Archive for the ‘Blog’ Category

Happy New Year everyone (I thought I had better get that in before the end of January!).

Just a quick note to let you know that the dates for the first round of  CashFlow Clinics for 2012 is now available.

If you want to have a full days training in how to use the Simply Budgets software and the principles behind it as well as a stack of practical tips for getting on top of your household finances then these are for you.

Find out more at CashFlow Clinics at http://simplybudgets.com.au/financial-education/cashflow-clinics/

 

Have a goody!

 

David Wright

Hello everyone. 2012 is looking very busy already.

I sent the following info out in a recent e-mail but should have put it up here at that time. People keep asking what is happening so here is the list (so far).

MORE – This year (as always) we continue to improve, develop, deliver and support the Simply Budgets and DebtBuster Software. We have had a hold-up in the development of an Apple compatible Simply Budgets product but it is a good one. There are new options coming available soon that may allow us to create one single Simply Budgets application and then compile it for PC or Apple or Linux etc at the press of a button. Pretty exciting if it is as good as it is reported to be.

Of course the hold-up is waiting to check it out to see if it is as good as it is cracked up to be and then there will be another huge job of creating the next new version but it is always a work in progress.

Another possibly exciting de velopment in this area is that hopefully for the first time software will have graphics that scale to fill your screen so an application can be written and it will scale to fit on the screen it is displayed on. Up till now every part of what you see on the screen in your software had to have a designated size in pixels and had to be moved around to try to fit the particular screen it was displayed on without flowing off the edge or becoming distorted, something that has often caused headaches. Hopefully all a thing of the past!

NEW – Reduce your electricity consumption by 10 to 15% using totally new technology that pays for itself in 12 to 18 months (guaranteed). I was so impressed with this technology I bought the company (well not really – I just remembered a line from a very old TV commercial and just felt like throwing it in there!).

I will have this product available in the very near future. I just need to take care of some technical details that will ensure people get the right sized unit for their particular needs. The way electricity prices are going up this is a top priority product.

NEW - I am really excited this year to be broadening my area of education and coaching & training. Over the years I personally have developed systems and methods to help people get on top of their day to day cashflow and I have had phenomenal success with tens of thousands of people. Now it is time to also look at the broader issues that have a negative impact on people’s lives, other than just money.

Everyone spends their days balancing relationships, time and money. I have predominantly just focussed on the money part of that trio.

Simply Budgets ‘Life Management’ will cross the line to get all three areas in harmony.

Having control of your money and paying your bills on time is a great feeling but if you and your spouse are struggling to work together on the bigger picture or your relationship is not working on a number of levels then paying bills on time does not equate to that happy fulfilling life you desire.

If you are so busy working that you don’t have time for relationships with others or time for yourself, then having your money under control is not gonna be such a great feeling either.

There are actually 12 pieces to the puzzle that go to make up your balanced life and these will all be covered on a regular schedule.

More about this in one of my next e-mails.

MORE - As usual I will be visiting all the major Australian cities to present workshops. This year I am changing the format of my training days to bring new information and more energy and excitement into the classes.

I will be presenting information personally and will also be bringing trusted colleagues who are the experts in their fields for specific workshops and seminars. Keep an eye out for dates of events in your area when these are published shortly.

MORE - As always I will continue writing educational blogs and e-mails designed to get you thinking about matters relating to money & life.

BONUS - I’m looking for an enthusiastic bunch to join my Simple Wealth Steps program in February. This group will get to enjoy the added benefit of bonus weekly teleconferences with me. We will be discussing each week’s topic and I can answer any questions that might come up and of course connecting at the same time each week in this way will help to keep everyone focused on the program. I want to make sure my Simple Wealth Steps program really delivers what it promises and this added bonus will be a really great incentive to help people make the decision to get involved early in 2012.

NEW – For people who have the best intentions to stick to their budget but lack the self discipline to actually make that happen and this is holding them back, I am adding a very powerful new service where I can watch over your shoulder and hold you accountable to your budget targets each week to get you over that lack of self-discipline. People who have used this service in the past have reported amazing results and I have now simplified and perfected the system to deliver it, so I am now making it widely available to anyone who needs it (or wants it).

