Amanda Morrall talks to personal financial trainer Hannah McQueen about how to improve your fitness levels so you can get ahead financially and still have a life.
By Amanda Morrall
Remember the '80s mantra for getting fit? No pain, no gain.
In the world of personal finance, you'll often hear a similar line propounding sacrifice as a means of savings.
Personal finance trainer Hannah McQueen has a more forgiving approach.
Instead of giving up all the luxuries and indulgences that give us pleasure, she says we simply need to cut back, cut out the fat, and get smarter about using our money productively.
In her work with clients, McQueen, author of a new book called "The Perfect Balance: How to get ahead financially and still have a life", extols financial fitness through heightened understanding of habits.
So how does a personal finance trainer differ from a financial advisor?
"Our whole objective is to understand where people are at now, what they want to achieve and whether we can get them to that point faster than what they naturally are on track to do. Our role is to get you to do things that you know you need to be doing, but perhaps don't get around to doing. That, in addition to a whole lot of financial smarts, is what goes into being a financial personal trainer."
|For a chance to win a copy of Hannah's book send Amanda an email with enableMe in the subject line along with an explanation about why you need this book. The winner is entitled to a discounted session with a personal finance trainer. email@example.com|
It's a relationship that generally lasts about 13 months, but prior to embarking on a personalised plan, McQueen and her team spend about a month laying the ground work.
Although it's possible to whip yourself into shape financially, being accountable to someone for your actions can make all the difference between what McQueen calls "floating" (just getting by) and "flying" (moving toward your goals in a measurable, linear fashion.)
"A lot of our clients are going through change management, so they're having to change their behaviour with money. And we know that if you are going through change management that you are six times more likely to get a sustained result if you are accountable to someone who is independent and qualified.''
Depending on the client's circumstances, it will set you back between NZ$2,000-NZ$4,000 in fees.
McQueen, a chartered accountant with a Masters degree in taxation law, says her services are often financed through commissions received from banks in the course of mortgage loans or restructuring.
"So for some clients, it costs nothing because the commission rebate offsets the cost of the services.''
Ironically, a lot of McQueen's clients are high income earners. Whilst theoretically in a better position to save, most end up frittering away their money on non-essentials because their spending has merely adjusted in line with their pay cheques. McQueen refers to them in her book as "floaters."
Learning to fly
"They're not going backwards, they're just not getting ahead particularly fast. So they can get a pay rise but they don't feel any wealthier because the money is almost pre-allocated before it's received. Most of our clients fall into that category. They're not making the progress they feel they should be making."
McQueen's objective is to teach the floaters to "fly, so they can meet their goals and objectives in a set time frame.
Mortgage restructuring is a formative part of her work. A key component of that is working with clients to determine where and how they can reduce spending so they can redirect the savings to reduce debt.
McQueen's personal struggle to overcome this money trap that led her to doorstep of calculus lecturer Dr Jamie Sneddon, who helped her devise a formula to fast track debt.
It works on one key assumption: that you have money left over at the end of the week or month to knock back the mortgage. As a result behaviour modification is every bit as an important.
Based on her work over the five years she's been in business, McQueen estimates most fritter away 15% of their income. By helping people to understand that they can still splurge here and there whilst sticking to plan, McQueen said she's achieved a 97% success rate in terms of clients realising their goals.
Don't be fooled
McQueen said discussions with friends about her own situation, made her appreciate just how poor people are at managing their money, despite the appearances of having wealth.
"One of the greatest myths is that people think the more money you earn, the easier it is to get ahead. If anything it's harder because you get more commitments and obligations and you're still not making the progress you should.''
Peoples' reluctance to talk about money doesn't help mattters.
"No one is honest about money and it's all kind of an illusion with a lot of people.''