February 8, 2023 • 23 mins
We're taking a look at real-life budgets and seeing what ways we can save them some money.
This week, senior economics writer Jess Irvine puts the spotlight on Money editor Dom Powell to see if there's anything he can do to help his budgeting strategies.
It All Adds Up is the podcast where we make money easy to understand so that listeners can begin building their financial wealth. You can submit questions to italladdsup@nine.com.au for Jess and Dom to answer each week.
See omnystudio.com/listener for privacy information.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
S1 (00:07):
Hello and welcome to It All Adds up the podcast.
So we chat about money, how to get it, how
to spend it, and how to invest it. I'm money editor,
dumb pal.
S2 (00:13):
And I'm senior economics writer Jess Vine, and I think
we need to add how to save it to our
opening spiel because that is the focus of our new
Budgeting advice series. We're looking in particular at all the
ways that you can save and keep ahead of rising
costs of living and also interest rates, which we learned
from Reserve Bank Governor Phil Lowe are going to continue
(00:36):
to go up. So, Dom, you have graciously agreed to
be our guinea pig and to kick off the season
by letting us have a little look at your budget. Yeah, look, I'm.
S1 (00:46):
Feeling pretty scared about this, to be honest. You know,
I've never had never had my finances so thoroughly displayed
or analyzed, But I think it's the you know, the
aim of this series is to sort of help you
out by showing how we and others sort of think
about money, which can then help you sort of think
about it differently yourself. Our, you know, at the very least,
(01:08):
even if it doesn't help you think differently, the total
chaos of my finances might make you feel a little
bit better about yours.
S2 (01:14):
You don't have to be scared. I will be very
gentle in my feedback on your figures.
S1 (01:19):
Yeah. Otherwise it'll be, you know, highlighters at ten paces. I.
S2 (01:23):
I know because I am quite notoriously not backwards in
coming forwards with my own figures. I post them all
on my money with just Instagram accounts. So I think
people probably have a pretty good idea about where my
money goes if they care to, to have a look.
And I sort of felt kind of embarrassed or like
a little bit hesitant sharing that at first, but then just, well,
(01:45):
the feedback of how useful it is to actually see
somebody else's budget and how much they're spending on Internet
or whatever is so useful. I mean, comparison can be
the safe of joy and you can't you know, everyone's
going to have a different set up. But I think
it is genuinely very, very helpful to have these conversations
about how much money was spent, how much stuff costs,
(02:06):
and people can go, That takes more than me or
Dom's doing what don't. You should not be spending that money.
So I'm very much I've had a little sneak peek
at your figures that I'm I'm very excited to to
run through them and to give you my feedback.
S1 (02:19):
Yes, absolutely. And I think you're right. I think there's
a sort of you know, we're sort of brought up
in this culture of sort of not talking about money
too much. And, you know, everyone's a bit secret, secretive
about their pay and which obviously I totally understand a
lot of situations. But, you know, I think you're right,
talking about this sort of stuff can really help you
think about it differently.
S2 (02:35):
Yes. So when you sort of laid out your figures,
what's the bottom line? Are you actually in surplus or
are you spending, you know, go to finance, spend less
than you earn? Are you are you doing that?
S1 (02:46):
Well, in theory. So should we get into it? Yeah.
All right, let's do it. So I've sort of broken
into two categories. So we've got fixed monthly expenses and
sort of variable monthly expenses. So just as the top line,
my monthly income is around 5500. And of that, I
have sort of have these, these fixed expenses. So I
(03:07):
spent about just under 1500 on my mortgage each month,
which as we mentioned, is fixed at the moment, which
I'm thanking my lucky stars for because it won't be
fixed for much longer. And by the start of next year,
I'll have to go to a variable loan which will
drastically increase my fixed expenses and then my body corporate
every month is about $150. So that collectively is about
(03:28):
$470 every quarter.