I saw one of the TV shows the other morning they were suggesting people should leave their mortgage payments higher as the interest rates come down yet when interest rates were going up they were whinging and complaining saying nobody could afford the higher payments! Not very consistent in my eyes!

I’ll leave you to consider the quality of our media….

Have a goody.
David W

 

Today we look at Big-‘E’ number 10.

So far we have looked at Emotions, Environment, Ego, Education, Expectations, Earnings, Expenses, External Forces and Excuses. You can check out all of these previous topics at my blog page.

Today’s Big-‘E’ is Energy.

So this is where the rubber meets the road! You can have everything else in place but if you haven’t got the energy to make it all happen you will never make it.

Sounds obvious doesn’t it?

Ever felt too pooped to pop? I expect we all have at some time or another. You just could not be bothered to get up, or to make one more phone call, or one more Google search, or run the numbers on one more deal. You’ve just lost interest and you’ve had it! Could not be bothered!!!!

Of course, when you are totally pooped, if a wild animal jumped out in front of you I’ll bet you would find the energy in reserve somewhere to run like blazes for hundreds of metres!

Energy comes from your head more than it comes from your muscles. Your frame of mind has a lot to do with this and if you are depressed and disinterested then it is easy to be low in energy as well.

Clearly the two are interconnected. If you act pooped, you will think pooped. If you think pooped you will act pooped. But if you push through the physical barriers and work on your mental state you can find energy you never knew you had and start to get your physical state to lift and match your head.

If you can remember the first time you were in love I’ll bet you felt supercharged and no doubt when you broke up you felt totally discharged! There is a word that often gets used with lovers and that word is ‘Passion’.

When you have passion you find energy from everywhere. You may have heard me tell the story of how I blew my first attempt at launching Simply Budgets because I targeted the wrong people. I used up all my Long Service Leave and had to go back to work with my tail between my legs.

Rather than give up though, I still had a fire inside that just drove me like a nuclear reactor drives a power station and I could not stop! I was just way too excited because I firmly believed there were millions of people who I could help and I just wanted to help them!

There really was no decision to be made. I just changed the product so it was aimed at individuals instead of professionals and began re-writing the software user guide to match. That gave me an opportunity to make it even better because I had learnt so much in my first attempt and now I was starting again.

It would be so much better second time around! The only problem was WHEN was I going to do it?

The only time I could do it was after my family went to bed so at 10pm every night for 6 months and on week-ends I would sit down to my computer and start typing. Within minutes I would be fast asleep in my chair and somewhere around midnight I would wake up, slap myself around a bit and start typing again.

Before I knew it, it would be 4am and I would have to make myself stop and go to bed because at 6:30am I would have to get up to get ready to go to work.

People would ask me where I found the energy and I would simply reply “adrenalin”; I am just so excited about what I am trying to achieve!

If you are feeling like everything is going wrong and nothing is working out for you then it is time you found your energy source by finding your passion. You just simply MUST find your passion. And that comes from your heart.

Maybe you need to get angry about something that is so wrong and decide you are going to do something about it. Maybe you need to look at your children and decide you want the world to be a better place for them, or maybe you need to look yourself up and down in the mirror and ask yourself what are you here for and find a cause. What do you love or what do you hate?

It could be a negative passion or a positive one. Look at Bruce and Denise Morecombe. What they have gone through due to the abduction and murder of their son is terrible. But look at the energy that they have found from a passionate desire to find their son. Something good has come out of that energy and it will grow to be bigger than Ben Hur.

When you are energised like that nothing gets in your way! You go around it, over it, under it or even straight through it if need be! Sure you make mistakes but there is no question of giving up. You are energy itself!

If you just can’t find the passion you won’t find the energy, so stop forcing it. Look for something that will really get you going and instead of having to put energy into it, you will draw energy from it!

