It’s just a bonus, you’re welcome. But I wanted to bring it up because I wanted to make a super important point here. * Sometimes, motivation isn’t enough. And I know you know what I’m talking about. * We’ve all had times in our lives where we’ve wanted something. Really, deeply wanted something. Your “why” for this goal is incredibly strong. It means so much to you. You can’t imagine your life without it. You need to achieve this goal. * But we all know that sometimes motivation isn’t enough, right? Just because you want something, doesn’t mean you’ll get it. * No matter how badly you want it. And sometimes, it’s because of factors that are outside your control and that’s sad and frustrating. * But sometimes it’s because of factors that are within your control and that’s what we’re talking about in the next part of this episode. * > We’re talking about those things you can control that will really give you a leg up when you’re trying to achieve goals and make changes.

And these tips will apply whether you’re setting money goals or life goals.

You know that I don’t really differentiate between financial goals and life goals. I need money to fund my dreams, no matter what they are.

They’re one and the same to me. So, these tips will apply to any type of goal you have.

1. Change yourself before you change your life * My first big tip is this — before you can change your life, you need to change yourself. * And what I mean by that is that sometimes you have to change a little bit to be able to achieve the things you want to achieve. * And that kind of change is more than just skin deep. So, for example, one of my big goals for the year is to get healthy and get in shape. * I have a huge sweet tooth and I’m an emotional eater, which is something I’ve really struggled with for a number of years. * I can’t just say I’m going to stop eating sugar and work out 5 times a week and expect that to stick. * I might be able to do it for a couple of weeks, but without changing something about myself, those habits won’t last. * I need to do more than just eat healthy and work out. I need to become a person, a version of me, that eats healthy and works out. * I need to become a version of me that doesn’t self soothe with food. Now, when you put it that way, it sounds a lot harder to achieve that goal, right? * It almost sounds impossible but it’s not. It’s going to be really hard to make lasting changes or reach new achievements with what tools and mindset you currently have. * Especially for goals that you’ve tried and failed at before. There’s a reason they didn’t work out. There was too much resistance between the goal and yourself. * There was too much of a gap between who you are and the person you needed to be to achieve that goal. * > A really simple way of looking at this is to understand that to sometimes to reach big goals, you need to start with your daily habits. You need to change something you do every day in order to become that person who can achieve those goals.

So, for me trying to get healthy, I need to change the habit where I reach for chocolate when I’m stressed or upset.

I need to find something else to help me feel better. I need to replace a bad habit that doesn’t serve me with a better one that does.

And so far, I’m trying to journal when I feel like that. I’m trying to read. Eventually, I want to work out when I’m feeling stressed or upset.

And little by little those habits you practice daily change you. I’ll hopefully stop being an emotional eater and become an emotional exerciser instead.

Do you see what I’m getting at? I need to change something about myself in order to achieve the goal I’m aiming for.

That’s how you can create lasting change in your life. That’s how you can achieve goals that have been out of your reach up until now.

2. Create an accountability structure to support & sustain you * The next tip I have for you is about accountability. Making changes and reaching goals is hard work and it’s not going to happen overnight. * It’s easy to slip up or revert back to old ways or to procrastinate and let things fall by the wayside. * > Accountability is what keeps you honest. It’s what helps you consistently make the choices you need to make in order to reach your goals.

And it does that because someone is watching you. Someone is holding you accountable.

So, for example, if I’m trying to save money, it’s easy for me to sneakily spend it when no one is watching me.

But if I’m sharing my budget, my real numbers with my Campers every month, they can call me out on it when I spend money that I shouldn’t be spending.

Accountability is almost like having a coach keeping you on the path you need to walk to reach your goals.

And it’s super important because it can really sustain you throughout your journey. You need something to help you stay the course and keep you on track.

And accountability really helps. Now, the problem here, though, is that most people can’t hold themselves accountable.

They need someone else to hold them accountable. They need external accountability.

And that’s not an insult or anything like that, it’s just a personality thing. Some people can hold themselves accountable, but the truth is that most people can’t.

If you’re wondering where you fall on the accountability spectrum, a great resource is Gretchen Rubin’s 4 Tendencies.

