July 8, 2025 • 22 mins
Budget in need of a tune-up? Or yet to set one up, and not sure where to start? Join Canna Campbell - a financial planner for 20 years - and Fear & Greed's Michael Thompson as they go through Canna's own guide to budgeting and taking control of your money.
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The information in this podcast is general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.
Canna Campbell is an Authorised Representative and Financial Adviser of Links Licensee Services Pty Ltd AFSL No. 700012 ABN 97 678 975 589.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Welcome to How Do They Afford That, The podcast that
peaks into the financial lives of everyday Australians. I'm Michael Thompson.
I'm an author and the co host of the podcast
Fear and Greed business News. As always, I am with
Canna Campbell, financial planner and founder of Sugar Mama TV,
the financial literacy platform that you'll find on YouTube and podcast, books, Instagram, threads, TikTok,
(00:21):
keynote speeches and more. Hello, Canna, I have.
Speaker 2 (00:26):
Got so many duty things to share in today's episode.
Speaker 1 (00:29):
You have been almost bouncing since you walked into the
studio today, big bull of the gate, because we are
talking about budgeting, which elicits quite like. Your face lights up,
your eyes just go bright, you smile. This is like
(00:50):
budgeting is your love language you.
Speaker 2 (00:54):
Actually, it's an active It was a service and active
service you.
Speaker 1 (01:01):
I appreciate a good budget right and a while ago
you took me through a basic guide to budgeting the
way you structure your accounts and things. Today, today we
are stepping it up significantly. You are taking me through
budgeting Sugar Mama style.
Speaker 2 (01:20):
It's like your financial GPS, as.
Speaker 1 (01:24):
In, like you will navigate me through my budget.
Speaker 2 (01:27):
Your cash flow, your financial goals.
Speaker 1 (01:30):
Great, all right, I thought you were saying financial GP
as in the like a doctor and you're going to
do a health check on my.
Speaker 2 (01:37):
Turn up your hearing aid.
Speaker 1 (01:38):
Please let us roll with this. Do this is a
dangerous question, but I just need to ask you this.
Do people actually need a budget or can you just
get by with just tracking what you spend? Do you
actually need to have the intention behind it as to
where the money is supposed to go? Surely tracking it
(01:59):
is in the Yes, you need.
Speaker 2 (02:01):
A budget, and no. Budgeting isn't about tracking where you
spent your money because you're If you're tracking what you spent,
it definitely helps, but you've already spent it, So how
does that actually proactively help you going forward? Is just
documenting that you're wasting your money? So a budget is
actually more about planning. Okay, you know I use the
(02:24):
analogy of a traffic control director, which I will, you know,
save you the pain and torture of another analogy in
today's episode. But you know, it's a tool where you
tell your money what to do, rather than wondering where
it all went. That's just the issue with tracking in
my opinion, and it gives you a sense of control,
It gives you the clarity, and it makes you feel
so much more confident with money when you do go
(02:46):
and spend it, and it actually can help you create
some really healthy financial habits, you know, such as extra
mortgage repayments, helping pay off debts sooner, even starting to
invest and maybe even include your superannuation in your budget,
which is something that I highly recommend.
Speaker 1 (03:02):
Okay, I think by now we've been doing this podcast
for a number of years now, I understand the value
of a budget, and that question was really just to
try and base you into getting fired up for the
start of the podcast. What's the best way to build it?
Speaker 2 (03:20):
So the best way is the one that it's going
to you to use and enjoy using.
Speaker 1 (03:25):
Okay, Yeah, Because you can't just use a template or
something that that necessarily is not applicable to you, or
that you go I'm never going to look at this again,
for instance, It's got to be something that you're actually
willing to do.
Speaker 2 (03:37):
You enjoy using it, you're part of it. You are
happy to sit down and look at it and review
it and check it. So for some people that might
be an app some people that might be an Excel spreadsheet.
For some people it might be the envelop system, and
for some people it might be just a journal.
Speaker 1 (03:52):
Really it can be that. No, I don't mean to
be I always thought that you had to be probably
more delay about it, that it needed to be a spreadsheet. Essentially,
in order to get full visibility over your money, you
need it to be really quite deliberate about the way
it's structured, and a spreadsheet would be the way to
(04:13):
do that. That's how I do it, at least the way.
Speaker 2 (04:16):
I do it is I obviously have Internet banking open
so I can see all our transactions. I then grab
a piece of paper and a pen, write everything down,
make sure I've cross checked everything, and then I go
and plug it into an Excel spreadsheet. Okay, and I
have a template that I use it I built myself
that adds everything up for me, and you know, can
work out the cash flow accounts. But there's something very
(04:38):
powerful I feel that when you use pen to paper
you're a lot more switched on. When you're looking at
a whole pile of numbers on a screen, it can
start to look like an international phone book, and you
kind of lose perspective and sense of what it actually represents.
Whereas when you're actually handwriting this is our private health
insurance and this is much it costs per month to
(04:58):
the scent, there's different awareness and connection that you have,
and I think you get more involved, you know, emotionally
with the reality of all your numbers.
Speaker 1 (05:08):
It's almost like the equivalent of paying for something in cash,
but there we go instead of paying just by credit
card or transferring money. If you are handing over money
and you're physically doing it, you feel it a lot more.