So; that’s all on that topic for now (I just couldn’t be bothered writing another word about it!).

Have a great week-end.

Don’t forget I am celebrating 15 yrs of Simply Budgets this month. Last week I said I am moving office and don’t want to pack up and move hundreds of copies of Pocket Pal, my children’s pocket money system.

Stacks of them went out in the mail this week but there are still some left so they are still half price at $24.95 incl postage. Go to www.pocketpal.com.au and pick up a bargain. These would make a perfect Christmas gift for any child aged between maybe 7 and 13. Teach them good money habits while they are young and they will carry that through for life!

David wright
Simply Budgets

Today’s topic is Excuses which is Big-‘E’ number nine on my list of words that start with the letter ‘E’ that will determine your financial destiny.

So this may be a pretty confronting topic for some people.

We all have things we would like to do and we all have reasons why we are not getting to do them.

As people get older I notice they have a tendency to give up on dreaming because they lose belief in their ability to ever get to do or achieve the things they once thought they might.

Excuses

Over the years I have had all sorts of reasons given to me by people as to why they can not overcome these reasons. Here are some of them.

1. too young
2. too old
3. too tall
4. too short
5. too fat
6. too skinny
7. wrong race
8. wrong religion
9. born into the wrong family
10. went to the wrong school
11. live in the wrong place
12. born at the wrong time
13. got no money
14. too busy
15. too tired
16. single parent
17. abusive partner
18. rotten childhood
19. health problems
20. unlucky

Now of course I’m sure you have never used any one of those excuses for not achieving what you wanted.

Only True if You Believe them

The thing is that there is only one person who actually believes your excuses and that is you!

There are millions of people in the world who had an excuse and ignored it. In fact many of them used the excuse as the motivation to over-achieve! So many high achievers have had to overcome a disability of some kind. It’s almost as if people who are born quite normal lack the drive to push themselves and people who have had to push themselves to overcome a problem have gone further and excelled!

Grant Hackett had an asthma condition that he could have used as an excuse NOT to compete in swimming events. His coach did not even know of his condition for quite some time!

Libby Trickett had small feet and asthma but didn’t let that get in her way to winning 3 Olympic Gold medals in swimming.

Ian Thorpe was allergic to pool chlorine at one stage.

Leo Sayer had a number of hit singles in the 70’s and he started singing because his doctor told him it might help his asthma! He still gets invited all over the world to perform his hit songs 35 years later!

Check out these two blokes on You Tube and tell me they didn’t have a valid excuse…

http://www.youtube.com/watch?v=RiDoYIflqAY

http://www.youtube.com/watch?v=m3gMgK7h-BA

Nobody achieves everything they can dream of so don’t beat yourself up after seeing those two but you do need to work out what your excuses are!

Make a List – Write a Story

Here’s what I reckon you should do! Write down your excuses! Write down exactly why you are not being, doing and having everything that you would like.

Write at least 3 ‘stories’ about yourself. I have started each one for you here below.

1. “I don’t have xxxxxxx because…..”

2. “I am not spending time xxxxxx because…”

3. “I don’t get paid 10 times my current income because….”

Do not stop writing each story until you absolutely can not think of one more word to write. Then go on to the next one. If you find you think the last story is stupid then you really have to overcome the issue of your limited belief in what you are worthy of!

I think you will find a few excuses in there if you carry out this exercise honestly.

When you have done that, you need to ask the question, “What do I need to do and who can help me stop using these excuses”.

The Power of Belief

I remember being told in school that in Aboriginal culture if someone pointed a bone at another person they would be dead in 3 days. I’m not sure if it was a special bone or under special circumstances but I was amazed to learn that. The power of belief is an amazing thing. You need to be careful what you believe if this is true, and you also need to know what you believe!

So, we all have excuses that are holding us back and we need to find out what they are. We then need to prove them to be wrong.

Bodo Schaffer makes the point in his book ‘The Road To Financial Freedom’ that for every person on the planet with a belief you can find someone else with the opposite belief and both people have reasons that are valid and real for them.

