There’s only so many levers you can pull in your financial life to get better traction with your money.
A lot of the clients I come across – whether it’s a tardies on a job site, a professional, or a business owner – are really good at bringing money in the door, but not enough of it sticks to the sides.
This becomes a vicious rollercoaster – just briefly catching your breath for moments but constantly spinning your wheels financially. Never any surplus, always just enough cash to get by.
It all comes down to your financial operating system.
The Car Analogy
Let me zoom out for a moment and think about the car analogy.
To drive a car confidently, you need seven things:
- A road-worthy vehicle
- A tank full of fuel
- The foundational functions – engine, transmission, steering wheel
- Safety features – brakes, mirrors, seatbelts
- A dashboard that shows everything you need to know – fuel, speed, and so forth
- A clear destination – where you’re going
- The ability, both physical and mental, to bring these parts together and get them working all in the same direction
Your wealth creation’s no different.
Take Control or Stay a Passenger
A lot of people dislike the nitty-gritty of financial details. But the reality is, to take control of your future, you’ve got to get in the driver’s seat and use your income as a vehicle to fast-track yourself to financial freedom – so that you’re not chained to your desk until you’re well into your 60s.
The alternative? Abdicate all responsibility, put your head in the sand, and watch as someone else drives your car with the handbrake on.
The 8 Levers in Your Financial Operating System
If we get your financial operating system right, you’ll have clarity and control over your money instead of constantly struggling just to keep your head above water on the hamster wheel.
Think of these as the different controls in your financial car – some you’ll use more than others depending on where you’re at in your wealth-building progress:
1. Spend Less Than You Earn
This isn’t about eating two-minute noodles every night or being so frugal that you don’t enjoy life. It’s about understanding where all your money goes and being conscious about what you’re spending it on.
When you get visibility of your cash flow, you’ll likely notice leaks in your spending that you can plug without it impacting your lifestyle. Maybe it’s subscriptions you’ve forgotten about, or impulse purchases that don’t actually add value to your life.
The goal isn’t to live like a monk – it’s to make sure your money is going toward things that you need and actually matter to you.
2. Earn More Money
Whether it’s boosting your employment income, starting a side hustle, or growing your investment income – more money coming in gives you more options.
The key is making sure the extra income doesn’t just disappear into lifestyle creep.
3. Go Into Investment Sprint Mode
Think of it like training for a marathon – periods of intensity followed by more sustainable pacing.
A certain points in your money progress, you go really hard on investing. It might mean skipping that overseas holiday or driving the car for another year, but it gets you to your next financial milestone faster.
4. Work a Bit Longer
Delaying when you want to get to your financial freedom number can be incredibly powerful. Here’s why: as your investment pool grows over the years, the dollar impact of your returns gets bigger and bigger.
If you have $100,000 invested and earn 8%, that’s $8,000. But if you have $800,000 invested and earn the same 8%, that’s $64,000. Same percentage return, but eight times more money in your pocket.
That’s why a year or two of extra work could make a huge difference to your retirement lifestyle and financial security.
5. Be Tax Smart
This is about paying less tax legally. If you increase your after-tax return, you’ll accelerate your progress significantly.
I’m obsessed with after-tax returns and less obsessed with tax deductions. It’s not about chasing tax breaks; it’s about structuring things so more money ends up in your pocket, not the ATO’s.
6. Use Leverage Strategically
This means borrowing money to invest – to amp up your wealth building. Leverage is the rocket fuel of your car to help spur it along. But leverage amplifies both gains and losses. You need to understand what you’re doing.
7. Take More Investment Risk
This means adding more high-risk, high-return investments to your portfolio. For example, putting more money into growth shares instead of keeping it all in term deposits or bonds.
The upside? Growth shares historically deliver much better long-term returns. The downside? They’re more volatile – your portfolio value will go up and down more, especially in the short term.
It’s about having the right mix to suit your timeframes and sleep-at-night factor. If you’re investing for 20+ years, you can handle more volatility because you have time to ride out the ups and downs. But if you need the money in 2 years, or if market swings keep you awake at night, a more conservative approach makes sense.
I often see people try this lever before the others, unfortunately. It’s usually a symptom of not having a clear strategy.
8. Lower Your Future Lifestyle Bar
I’m all about having ambition and shooting for the stars, but if you want to make work optional sooner rather than later, you need to be realistic about the trade-offs.
A client of ours was adamant that they wanted to live in an oceanfront apartment in their next chapter, when their kids finished school. But when we did the numbers, it meant they’d be obligated to work well into their 60s.
They wanted to have the choice to pull the pin well and truly before that, so they could travel more and work less.
So we adapted the goal – a unit a street back, that’s $1 million less, suddenly looked pretty appealing.
Sometimes the difference between your dream retirement and a pretty bloody good retirement is 5-10 years of extra work. The math is simple: need less, save less, retire sooner.
Any questions or concerns?
If you’re ready to take the first step, it all starts with having a conversation about your financial goals.
Stay Beautiful!
John Manserra
Certified Financial Planner®, Director
Apex Advice – Geelong Financial Advisers for professionals and tradies who want to organise, grow and spend their money with confidence.
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Note: The information contained in this update has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs.
You should seek advice before making any decision regarding any information, strategies or products mentioned to consider whether that is appropriate to your own objectives, financial situation and needs.