You’re getting paid!

As I write this, 15.3 million Australians find themselves in lockdown. The remaining 10.4 million Australians find themselves living with some form of restrictions.

There’s a lot of fear and disunity right now. Regardless of where you stand on vaccines, masks, lockdowns and borders, I think there is universal empathy for our fellow Australians who are struggling in this environment. Mentally, emotionally, physically and financially – lockdowns and restrictions make the everyday challenges of life that little bit tougher.

When I wrote Bulletproof Investing, I cited the fact that 20 per cent of Australians deal with a mental health challenge.

This week, cognitive neuropsychologist and Swinburne University of Technology researcher, Susan Rossell, said the demand for mental health services has grown as the pandemic entered a second year.

She said:

“pre-pandemic we were seeing about 20 per cent of people needed to go and see a psychologist, psychiatrist … needed some help with their mental health. I think with the data we’re seeing now, we would be more along the lines of 35 per cent of people who need to go and get some help with their mental health.”

The relationship between personal finances and mental health is well established; individuals with depression and anxiety are three times more likely to be in debt.

Half of all working Australians live payday to payday and one in three would not be able to find $500 for an emergency. It’s not hard to see how lockdowns could rock the typical Aussie household.

In last week’s newsletter, I wrote about my own experience with anxiety. At its peak I found it caused me sleep deprivation which led to the uncertainty snowballing and making the problem seem even bigger.

I can’t speak for the solution to mental health challenges unrelated to personal finances. However, I can speak from my own experience when it comes to anxiety and mental health brought on by a lack of control over personal finances.

Unfortunately, there’s no silver bullet. At least there wasn’t for me.

The solution was taking one step at a time to get my personal finances in better order.
That leads me to the bulletproof tip for this week: PAY YOURSELF FIRST.

Bulletproof tip


Set up an automatic transfer the day after payday that sends 10 per cent of your after-tax pay into a separate bank account with a different bank. That bank account is for your future self, to be invested and multiplied to grow your wealth.

This was the first step for me.

I came across it after reading The Richest Man in Babylon – a classic book first published in 1926 (which, by the way, is the perfect gift for any kid finishing school).

The book talks about differentiating between needs and wants (last week’s newsletter), but also encourages the reader to allocate 10 per cent of each pay cheque to their future selves before spending a single cent.

It might sound simple, but most people manage their finances in the reverse order: they meet their various expenses, then endeavour to save what’s left.

I finished high school and obtained a degree in law and accounting yet none of those qualifications taught me this one very simple principle.

The key is to then have the discipline to let that 10 per cent accumulate and grow– and eventually invest it – week after week without touching it.

I admit I was guilty of dipping into the ‘Future James’ account from time to time. Normally once I’d had a few beers. I’d start transferring money from the ‘Future James’ account into the ‘Everyday’ account. I finally future-James-proofed my system by setting up a bank account with a separate bank that didn’t have a card or internet banking.

From there, I started to feel as though I was moving forward, week by week. It immediately made me feel less anxious about my finances. It wasn’t a silver bullet solution. There would be other things I’d need to do to remove anxiety, but this was the first step.

I think we would all know someone who is doing it tough right now and/or experiencing anxiety.

If you want to help them out, I’d suggest setting them up a ‘Future Them’ bank account that they can start transferring money into. You might even want to help them out by depositing $20 or $50 in the bank account to get them started.

It’s never too early or late to grow your wealth

P.S. Personal finance is cited as the single biggest cause of stress for one in two Australians. It doesn’t have to be the case for you. Get the book.