This would be the same because you are physically writing
it down and it suddenly becomes not just numbers on
(05:29):
a screen, but your money will Yeah, okay, I like that.
How often should we check it? How not just check it,
but actively review it and make sure that it is
still fit for purpose because to me it feels like
having to review it every week for instance, is a lot.
Speaker 2 (05:52):
It's not. Okay, So, as you said, there are two things.
There is a check in and then there is a review.
So a check in is just to see how you
are tracking. Are you sticking to your budget? You know
you've allocated say five hundred dollars per week to groceries.
You will check in during that week to say, okay,
we'll how many trips are read on the supermarket. Are we,
you know, under budget or are we gone approaching the limit?
(06:14):
I actually recommend that you do a check in twice
a week, and so what I actually recommend is two
times per week. So I will check our budget and
I'll check our transactions on a Friday morning or a
Friday afternoon, and then I do that again on a
Sunday morning or afternoon, which sounds dull and boring, but
it takes me two minutes because I'm only having to
go back a maximum of five days, or you know,
(06:37):
on the weekend, only maximum two days. And it means
I am if there's a problem and you know we
have spent more money than we should of, I can
quickly quarantine that problem, and I can figure out where
to pull money from from our other accounts to help
rebalance the budget. When it comes to reviewing, which is
a proper sit down process where you very different and
(06:57):
it's about going back through your schedule of direct debits.
Have they, you know, changed. I had a class example
with my dog's pet insurance. It went up quite significantly,
which I was able to capture and be aware of
an update because I did a review.
Speaker 1 (07:11):
Can I guess at how frequently we need to review?
Speaker 2 (07:15):
Go on.
Speaker 1 (07:17):
Every year? What's your mouth out? Every six months' wash your.
Speaker 2 (07:23):
Mouth out again? Not only this economic climate like we
were dealing with, you know, significantly expensive world. I mean
I've been twelve dollars fifty for a croissant the other day. No,
I know it was really good. It was a do
you Bai inspired chocolate croissant?
Speaker 1 (07:41):
Was that the ones with the pistachio in it?
Speaker 2 (07:43):
Yeah? That's very mixed feelings about this, But no, we
have to check it on a regular basis, So I
would say on an absolute minimum quarterly, but I would
say every time something changes that you capture. So you might,
for example, sign up to a new subscription, or you
might change your mobile phone plan. Whenever you've made a
(08:05):
change to your budget, you might negotiate a better deal
with your energy provider. That's when you need to sit
down because you want to make sure that you use
those savings to your advantage. So if you get your
energy bill down from saying two hundred and fifty dollars
a month to two hundred and twenty dollars a month.
Make sure that that thirty dollars savings actually is documented
in your budget so it doesn't become the lifestyle creep. Yeah.
Speaker 1 (08:24):
See, I walked right into that one, didn't I.
Speaker 2 (08:26):
I was wondering why you were moaning and groaning.
Speaker 1 (08:29):
No, no, no, it's because in the past I have tried
to apply very kind of strict parameters to things. Remember
when we've talked about kind of emergency money and I
say how much do we need? Do we need kind
of two months of salary for it? And you just
say no, no, you cannot do this, just kind of
a pick a number and go for it. This is
(08:50):
the same kind of thing that it needs to be
more fluid, that you need to be updating it when
something changes. And that makes perfect sense, because all of
a sudden, you might be needing to find another two
hundred dollars a month in order to cover an increase
in your home insurance or your car insurance or something
like that, and leaving that to the end of the year.
Speaker 2 (09:10):
Setting uself up for failure if you want to, and
what you put in is what you're going to get out.
Speaker 1 (09:16):
I wish I could retract what I said now about
the every.
Speaker 2 (09:21):
Everyone's listening.
Speaker 1 (09:23):
Do budgeting apps work? And that's probably a bit broad,
but there are so many different budgeting apps out there.
Do they just kind of give us more screen time,
more guilt attached to that or is it going to
keep you on track?
Speaker 2 (09:39):
There is actually a Sugar Mama budgeting app, and look,
they do work, but you've got to use them consistently.
And the trick is not to obviously be obsessive in
tracking every single transaction, but to use them as a
tool of awareness and to help build really healthy you know,
cash flow and budgeting habits. You know, if you're feeling guilt,
it's a sign that you need obviously tweak your spending
(10:01):
and be kinder to yourself. So perhaps the app isn't
right for you. And you know, I really do think
pen and paper is very, very valuable and you know,
putting it into a journal, keep it on your bedside
table so it's quick and easy to access. So you
don't necessarily need to use an app. But if it
whatever works for you, stick to it.
Speaker 1 (10:18):
One more question then we'll take a quick break. Where
do most people go wrong with their budget? Is it
some of the examples that I've already given of not
checking it frequently enough and thinking that you only need
to review it every year.
Speaker 2 (10:31):
I see so many ways that people go wrong with
their budgets, and I don't mean that in a in
an arrogant way or a patronizing way whatsoever. And I
actually offer one on one sessions with people to help
them with their budgets. But I see people, you know,
I guess, not doing their budgets correctly in at the
first time they sit down, you know, not looking back
(10:52):
on enough data, so they only capture, like what a
typical month looks like, but they don't actually realize that
during the whole entire year, we have Christmas, we have birthdays,
we have anniversaries, you know, we valentied.
