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Money Multi-tasking - Saving, Paying off Debt AND Investing

financialliteracy financialplanning learnaboutmoney moneylifestyle moneypie Aug 01, 2022

The concept of multi-tasking is something often associated with women, and how we can do multiple tasks all at once. Well, what it really is is jumping from one task to another, to another, coming back to the first one, then jumping to another. Sound exhausting? Well, it is!

I don’t think anyone actually likes to multi-task. It’s usually done out of necessity, born out of a lack of time (or the perception of not having enough time), and too many things on the to-do list.

For myself, multi-tasking is something I often do but don’t enjoy. I try to start and finish an activity, but often life gets in the way.

From a brain functioning point of view, multi-tasking has been shown to not use our brains to the best of their ability.

When it comes to money though, you can absolutely multi-task!

Like many things in life, money is not linear. By that I mean that you don’t need to first save, then buy a house and pay it off (along with all your other debt, although I’ll come back to that), then start investing. There are things you can do in parallel.

The one thing I will say though, is that personal debt (that is, credit cards, store cards, buy now pay later, and any other debt that has a high interest rate) should be paid off as quickly as possible.

Without going into too much theory, here is the logic behind what I just said. Now, keep in mind that even with the recent interest rate increases, the average home loan rate is about 4.3%.  Interest rates for personal debt run between 10% and 25%. So, paying off such high interest rates is the priority, because you’re paying a lot of money above what you originally paid for the item you bought.

So, figure out how long you think you will need to pay off that debt, and get stuck into paying it off in as short a time frame as you can.

Be sure to also put at least 5% of your income aside for your Emergency Fund (more money multi-tasking).

If you think of your money in terms of a pie, you can slice it up to suit your current lifestyle, while having your future or lifestyle vision in your mind.

Once you have paid off that personal debt (which is a slice of your Money Pie) and while you’re used to not having that cash, start to save that money for other things.

Make sure you are clear on what you’re saving for though (otherwise the motivation for saving will quickly wane). Just like anything in life, when we have a goal the motivation is much easier to come by. Especially when temptations are dangled (like a great sale from one of your favourite clothing brands).

Clarity comes from having a vision for your lifestyle, and aligning this with your Core Values. I’ve recently launched a Money & Lifestyle Vision mini-course for $27, which includes a guided lifestyle vision meditation to help you gain that clarity.

We all waiver, and that is understandable. The key is to have a buffer so you can have fun, which is why I call it a Fun Fund (which is another slice of your Money Pie).

Then comes using some of those extra funds that you’re no longer using for paying off personal debt, for investing – starting with topping up your superannuation until you reach the Super Guarantee limit for a financial year (which at the moment is $27,500).

You could even start micro-investing if you want to get into investing without putting in too much money. There is a link in the show notes to my free guide, “How to Invest with Only $1” if you want to know more.

There are now a few slices in your Money Pie (included living expenses), so it’s important to make sure they add up to 100% - which is why starting with the end in mind is a way to ensure you don’t go beyond your financial capacity.

Multi-tasking your money is an important way to make sure you achieve the lifestyle you want, which means also building wealth.

Start with getting clear on what lifestyle you want, and then set up your Money Pie to make sure you get there.