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The road to financial freedom is paved with treats

“Treats”, “happy” and “frivolous” aren’t words you’d usually expect to hear from a financial adviser.

But Hannah McQueen, founder of enableMe, and financial personal trainer, says spending money on the things you enjoy can help pave the way to financial freedom. “If any financial plan is going to work, you need to understand what makes you happy, even if it’s frivolous,” she says. “Put what’s non-negotiable at the centre of your plan, because if you don’t live your life, you won’t stick to the plan.

“You don’t have to stop enjoying your life to get ahead. You simply need to find the balance — something I know a thing or two about.”

Ten years ago Hannah and her husband were faced with the prospect of paying a huge amount of interest on their own mortgage. Hannah wanted to understand how they could reduce this cost.

After working with Dr Jamie Sneddon from the maths department at the University of Auckland she developed a formula that allowed her to save the size of her mortgage in interest costs. She patented the formula but soon realised that this was only one half of the equation.

Like many of us, Hannah found it difficult to stick to a budget, despite being a chartered accountant. The part missing from the equation was her “psychology of spending”.

“I was earning good money, but the more money I earned the more I believed it meant I didn’t have to worry about my money,” says Hannah. “I wasn’t doing the smartest thing with it. I spoke to friends, and they were just the same.” And so enableMe was born.

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With a client list over 4,000 strong, enableMe has established itself as one of the nation’s fastest growing financial advisory firms. Their Auckland branch has recently relocated to offices on Parnell Road, while further hubs can be found at the Wellington and the Bay of Plenty. Hannah and her team are excited to announce the imminent opening of their seventh office — and their first in the South Island — in Christchurch.

“From the beginning, our goal has been to open franchises throughout the country,” says Hannah. “As client demand grows, the need to have a presence in the main cities has become more important so we can better serve our clients.”

Hannah knows that money is often a highly emotive issue: “Your environment and your upbringing in particular, can have a big impact on how you handle money. Luckily, there is no right or wrong money personality, and it is not too late to learn how to make yours work. ”

Hannah is adamant that financial planning doesn’t always need to be about going without. Unless you include the odd treats into the plan, she says that your are far less likely to stick to it.

So how what is the best way of taking charge of our finances?

“First, take a breath. Jump on the financial scales and get a second opinion on where you are at. This can help you sort out your priorities. Most of our clients are doing fine but are capable of doing better and achieving more.”

Hannah says that by evaluating your financial status, along with developing and aiding in the implementation of specific targets, her financial personal trainers will help you get your financial life back on track.


Case Study Good income, big mortgage, no progress

Jody and Peter were both aged 39 and married with one seven-year-old child when they first came to me. Jody is employed as a solicitor and Peter is a communications consultant. Their combined before-tax income was $250,000per annum.

They owned a house valued at $850,000 and had a mortgage of $650,000 that they were on track to pay off over 30 years. The mortgage payments left them feeling like they didn’t have any spare money – when there was an emergency, or they wanted a holiday, they’d always have to use credit to pay for it. Money was constant source of stress. Although they could pay their bills and get by, they weren’t getting ahead in paying off their mortgage — I think they’d become a bit defeatist about it.

They both wanted more balance in their lives and, if possible, to be able to work less. That simply wasn’t a possibility with the size of their debt. They realised that if they didn’t sort out their financial situation and reduce the debt they wouldn’t have any options and may not be able to take up interesting opportunities that came their way.

Instead of spending because they could, we worked on a budget that allowed them to do the important things they wanted to spend money on. All remaining funds were captured and applied to the mortgage with the result being paying the mortgage off in 14 years, after allowing for an annual family holiday, and car replacements.

Jody and Peter took to their budget like ducks to water. After two years, they had reduced their mortgage by over 30 per cent. They have stuck to their spending plan since and earned significantly more than forecasted. Before they had a plan, additional earnings would just be spent; now that money is captured and consciously allocated to reducing debt or buying things they want.

Because their spending plan recognises everything they want to spend money on, when their income increases they don’t need to spend more — they already have what they want. Having the plan has meant that they haven’t frittered away the extra income.

Because they’ve also prioritised what’s important to them, including a family holiday at least once a year, they’ve managed to have money for the things they want and been able to pay their bills without giving them a second thought. Best of all, they’ve got ahead in their goal to be mortgage-free. Having an earnings target has been very motivating for Peter.

Jody and Peter have learned that you can waste an awful amount of money on stuff that just doesn’t really matter. It’s the small things that can add up and after the first 12 weeks they looked back and said, “Did we really spend $4000 last year on coffee? That could be an extra holiday for the family or a new racing bike!”

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The compounding results of the last six years mean that Jody and Peter are now mortgage-free, and have purchased their first investment property. They have killed their mortgage in almost an eighth of the time originally set up with the bank. This has positioned them to complete a huge renovation on their property without compromising their lifestyle and retirement goals.

They feel in control of their finances, less stressed and they no longer argue about money. Although that have achieved a lot already, it can be hard to stay motivated simply to eliminate a mortgages — it is important to have some rewards along the way. We reset the goals each year, and still they remain $5,000 ahead of schedule. If this momentum continues they will be able to live in their dream home and retire before 65.

Like most things in life, you have to be ready to change to be successful — just like giving up smoking, gambling or any other vice. It won’t work if you’re not ready to commit to change. For Jody and Peter, turning 40 was a milestone. They realised they’d been working for nearly 20 years and it looked as if they were going to have to keep going for the next 20-30 years just to pay off their mortgage. They wanted to get some control over their situation and get in position where they had options.

The keys to progress are having a clear idea of your priorities, making sure you budget for them, and tightening up on the miscellaneous spending. The regular meetings we continue to have make them accountable, keep them enthused and on track to continue meeting their financial goals.


Hannah McQueen