Speaker 1 (11:04):
Stay annual expenses like your regio, your car, red Joe
like that.
Speaker 2 (11:07):
Dental appointments, those sorts of things, so you know, those sneaky,
irregular expenses. Then I see people who budget to the
nearest dollar, so there's no buffer there, and that's you know,
that's a way to full flat on your face and
it doesn't feel particularly nice. And then obviously being unrealistic.
You know, a budget is not about depriving yourself or
punishing yourself. It's about, you know, having the things that
(11:31):
you value and living a life in alignment to that.
So if you value go and getting a massage once
a month, put that in your budget and don't be
embarrassed or feel ashamed or guilty for that. That's important
to you and your value system, so own it. Don't
try and like think as a budget about like cutting
everything out and living off the center of an oily rag.
It's just about getting the most out of your money
(11:52):
and you know, being in control at all times.
Speaker 1 (11:55):
Okay, a quick break. When we come back. I want
to get some more on your personal approach to budgeting,
which we have talked about on a few occasions, but
I want a little bit more detail today if I
can please, and I'm going to put you on the
spot a little bit of notice now. Obviously I want
(12:15):
a budgeting one quick budgeting win that someone listening to
this right now can introduce and feel like they have
had a win from budgeting.
Speaker 2 (12:25):
Do you have.
Speaker 1 (12:25):
Something in mind?
Speaker 2 (12:26):
I certainly do.
Speaker 1 (12:27):
Excellent. We will take a break and come back in
a second. Can we are talking about budgeting? If you
had to rank your favorite topics. Budgeting would be up there.
Superannuation would be number one though.
Speaker 2 (12:43):
Right, Oh it's a tie. I'd say, super investing and budgeting.
Speaker 1 (12:49):
Are all yeah, at the top top.
Speaker 2 (12:52):
Sorry, I can't. That's like asking me to tell you
which child I love the most when I love all
of them obviously equally, depending on which one. It's like,
it's killing me today.
Speaker 1 (13:04):
I don't think your kids. Listen, you can be honest
here your personal your personal approach to budgeting. Do you
follow a set formula with it or is it? It
sounds as though from what you've said that you do
allow yourself a bit of flex because you have the
capacity to do so. By checking in regularly, you can
(13:25):
move things around as you need to.
Speaker 2 (13:27):
Yes, because I'm checking and I can, I can sort
of preempt something that's around the corner, or a potential
expense that you know is out of the blue. You know,
I like to keep it fluid and it keeps us safe.
So you know, I recommend you know, life isn't simple.
Let all sorts of things suddenly change, and also in
a good way in a bad way. But you know,
(13:48):
if I was to share one simple budgeting hack of mine,
I have in my phone a schedule. And I don't
own a credit card, not because bad with credit cards.
I just was complicated. I got scams so many times
it just annoyed me all the life admin to update things.
But I have all our direct debits in my phone
(14:08):
in chronological order, so I can see, for example, the
first every month, six hundred dollars is going to come
out for a private health insurance. I can see on
the third of every month that our gas bill comes
out for two hundred and ninety dollars. I can see
that our you know, life insurance comes out on the
fifteenth or inything. So I have it so at any
time when I'm doing my you know, bi weekly check in,
(14:30):
I can see where we're up to in the month
and what remaining direct debits I've got coming out. Now,
what this does is it doesn't It means that I
don't get like led into a false sense of security
where I look at our account and go, oh, look
how much money we've got in our account. You know
what we can you know, afford to go and do
this or that this weekend and then realize I've actually
spent the gas money or the you know, power bill
(14:53):
money and it allows me to actually ration out the
money for the whole entire pay cycle so that we
have money all the way through and we don't and
fall short. And I've taught this to people, and I
know from the feedback I've gotten, the people I've watching,
the impact we've had, how helpful that is. As a
quick go to reference is a tree saved in the
notes of my phone, and it's really easy to check,
(15:14):
cross reference and update, and you just you don't end
up spending money that you shouldn't do.
Speaker 1 (15:21):
And really all you need to do is know when
you're because that is the big challenge that I have
had with budgeting is that I know right that we
have kind of gas bill. I know how much it's
going to be, but what I overlook is when it's
going to come out of the account. And as a result,
(15:43):
when you've got this kind of float in your account
and you're not paying attention to the dates that things
are going to be coming and going from your account,
then all of a sudden you get caught short really quickly.
Speaker 2 (15:55):
And there's another great thing about this is this particular
hack of mine is if, for example, the fifteenth falls
on a weekend, obviously that direct debit may not necessarily
come out or not come out until say the Monday
or the Tuesday, And this is where people can think,
oh wow, God, so hoctual money in my account and
I thought I would have and they spend it on
that weekend, only to realize there was a delay in
(16:16):
their schedule direct debits coming out. So having this is
it just keeps you accountable, keeps you informed at all times,
and you never sort of you just don't spend money
that's not yours yet.
Speaker 1 (16:25):
Okay, how then do you stick And you talked before
about kind of making sure that you're spending is in
alignment then with your values, that you are buying the
things that you want. But how do you do that?