He says, if a belief (an excuse) is holding you back then look at how someone with the opposite belief is justifying that belief and then change yours! After all a belief can be changed in an instant!

A child learning to ride a bike who just fell off for the 20^th time could say “I can’t ride a bike” and believe it. They could walk away believing for the rest of their life that they can not ride. They would then start to create the excuses. I’m too tall, too short, too something or other. Or they could decide to give it one more go.

Then on the 21^st try if they don’t fall off they will change that belief in an instant! “So I CAN ride a bike!”

I’ll leave you to give this some serious thought!

Hopefully you are enjoying and learning from my Big-‘E’s and hopefully you are able to apply each one of them to becoming more prosperous.

 

Have a great day!
David Wright

Simply Budgets

I have just been talking with Paul, my mortgage broker.

He told me that in the past few weeks there has been aggressive discounting by the major banks (and the smaller funders as well) to compete for market position. They have been dropping variable rates to attract competition. However there is a trick to getting the discount.

To get a reduction in your interest rate you have to ask for it! Who would have thought it could be so easy?

Recently there has also been a rapid decrease in fixed rates, so for a 3 year fixed period you would be looking at a rate of about 6.43% which is nearly 1.4% under the current standard variable rate (not including any discounts).

Paul said that all this hints that we may see a decrease in the official variable rates over the next 6 months but will depend on other factors and unfortunately his crystal ball is a bit cloudy.

So with all this in mind you would have to be thinking it is a great time to review your situation and either approach you current bank to reduce your lending rates or talk to someone about reviewing your overall position to save a few $$. As a guide, if you have loans totaling over $250K you should be looking at a variable rate of around 6.9% and over $500K a rate of approx 6.8%

Why not contact your broker or bank today?

As you would know, I am not in the business of selling home loans but if you are not happy with who you are currently dealing with (or you don’t even know who to talk to) shoot me an e-mail and I can put you in touch with Paul.

I would love for you to leave a comment here to tell others of your experience with this as I am sure it will help them to get motivated and learn from your experience.

Regards

David Wright

Hi everyone, here is my next Big-‘E’ and today it is External Forces

I’m sure you can tell me what the acronym ‘GFC’ stands for. There are lots of things in your life that you have control over and then there are things that just happen that are outside your control. The ‘Global Financial Crisis’ was (or still is) an external force like that.

You have absolutely no control over these events. They’re not your fault, but you have to deal with whatever effect they have on you and you just have to make the best of them when they come your way.

Control What is Controllable

My motto is to control what is controllable so the uncontrollable things in life have less ability to bring you unstuck. Identifying things you can not control is important because it allows you to be aware of what could happen so you have a better chance of being prepared for when or if it occurs. It also makes you more conscious when you are considering taking on new commitments of what could possibly cause you grief. If you are aware of it you can monitor it!

I would say that good advice, savings and insurance are essential for managing things beyond your control!

If your finances are in a shambles and then something bad hits you from left field you may find it almost impossible to recover. On the other hand, if you have your finances in order and your money is organised so when the bills arrive the money is there waiting to pay them and something hits you from outside your control you will find it much easier to manage.

A Personal Example

Just over 10 years ago our then 18 yo daughter e-mailed us from Canada and invited us to her wedding. Maybe I should have seen that coming but I didn’t. It cost $10,000 that we did not have at the time to get the rest of the family to the wedding and back. However, we had our finances in order so this ‘surprise’ from beyond our control was not a knock-out blow. We were able to deal with it relatively painlessly by borrowing the money and putting the repayments into our budget.

(The week after we returned I sold the very first copy of Simply Budgets and within 6 months left my school teaching job for a much more exciting career.)

Crossing the Line

So, for thousands of people it is the inability to deal with these External Forces that bring them unstuck. Basically this is because they fail to have a ‘bottom line’ plan for those things that are within their control and as a result there is no boundary that says “If you cross this line you are in trouble”. If you don’t know where the line is it is way too easy to be on the wrong side of it!