S2 (03:30):
That's the one that floors me. And I'm so jealous
because my body corporate is about 8000, eight or $9,000
a year. So yours is less than $2,000.
S1 (03:38):
Yeah. And I think it's insane that you also $8,000
a year. But, you know, I think maybe this is
the difference, difference between living in Melbourne and Sydney and
like the size of our apartments. So it's not.
S2 (03:47):
For me to decide much in the pool, but if
I have my time again and I was doing the
property search, gosh, I would have paid a little bit
closer attention to Strata face because I can be a
major ongoing cost.
S1 (03:57):
Yeah, absolutely. My rates are about $130 a month, so
just under $400 a quarter. I pay my car insurance monthly,
which is about $100 or so, which I think is
a bit expensive. But every time I've tried to get
that down, I can't. So what type.
S2 (04:12):
Of car insurance do you have.
S1 (04:15):
So.
S2 (04:15):
Comprehensive? Okay. Yeah, I think I'm only paying about $600
a year. Yeah, my comprehensive and yours is what, so
12 over $1,000 there? Yeah.
S1 (04:25):
My internet is $69 a month. I spend about $120
on petrol a month for the car. Electricity is about
$100 a month. Oh, and I should sort of preface
all this. I'm a single person. I live by myself.
I have no dependents. So 100 bucks a month for
electricity I think is probably about fine.
S2 (04:42):
That's about what I pay. So I'm a single mother,
so me and a little kid for half of the week.
So I think actually a lot of our expenses are
about the same with the electricity. I think we're both
living in sort of old style, two bedroom flat. So yeah.
S1 (04:57):
So absolutely. My water is about $70 a month, so
but I pay it quarterly, which is about. $200 a
quarter on various subscriptions like streaming services, Spotify. I pay
a little bit of every month for like extra data
on my Google account that totals about 50 bucks a month.
And then I also have a pool membership. So my
(05:20):
local gym, but I just pay for the pool. And
that's $70 a month. So those are my sort of fixed,
fixed expenses. What do you what do you think, Jess?
How am I going so far?
S2 (05:29):
I think that's looking pretty good. I don't think I
can't see any obvious areas where you're bleeding money unnecessarily.
And so, so far, so good. All right. Do you
use the pool membership?
S1 (05:41):
Well, I do. Yeah. I was. I was really good
about it last year. I've been a bit slack this year,
but I was going about three times a week, so
I think I get pretty good value out of it.
S2 (05:48):
Yeah, I pay about that much per week for my
gym membership so that all the areas where I do
spend quite a lot of money is on my CrossFit membership.
But I get a lot of value out of it.
S1 (05:58):
So yeah, I think that's fair enough. I mean, if
you can justify if you going like four or five
times a week, that's fine. Like, you know. Yeah. So,
so far we've made it without any glaring, glaring issues.
S2 (06:09):
Perhaps some glaring omissions, but I'm going to save that
till later.
S1 (06:12):
All right. Well, sorry. That's a bit. Okay.
S2 (06:14):
But you fix that. A monthly bills? Yeah, the regular things. Okay. Yeah.
S1 (06:20):
And then on top of this is sort of the
variable expenses like food. So I think I spend probably
around 30 and $50 a month on food. Again, I'm
a single guy living by myself, so food is not
a massive expense for me. And then sort of the
collective sort of eating out alcohol events, sort of, you know,
(06:40):
fun activities, I probably spend about 400 ish a month,
maybe a bit more on that. And then I spend
about $200 on hobbies. I probably spend about 50 $200
a month on clothes and things like that.
S2 (06:53):
So I for me, actually that was the really. Oh, dumb. Yeah. Well,
you are you are always very nicely attired so I
can't complain. But I went a whole year without spending
any money on clothes which, you know, it is possible.
Depends what the state of your wardrobe is like. But
you know, up to $100, you know, so that's a
new sort of item every month or so. I mean,
(07:15):
maybe that I know I go to the extreme and
I probably do need some more clothes.