How do you stick to a budget without kind of
feeling like you are constantly saying no or that you
are depriving yourself of things?
Speaker 2 (16:48):
So, as I said, budget is not about depriving yourself.
Is actually about planning for the things that you love.
So if your budget doesn't include freedom, fun, flexibility, then
that budget is not working for you and it's certainly
not sustainable. So you know, when we had our first
interest rate cut, Tom and I promised the kids that
would bring back a monthly family date night, so that
(17:09):
is back in the budget. So we allow for those
things because it means we can actually enjoy them and
they're not going to be detrimental to our cash flow
and sticking to our budget and you know, it's we're
not depriving ourselves or our family and we can still
spend our money. With Droy, I want people to spend money,
but I want them to do it within the safe
boundaries of a budget.
Speaker 1 (17:27):
Okay, we know. So I'm just I'm processing all of
this because budgeting is something I thought I had a
fairly good grasp of, but there's a lot more to
it then, or a lot of just little things that
I can be doing that that's going to be making it,
make it better in terms of knowing when the direct
debits are going to come out, rather than just knowing
(17:48):
how much I need and checking in more frequently and
doing a more comprehensive review more often when something does change,
because that's the other problem that we do it every say,
six months, and we are making these massive wholesale changes
to our budget because so much has changed in just
six months. So I want to know then can budgeting
actually help you then get ahead financially or is it
(18:12):
just in its first instance about helping you survive week
to week and the long term stuff can come later.
Speaker 2 (18:19):
So you know, a good budget has space, and that
includes space to save, to pay down debt, and to
invest and for all of those special meaningful goals and dreams.
So it's about telling your money where you want it
to go. So I recommend when you're doing your budget,
please put into your budget your goals. Put in your
(18:42):
budget your goals to pay off your mortgage sooner. Put
in your budget to be able to have enough money
to retire. Put in your budget a regular investment plan.
It is the only way you're going to actually create
a habit system and safely automate something that actually going
to start seeing pro in your life. And it is
a non negotiable you've got. You know, you want to
(19:05):
make sure that that's spare extra money that you create
from doing your budget. You know, these little savings you
find here and there really count and improve your financial wellbeing.
So I would recommend everyone puts into their budget their
financial goals, and it should be up there with groceries.
Speaker 1 (19:21):
How do you not though, just go to those things
as the first thing is to cut when things get hard.
Because we've talked about kind of how to find savings
within your budget, are you saying that you should really
make those things almost just no, don't touch them if
you can avoid them at all, don't touch them because
long term it will set you back further.
Speaker 2 (19:44):
Okay, So you've got to obviously look at the situation
at hand. If you're in a situation of crisis, okay,
if it means having to cut down those extra mortgage
repayments because you've got to say a medical emergency, of
course you have to do that. But thank goodness for
your budget because you've quick been able to identify it.
Something can help you out. Of course, when things turn
(20:04):
around again, yes you go back and go, all right,
we can increase that extra mortgage repayment again. So you've
got you know, this is why it's fluid. You've got
to work with the best. You've got to work with
what you've got to the best of your ability. But
the budget will gives you that clarity and go, you
know what, this has just happened, but it's going to
be okay because I can you know, take some money
off this regular investment plan or extra debt payment plan
(20:27):
or extra mortgage repayment or our regular savings we can
tweak and change. And of course in your budget though,
you should have a regular savings to your emergency money,
so that that does help obviously support and protect when
things do suddenly change or there's something that happens out
of the blue.
Speaker 1 (20:43):
Okay, you have done a lot of work on budgeting
externally to this. You've taken us through a lot on
this podcast on previous episodes. How do people find you
if they want more information?
Speaker 2 (20:53):
If you're interested in wanting to sit down with me
and we can go through your budget and I can
show you how to do it, just send me a
DM on Instagram and I can send you the details.
But I will show you how to do a budget
correctly and how to make sure it's really easy to maintain,
to check in and a review, and I will hold
you a hand until you are ready to fly on
your on your own. And you you know, I've coached
(21:15):
people out of huge amounts of debt and it's amazing
seeing how protective people we come of their budget once
they've realized how to do it correctly. The right way,
and it makes people feel really safe and secure. And
you know I stand by that myself. That's how I
feel about our budget.
Speaker 1 (21:32):
One day, I'm going to show you. I amn't scared
how my household budget. It's a spreadsheet.
Speaker 2 (21:40):
It's going to be a mammoth spreadsheet.
Speaker 1 (21:43):
I'm sure it is huge, which you would expect considering
we have, was it twenty odd bank accounts and four
banks and things?
Speaker 2 (21:50):
Doesn't need to be like that. It really needs to
be very simple.
Speaker 1 (21:53):
This is what I'm starting to realize. It's only taken me,
what three and a half four years to realize that
maybe maybe I over complicate things.
Speaker 2 (22:01):
I might need to come over to your house one
day and sit down and give your budgeting session and
you can just buy me a Dubai croissant with the pistachiates.
So thank you.
Speaker 1 (22:14):
Okay, all right, that sounds like a good deal, well negotiated,
all right. So we're finding you on Instagram and you
can hear me every day with Sean Aylmer on Fear
and Greed. Thank you very much for listening to how
to they are for that. Remember to please hit follow
on the podcast and the best thing that you can
do is to tell somebody else send them the link
to this episode if you think that it is something
(22:35):
that they could possibly learn from and help us spread
the word about how to they are for that. Thank
you for your company. Join us again next week.
