If you’re serious about sticking to your budget and achieving your 2020 financial goals finding a reliable and trustworthy friend to act as your Money Buddy and join you on your financial journey could be the thing that makes 2020 and beyond the year you reach your goals and improve your financial health.

But how do you choose the right friend and how does a Money Buddy make a difference? Find the answers and more in this article.

• What is a Money Buddy?
• Why having a Money Buddy Helps?
• How do you choose the right Money Buddy?
• Why is it Important to use Money Wisely?
• What is the Best Thing to do with Money?
• What does it mean to be Good with Money?
• Is Money Good or Bad?
• Why is Money Good?
• How can Money be a Bad Thing?

What is a Money Buddy?

One of the most effective ways to lose weight is to enlist the help of a friend. A diet and exercise buddy can give you support when you are feeling unmotivated to exercise, or help you resist the siren call of readily available doughnuts. Going through the same activities together can help you both stay on the positive path.

Read Also: How to Get Better with Money

By the same logic, you can find a financial friend for mutual help with saving and investing. You can help each other resist the temptation to buy that unnecessary power tool or wildly overpriced pair of shoes, and serve as a double check on each other for investment decisions. You will have a savings and investment friend – in other words, a money buddy.

It is important to choose your money buddy carefully. If you both have careless attitudes toward money and similar blind spots, you will help each other in the wrong direction.

Preferably, your money buddy should have good financial habits and a reasonable amount in common with your financial situation so he/she can understand the challenges you face. The best situation is if you have complementary areas of difficulty – for example, one of you may be excellent at saving money but poor at choosing investments and the other may be great at investing but rarely saves enough money to invest.

You and your money buddy should meet to discuss your goals and how you plan to meet those goals, and then meet regularly to go over your collective progress. Regular meetings are important to maintain positive momentum and to keep from backsliding into bad habits.

If you can’t find one suitable buddy, how about a half-dozen? Money clubs, groups analogous to book clubs, are being formed throughout the country by people with similar interests and financial goals.

Money clubs tend to be a combination of collective financial assistance and social gathering – it is a reason to get together with friends as well as to help give each other support and advice. Focusing on the positive and highlighting everyone’s areas of progress is important. Negative attitudes and constant complaining about your situation is likely to get you removed from a money club.

Many money clubs have been started by women and are exclusively for women – but there is no reason that men cannot start a money club, or benefit from membership in one. If you cannot find a money club, start one of your own.

If those options don’t suit you, how about investment clubs? While they are waning in popularity because of the ease of online investing and the wealth of available information, investment clubs still exist. They may be self-directed, where you all meet to share advice and then invest independently, or they may pool resources for investment.

From the savings side, you can start a similar group with money challenges. Challenging your friends with an achievable savings goal in a set time can be a great source of motivation while adding some fun elements. Thanks to social media, they are simple to start and feedback is easy to share. To add extra spice, make an inexpensive silly prize for the winner.

Many such clubs can be found with online searches, but others are private and difficult to locate. If you would like to start one of your own, there are plenty of online resources available to help you learn the ropes.

If you are having trouble staying on the financial track, seek the support of a trusted money buddy – whether it is an individual or a group.

Why having a Money Buddy Helps?

1. A Money Buddy will help you stay accountable

Ever heard the saying “those who write down their financial goals are 42% more likely to achieve them’’? As well as writing down your financial goals, sharing your goals with people who you trust can help to keep you accountable and increase the chance of you reaching those goals.

You might decide with your Money Buddy that you want to save $5,000 in the next 6 months, so you need to save $200 a week in order to do that. Each week you call each other and check in on how you’re tracking. You may even find you have some savvy saver tips to share.

Having someone hold you accountable also means you need to fess up on the weeks you accidentally impulse buy and spend your “saving money” on the latest trending product that you couldn’t possibly wait to have. The thought of having to fess up might be enough to stop you from pressing “BUY NOW” all together! And yes, it still counts even if you ‘Buy Now Pay Later’ over 4 easy fortnightly payments.

2. Friends can make a massive impact on your social spending

“We are the average of the five people you spend the most time with” a famous theory by motivational speaker Jim Rohn. This refers to not only behavioural choices like how many times you go out together a week or go shopping but all areas of your life including your mindset, salary, career goals, values, aspirations, and personal success.

For example, your friends are all saving roughly $100 a week but you know you’re capable of saving $300, you never end up saving more than $150 at best because you don’t feel the pressure or expectation to be saving more. Where comparatively if your friends were all saving $300 a week it’s more than likely that you would be reaching closer to saving the full $300.

If your friends aren’t on the same page as you when it comes to financial goals and they are still set on going out two nights a week and owning the latest gadget instead saving it towards something bigger, it may be time to start networking and find some friends who have similar goals. Look for people who inspire you and who aren’t going to derail you from your own journey to success.

