I don’t know anyone who hasn’t thought about winning the lottery and how they’d spend their windfall. We all dream of a life where we have plenty of money to spend on the lifestyle we want and never have to worry about money again.

Whether you have reasonable wealth or are a wage slave and get by from pay cheque to pay cheque, we all think about money – earning it, keeping it, or losing it. But while money is a concept we have to respect, worrying about it isn’t going to change our circumstances.


A lot of rich people are secretly broke, simply because the amount they spend every month equals, or is even more, than the amount that they earn. These people don’t have an emergency fund for things that “go wrong in life” or are “not planned for events”.

If this sounds like you, try and write down the key things you are worried about that could go wrong with your finances. Most likely, it boils down to about three or four things – you lose your job, you get sick and can’t work, an emergency happens or you don’t have enough to retire. Remember to include the extended circle of financial connections in your family – the dependents in your household (or beyond) and those who contribute to your household income, such as your partner, children, parents, flatmates, or extended family. Essentially, the same three or four events could happen to
any of them.


There are essentially two different ways to look at your money: your cash flow, and your balance sheet.

Your cash flow is made up of your income, and your expenses.

The first step to managing your money is understanding what your cash flow situation is. What are you spending your money on each month?

Keep a very accurate record of ALL expenses, for a period of about 3 months. Use a spreadsheet to help with this or look for an app with the function to record expenses on a daily basis, as well as details about the expense.

After 3 months, go through the list of expenses and try to figure out which are essential expenses, normally things like rent, transport, utilities and food.

Non-essential expenses are things like crap that you buy to make you feel happy (pardon the potty mouth, but it had to be said!), bought lunches at work, beauty treatments and extravagant evenings out. But it could also be that cup of latte you buy every single day.

If you do not have extra money saved to cover unexpected events, or you don’t have enough in your retirement fund, then I’m afraid you’re going to have to say auf wiedersehen to daily treats like that, and be content with having these luxuries on a less often basis, until your financial situation have changed.

I know, the struggle is real. But consider the alternative – having to dial back your lifestyle considerably when you retire, because you didn’t put enough money away to cover your essential needs… Yep, scary thought indeed.


Your balance sheet is made up of two items: assets (things you have) and liabilities (things you owe). The difference between assets and liabilities is called your net worth.