Welcome to How Do They Afford That, The podcast that
peaks into the financial lives of everyday Australians. I'm Michael Thompson.
I'm an author and the co host of the podcast
Fear and Greed business News. As always, I am with
Canna Campbell, financial planner and founder of Sugar Mama TV,
the financial literacy platform that you'll find on YouTube and podcast, books, Instagram, threads, TikTok,
(00:21):
keynote speeches and more. Hello, Canna, I have.
Speaker 2 (00:26):
Got so many duty things to share in today's episode.
Speaker 1 (00:29):
You have been almost bouncing since you walked into the
studio today, big bull of the gate, because we are
talking about budgeting, which elicits quite like. Your face lights up,
your eyes just go bright, you smile. This is like
(00:50):
budgeting is your love language you.
Speaker 2 (00:54):
Actually, it's an active It was a service and active
service you.
Speaker 1 (01:01):
I appreciate a good budget right and a while ago
you took me through a basic guide to budgeting the
way you structure your accounts and things. Today, today we
are stepping it up significantly. You are taking me through
budgeting Sugar Mama style.
Speaker 2 (01:20):
It's like your financial GPS, as.
Speaker 1 (01:24):
In, like you will navigate me through my budget.
Speaker 2 (01:27):
Your cash flow, your financial goals.
Speaker 1 (01:30):
Great, all right, I thought you were saying financial GP
as in the like a doctor and you're going to
do a health check on my.
Speaker 2 (01:37):
Turn up your hearing aid.
Speaker 1 (01:38):
Please let us roll with this. Do this is a
dangerous question, but I just need to ask you this.
Do people actually need a budget or can you just
get by with just tracking what you spend? Do you
actually need to have the intention behind it as to
where the money is supposed to go? Surely tracking it
(01:59):
is in the Yes, you need.
Speaker 2 (02:01):
A budget, and no. Budgeting isn't about tracking where you
spent your money because you're If you're tracking what you spent,
it definitely helps, but you've already spent it, So how
does that actually proactively help you going forward? Is just
documenting that you're wasting your money? So a budget is
actually more about planning. Okay, you know I use the
(02:24):
analogy of a traffic control director, which I will, you know,
save you the pain and torture of another analogy in
today's episode. But you know, it's a tool where you
tell your money what to do, rather than wondering where
it all went. That's just the issue with tracking in
my opinion, and it gives you a sense of control,
It gives you the clarity, and it makes you feel
so much more confident with money when you do go
(02:46):
and spend it, and it actually can help you create
some really healthy financial habits, you know, such as extra
mortgage repayments, helping pay off debts sooner, even starting to
invest and maybe even include your superannuation in your budget,
which is something that I highly recommend.
Speaker 1 (03:02):
Okay, I think by now we've been doing this podcast
for a number of years now, I understand the value
of a budget, and that question was really just to
try and base you into getting fired up for the
start of the podcast. What's the best way to build it?
Speaker 2 (03:20):
So the best way is the one that it's going
to you to use and enjoy using.
Speaker 1 (03:25):
Okay, Yeah, Because you can't just use a template or
something that that necessarily is not applicable to you, or
that you go I'm never going to look at this again,
for instance, It's got to be something that you're actually
willing to do.
Speaker 2 (03:37):
You enjoy using it, you're part of it. You are
happy to sit down and look at it and review
it and check it. So for some people that might
be an app some people that might be an Excel spreadsheet.
For some people it might be the envelop system, and
for some people it might be just a journal.
Speaker 1 (03:52):
Really it can be that. No, I don't mean to
be I always thought that you had to be probably
more delay about it, that it needed to be a spreadsheet. Essentially,
in order to get full visibility over your money, you
need it to be really quite deliberate about the way
it's structured, and a spreadsheet would be the way to
(04:13):
do that. That's how I do it, at least the way.
Speaker 2 (04:16):
I do it is I obviously have Internet banking open
so I can see all our transactions. I then grab
a piece of paper and a pen, write everything down,
make sure I've cross checked everything, and then I go
and plug it into an Excel spreadsheet. Okay, and I
have a template that I use it I built myself
that adds everything up for me, and you know, can
work out the cash flow accounts. But there's something very
(04:38):
powerful I feel that when you use pen to paper
you're a lot more switched on. When you're looking at
a whole pile of numbers on a screen, it can
start to look like an international phone book, and you
kind of lose perspective and sense of what it actually represents.
Whereas when you're actually handwriting this is our private health
insurance and this is much it costs per month to
(04:58):
the scent, there's different awareness and connection that you have,
and I think you get more involved, you know, emotionally
with the reality of all your numbers.
Speaker 1 (05:08):
It's almost like the equivalent of paying for something in cash,
but there we go instead of paying just by credit
card or transferring money. If you are handing over money
and you're physically doing it, you feel it a lot more.
This would be the same because you are physically writing
it down and it suddenly becomes not just numbers on
(05:29):
a screen, but your money will Yeah, okay, I like that.