3. A Money Buddy can prevent you from giving up early

Saving isn’t easy and it can sometimes feel like you have to live out your days like a hermit in fear venturing out of the house, as any error of judgement could lead to you blowing your savings account! The beauty of a Money Buddy is that they are going through this with you!

Just like when your gym buddy is dragging you along the cycle class you were adamant on skipping out on a Money Buddy may convince you to choose a movie night instead of going to the cinemas.

Having someone on the same savings journey with you who is consciously aware of what you are trying to achieve means you won’t feel alone in your efforts and like you need to give up your entire social life.

How do you choose the right Money Buddy?

Although having anyone hold you accountable is better than having no one there are some considerations to make when choosing a Money Buddy.

Finances can feel very personal so it’s important you choose someone you feel comfortable sharing your savings and financial goals with. You don’t need to share salary or a detailed budget but opening up about money can be harder than you originally thought.

One great way to start money conversations is to identify your goals. To get your head around this you may want to start by listing your achievements for the last 12 months. This can help you set the scene for the year ahead. You may also want to have an expert on your side, participate in deliberate savings, and know what your next investment is.

Another great way to start to talk about money is by identifying your Money Mindset. It can provide valuable insights into how you approach your relationship with money as a start-point to having meaningful conversations. We discuss this further in our article on how to talk about money.

You will want to find someone who is in a similar position to you or who is a good role model. You don’t want anyone who is going to resent you for having big dreams and potentially being able to save more than you can. It’s good to find someone who is happy with their own financial situation, or who has clear goals for achieving their own financial goals.

1. Choose someone you see and speak to regularly. You need to be able to comfortably check-in with your Money Buddy and although it’s not crucial it helps if you normally spend time together so you can switch the expensive night out to a fun night in.

2. Work out a time and place if you’d like to meet face-to-face to talk about your progress regularly. This may be weekly or fortnightly.

3. Set your goals and share them with each other whether it’s to save $600 a fortnight or save $20K for a house deposit. Your goal could even be saving $3,000 in your emergency fund or $2,000 for a special holiday. However big or small every dream and goal really does count! A larger long-term saving goal helps to set milestones, for example, you want to save $16,000 in a year. Each quarter you need to save $4,000 so set quarterly milestone goals.

4. Create a Budget together as creating a budget can seem like a daunting task so why not do it with your Money Buddy to see exactly where your money is going and where potential savings lie. You never know it might be fun and generate a few laughs! You can use our free budget planner

5. Keep your eye out for any savvy saver tips you may have picked up. Be tuned in to financial information, i.e. review articles, watch the News, google topics of interest.

6. Celebrate the wins! Congratulate each other on reaching milestones and final savings goals!

Why is it Important to use Money Wisely?

1. Stops Overspending

Spending money without thinking carefully about where it all goes can easily lead you to overspend each and every month. Overspending limits your spending power in the future as more and more of your income has to be applied to debt payments.

If you are worried about restricting your spending, consider what it would feel like to have the majority of your paycheck being applied to credit card payments. The stress of finding a way to pay for your everyday needs can be astronomical when most of your paycheck is already spoken for.

2. Helps You Reach Your Goals

Spending money wisely helps you prioritize your spending. With a budget, you can move to focus your money on the things that are most important to you. It may be getting out of debt, saving up for a home, or working on starting your own business. Your budget creates a plan and lets you track it to make sure you are reaching your goals.

3. Helps You Save Money

People who spend money wisely tend to save less money than people who do. That’s because when you budget, you assign your money to do certain things. You can have money automatically transferred into a savings or investment account each month. And a budget can help you stop dipping into your savings each month. As you do those things, you can begin to build wealth and give yourself true financial freedom.

4. Helps You Stop Worrying and Enjoy Your Money More

When you’re budgeting, you get to decide how much you spend in each category. So if you want to put a significant portion of your money toward leisure activities, you shouldn’t feel bad about that as long as you are still saving and meeting your other needs.

Budgeting is not about limiting the fun in your life; it’s about opening up opportunities to have more fun. And helping you worry less about your future

5. Puts You in Control

Spending wisely can help you gain a feeling of control over your money. It allows you to prioritize your spending, track how you are doing, and realize when you need to stop. It puts a solid plan into place that is easy to follow and gives you the chance to plan and prepare for the future. It is the biggest tool you have to change your financial future, and it gives you the power to make changes starting today. 

What is the Best Thing to do with Money?

1. Spend

This is straightforward. We live in a consumer-driven society, so surely you are all familiar with how spending your money works. What you might not be familiar with is the hidden costs of spending your money.

Not only are you losing out on the money you are spending every time you swipe your credit card or hand over a wad of cash, you also have to deal with sales tax and the missed opportunity of growing that money. Because of a little thing called sales tax, the penalty for spending your money can be high.