She’s written an amazing book on the 4 different ways people respond to expectations — both outer expectations from other people and inner expectations we have for ourselves.

You can figure out what your tendency is online, she has a free quiz on her website: quiz.gretchenrubin.com.

I’ve taken the quiz myself, I’m an Upholder. This is something I’d really love to explore with my Campers someday as well.

Knowing what personality type you are when it comes to meeting expectations will really help you figure out ways to keep accountability towards reaching your goals.
Here’s another quick tip, though. A great way to keep yourself accountable and on track is to create milestones or progress goals.
Then when you hit those milestones, reward yourself.
And these milestones don’t have to be huge. All wins deserve to be celebrated no matter how small they are.

3. Address the barriers that are holding you back * And the last tip that I have for you today is about barriers. We all face resistance to change, no matter what it is that we’re trying to change. * > And we all face barriers that stand in the way of where we are now or who we are now, and the people we need to become in order to get where we want to go.

And these barriers can be both internal and external. Internal barriers are those barriers that usually only exist in our heads.

They’re usually excuses, to be honest, but the good news is that these types of barriers are more within our control.

External barriers are the ones that occur outside of our heads. We can’t always break them down but there are ways that we might be able to get around them or overcome them.

Internal barriers * So, for example, if we get back to my personal example of wanting to get healthy and get in shape this year. * An internal barrier I face is that I know I’m an emotional eater. And I really like chocolate and baked goods. * And sometimes I just want them, consequences be damned. I know better, but it doesn’t mean I always do better. * This is a mindset barrier and it’s something I can try to change. I have control over what thoughts I let in to my head. * I can rewrite the script in my head that tells me that food will help me feel better. Of course, it’s a lot of work. I’m not downplaying that. * But my point is that I have the power to take control of it and turn things around. * > Another example of internal barriers is fear — fear of change, fear of outshining other people around you, fear of leaving people behind or outgrowing people, fear of what you’re going to have to sacrifice to reach this goal.

These kinds of fears are all limiting beliefs. Another big one is feeling fundamentally flawed.

You may have gotten it in your head that you’re just bad with money. That’s who you are as a person and you can’t change it.

That’s not true. You have more control than you realise. And you know that Girl on FIRE is all about taking control.

External barriers * Now an example of an external barrier is that I have a full time job. And when I get back from the office, I’m hangry and tired and before you know it, it’s time to go to sleep only to wake up and repeat. * That makes it really hard for me to work out after work. And I can’t work out during work, that’s not an option for me. * So, I’m facing a barrier here of not having time to work out when it’s most suitable for me. * Another example of external barriers is financial constraints. Let’s say you’re hoping to save up $10,000 for a dazzling European vacation. * But you’re not able to save enough money each month to make that happen. That’s an external barrier that’s somewhat within your control. You can find ways to earn and save more money. * But travel bans and COVID restrictions, that’s outside of your control. * > So, the key here is to identify your barriers and brainstorm ways to get past them. But most importantly, focus on the ones that you can actually control. Don’t waste your time and energy trying to change something you can’t control. You’ll just end up frustrated and disappointed.

Next weeks’ episode * And that’s all I have for you Girls on FIRE today! * My challenge for you this week is to think about your ideal life and what that looks like. What do you want? What kind of life do you want to live? * Then, start identifying how you can turn that into reality — who do you need to become to make it happen? What barriers are going to stand in your way and how can you overcome them? * For my Campers, the deluxe version of the transcript including action items and additional notes is up and waiting for you in the members’ area. * On next weeks’ episode, we’re talking about retail therapy and emotional spending. * We’re talking about what it is, why it happens and — most importantly — how you can get your emotional spending under control. * It’s going to be a really interesting episode, so you’re definitely not going to want to miss it.

Sources * Psychology Today: Why Most New Year’s Resolutions Fail * Gretchen Rubin’s Four Tendencies Quiz

The post Ditched Your New Year’s Resolutions? 3 Hacks to Stay Motivated on Your Financial Journey (Episode #46) appeared first on Paper Money Co.

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Show notes This week, I’m sharing some of the money lessons I learned during the life changing experience of living in Europe in 2018 and 2019. I’m not exaggerating when I say that I came back to Australia after that experience as a changed woman with huge plans. COVID had other plans, of course, but the lessons I learned still follow me around every day.