S1 (07:21):
And then like probably 90 bucks on like public transport.
And that's my variable monthly expenses. So you've said that
I miss I might be missing some stuff. What do
you think I'm missing?
S2 (07:31):
Yeah. So what did you add that all up to
for your monthly expenses?
S1 (07:35):
Yes. So that's approximately $3,600 ish a month for my expenses.
S2 (07:41):
Yeah. So to me, that just seems like. Well, that is,
you're doing pretty well if you're keeping it that low.
And but from what you've said, you think maybe that
might not be an accurate representation of how much you're
actually saving?
S1 (07:54):
Absolutely not. Because according to this, I say I could
do that. If you look, if I don't take it
on face value, I should be saving nearly $2,000 a month,
which I absolutely I'm not. No way. Not even close.
So this is the thing, I think, which is it's
is good for us to talk about, which is clearly
like despite the fact that I think that I'm moderately
well regimented when it comes to budgeting, obviously, I'm leaking
(08:15):
funds here like I'm spending and I know I do this.
I spend money on little, little bits here, a little
thing there, or, you know, like last week I spent
$200 on a little attachments that I wanted for my
my speaker system. And that doesn't fall into any part
of my budget. That's just something that I just spend
money on sort of thing. So like, so it's sort
of a it is a leaky it's not a it's
not a water tight budget. Like, Yeah.
S2 (08:35):
And I love it because it's such a classic example
of like, you know, we're all told you need a budget,
write yourself a budget, stick to it. Done. And people
do their very best and you try to rack your
brain and think of most of the things and you like,
right them my expenses and then maybe track it for
a month and you get to the end of the
month and are they but not my expenses. I have
no idea what is happening. And that's sort of what
(08:58):
inspired me when I did my sort of amazing exercise
of going through the Bureau of Statistics Household Expenditure Survey,
which has about 7000 things that you can spend money
on grouped by category. And I rearranged them all just
the myriad of things that can come up that, you know,
if you're not expecting them, then you think you've failed
because you set your budget. And it wasn't realistic. But
(09:21):
I mean, so some obvious sort of things that I
wondered about is do you ever go on holidays? Because
you probably will. And this is the thing at things
that you don't go every month unless you live in
a great life, but there's sort of these irregular sort
of once a year or once every quarter sort of
expenses that you might need to sort of if you're
(09:41):
looking at how much you're spending, maybe you need to
save at least 100 or $200 a month to sort
of be putting aside into a holiday fund unless you're
not taking holidays.
S1 (09:53):
No, I mean, I know. No, I do. I do
take holidays. I had a lovely holiday last year to
Vietnam for about three weeks, which was lovely. But the
thing is that like when they know. I want to
do that. I like I start saving for it. Like
it's idea for me. It's like a very like a Oh,
I'm going on a holiday to X or Y this year.
I better start and like, you know, months ahead, I'll
be like, well, I need to start saving for that.
(10:14):
So that's when I'll start putting money aside. I don't
do it on like a regular basis, so that makes sense.
S2 (10:20):
Yeah, but whereas I do, because I sit down at
the start of each year and I go, Well, how
much is my holiday budget? This is what I think
is reasonable. And then I try to keep sort of
within that envelope and I set aside a certain amount
each month to contribute to that, which is actually sort
of a prompt for me to go. Just don't forget
to book a holiday cause it's actually good for you to, to,
to take the risks. Some other little areas. Do you
(10:41):
have any home insurance?
S1 (10:42):
Oh, yes. So while home insurance falls underneath under my body, corporate.
S2 (10:47):
So all that contents insurance.
S1 (10:49):
Yeah. So I should have mentioned a condo insurance for
me costs $170 a year. So on a monthly basis,
that's pretty negligible.
S2 (10:56):
Yeah. And then I did wonder about your car expenses
because we had the insurance there. But I mean, car
is one thing that just catches everybody out because the
I presume you would have annual reg, so you would
be servicing that car at least once a year and the.