2. Save

Saving your money is definitely better than spending it. It’s the early stages in the turning point from being a pure consumer to being a wealth builder. The problem is, by simply saving your money you aren’t leveraging the power of investing, nor are you utilizing tax strategies that can help you minimize your tax-burden and help accelerate your wealth building.

Put your money into a checking account, savings account, or other form of low- to no-risk account. Your money will be safe, but it is just sitting idle, not working for you.

3. Invest

This is where the good stuff begins, where real wealth-building is accelerated. If you haven’t heard of it before, compound interest is one of the driving forces for creating wealth. It’s the concept that your money can keep growing, earning interest, and building upon itself.

Actions To Take: There are a lot of options. The easy ones are investing in stocks, bonds, ETFs, Index Funds, and more. Others that I really like: investing in real estate and/or starting your own business.

4. Give Away

Charity is a great way to give back to those who are less fortunate. You can always do something, no matter what stage of your wealth-building you are in. You don’t have to be a billionaire to donate to charity.

One thing the wealthy know is that charitable donations are tax write-offs. So it can actually benefit you to do good!

Actions To Take: Find a charity that is close to your heart and make it a point to donate each year. It doesn’t have to be a lot, but it’s good to get in the habit.

5. Pay Taxes

To a certain extent, you do have a choice in this matter. You obviously can’t choose to not pay taxes, but you do have the ability to leverage the rules in the tax code to minimize the amount you pay. Burying your head in the sand and not paying attention to this is a great way to ensure you pay more taxes than necessary.

What does it mean to be Good with Money?

For people who are good with money, it’s not about always having the latest and greatest, or even having huge incomes or bank accounts. It’s about good habits for saving and planning for the future. 

According to Lynette Khalfani-Cox, an author and money coach, there are certain habits those who are good with money know that the rest of us just don’t understand:

They know they don’t need to buy everything that crosses their path

Khalfani-Cox says that one of the things that people who are good with money do is say no to consumer culture. 

“People who are good with money are often not afraid to go against the grain and to actively unplug from consumerism,” she says.

“Whereas the person who is deep in debt and broke and living paycheck to paycheck might drive a BMW and have designer handbags or some of the trappings of success in terms of material goods, the person who does far better has several hundred thousand in the bank,” she continues. 

For example, Warren Buffett still lives in a house that’s worth just .001% of his net worth (not that you have to be a billionaire to be good with money). For those who are good with money, it’s all about living on less than you really need to. 

When they do buy things, they’re not chasing brands

People who are good with money aren’t chasing name-brand goods. Instead, they’re chasing value and deals, as well as searching for quality items that will last. 

“They’re more concerned with quality as opposed to quantity, and they’re also less interested in brand names just for the sake of flossing and just trying to look good,” says Khalfani-Cox.

And when people who are good with money do splurge, they’re thinking about things long-term. “If they are going to buy a $500 bag or something, it’s going to be like, ‘oh, this bag’s gonna last me 10 years,'” she continues.

And they spend their money on experiences over things

“People who are good with money that they would rather have an experience than an item to be able to show off,” Khalfani-Cox says. 

Millennials are increasingly displaying this pattern, and making spending on experiences a priority. As Business Insider’s Hillary Hoffower reports, in a survey of millennials, “more than a quarter of respondents said that after a rough week, the thing that would bring them the most joy is some form of entertainment, such as going to the movies, happy hour, or a concert.”

And in Khalfani-Cox’s opinion, millennials might just be onto something. 

They plan carefully for the future

Those who are good with money are planning ahead, whether it’s through saving, investing, or working with financial planners.  “People who are not as capable with money are present-oriented,” says Khalfani-Cox.

One of the key differences between those who are good with money and those who aren’t, in her experience, is that those who are good with money are planning ahead. “Be strategic in your planning and don’t be so driven by everything today,” she says.

They make saving and investing a part of their routine

Those who are good with money aren’t waiting for a raise or a large gift to save — they’re making it a part of their routine and using whatever money they have now. 

“People who are good with money know that discipline and consistency are far more important than large gestures of any kind,” says Khalfani-Cox.

She’s seen this particularly with those wanting to invest. “The person who is not particularly good at investing or not as good with money is thinking, ‘oh, I have to wait until I get $5,000,’ or, ‘I have to wait until I get a lump sum of cash to be able to invest that,'” she says. 

Khalfani-Cox emphasizes even the smallest of contributions are valuable. “These people have made saving or investing a habit and they’re more successful as a result,” she says. 

They’re not always millionaires — they just know how to do the best with what they have

“Anybody at any income or asset level can be good with money by practicing fiscal discipline and smart money management habits,” says Khalfani-Cox. 

While she acknowledges that building wealth is a very different scenario for those with little access to credit and lower incomes, there are still things anyone can do. 