This episode discusses topics like:

Why travelling is better when you have more money to spend;
Why I prioritise spending money on experiences rather than material things; and
Why learning to set and enforce boundaries is more important now more than ever.

Links from this episode: * Ready to finally take control of your money and build the life of your dreams? Join Camp FIRE! Camp FIRE is the premier membership community helping you get your money under control and reach your goals for a happy and fulfilling life. With tons of masterclasses, bonus content, spreadsheets, accountability and fun, get ready to say YES to a life you love. Become a Camper now for just $4.99 a month (or get 2 months of membership for free when you pay yearly).

Credits: * Producer: Gonzalo Araya * Editor: Gonzalo Araya

Transcript

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Priya's Review

Hey, friends! And welcome back to Girl on FIRE, the financial independence podcast for independent women.
My name is Priya, I’m a chartered accountant, an analyst and the creator of Paper Money Co.
I’m also a fierce financial feminist and the host of this podcast. I believe that a woman who is in control of her money is in control of her life.
On this week’s episode of Girl on FIRE, I wanted to do something a little light hearted and fun.
Today, I wanted to share with you some of the things I learned about money while I was living in Europe over 2018 and 2019.
So, my long time listeners know that I was sent over to Germany with my work a few years ago. And I spent 15 glorious months working and living in Germany and travelling around Europe as much as I could.
And that has been one of the most incredible experiences of my life so far. Living in Europe was the #1 thing on my bucket list since I was a teenager and I wanted to run away to Paris.
It was my do-it-or-die-trying life goal. No matter how long it took and how hard I had to work, I was going to do it.
And I did. It wasn’t easy — I worked my butt off for that opportunity for over 10 years. The day I got on the plane to fly away to Germany, I was 26.
And I remember thinking, well I’ve achieved my biggest life goal at 26, so what’s next?
So, that entire experience was really life changing for me. I learned a lot about myself.
One of my favourite quotes, by David Mitchell I believe is, “travel far enough, and you meet yourself”.
And that’s exactly what I experienced. But I also learned a lot about money while I was over there. It’s the language that everyone speaks.
Doesn’t matter if you don’t speak German, if you speak money, we can still understand each other a bit.
So, today, I wanted to share those money lessons with you.
But before we get started, I wanted to let you know that I’ve put together a super helpful financial success checklist for you.
It’s a step by step checklist that’ll guide you in taking control of your finances and creating your own financial success.
It’s totally free and it’s just for my Girl on FIRE listeners. You can get your copy at papermoneyco.com/checklist.
You just need to enter in your email address and I’ll send it straight to your inbox.
If you want to spend money and enjoy life while still saving money and preparing for retirement, then this checklist gives you a plan to follow to get there.
It’s the closest thing to having all my secrets in one place and I can’t wait to share it with you. That URL once again is papermoneyco.com/checklist.
As always, Girl on FIRE is about learning so grab your favourite notebook or journal and get ready to take some notes or draw some diagrams, write down your questions for me, you do you.
If you listen to this show while doing other stuff or you can’t find a pen then you can always find the transcript on my website at papermoneyco.com/gof45.
For my Campers, you’ll find the deluxe edition of the transcript in the Camp FIRE members area.
It’s an interactive document which includes my own notes, steps to help you take action on this episode and a space to journal your notes and thoughts.
Camp FIRE is the premier membership community helping you take control of your money and take control of your life with a ton of masterclasses, bonus content, spreadsheets, accountability and fun for just $4.99 a month.
And because I love helping you save money, you can also get two full months of Camp FIRE access for free if you pay yearly. Head on over to papermoneyco.com/campfire to join.
Okay, let’s dive in!

1. Travelling is better when you have more money * Lesson #1 is probably going to be a bit controversial for some people. But I found that travelling is better, at least for me, when I have more money. * The first time I travelled around Europe was for my honeymoon in 2017. I had been saving for that trip for a long time. * But I was making less money back then compared to 2018 and 2019 when I lived in Europe. * I was still on a budget but earning more meant that I had more disposable income. * > And I found that travelling was a lot more carefree. We were able to be a lot more spontaneous. And that allowed us to really enjoy travelling a lot more. We were able to let the adventure sweep us off our feet.

