In this chapter from journalist Frances Cook’s guide to getting your finances sorted, she finally comes to terms with her attitudes and behaviour around money. 

They say the first step is accepting you have a problem. One of the first things I had to accept was that I was guilty of ‘lifestyle creep’. With each of my hard-won pay rises, I immediately found something I ‘needed’, which soaked up my new disposable income and stopped me from using the extra money to truly get ahead. 

Convincing myself stuff must have been good because it was more expensive became a pattern. A high price-tag was a shortcut that showed me something was high quality. It’s easy to spend to your limit every month when you’re using that kind of lazy shortcut. 

I’ve never been paid six figures – although, note to the universe, that would be very nice – but I had managed to get to the stage where I earned a good amount of money, yet was still barely scraping by.

Part of the problem was that I’d been so broke for so long. There have been ups and downs throughout my life. I’d had a taste of the high life, which was followed by sudden uncertainty about whether we’d even keep a roof over our heads.

When I was a young kid, my family was reasonably wealthy – lots of toys, a nice house, all of that stuff. When I was a little older my parents got into a bitter, nasty divorce. At one point, the bank account was frozen as part of the legal games.

I remember my mum bringing home an enormous sack of carrots, because it was the cheapest thing she could buy in bulk with the little bit of cash she had. A family friend sorted us out for potatoes and onions. We had chickens, so that meant we had some eggs. It turns out Mum could be quite creative with combinations of potatoes, carrots, onions and eggs. But there’s only so much creativity that can take you through that: I still don’t like frittata.

She did her best to protect us from the stress of that time, but kids know. I would only find out later that she had only just managed to keep a roof over our heads, as well.

Then she met my stepdad, and I’d say we were comfortable through my later teens – not flash, but certainly there were no more worries about food. I got high-school jobs, first picking tomatoes, then working at a café, to get enough petrol money for a taste of freedom in rural New Zealand.

When I went to university, my savings from those high-school jobs lasted a while. I worked part-time when I could. I knew how to cut corners, surviving on carrots and hummus for surprisingly long stretches. As well as the carrots and hummus staple, there was the discovery that a can of chilli beans mixed with frozen vegetables made a surprisingly cheap, filling and tasty dinner. I spent a lot of time walking from my first job, to my second job, and then to a university lecture, so I could earn as much as possible without paying for petrol to get between them. At my flat, we stuffed bubble-wrap into the gaps in the old wooden window sills, which stopped a breeze from blowing across the room and meant we didn’t feel quite so cold.

I would often cut every bill back to the bare minimum for a month just to make sure I could afford one rowdy BYO dinner out. It wasn’t exactly pleasant at times, but I managed to make it work.

As the years went by, my high-school savings ran out, and higher level uni courses demanded more of my time, making it hard to hold down a part-time job. After six years of study, a casual job in journalism earning $20 an hour felt like riches.

Somehow, even as I finally got money coming in – and even after a few pay rises – I was still living pay cheque to pay cheque.

By the time I started to climb the ladder and earn more, I was like a starving person. I’d developed a mentality of ‘I’ve earned it’ so I can spend it. I stuffed myself with disposable income, spending it the moment it came into my hands, telling myself it was my reward for how hard I’d worked. Except, it turned out my ‘reward’ was cheating me of better and brighter things.

When I got my first real job, my eating habits changed. Carrots and hummus were finally reduced to their normal standing as a snack, and other cheap combinations – like canned chilli beans and mixed vegetables – were ditched entirely.

I don’t think many people would begrudge me being able to eat real food again, but I also didn’t need to replace those staples with fresh berries, takeaways at least twice a week, and regular café brunches on the weekend. I wasn’t at that place where I could comfortably afford those things yet, but I was acting like I could.

My next major raise led to a change in my shopping habits. I justified this to myself by saying a job with more responsibility needs better clothes. With each pay cheque I would treat myself to a new pair of heels, an expensive skirt for the office or maybe even both. Again, work clothes can be necessary – but every single time I got paid? Come on.

Following my next pay rise, I decided I no longer needed to worry about dyeing my own hair. My husband was relieved of his duties as Hairdresser-in-Chief, and I started going to the salon for a professional cut and colour every three months. Never mind that they actually did a worse job of my hair than my husband had done – it was professional, so it must have been good.