S1 (11:12):
Car is currently due for a service. So I need
to that will cost me about 500 bucks. So that's
something that I need to to prepare for. And yeah,
my Reg, I was like I think a pretty standard
range of like eight 800 to $900 a year.
S2 (11:25):
Yeah. And then every so often every three years ago
or so, your battery's going to go and that's a
couple of hundred dollars and then your tires are going
to go. So I do set aside money each month
for my car Future Fund, and I think I added
up the running. My car costs may something in the
region of $5,000 a year or something. It's when you
(11:47):
add up all the insurance and the reg over and
that includes that petrol as well. So that might be
that might be something that you need to consider. And then,
you know, you look fit and healthy. But medical expenses,
do you go to the dentist maybe once or twice
a year? I should you should know, maybe that's getting
too personal.
S1 (12:08):
No, no, no. I like I definitely try to I
think it's one of those things that I always forget about,
but like I have, I do try and go the
nineties once a year. I'm definitely due for a checkup
this year. I did go at the start of last year,
so I'm probably about 12 months in.
S2 (12:21):
Some people completely forget to factor in on even like
medicines if you need some antibiotics every so often I
put suncream under medicine as well. Like if you need
new contact lenses or glasses, you know, seeing the GP,
seeing the dentist, that is something that can really derail
people's budgets again. So I again I sit down and
(12:42):
I set aside about $1,000 for dental and GP and
I and I put the little amounts aside each month
to cover things like that. So yeah, I mean the other,
the other, the other thing I thought is like gifts
and you know, Christmas time or even just like when
you're going to someone's house for dinner and you need
to take a bottle of wine, that's one thing I've
(13:02):
realised that I, I don't want to be the very
stingy friend, although I completely am. But like, it's nice
to give people things, you know, on the rig, like
just go to the house. So you buying something for
all the people? So people sometimes get to factor in
that as well. And I think once we add up
all of that, maybe that might be where your money's going. Yeah.
S1 (13:22):
And I think well, I think I think on the
medical side of things, like I'm like, I don't want to,
you know, I'm it's sort of quite a healthy person. Like,
I don't go to the doctor very often. I don't
have that many sort of things that go wrong with me.
So I'm pretty I'm pretty. Okay from from that perspective
when it comes to like, things like gifts and stuff,
like if I'm going to a friend's house, I'd be
buying like a bring like a bottle of wine that
(13:43):
sort of comes in to like the alcohol budget. For me,
that makes sense because I'll probably drink some of that wine.
So therefore, that's, you know, I mean, we could we
can talk about like how I split up my, my
funds by pay, if that helps in terms of the
actual way I do.
S2 (13:58):
But I wonder how you do cope. Sort of, yeah.
When you have some of those bigger expenses, get rid
of them. How do you how do you structure your
sort of money to account for sure.
S1 (14:08):
So I have my phone in front of me right now,
which has my banking app, which has spoken about a
few times and I love my banking app. But basically
what what happens every fortnight when I get my pay,
it is automatically split into ten different accounts and I'll
read through these accounts. So my first account is called beans.
(14:32):
I don't know why I called it this like a long,
long time ago, but basically it's just my generic savings account.
I call it sort of my savings slush fund where
like a decent chunk of my of my salary goes
into this account. And it's just money that I could
spend for a one off, like, let's say, like a
car service or something like that or a gift for
someone or something unexpected that I'm not budgeting for. That's
(14:55):
where I typically take that money out of. And I
have my play account, which is just sort of like alcohol.
That's what the one I mentioned before, like events going out,
that sort of stuff.
S2 (15:06):
So you're putting aside the sort of two, was it
400 or so a month.
S1 (15:10):
$200 a fortnight ish. Yeah. It go into and.
S2 (15:13):
Then if you reach the max of that do you
just stop going out or do you.