(I remember my first date. I had very clear boundaries and knew exactly where the line was! That made it really easy for me to say NO when the pressure was on to start all that mushy stuff!)

Sorry, I digressed a little but you know what I mean!

‘Knowing’ makes all the difference

When external financial pressure comes your way you really have no protection against it if you do not know if you have surplus money or not. E.g if friends drop around and suggest you go out to dinner your financial success or failure for the day is about to be determined by External Forces.

If you knew you had surplus money, you could go out to dinner with no feelings of stress or guilt and have a good time. If you knew you had no spare money it would be just as easy to say “Yeah sure, let’s go but it’s your shout ‘cause I’m broke until next payday; or would you rather we knock something up here at home together this time and we’ll plan it better for next time”.

There is no embarrassment in that situation, you just made it clear that you know your position and what is possible right now. You also did not say NO, you just said we’ll plan it better for next time, which says you would love to go but it will be much better for you if it is planned right.

Of course if you don’t know you are already behind your safe bottom line target and you just agree to go because it was suggested, you might still have a good time, but soon enough you are going to feel ongoing stress over bills you can’t seem to pay on time, and they will just keep coming!

A ‘Bottom Line’ Plan

I mentioned having a ‘bottom line’ plan. The way I like to prepare a budget plan is to include only the expenses I absolutely must pay for. This is my ‘bottom line’ plan.

A bottom line plan is what you would fall back on if everything went to pieces because of some External Force. Your ‘bottom line’ plan requires as little income as possible and only includes absolute ‘must pay’ expenses. A plan like this will show your target bank balances for each day for the next year based on paying only your bottom line expenses and depositing JUST enough each pay to cover them.

On payday the amount that is deposited into your account is more than the plan is based on and so it is really easy to get ahead of target. You check your account balance on a weekly basis and compare it with your target account balance to see how much spare money you have. It is literally a 2 minute exercise to take control using this method where hours and hours of record keeping would not give the same peace of mind.

Defining ‘External Force’ Expense.

Many people will quote ‘the car blowing up’ as an external force type expense as if they have no control over that. Just this week I cooked the engine in one of my cars. I could fix it myself but have other things I need to do with my time so I had it towed to the mechanic.

The car is 19 years old and has done 200,000 km so my question is, was this an unexpected event or something I could have seen coming? There is an obvious answer to that question.

If your car is one week out of warranty and it blows up, you can say that was an unexpected out of your control, external force acting on your finances. My experience was NOT an ‘External Force’ event. It was predictable and fortunately I have money put away for External Force events like this just in case. (It was still annoying because a tiny hose no more than 12mm in diameter will gobble up a chunk of my ‘rainy day’ money and I should have been checking more diligently more often).

A child needing an operation on a broken bone or a tooth that was knocked out in a footy game are also valid External Force events and you need as much as possible to try to include money for these kind of events in your budget plan. If you do your best to keep the controllable things under control then, as I said earlier, the External Forces can not muck up your finances anywhere near as much as they otherwise might.

Hopefully you are enjoying and learning from my Big-‘E’s and you are gaining a better understanding of how to manage money. If you have any topics you want me to write about in the future please let me know via reply e-mail.

That’s all for now.

Don’t forget to be my ‘friend’ on Facebook. Go to www.facebook.com/simplybudgets.
David Wright

Hello again.

I don’t know about you but I’m really starting to get tired of all the press and other media warning of financial disaster ahead.

How long do we have to wait for all this bad stuff to happen? Let’s just get it all over and done with if it IS going to happen. Otherwise let’s get on with the recovery!

I am sick of getting e-mails talking about double dip recessions and property market crashes and such like. How long do we have to wait for all this stuff to happen? We’ve been hearing this for well over two years now. I’m getting a bit over it all. Let’s just get on with whatever is gonna happen rather than talking about it for years!

Personally I think we should all just decide to get back to normal and ignore all the soothsayers predicting disaster. I think they are starting to get a bit boring!