Those ‘small’ lifestyle changes don’t look so bad at first blush, do they? Maybe you look at them and think, ‘Hey, what’s the problem?’ But a few hundred here, a few hundred there, adds up to a few thousand. I didn’t have a few thousand to spare – I still wasn’t even paid the average New Zealand wage. But I never looked at what was happening or checked in to my bank account, and I certainly never, ever talked to anyone about money. It was a quiet, ongoing panic, which I didn’t want to think about for long – so I didn’t. But it was like static in the background of my mind. 

At first, it was a small voice telling me I needed to change, but when my husband called me out, a clamour started to build in the back of my head. Change was needed.

Part of the reason the dreaded lifestyle creep snuck up on me was because I’d prided myself on getting by on very little for such a long time. I’d survived six years of student living on about $250 a week. But now with a higher income, I was in a position where, if I was to suddenly lose my job, I wouldn’t last two weeks. 

Look, I work in the news industry. I should probably have been more prepared to survive for a while without a wage.

I’m not glorifying the years when I had nothing. They were miserable and sometimes hungry times. There’s no way I want to go back to living that way just so I can pile up gold and roll around in it like Scrooge McDuck. I needed to find a middle ground where I could gain my financial independence without having to live like a monk.

If you have bad habits, a bigger income won’t fix them. You’ll just have those bad habits on a bigger scale. If you don’t sort your head out, there’s no pay rise in the world that will fix your money problems. There’s no point thinking about investing, buying a house, starting a business or whatever else you think will grow your wealth, if you haven’t sorted out your relationship with money.

This wasn’t something I accepted willingly at first. I was still hopeful I wouldn’t have to change my ways when I first met up with Hannah McQueen, whose personal finance business EnableMe was built on the idea of providing people with ‘financial personal trainers’. 

Like many people who sign up to work with a personal trainer, part of me was still hoping I could stick to my lazy ways, that I would be told it wasn’t really my fault, and that there was some easy trick nobody had told me about. I hoped that this ‘trick’ I had overlooked would still let me spend everything I had without repercussions.

Unfortunately, Hannah quickly gave me a lesson in things I didn’t want to hear. Her advice was that the biggest changes would come from how I handled the money I already had, not from how much was coming in.

Based on her experience, she estimates 15% of the average person’s income is frittered away on things they don’t even enjoy. That figure doesn’t even include the discretionary spending that actually brings you happiness.

Now, consider that the average person should – but doesn’t – save at least 10% of their income for retirement. The numbers start to align suspiciously well.

Yes, I know that’s not the case for everyone, but it’s the case for enough of us that I’m going to go ahead and generalise about it. If you have enough disposable income to buy a book, then we have some wriggle room to make changes.

Fifteen per cent on rubbish, things you don’t need and also don’t want, simply because we’re not really paying attention. Those things end up costing us what we actually want – financial security, a roof over our head, a good holiday. You only have a certain amount of money and time. In almost every job, you exchange your time for money. If you spend a week working only to blow that money on a dress you never wear, you just ticked away a week of your life for nothing. Why blow it on things you don’t even care about?

For every dollar you spend mindlessly, you lose a dollar that you could have put towards travelling to Paris. That dollar could have taken you closer to starting your dream business, so you can quit the day job you don’t love. You could spend that dollar taking your mum out for breakfast, because you might as well treat her while she’s still around.

Before heading out the door, Hannah told me with some astonishment that most people came to her ‘personal finance trainers’ thinking that a pay rise would help sort their problems. As soon as they got the raise, they once again started to spend more, so ended up still stuck where they started.

Guilty. As. Charged.

When I caught up with Hannah again for this book, she said the issue was the difference between knowing and doing. Yep. At the beginning, that was definitely me. I guess at least I wasn’t alone. 

What really helped turn my mindset around was learning the difference between income and wealth. That just earning more wouldn’t make me wealthy – I would simply be bringing in more and sending it straight out the door again. Meanwhile, people can become wealthy on a lower income, although it will obviously be more difficult.

Wealth is having savings to fall back on. It’s having a roof over your head that you can rely on, that you’ve maybe even paid off. It’s having investments that make you money while you have them and that you can sell in a pinch, so that you’re not solely reliant on a job you could be fired from at any time.

Income is what’s coming in. Wealth is any assets you have, minus your debts. Wealth is what will get you an easier life, one in which you’re able to rely on yourself more and in which you have the freedom to leave situations that you don’t like – bad jobs, bad relationship, boring life. Having some financial independence up your sleeve is your bargaining chip.