S1 (15:17):
Oh no. Absolutely not. Then. Then, then it comes out
of the, then it comes out of the slush fund
and then I have a similar account for food, which
is again about $200 a fortnight. I have a account
for bills which and all of these I've, I've calculated
to sort of match up to pretty much the exact
amount of money I spend on that thing each month.
(15:38):
So the idea is that I shouldn't have like I
should run it to zero every fortnight.
S2 (15:42):
For each of the accounts.
S1 (15:44):
For, well, for each of the accounts that aren't, that
are sort of on a fortnightly basis. So bills I
have an account for that, I have an account for
hobbies as well. And then I have my mortgage account,
which obviously that's the one where the most amount of
money goes in each fortnight, which takes exactly half of
every fortnight. Exactly half of my mortgage goes into that
(16:04):
account to split into that account. And then I have
a sort of body corporate bills which covers things like
petty corporate fees and rates. And then I have sort
of my goal saver account, right? So this is something
that I'm specifically saving towards currently, I'm saving towards a
a ski pass for for the year. So I'm I've
got a it's got a little emoji of someone skiing
(16:26):
because that's what I'm sort of saving towards.
S2 (16:28):
Yeah, that can be a powerful motivator if you've got
a savings going. A little picture there and you're putting
the money in, that must feel good to watch that.
S1 (16:36):
Exactly. And my app gives me like little notifications, like
I've saved 25% towards this. I feel it's, you know,
it's like a little little sort of serotonin hit. And
then I have my final sort of major savings account,
which is like, you know, emergency things sort of really
big long term things like any renovations I'd want to
get done or anything like that, which is sort of
where the bulk of my savings sits.
S2 (16:59):
Yeah. And I wonder is, is this a are these
offset accounts or are they just separate because you've got
a fixed loan? That might not that means something that
you don't have a mortgage offset.
S1 (17:09):
None of these offsets, these are just these are just
sort of separate savers within my within my bank. And
then anything else that doesn't go into that just gets
put into my access account, which is just sort of the,
you know, everyday spending sort of stuff. But the idea
is that every time I spend on something that that
is categorized into one of those accounts, I then move it,
move the money in and out sort of thing.
S2 (17:30):
Yes, that's okay. No, that's I mean, I think overall
you're doing so well like you do. You have massive
credit card debt.
S1 (17:37):
So I don't I don't have a credit card.
S2 (17:38):
No credit card. Yeah. I also don't have credit card debt.
That's the one. I think that's sort of the canary
in the coal mine for a lot of people. If
you've got quite a large credit card debt that you
keep rolling over, I think you need a budget and
I think you need a bit of a plan to
be paying off those debt. But I would love to
say if you don't, because we bought shares together on
one of those. Oh, yeah. Have you been doing any
(18:00):
regular investing since then?
S1 (18:02):
Not yet, but I plan to this year. That's, that's
on the cards.
S2 (18:04):
Because, I mean, I get I love my budget and
I love it precisely for the reason that at the
end of each month, you know, I have a budget
that I sort of my idea of what I'm going
to spend in the not track, what I actually spend.
And then I do look at my expenses and my
income and I invest the difference. And I feel just
so empowered when I do that, when I go, oh, yes,
you saved 600 bucks this month. Whatever it is, it
(18:27):
gets transferred straight into the share trading account because that
is my strategy at the moment. You could be investing
it in extra super or paying off the mortgage faster. But,
you know, I mean, I just want to spread that
joy with everybody, you know, the joy of savings to
feel that sense of accomplishment. So I don't know if
we will get you to that budget ninja level where
you want to actually.
S1 (18:48):
We'll say, I don't know. That's I don't know. That's
like I think my my sort of I'm just I'm
just sort of fast and loose about it, you know,
like I'm freestyle in and out here.
S2 (18:57):
And you seem to you seem to be doing.
S1 (18:59):
Good. Yeah. Well, apart from the fact that there's like
a you know, it is a just spend a sort
of money on things every month that I don't know
where it goes. So I'd like to get on top
of that. So that's my goal to sort of work
out these sort of extraneous expenses that I can't really track.