How often should we check it? How not just check it,
but actively review it and make sure that it is
still fit for purpose because to me it feels like
having to review it every week for instance, is a lot.
Speaker 2 (05:52):
It's not. Okay, So, as you said, there are two things.
There is a check in and then there is a review.
So a check in is just to see how you
are tracking. Are you sticking to your budget? You know
you've allocated say five hundred dollars per week to groceries.
You will check in during that week to say, okay,
we'll how many trips are read on the supermarket. Are we,
you know, under budget or are we gone approaching the limit?
(06:14):
I actually recommend that you do a check in twice
a week, and so what I actually recommend is two
times per week. So I will check our budget and
I'll check our transactions on a Friday morning or a
Friday afternoon, and then I do that again on a
Sunday morning or afternoon, which sounds dull and boring, but
it takes me two minutes because I'm only having to
go back a maximum of five days, or you know,
(06:37):
on the weekend, only maximum two days. And it means
I am if there's a problem and you know we
have spent more money than we should of, I can
quickly quarantine that problem, and I can figure out where
to pull money from from our other accounts to help
rebalance the budget. When it comes to reviewing, which is
a proper sit down process where you very different and
(06:57):
it's about going back through your schedule of direct debits.
Have they, you know, changed. I had a class example
with my dog's pet insurance. It went up quite significantly,
which I was able to capture and be aware of
an update because I did a review.
Speaker 1 (07:11):
Can I guess at how frequently we need to review?
Speaker 2 (07:15):
Go on.
Speaker 1 (07:17):
Every year? What's your mouth out? Every six months' wash your.
Speaker 2 (07:23):
Mouth out again? Not only this economic climate like we
were dealing with, you know, significantly expensive world. I mean
I've been twelve dollars fifty for a croissant the other day. No,
I know it was really good. It was a do
you Bai inspired chocolate croissant?
Speaker 1 (07:41):
Was that the ones with the pistachio in it?
Speaker 2 (07:43):
Yeah? That's very mixed feelings about this, But no, we
have to check it on a regular basis, So I
would say on an absolute minimum quarterly, but I would
say every time something changes that you capture. So you might,
for example, sign up to a new subscription, or you
might change your mobile phone plan. Whenever you've made a
(08:05):
change to your budget, you might negotiate a better deal
with your energy provider. That's when you need to sit
down because you want to make sure that you use
those savings to your advantage. So if you get your
energy bill down from saying two hundred and fifty dollars
a month to two hundred and twenty dollars a month.
Make sure that that thirty dollars savings actually is documented
in your budget so it doesn't become the lifestyle creep. Yeah.
Speaker 1 (08:24):
See, I walked right into that one, didn't I.
Speaker 2 (08:26):
I was wondering why you were moaning and groaning.
Speaker 1 (08:29):
No, no, no, it's because in the past I have tried
to apply very kind of strict parameters to things. Remember
when we've talked about kind of emergency money and I
say how much do we need? Do we need kind
of two months of salary for it? And you just
say no, no, you cannot do this, just kind of
a pick a number and go for it. This is
(08:50):
the same kind of thing that it needs to be
more fluid, that you need to be updating it when
something changes. And that makes perfect sense, because all of
a sudden, you might be needing to find another two
hundred dollars a month in order to cover an increase
in your home insurance or your car insurance or something
like that, and leaving that to the end of the year.
Speaker 2 (09:10):
Setting uself up for failure if you want to, and
what you put in is what you're going to get out.
Speaker 1 (09:16):
I wish I could retract what I said now about
the every.
Speaker 2 (09:21):
Everyone's listening.
Speaker 1 (09:23):
Do budgeting apps work? And that's probably a bit broad,
but there are so many different budgeting apps out there.
Do they just kind of give us more screen time,
more guilt attached to that or is it going to
keep you on track?
Speaker 2 (09:39):
There is actually a Sugar Mama budgeting app, and look,
they do work, but you've got to use them consistently.
And the trick is not to obviously be obsessive in
tracking every single transaction, but to use them as a
tool of awareness and to help build really healthy you know,
cash flow and budgeting habits. You know, if you're feeling guilt,
it's a sign that you need obviously tweak your spending
(10:01):
and be kinder to yourself. So perhaps the app isn't
right for you. And you know, I really do think
pen and paper is very, very valuable and you know,
putting it into a journal, keep it on your bedside
table so it's quick and easy to access. So you
don't necessarily need to use an app. But if it
whatever works for you, stick to it.
Speaker 1 (10:18):
One more question then we'll take a quick break. Where
do most people go wrong with their budget? Is it
some of the examples that I've already given of not
checking it frequently enough and thinking that you only need
to review it every year.
Speaker 2 (10:31):
I see so many ways that people go wrong with
their budgets, and I don't mean that in a in
an arrogant way or a patronizing way whatsoever. And I
actually offer one on one sessions with people to help
them with their budgets. But I see people, you know,
I guess, not doing their budgets correctly in at the
first time they sit down, you know, not looking back
(10:52):
on enough data, so they only capture, like what a
typical month looks like, but they don't actually realize that
during the whole entire year, we have Christmas, we have birthdays,
we have anniversaries, you know, we valentied.
Speaker 1 (11:04):
Stay annual expenses like your regio, your car, red Joe
like that.