I finally had income, but no wealth whatsoever. I’d relaxed all of the rules as I earned more, so that income had no chance to get me the wealth I hadn’t realised I needed.

I had no idea where my money was going. While I was lucky to not have any major debts, I only had about $200 saved. Investments? Those were for rich people, not normies like me.

If you went through hard times growing up maybe this problem with spending right to the limit sounds awfully familiar. That’s because there’s piles of research that shows scarcity actually changes the way you think. In other words, if you grew up going without, you’re going to find it harder to stay in control of your money.

If you’ve ever gone on a diet, you’ll know the feeling. Only a couple of days in and suddenly you can’t remember why you’re on the diet in the first place. Instead your head is crowded with thoughts of doughnuts, pasta, burgers. Before you know it, you’re stuffing your face.

When you grow up with money being uncertain, it gets harder to think long-term. Your brain focuses on getting you through the short-term stress, no matter what it costs your long-term goals. It can feel like nothing matters. Why try for a better future, when it won’t work? If you might not be able to pay rent this week, then it doesn’t make sense to have a savings account. But what starts logically soon turns into subconscious self-sabotage. You might give in to the impulse to buy something, to give you a momentary hit of feeling good, a break from the stress, even if it means you can’t pay rent that week. You might quit a stressful, low-paying job, because, hey, it’s barely paying your bills anyway, so will it really be that much worse? (Yes. It will.)

AUT consumer behaviour lecturer Sommer Kapitan says research shows growing up in a household where money is tight can impact your behaviour for the rest of your life. Interestingly, growing up in an unstable household can have the same affect – although the two often go hand in hand.

Sommer says part of dealing with this is just realising how your past will give you unhealthy impulses now. It’s not that your past dictates your future – plenty of people who grew up in wealthy, stable homes can also make terrible money decisions, and vice versa – but if you’re finding you regularly make unhealthy money choices, it’s worth being honest with yourself about that. Personally, once I realised why I was acting this way, I was able to see just how irrational I was being. The impulses are still there, but I know what they look like and have a plan to control them.

I was only thinking short-term, because in my past short-term issues had been the important problems. Get through the now and then maybe you’ll get the luxury of tomorrow. No time to plan for that tomorrow, though.

I wasn’t there anymore, but my brain couldn’t let go of it. I’m willing to bet a lot of people are dealing with this sort of money history. Maybe you have your own baggage that leads to a different spending pattern for you.

There’s not enough research into financial behaviour for my liking, but what is around is fascinating. Research from The Journal of Financial Therapy (2011) found some people believe they don’t deserve money; so they do things like sabotage their financial success or avoid spending money even on things that they need. They might even feel the urge to spend or give away money well beyond what they can afford, because they unconsciously want as little in their possession as possible.

The same research found that for other people money was a source of shame and secrecy. Whether they had a little or a lot, they just didn’t want to talk to anyone about money. The secrecy was driven by fear, an impending sense that something was about to go wrong, whether or not there was any reason to feel that way. So they hoarded, refused to talk to anyone about money, felt anxious and never enjoyed any of the benefits or security of the money they had. What an awful way to live. 

One of these might sound worryingly familiar to you or neither of them might. You might do other things that you suspect aren’t so healthy, which I haven’t described here. Whatever your personal history is, it’s worth taking the time to figure out what you’re doing, why and how you’re going to deal with it. 

It’s easy to hold yourself back when money just seems too hard. When you can’t imagine getting yourself into a better financial position, you just give up and give in to every impulse that enters your head. 

I was no longer struggling to eat or to keep a roof over my head. I had pulled myself towards a future where I could look after myself. Frankly, I was running out of excuses to be doing badly with my finances, and I was starting to become more aware of the traps I was allowing myself to fall into. Once you start to see what the traps look like, you can learn to sidestep them. 

I was sabotaging myself. I knew I was spending money on things I wasn’t even enjoying. Worse, my out-of-control cash flow was making me anxious. That low-level static was always in the back of my mind. 

What made me happy? I liked having new clothes and looking good. I liked meeting friends for coffee and brunches at cafés. I liked eating well. I also knew that my husband liked eating well and I quite liked having him around, too. I wanted to do better, but I wanted to keep those parts of my life that genuinely made me happier. 

It was time to experiment. It was time… to budget.