What do you reckon? I’d be interested to hear what you think.

 

That’s me for today!

David Wright

Money, Property and You

You may have seen that a few weeks ago Nhan Nguyen and I scheduled some mid-week workshops in Sydney and Melbourne on the topic of Money and Property.

This was a bit of an experiment on our part to see if people would attend workshops during the week. We got a pretty strong outcome. We did Brisbane on a Saturday and had a full house but the two mid week events did not work out well at all.

So, now we know we should stick to week-end events!!!!

Because we had so many people complain that they could not come mid-week Nhan and I have decided to schedule some additional events and have decided to make them bigger and better. We both felt we did not have enough time with one day between us to really do justice to our topics so we are going to make these new events 2 days over a week-end.

And the price will be exactly the same as for the 1 day events! How’s that?

Interested? It’s a really great opportunity to open up your mind to other possibilities!

Here’s what you can look forward to.

I will be focusing on helping you sort out your money. I know everyone has issues that are holding them back. We say one thing and we do another; we put up with financial hardship rather than refusing to accept it. Money gets our head and our heart out of whack and rather than working out what we need to do we try to hang on to stuff that is holding us back. I am going to do my best to help you deal with this without asking you to make impossible or unrealistic changes in your life.

Some questions I will be asking you to look at are:-

• Where are you now?
• What are you doing to improve on that?
• Is it working for you?
• What else could you be doing?
• What is your major stumbling block?
• How do beliefs and attitudes get in your way?
• What do you actually want?
• Do you know how to get that?
• How can you change when your life is driven by habits?
• Do you have a plan?
• What are the common mistakes people make with money?
• What can you do to overcome these?
• And More….

I really dislike seminars where you get lots of ‘sizzle’ but no ‘sausage’ and it leaves you on a high that lasts a few hours after which you may as well have spent the time at the beach. I will have you engaged and leaving with an action plan so make sure you bring a notepad, a calculator and a handful of pens.

Nhan Nguyen (aka ‘The No Money Down Man’)

Nhan will be making property investing simple easy to understand. He will deliver a turbo charged workshop filled with exciting interaction, cutting-edge information and results driven activities.

Nhan will train you In the following areas:

• Finding Deals in Short Periods of Time
• Buying Property Interest FREE for 2 years – Using OPTIONS
• NO MONEY PROPERTY DEALS
• The Magic of Property Renovation – Using Little Money
• The Lazy Man’s Way to Buy Property
• Ingenious & Simple Property Development Strategies
• “How can you make $50,000 to $250,000 every time you do a property deal?”
• Or if you’re already investing, “How can you replace your job income within the next 3 – 6 months” part time.
• “A smarter way to find deals that stack up”
• “How can you profitably work with sellers in a win/win situation where everyone benefits?”

Nhan will reveal his favourite strategies (and why they work regardless of what the property market is doing!)

Known for his generosity and giving spirit, Nhan always delivers more than you would expect; and his trademark at his events is giving away fantastic gifts of great value to attendees. Come prepared to be gifted with some life changing knowledge. Nhan has done over 20 million dollars in property deals, has a natural ability to teach what he knows and lives and breathes the property market.

His clients gladly pay him thousands of dollars for a one-on-one consultation (with complete faith they will make back many times the cost!). He is passionate about inspiring others and thrives on making a positive difference for everyone. No matter where you find yourself along your journey to financial freedom, the information he will share should literally be life-changing! If you’re ready for this we will love to see you there.

So what will it cost?

The good news is that it will only set you back $97 for the two days. Clearly at this price we do not want money to stop anyone from attending.

Don’t be fooled though; we should be asking a lot more. It is possible people will compare this event with a $2,000 workshop and think this one is pretty dodgy based on the low price.

I can assure you we will not be holding back at all. You will get a lot more value than the $97. If you have been on my mailing list for some time you know me well enough to know I deliver great value!

This information when applied will benefit you by thousands of dollars so please do not treat it as if it only worth what we are asking (otherwise I will have to put the price up next time).