Speaker 2 (11:07):
Dental appointments, those sorts of things, so you know, those sneaky,
irregular expenses. Then I see people who budget to the
nearest dollar, so there's no buffer there, and that's you know,
that's a way to full flat on your face and
it doesn't feel particularly nice. And then obviously being unrealistic.
You know, a budget is not about depriving yourself or
punishing yourself. It's about, you know, having the things that
(11:31):
you value and living a life in alignment to that.
So if you value go and getting a massage once
a month, put that in your budget and don't be
embarrassed or feel ashamed or guilty for that. That's important
to you and your value system, so own it. Don't
try and like think as a budget about like cutting
everything out and living off the center of an oily rag.
It's just about getting the most out of your money
(11:52):
and you know, being in control at all times.
Speaker 1 (11:55):
Okay, a quick break. When we come back. I want
to get some more on your personal approach to budgeting,
which we have talked about on a few occasions, but
I want a little bit more detail today if I
can please, and I'm going to put you on the
spot a little bit of notice now. Obviously I want
(12:15):
a budgeting one quick budgeting win that someone listening to
this right now can introduce and feel like they have
had a win from budgeting.
Speaker 2 (12:25):
Do you have.
Speaker 1 (12:25):
Something in mind?
Speaker 2 (12:26):
I certainly do.
Speaker 1 (12:27):
Excellent. We will take a break and come back in
a second. Can we are talking about budgeting? If you
had to rank your favorite topics. Budgeting would be up there.
Superannuation would be number one though.
Speaker 2 (12:43):
Right, Oh it's a tie. I'd say, super investing and budgeting.
Speaker 1 (12:49):
Are all yeah, at the top top.
Speaker 2 (12:52):
Sorry, I can't. That's like asking me to tell you
which child I love the most when I love all
of them obviously equally, depending on which one. It's like,
it's killing me today.
Speaker 1 (13:04):
I don't think your kids. Listen, you can be honest
here your personal your personal approach to budgeting. Do you
follow a set formula with it or is it? It
sounds as though from what you've said that you do
allow yourself a bit of flex because you have the
capacity to do so. By checking in regularly, you can
(13:25):
move things around as you need to.
Speaker 2 (13:27):
Yes, because I'm checking and I can, I can sort
of preempt something that's around the corner, or a potential
expense that you know is out of the blue. You know,
I like to keep it fluid and it keeps us safe.
So you know, I recommend you know, life isn't simple.
Let all sorts of things suddenly change, and also in
a good way in a bad way. But you know,
(13:48):
if I was to share one simple budgeting hack of mine,
I have in my phone a schedule. And I don't
own a credit card, not because bad with credit cards.
I just was complicated. I got scams so many times
it just annoyed me all the life admin to update things.
But I have all our direct debits in my phone
(14:08):
in chronological order, so I can see, for example, the
first every month, six hundred dollars is going to come
out for a private health insurance. I can see on
the third of every month that our gas bill comes
out for two hundred and ninety dollars. I can see
that our you know, life insurance comes out on the
fifteenth or inything. So I have it so at any
time when I'm doing my you know, bi weekly check in,
(14:30):
I can see where we're up to in the month
and what remaining direct debits I've got coming out. Now,
what this does is it doesn't It means that I
don't get like led into a false sense of security
where I look at our account and go, oh, look
how much money we've got in our account. You know
what we can you know, afford to go and do
this or that this weekend and then realize I've actually
spent the gas money or the you know, power bill
(14:53):
money and it allows me to actually ration out the
money for the whole entire pay cycle so that we
have money all the way through and we don't and
fall short. And I've taught this to people, and I
know from the feedback I've gotten, the people I've watching,
the impact we've had, how helpful that is. As a
quick go to reference is a tree saved in the
notes of my phone, and it's really easy to check,
(15:14):
cross reference and update, and you just you don't end
up spending money that you shouldn't do.
Speaker 1 (15:21):
And really all you need to do is know when
you're because that is the big challenge that I have
had with budgeting is that I know right that we
have kind of gas bill. I know how much it's
going to be, but what I overlook is when it's
going to come out of the account. And as a result,
(15:43):
when you've got this kind of float in your account
and you're not paying attention to the dates that things
are going to be coming and going from your account,
then all of a sudden you get caught short really quickly.
Speaker 2 (15:55):
And there's another great thing about this is this particular
hack of mine is if, for example, the fifteenth falls
on a weekend, obviously that direct debit may not necessarily
come out or not come out until say the Monday
or the Tuesday, And this is where people can think,
oh wow, God, so hoctual money in my account and
I thought I would have and they spend it on
that weekend, only to realize there was a delay in
(16:16):
their schedule direct debits coming out. So having this is
it just keeps you accountable, keeps you informed at all times,
and you never sort of you just don't spend money
that's not yours yet.
Speaker 1 (16:25):
Okay, how then do you stick And you talked before
about kind of making sure that you're spending is in
alignment then with your values, that you are buying the
things that you want. But how do you do that?
How do you stick to a budget without kind of
feeling like you are constantly saying no or that you
are depriving yourself of things?
Speaker 2 (16:48):
So, as I said, budget is not about depriving yourself.
Is actually about planning for the things that you love.