But I suppose, you know, what's the what's your overall thoughts, Jess?
How do you how do you write my my budgeting
and finances out of ten?
S2 (19:19):
Don't I think you've done really well full points for
effort as we say. I did notice some things that
maybe you have forgotten to pop in your budget. I
would definitely be thinking about those car expenses that can
really torpedo a lot of budgets when suddenly you've got
to put the car in the service and particularly parts
and repairs can can derail you. I think I'd love
(19:39):
to see you setting aside a little bit extra for
your holidays funds so that she can look forward to that.
And then maybe some of those medical expenses. It's it's
always prudent to have that in mind when you're putting
together your budget. But I think I mean, just full
points for even having a stab at putting something on paper,
I think that's the first step is just to really
(20:00):
have a stab at estimating what your expense. And then
it's going to be something that's going to evolve over
time as as now things come up. You go, Oh, yeah,
I didn't think about that when I first had the go.
And you can begin to incorporate the reality of your life,
and then eventually your budget starts to match your reality
in a way that can be really empowering. And I
(20:20):
think just knowing what your expenses are that can help you,
it can help you apply for loans. They always ask
you all these questions. You know, if if people need
to apply for a first home loan or something, having
some idea of your expenses helps. Having some idea of
how much you need to save for retirement. So what
your expenses are going to be at that end of
life can be so helpful. And and I would love
(20:41):
to see you working towards having an emergency savings fund.
You know, people talk about 3 to 6 months of
living expenses. That may seem like a lot from now
from where you are now, but I think that's something
that can provide a lot of peace of mind for people.
So I think that gives people a really solid idea of,
you know, if you were going to take a stab
at having a budget, you know, that's the sort of
(21:03):
things you should think about. And if anyone does want
to follow me on Instagram, I've got a heap of
worksheets and I've got an annual Excel spreadsheet where you
can sort of go through my categories and think of
all the things that you might have missed. And I
think we're going to be encouraging anyone who is listening
and who wants to to have that experience of us
looking through the figures and seeing if there's any obvious
(21:24):
leaks in the ship. We're still keen for people to
get in touch with us.
S1 (21:28):
Yes, send us an email too. It all adds up
at o'clock today. You you can just sort of say
hi and then will be in touch to ask you
some details, like your monthly expenses, just like I've I've
revealed today. And tell us what sort of budgeting strategies
you use along with any long term goals or any
things that you're struggling with sort of financial sticking points.
And then we'll get back in touch and find out
(21:50):
a few details and then we can run through them
on the pod and let you know what we think.
S2 (21:54):
I love looking through everyone's budget, so do do send
them in. Obviously, we can't give you with financial advice.
We're not licensed to do that. But I do just
think that it can be helpful to share figures and
we can point out some areas where you might just be,
you know, obviously missing some things in your budget like
you've forgotten to put in your holidays or whatever, or
if we do see an expenses that look particularly large,
(22:17):
we might be able to delve into some common ways
to save in that sort of area, which may be
of help to you.
S1 (22:24):
Thanks for listening, as always, and we'll see you next week.
S2 (22:27):
And well done, Dom. I think that was very brave
of you to share your figures and I think you've
done a good job. Well, thank you.
S1 (22:32):
Just.
S2 (22:33):
Thank you. See?
S1 (22:39):
This episode of It All Adds Up was produced by
Chee Wong. The information discussed is general in nature and
does not take into account your personal financial situation, goals
or objectives. You should always do your own research or
get professional advice before making any major financial decisions. If
you like today's episode, hit, follow your podcast app. Leave
a review and recommend it to all your friends. You
(23:00):
can also submit your listen to questions in text or
audio form at. It all adds up at 9:00 PM today.
Thanks for listening.
Hello and welcome to It All Adds up the podcast.
So we chat about money, how to get it, how
to spend it, and how to invest it. I'm money editor,
dumb pal.