Now for more good news; you can bring a friend for f’ree. Split the cost if you like but make sure you share this invitation with someone you feel would really benefit from the opportunity.

I am looking forward to meeting you there.

If you are feeling nervous about your financial future and wondering how bad things can get then I can assure you this workshop will give you some real comfort, answers and direction. There are things you can be doing right now to improve your financial well-being. You do have the ability to take control of your financial future right now and Nhan and I will be showing you how.

‘Money, Property & You’ Workshops

Sydney; Saturday & Sunday 24th & 25th September 2011 Click here to register
Melbourne; Saturday & Sunday 8th & 9th October 2011 Click here to register
Brisbane; Saturday & Sunday 22nd & 23rd October 2011 Click here to register

Seats are limited, so take this opportunity and register today!

Each event has an 8:30am registration for a 9:00am start and a 6pm finish.

Locations. I am sorry that some of you will feel like you have been excluded because of the locations. One reason the price is low is so you can afford to travel. I had people fly to Sydney from Perth last year and they were not disappointed. It would be well worth making the trip from wherever you live.

Early Bird Bonuses

If you book in the next three days you will receive a free copy of my new DVD, “Big Budgeting Mistakes – Even Bigger Solutions” and Nhan’s best selling book, “Property Millionaire”

Those two alone are almost worth the price to attend!!!!

That’s all for now.

Today’s Big-‘E’ is Expenses.

Most people would have expected me to start with this one rather than leave it to number 7. In fact, one person wrote on my Facebook Wall “The Australian retailers must be writing asking you to stop. Everyone is saving their money instead of spending it.”

That’s very flattering but I don’t think I have quite that much influence over so many people’s spending & saving habits just yet! I’ll keep working on it.

Today’s message is about this very topic though.

What happens to your income? Are you in control of your Expenses or are they in control of you? Do you save any of your money so you will have the ability to generate income without giving up your time in order to do so, or do you spend it all and more?

You can’t be perfect!

Let’s start by acknowledging that it is not possible to be perfect with your finances so it’s OK if you’re NOT completely in control right now. The fact that you are reading this tells me you are keen to improve and willing to do something about it. That’s a really good start though!

Cost of Living

So, what I have noticed is that for 95% of people. “Their Cost of Living is determined by their Income”. They spend all they earn and as their income goes up so do their Expenses.

Pay rises come and go and nothing seems to ever reduce the financial stress. In fact it seems to be getting worse, not better. Prices seem to be going up faster than income and it seems to be getting harder to make ends meet.

Why is this so?

It would be easy to blame everyone else, the government, the GFC, the boss and so on but the fact is that in your street there is someone who earns less than you who is doing better financially than you are. And, someone else earns more and they are doing worse!

If you interviewed 100 people at random and asked them what is their income and do they ever have difficulty with money, their responses would show that most people have difficulty with money regardless of their income!

Value your Money

In Big-‘E’ #6 (Earnings) I said you need to place more value on YOU if you want to increase your income. Now I’m going to tell you that you need to place more value on the money you earn if you want to become wealthy.

7 Key Questions

When you are about to part with your hard earned cash, stop and ask these questions.

1. Is what you are about to purchase a good exchange for the hours you worked to earn this much money (Is the benefit worth the pain you went through)?
2. Could you pay less for the same benefit?
3. Is there another way to get this benefit?
4. Is this purchase something you ‘want’ or ‘need’?
5. Do you need it right now? Before you spend $1 it has a million possibilities. Once spent it has one outcome! Make sure you don’t regret receiving that outcome over another.
6. Do you really need it at all? (Have you ever said something like “I need a new car” but kept driving the old one? We are all good at telling ourselves stories!)
7. If it is a ‘want’ rather than a need could you satisfy this emotion in a different way with a better financial outcome?

What is normal?

At a recent workshop I asked people to complete a sheet that listed 20 common household expenses. Their task was to enter amounts they thought were appropriate for an average family for each of the items and then tally up the total spend for 12 months.

