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The $1000 project

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Some books provide a wealth of advice. The $1000 project has basically one idea - but it's good.


Why don't we have more money?

It's not like we don't earn money. At the average Australian salary of $75k, we'd earn a million dollars by 35. According to author (and financial advisor) Canna Campbell, people who find this out wonder "where has all my money gone?".

Well, it's not about salary. It's what you do with it.

Pretend savings

So often we 'save' money - a bargain at the grocery store, taking a packed lunch to work, or getting a lower rate on our mortgage. Other times we get a bit of extra money - some over-time at work, a tax refund, selling something online.

So where does all this money go? Often we spend it on something else. "I saved $50 on X, so I can afford to blow $50 on Y" is often the way we rationalise it. Clearly that's no actual saving at all.

What's the answer?

Step 1 - Canna sets up an extra bank account and calls it the "$1000 Project".

Step 2 - Every time she saves money she transfers the same amount to that account. Same for any extra money that comes her way.

Step 3 - When she hits $1000 in the account, she invests in shares. (Then repeats steps 2 and 3)

Is it for everyone?

There's maths and there's psychology. In maths terms, yes buying shares in small increments rather than in bigger chunks might cost her more in fees.

The power of her approach is in the incentive to save (or earn) extra money. The $1000 goal is small enough to be achievable in the short term. There's great motivation to spend less and save more when the target is within reach.

Want more?

While the strategy is the core of the book, there's also a chapter of ideas for earning extra money, a chapter of ideas for saving, and a chapter introducing the idea of shares - if it's new for you.

Why not invest in property?

As a financial consultant she sees a lot of people looking to buy a home. When asked why, they say things like "it's time" or "I should". She says it's not important to them - just to society.

Her advice is to work out what fulfils you. If you really want it, then it's easier to save for it.

What did the project teach her?

Before the book, Canna did this project for a year and reached $1000 many times. Along the way she discovered:
  • saying no to some expensive activities brings relief
  • a bit of organisation and preparation can save a lot of "outsourcing"
  • saving money is not a deprivation but taking care of your future self
  • the value of simple things, relationships, connections and creating memories
  • the power of small conscious actions to make a big difference

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Comments

  1. Illuminus13 July 2020 at 18:18

    Mindful Money, her latest book is great and delves more into other areas. I obtained it from loaning from local library after I had a hold on it.

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    Replies
    1. david14 July 2020 at 09:15

      Hi Illuminus. Thanks for that recommendation. A couple of people have mentioned that book to me since I posted this review. I've also added it to my borrow-from-the-library list. :)

      Delete

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