S2 (00:13):
And I'm senior economics writer Jess Vine, and I think
we need to add how to save it to our
opening spiel because that is the focus of our new
Budgeting advice series. We're looking in particular at all the
ways that you can save and keep ahead of rising
costs of living and also interest rates, which we learned
from Reserve Bank Governor Phil Lowe are going to continue
(00:36):
to go up. So, Dom, you have graciously agreed to
be our guinea pig and to kick off the season
by letting us have a little look at your budget. Yeah, look, I'm.
S1 (00:46):
Feeling pretty scared about this, to be honest. You know,
I've never had never had my finances so thoroughly displayed
or analyzed, But I think it's the you know, the
aim of this series is to sort of help you
out by showing how we and others sort of think
about money, which can then help you sort of think
about it differently yourself. Our, you know, at the very least,
(01:08):
even if it doesn't help you think differently, the total
chaos of my finances might make you feel a little
bit better about yours.
S2 (01:14):
You don't have to be scared. I will be very
gentle in my feedback on your figures.
S1 (01:19):
Yeah. Otherwise it'll be, you know, highlighters at ten paces. I.
S2 (01:23):
I know because I am quite notoriously not backwards in
coming forwards with my own figures. I post them all
on my money with just Instagram accounts. So I think
people probably have a pretty good idea about where my
money goes if they care to, to have a look.
And I sort of felt kind of embarrassed or like
a little bit hesitant sharing that at first, but then just, well,
(01:45):
the feedback of how useful it is to actually see
somebody else's budget and how much they're spending on Internet
or whatever is so useful. I mean, comparison can be
the safe of joy and you can't you know, everyone's
going to have a different set up. But I think
it is genuinely very, very helpful to have these conversations
about how much money was spent, how much stuff costs,
(02:06):
and people can go, That takes more than me or
Dom's doing what don't. You should not be spending that money.
So I'm very much I've had a little sneak peek
at your figures that I'm I'm very excited to to
run through them and to give you my feedback.
S1 (02:19):
Yes, absolutely. And I think you're right. I think there's
a sort of you know, we're sort of brought up
in this culture of sort of not talking about money
too much. And, you know, everyone's a bit secret, secretive
about their pay and which obviously I totally understand a
lot of situations. But, you know, I think you're right,
talking about this sort of stuff can really help you
think about it differently.
S2 (02:35):
Yes. So when you sort of laid out your figures,
what's the bottom line? Are you actually in surplus or
are you spending, you know, go to finance, spend less
than you earn? Are you are you doing that?
S1 (02:46):
Well, in theory. So should we get into it? Yeah.
All right, let's do it. So I've sort of broken
into two categories. So we've got fixed monthly expenses and
sort of variable monthly expenses. So just as the top line,
my monthly income is around 5500. And of that, I
have sort of have these, these fixed expenses. So I
(03:07):
spent about just under 1500 on my mortgage each month,
which as we mentioned, is fixed at the moment, which
I'm thanking my lucky stars for because it won't be
fixed for much longer. And by the start of next year,
I'll have to go to a variable loan which will
drastically increase my fixed expenses and then my body corporate
every month is about $150. So that collectively is about
(03:28):
$470 every quarter.
S2 (03:30):
That's the one that floors me. And I'm so jealous
because my body corporate is about 8000, eight or $9,000
a year. So yours is less than $2,000.
S1 (03:38):
Yeah. And I think it's insane that you also $8,000
a year. But, you know, I think maybe this is
the difference, difference between living in Melbourne and Sydney and
like the size of our apartments. So it's not.
S2 (03:47):
For me to decide much in the pool, but if
I have my time again and I was doing the
property search, gosh, I would have paid a little bit
closer attention to Strata face because I can be a
major ongoing cost.
S1 (03:57):
Yeah, absolutely. My rates are about $130 a month, so
just under $400 a quarter. I pay my car insurance monthly,
which is about $100 or so, which I think is
a bit expensive. But every time I've tried to get
that down, I can't. So what type.