So if your budget doesn't include freedom, fun, flexibility, then
that budget is not working for you and it's certainly
not sustainable. So you know, when we had our first
interest rate cut, Tom and I promised the kids that
would bring back a monthly family date night, so that
(17:09):
is back in the budget. So we allow for those
things because it means we can actually enjoy them and
they're not going to be detrimental to our cash flow
and sticking to our budget and you know, it's we're
not depriving ourselves or our family and we can still
spend our money. With Droy, I want people to spend money,
but I want them to do it within the safe
boundaries of a budget.
Speaker 1 (17:27):
Okay, we know. So I'm just I'm processing all of
this because budgeting is something I thought I had a
fairly good grasp of, but there's a lot more to
it then, or a lot of just little things that
I can be doing that that's going to be making it,
make it better in terms of knowing when the direct
debits are going to come out, rather than just knowing
(17:48):
how much I need and checking in more frequently and
doing a more comprehensive review more often when something does change,
because that's the other problem that we do it every say,
six months, and we are making these massive wholesale changes
to our budget because so much has changed in just
six months. So I want to know then can budgeting
actually help you then get ahead financially or is it
(18:12):
just in its first instance about helping you survive week
to week and the long term stuff can come later.
Speaker 2 (18:19):
So you know, a good budget has space, and that
includes space to save, to pay down debt, and to
invest and for all of those special meaningful goals and dreams.
So it's about telling your money where you want it
to go. So I recommend when you're doing your budget,
please put into your budget your goals. Put in your
(18:42):
budget your goals to pay off your mortgage sooner. Put
in your budget to be able to have enough money
to retire. Put in your budget a regular investment plan.
It is the only way you're going to actually create
a habit system and safely automate something that actually going
to start seeing pro in your life. And it is
a non negotiable you've got. You know, you want to
(19:05):
make sure that that's spare extra money that you create
from doing your budget. You know, these little savings you
find here and there really count and improve your financial wellbeing.
So I would recommend everyone puts into their budget their
financial goals, and it should be up there with groceries.
Speaker 1 (19:21):
How do you not though, just go to those things
as the first thing is to cut when things get hard.
Because we've talked about kind of how to find savings
within your budget, are you saying that you should really
make those things almost just no, don't touch them if
you can avoid them at all, don't touch them because
long term it will set you back further.
Speaker 2 (19:44):
Okay, So you've got to obviously look at the situation
at hand. If you're in a situation of crisis, okay,
if it means having to cut down those extra mortgage
repayments because you've got to say a medical emergency, of
course you have to do that. But thank goodness for
your budget because you've quick been able to identify it.
Something can help you out. Of course, when things turn
(20:04):
around again, yes you go back and go, all right,
we can increase that extra mortgage repayment again. So you've
got you know, this is why it's fluid. You've got
to work with the best. You've got to work with
what you've got to the best of your ability. But
the budget will gives you that clarity and go, you
know what, this has just happened, but it's going to
be okay because I can you know, take some money
off this regular investment plan or extra debt payment plan
(20:27):
or extra mortgage repayment or our regular savings we can
tweak and change. And of course in your budget though,
you should have a regular savings to your emergency money,
so that that does help obviously support and protect when
things do suddenly change or there's something that happens out
of the blue.
Speaker 1 (20:43):
Okay, you have done a lot of work on budgeting
externally to this. You've taken us through a lot on
this podcast on previous episodes. How do people find you
if they want more information?
Speaker 2 (20:53):
If you're interested in wanting to sit down with me
and we can go through your budget and I can
show you how to do it, just send me a
DM on Instagram and I can send you the details.
But I will show you how to do a budget
correctly and how to make sure it's really easy to maintain,
to check in and a review, and I will hold
you a hand until you are ready to fly on
your on your own. And you you know, I've coached
(21:15):
people out of huge amounts of debt and it's amazing
seeing how protective people we come of their budget once
they've realized how to do it correctly. The right way,
and it makes people feel really safe and secure. And
you know I stand by that myself. That's how I
feel about our budget.
Speaker 1 (21:32):
One day, I'm going to show you. I amn't scared
how my household budget. It's a spreadsheet.
Speaker 2 (21:40):
It's going to be a mammoth spreadsheet.
Speaker 1 (21:43):
I'm sure it is huge, which you would expect considering
we have, was it twenty odd bank accounts and four
banks and things?
Speaker 2 (21:50):
Doesn't need to be like that. It really needs to
be very simple.
Speaker 1 (21:53):
This is what I'm starting to realize. It's only taken me,
what three and a half four years to realize that
maybe maybe I over complicate things.
Speaker 2 (22:01):
I might need to come over to your house one
day and sit down and give your budgeting session and
you can just buy me a Dubai croissant with the pistachiates.
So thank you.
Speaker 1 (22:14):
Okay, all right, that sounds like a good deal, well negotiated,
all right. So we're finding you on Instagram and you
can hear me every day with Sean Aylmer on Fear
and Greed. Thank you very much for listening to how
to they are for that. Remember to please hit follow
on the podcast and the best thing that you can
do is to tell somebody else send them the link
to this episode if you think that it is something
(22:35):
that they could possibly learn from and help us spread
the word about how to they are for that. Thank
you for your company. Join us again next week.
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