The Six Reasons We Spend Money – part 6

Today I have a question for you:- What is the difference between being Smart and being Wise?

To my way of thinking, Smart is about knowing lots of facts whereas Wise is about knowing what will happen before it happens which I believe is much more useful!

We’ve been looking at the six different types of expenses over the last few weeks. Today we look at the sixth and final expense type.

Based on my definition of Wisdom then, understanding the 6 different expense types will give you financial wisdom because you will be in a much better position to recognise them when they arrive and you will have the opportunity to be prepared for them in advance!

If you missed the first five installments you will find these at my blog.

1. Weekly Expenses
2. Non-Weekly Repeating Predictable Expenses
3. Product Purchases
4. Repairing Items That Support Your Life
5. Replacing Items That Support Your Life

Here is the final expense type.

6. Major ‘Once in a Lifetime’ Occurrences.

These fall into two groups:-

  1. Larger Life Goals:- These are bigger events you want to make happen and you have a time frame in mind. E.g. retirement, an overseas holiday, big dreams and desires.
  2. Unpredictable larger expenses:- These are expenses that you don’t really know when or even if they will occur but you need to be prepared for them just in case. E.g. A major car repair bill, a child’s future university education, a medical emergency, a child’s wedding and similar

 Where to keep this money

 Without a doubt you should talk to a financial planner for investment/retirement advice which will undoubtedly look at where to put your investment dollars.

 If you do not have a financial planner contact me and depending on where you live I may be able to connect you with someone I know and trust.

 Otherwise ask the following questions.

  1. What is their track record? Seek out current customers and see what they have to say. Do a Google search to see what people might have said about them in the past.
  2. What is their level of expertise and are they able to give independent advice or are they tied to a bank or group that will dictate what investment products they can offer you? Financial planning covers quite a few different topics and different financial planners will most likely have expertise in different areas. Some may prefer to work in the risk area and will be able to advise you on life insurance needs while others may have a preference for giving investment advice.
  3. Would you be able to work together? E.g. Do they personally have an interest in the kind of investments you prefer. E.g. If you like property and they personally prefer shares as an investment you might be talking a different language and not a good match!

Make a short list and interview them.

I recently met a financial planner who has written a book that I believe would help you with making this choice. The website for the book is at Money does grow on trees

For other big goals that do not fall under the retirement or investment banner you could use Simply Budgets to plan and track this money by setting up separate accounts under your savings list. This will keep this money easily identifiable

How to manage this money

You should see a financial planner for investment/retirement advice.

 For the other goals you are saving towards, when you reach your target, withdraw the money and have fun!

 For the unpredictable events you put money aside for that may never happen (but you want to have an emergency fund in place just in case), you will simply deposit an amount each pay to build up your chosen target slush fund.

 There is no guarantee you will get this right but doing something is much better than doing nothing! If you are lucky this money could end up being surplus and once a sum you consider to be sufficient to cover most emergencies is reached you could start channeling surplus into another ‘money bucket’ of your choice.

 I am a big fan of Bodo Schafer’s book and audio series ‘The Road to Financial Freedom’. Bodo recommends you save up 3 to 6 months worth of income and keep it available at short notice so no matter what happens, you will always be OK for long enough to come up with a solution if something really bad happens to you such as becoming unemployed or unable to work.

Do you need help?

I’m in the business of helping people fine-tune their finances. If you’re sick and tired of money stress and are ready to take action and you really want someone else to hold your hand through the process give me a call on 07 5472 0155. Let’s work out what needs to happen to get your finances running on all cylinders.

Succeed With Money

 No matter how much you earn I’ll bet you can make that income work better for you! In fact, the more you earn the more that statement would be true!

 Attend a life changing day with me focusing on getting your personal finances all sorted out and I seriously doubt you will ever regret it!

 Go to http://www.simplybudgets.com.au/financial-education/succeed-with-money-2/ to find out more.

 Why put up with financial stress when it is quite likely you can leave it all behind easily?

 With close to 20 years experience in educating people in day to day money matters and providing practical tools and support to make changing direction as easy as possible why would you miss the opportunity to spend the day with me as I take you through the steps to get your finances right?

 There are workshops scheduled in the weeks ahead for Melbourne, Sydney, Brisbane and Perth.

 What I teach is practical, easy to understand and backed up with tools to make it easy for you to crunch the numbers to reveal your optimum financial future.

 AND to make the decision even easier, for the next week only, you can use the coupon code EARLY to save $50 on the regular ticket price.

 Go to http://www.simplybudgets.com.au/financial-education/succeed-with-money-2/ to find out more.

 Statistics show that 80% of people who attend seminars never do anything with the information they receive. That’s why I run workshops! You are hands-on participating and when you go home you have used the tools I have given you and already taking action.

 That’s a huge advantage!

 Give me a call if you have any questions. My number is below.

 That’s all for today; have a goody!


Warm Regards David Wright
Simply Budgets
Ph 07 5472 0155