When we looked at the totals, the spread for all the people in the room ranged from around $30k p.a. to $130k p.a.

Does this surprise you?

The amounts YOU think are reasonable for everyday expenses are not the same as the people around you. You might be feeling comfortable spending $50 at the butcher each week and yet someone else would be mortified if they spent more than $20. You might think it’s OK to spend $90 a month on pay TV and watch all the movies and sport while someone else watches a free movie on a Friday night and an occasional other program now and then and they spend their spare time on the week-end hiking and swimming and in the evenings prefer to interact with the kids, play board games, read books, go to meetings, play an instrument and learn a craft.

Always Other Ways

The important thing to note here is that there is ALWAYS another way of looking at everything. You might have read ‘play board games’ and nearly choked or you may be someone who would be happy to play board games. Your attitude is what makes the difference. (Pity it doesn’t start with an ‘E’ or ‘Attitude’ would be another of my Big-‘E’s).

There is ALWAYS another way to solve a problem.

For example, when I was 19 I had to hand my driver’s license in for a month because of a few speeding tickets I had picked up due to youthful exuberance. I should have had the problem of not being able to get to work or band practice or week-end events but I simply asked work mates to give me a lift to and from work and friends to take me other places. If that was not possible I simply rode my trusty old push bike!

And it is ALWAYS easier to make the more expensive choice.

For example, If you have money in your wallet and money in your account and you arrive home at meal time after a really hard day at work only to realise you forgot to take steps to prepare for your evening meal prior to leaving in the morning, most people will find it all too easy to ‘order in’, ‘take away’ or ‘dine out’.

If you put MOST people in the same situation but take away the money and it’s amazing how the choice to prepare a meal at home becomes so much easier to make.

A Different Angle

I am going to make it really clear here that whilst I am talking about being more frugal with your Expending, that is NOT what I specialise in. I have been on TV with the title ‘Budgeting Guru’ after my name and yet I don’t think I have ever written about how to save money on household items. There are plenty of web-sites you can go to for information on how to save on almost everything you could think of spending money on. I would recommend www.simplesavings.com.au as a good starting place. This is just NOT what I do.

I prefer to look at the topic of budgeting from a totally different angle.

The one thing that I know for sure when it comes to Expenses is that it is easy to overspend when there is no roadmap and no plan but when you isolate your ‘must pay’ predictable expenses and project them forward into the future so you can see what is coming long before you get there, making other spending choices is a much easier task. Nobody else seems to have worked this out, or at least they aren’t talking about it!

Almost every time I speak to one of my Simply Budgets software customers I hear the same story. They tell me ‘this has taken away all the guesswork and all the stress’.

My Hot Tips

So to finish off for today, my hot tips for managing Expenses are:

1. Set limits for your spending. E.g. allow a certain amount for food, fuel, entertainment etc. each week and stop when you have spent to your limit (to my surprise I discovered that not everyone does this. It is the most basic and crucial first step!).
2. Identify your regular predictable expenses and prepare a 12 month plan to pay them on time every time, looking not only at the ‘how much’ but also at the ‘when’ so you always know how much needs to be set aside to meet those payments on any given day of the year (that’s what my Simply Budgets software does).
3. List your essential aging possessions (fridge, car, washing machine, TV, Stereo etc) and prepare a 10 year plan to replace these items and put money aside for these as well (that’s also what my Simply Budgets software does). Note:- a $1,000 washing machine costs $2 a week if you have 10 years to save for it, $4 a week if you wait 5 yrs before starting and $20 a week if you only have 1yr left to go so start soon!
4. If you know you are at risk of spending the money from 2 & 3 above on other stuff, keep it in a separate account. If the only money in the account you have easy access to is for your weekly expenses it is really hard to accidentally spend money you need for paying larger less frequent bills!
5. Keep the 7 points I listed above at the top of your mind when you go shopping.

I could probably keep going on this topic for a lot longer than you have available right now. I think I have presented the key basics that will help you head off in the right direction though.

Happy ‘Expensing’!

David Wright