Rather than saying they can’t, people who are good with money see anything as a step in the right direction. Someone who is good with money would say, ‘If I can just save, even if it’s $25 a month, that’s better than nothing,’ rather than, ‘Why bother saving if I’m only saving $25 per month?’

It doesn’t take tremendous wealth to manage your money well — whether you’re saving $25 or $2,500 per month, anyone who’s good with money knows how to work with the wealth they have.

They’re willing to invest in getting financial help

“People who are good with money buy the financial products and services, and buy the team that’s going to help them to gain further wealth,” says Khalfani-Cox. 

They see these kinds of expenses as an investment. “The person with a wealth mindset knows that accountant, that money manager, that financial planner, et cetera, is going to help them to double their wealth or to further grow their assets, and potentially their income as well,” she says. 

Those who aren’t as good with money are going to feel that they can’t afford this expense, and won’t see it as an investment, she says.

Is Money Good or Bad?

Money is not inherently bad. In fact, great good can be done with the money when it is used properly. Good people are often empowered to do even more good when they have money. Think of the Good Samaritan in the Bible.

If he were penniless, his ability to care for the man who had been mugged would have been severely diminished, because he would not have been able to pay the innkeeper. Thousands of charitable organizations that do a tremendous amount of good throughout the world could not exist without the generous donations of many affluent people.

On the other hand, when we set our hearts upon our possessions, hoard them all for ourselves, or covet other people’s riches, we are headed down a dangerous road that will certainly lead to misery. We must learn to love people, not money.

Obviously, the primary purpose of money is to provide for the basic necessities of life: food, clothing, and shelter. After we have met these three basic needs, the choices for what to do with our surplus are endless.

Why is Money Good?

The size of our annual income does not matter as much as how wisely we use what we receive. There are people earning $100,000 per year who are millionaires because they have always lived well below their means, saved a large percentage of their income, and invested wisely.

On the other hand, there are people earning $1,000,000 per year who are just a step away from bankruptcy because they have always spent almost everything they make, incurred huge amounts of debt, and invested mainly in very risky assets, if at all.

Of course, this is not only about investing, because it certainly also applies to the proper use of our gifts, abilities, time, knowledge, and other resources, as well as how well we use our money to improve the lives of other people.

Surely someone who earns $100,000 a year and gives 10% of it away to people in need will be viewed much more favorably in the eyes of God than someone making $1,000,000 a year who wisely invests 50% of it but gives nothing to others.

Furthermore, we are not suggesting that all of our extra money after meeting basic needs should be invested or given to other people. Sometimes spending money on wholesome recreational activities or for our children’s education is more important.

The point is that we need to exercise a balanced approach as we carefully consider what the best use of our money might be in each circumstance. If we are good stewards, we will always treat money with great respect, rather than buying whatever we want, whenever we want it, regardless of the consequences.

How can Money be a Bad Thing?

Most, if not all, people would love to have a large amount of money dropped into their laps. They say this because they feel that money can solve almost all their problems and worries. However, while it may be true that having money can take care of your basic needs like food and a place to stay, having too much money is bad for your body and your soul.

Firstly, having too much money can lead to a deterioration of values. Becoming rich can make a person proud and arrogant. The rich can afford flashy cars, branded clothing, and jewelry. They always look well-groomed and so they become vain and proud. Putting too much value on material things makes a person shallow and uninteresting.

They think highly of themselves and look down on others who struggle to make ends meet. In addition, the rich are used to solving their problems with money and they can no longer tell right from wrong. They begin to think that whatever they do is right. Hence, having too much money can change your personality, destroy your moral values, and make you an unlikeable person.

Secondly, being very wealthy can affect relationships. A wealthy man will attract insincere people who try to befriend them for personal gain. This leads to suspicion and mistrust of others which can affect relationships with family and friends. A rich man can end up being quite lonely as he does not know who his true friends are. Having too much money can destroy relationships and lead to loneliness. In other words, too much wealth may lead to unhappiness.

Besides that, having too much money can lead to poor health and an early grave. We know that the wealthy can afford to eat good food regularly. There is nothing to stop someone who has the means from indulging in whatever he likes, be it exotic meats or expensive sweets.

Read Also: This is the Most Important Conversation to have with your Spouse About Money

Unless he is disciplined and health-conscious, a rich man is likely to eat too much rich food which may harm his body. Coupled with a lack of exercise due to his being driven everywhere and having everything done for him, he is likely to develop some critical illnesses such as heart problems and high blood pressure.

In conclusion, since having too much money has such serious negative effects, it is quite obvious that having too much money is a bad thing. Nevertheless, the same is true of having too little money, which is the reason why we should aim to simply have enough, and be thankful for what we have.

Finally

Having a money buddy can prove to be helpful for your financial wellbeing. All you need to do is find the right money buddy with the tips we have provided in this article and put in the necessary efforts.