I could spontaneously decide that I wanted to go to a cabaret show or take a city tour.

We ate where and when we wanted to and I wasn’t constantly stressing about the budget.

But something to note here — this doesn’t necessarily mean that you need to earn more. It means you need to save more.

Or, that you need to compromise on the things that don’t matter as much so that you have more to spend on the things that do.

2. Experiences are better than material things * Lesson #2 — experiences are better than material things. I’m a shopper by nature. * I like to shop, I like to collect things. I have more planners and journals than I’ll probably need for the rest of my life. * I have a growing collection of rose gold jewellery and Kate Spade handbags. * I have a home stockroom of candles and body products. I like to shop. That’s not really surprising to anyone. * But something I learned while I was overseas is that I’d rather spend my money on experiences than material things. * > Experiences just have a way of making you feel a certain way, and they create memories in a way that material things don’t.

They really enrich your life. And it makes me feel alive. I really feel like I’m spending my time on Earth wisely.

Experiences also have the opportunity to change you. Climbing through the Colosseum in Rome changed me.

It was a profound experience to sit amongst these ancient ruins and think about my life.

It was a profound thing to stand inside Notre Dame, a cathedral that people built with their hands almost 1,000 years ago.

To think about the passion and conviction that inspired people to build a structure like that. And all the people who visited it throughout history.

It felt like a thousand years of prayers somehow seeped into the stone. And now, all those years later, I’m standing in the same spot. It was extraordinary.

Now, don’t get me wrong, I love my stationery. But it doesn’t change me like that. It doesn’t make me feel alive.

And when I’m an adorable 80 year old and I’m looking back on my life I’m going to smile when I think about the macaron making class we took in Paris.

Or watching a West End musical or a cabaret show in Paris. It already makes me smile to think of those things. I feel like I lived well.

Life goes by so quickly. And it’s moments like that that slow it down and give us a chance to savour it.

Material things are nice to have and enjoy in the moment, but that feeling doesn’t carry through the rest of your life in the same way.

And I’m sure you can relate to this. If you have any sort of bucket list in your head or on paper or anywhere. How many of those things are experiences, and how many of them are things?

3. It’s okay to splurge at times * On to lesson #3 — it’s okay to splurge at times. This is something I see a lot of people get tripped up on and feel guilty about. * > Just because you’re budgeting and trying to save money or pay off debt, it doesn’t mean that you can’t enjoy yourself and splurge once in a while.

I know that a lot of old Dave Ramsey followers who convert to the Girl on FIRE way feel surprised by that.

I get a lot of emails from listeners saying how relieved they were to hear me say that it was okay to spend money.

I’ve said it before on this show but money is just a tool. You’re not taking it with you and it serves no purpose to stockpile excessive amounts of it.

Your money is just a tool to help you live your life in a way that aligns with your goals and your values, no matter what that looks like for you.

But you don’t need my permission. I’m not going to sit here and tell you what to do, you know me, that’s not who I am.

As long as you’re making responsible choices about your money and your needs are taken care of, then who cares what you spend your money on.

I used to get a lot of judgement from people on social for saying that it’s okay to spend money.

Spending money doesn’t make you a bad person, I don’t know why some people think it’s some kind of character flaw to want things and make them happen for yourself.

I’m a big believer in spending money when it’s worth it. And to me, travelling is one of those things.

I’d rather die with a head full of incredible, happy memories than a fat bank account.

4. There’s more to life than just earning money to pay the bills * And the last lesson I want to share with you is probably the one that hit me the hardest. * I’ve mentioned this before on the show, but at the time that I left for Germany, I was trapped in a really toxic job. * I was overworked and grossly under appreciated. My boss was a bully, and constantly took credit for my work. * I had been passed over for a promotion I had more than earned multiple times because I was someone else’s stepping stone. * I hated my job, I would have daily panic attacks while driving to work in the morning. I often had to pull over just to be able to breathe. * And I felt trapped in that job because I was the only source of income for my family and rent and food aren’t free. * I was trapped in this vicious hamster wheel of working to pay the bills and then spending money on material things to make myself feel better. * But everyone knows that retail therapy makes you feel better for about 10 minutes but it doesn’t fix you. It doesn’t fix the problem. * And my work life was so bad, that I’d bring all that stress and anxiety home and it affected my health, both physical and mental. * And it affected my marriage too. I was miserable. But I couldn’t get off that hamster wheel. * But when I started my position in Germany something changed. I was able to get enough distance from my old job and the bully. * And I realised, really realised, that I don’t want my life to be a hamster wheel. It’s just not worth it. * All of us were born for more than to just pay the bills and die. There’s more to life than that. * And really accepting that truth is what allowed me to get really fierce about setting boundaries. * > Because I learned the hard way in that toxic job that if you don’t set boundaries for other people and enforce them, then they’re just going to take advantage of you.

Next weeks’ episode * And that’s all I have for you Girls on FIRE today! * My challenge for you this week is a fun one — I want you to create your bucket list if you haven’t already got one. * What do you want to do and achieve and experience in your life? Write it down! * And if you do already have a bucket list, then I want you to pick one of those goals and start budgeting for it. Start turning your dreams into reality. * For my Campers, the deluxe version of the transcript including action items and additional notes is up and waiting for you in the members’ area. * On next weeks’ episode, we’re talking about emotional spending. What is it? Why is it keeping you broke? And how can you get it under control? * It’s going to be a really interesting episode, so you’re definitely not going to want to miss it.

The post 4 Things I Learned About Money While Living In Europe For 15 Months (Episode #45) appeared first on Paper Money Co.

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A budget calendar is a simple but powerful tool to organise your finances. It'll help you break the paycheque to paycheque cycle by ensuring you always have enough to pay your expenses. Download your free printable budget calendar worksheet and follow the steps and examples above to create your own budget calendar.

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Your budget will become a lot easier and make a whole lot more sense if you budget each paycheck separately.

It’s called budgeting by paycheck and it’s one of the best ways to break the cycle of living paycheck to paycheck.

The post How to Budget Bi-Weekly Paychecks the Easy Way (Unlock the Ultimate Guide) appeared first on Paper Money Co.

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The post The Ultimate Guide to the 50 / 30 / 20 Budgeting Method (Free Template) appeared first on Paper Money Co.

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The post The Ultimate Guide to Budgeting Household Income with Percentages appeared first on Paper Money Co.

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Spending money can feel like an addiction. Once you start, it’s hard to stop. But it’s a dangerous pattern of behaviour that can lead you into debt. Knowing why you overspend is crucial to being able to stop spending so much money. It’ll take a little bit of work, but the rewards will be worth it.

The post How to Stop Spending Money: A Guide to Curbing Excessive Spending appeared first on Paper Money Co.

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Having some blow money in your budget is a great way to stay sane throughout the budgeting process. It’ll give you a chance to enjoy your money now without sacrificing your goals or your financial health. Blow money also keeps you motivated to stick to your budget. It shows you that you can still have fun on a budget.

The post How to Splurge Even if You’re on a Budget (ultimate Guide to Blow Money) appeared first on Paper Money Co.

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They can be difficult and they’re not a whole lot of fun, but when you see how much you’re saving it’ll all be worth it. The secret to saving a ton of money with your spending freeze is to plan ahead and get a strategy together.

The post How to Save Money Fast with a Spending Freeze (Save $1,000 in One Month!) appeared first on Paper Money Co.

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If you're living paycheck to paycheck, you're either not earning enough or spending too much. You can create more room in your budget if you drastically cut your expenses. This will give you extra money without needing to increase your income. That extra money can be used to pay down debt or build up your […]

The post How to Drastically Cut Expenses (130 Proven Ways) appeared first on Paper Money Co.

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To achieve lasting financial freedom, you want your budget to be as strong as possible. However, there are a few important things that might be missing from your budget. It's crucial to identify these missing items and include then in your budget appropriately. This will help make your budget as strong and as accurate as possible.

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Budgeting doesn't have to be difficult or time-consuming to be really effective. In just 15 minutes a day, you can manage your money and set yourself up for lasting financial independence. If budgeting is a little difficult for you, then this quick and easy routine will be perfect for you!

The post How to Create a Quick & Easy Daily Budgeting Routine appeared first on Paper Money Co.

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