S2 (04:12):
Of car insurance do you have.
S1 (04:15):
So.
S2 (04:15):
Comprehensive? Okay. Yeah, I think I'm only paying about $600
a year. Yeah, my comprehensive and yours is what, so
12 over $1,000 there? Yeah.
S1 (04:25):
My internet is $69 a month. I spend about $120
on petrol a month for the car. Electricity is about
$100 a month. Oh, and I should sort of preface
all this. I'm a single person. I live by myself.
I have no dependents. So 100 bucks a month for
electricity I think is probably about fine.
S2 (04:42):
That's about what I pay. So I'm a single mother,
so me and a little kid for half of the week.
So I think actually a lot of our expenses are
about the same with the electricity. I think we're both
living in sort of old style, two bedroom flat. So yeah.
S1 (04:57):
So absolutely. My water is about $70 a month, so
but I pay it quarterly, which is about. $200 a
quarter on various subscriptions like streaming services, Spotify. I pay
a little bit of every month for like extra data
on my Google account that totals about 50 bucks a month.
And then I also have a pool membership. So my
(05:20):
local gym, but I just pay for the pool. And
that's $70 a month. So those are my sort of fixed,
fixed expenses. What do you what do you think, Jess?
How am I going so far?
S2 (05:29):
I think that's looking pretty good. I don't think I
can't see any obvious areas where you're bleeding money unnecessarily.
And so, so far, so good. All right. Do you
use the pool membership?
S1 (05:41):
Well, I do. Yeah. I was. I was really good
about it last year. I've been a bit slack this year,
but I was going about three times a week, so
I think I get pretty good value out of it.
S2 (05:48):
Yeah, I pay about that much per week for my
gym membership so that all the areas where I do
spend quite a lot of money is on my CrossFit membership.
But I get a lot of value out of it.
S1 (05:58):
So yeah, I think that's fair enough. I mean, if
you can justify if you going like four or five
times a week, that's fine. Like, you know. Yeah. So,
so far we've made it without any glaring, glaring issues.
S2 (06:09):
Perhaps some glaring omissions, but I'm going to save that
till later.
S1 (06:12):
All right. Well, sorry. That's a bit. Okay.
S2 (06:14):
But you fix that. A monthly bills? Yeah, the regular things. Okay. Yeah.
S1 (06:20):
And then on top of this is sort of the
variable expenses like food. So I think I spend probably
around 30 and $50 a month on food. Again, I'm
a single guy living by myself, so food is not
a massive expense for me. And then sort of the
collective sort of eating out alcohol events, sort of, you know,
(06:40):
fun activities, I probably spend about 400 ish a month,
maybe a bit more on that. And then I spend
about $200 on hobbies. I probably spend about 50 $200
a month on clothes and things like that.
S2 (06:53):
So I for me, actually that was the really. Oh, dumb. Yeah. Well,
you are you are always very nicely attired so I
can't complain. But I went a whole year without spending
any money on clothes which, you know, it is possible.
Depends what the state of your wardrobe is like. But
you know, up to $100, you know, so that's a
new sort of item every month or so. I mean,
(07:15):
maybe that I know I go to the extreme and
I probably do need some more clothes.
S1 (07:21):
And then like probably 90 bucks on like public transport.
And that's my variable monthly expenses. So you've said that
I miss I might be missing some stuff. What do
you think I'm missing?
S2 (07:31):
Yeah. So what did you add that all up to
for your monthly expenses?
S1 (07:35):
Yes. So that's approximately $3,600 ish a month for my expenses.
S2 (07:41):
Yeah. So to me, that just seems like. Well, that is,
you're doing pretty well if you're keeping it that low.
And but from what you've said, you think maybe that
might not be an accurate representation of how much you're
actually saving?
S1 (07:54):
Absolutely not. Because according to this, I say I could
do that. If you look, if I don't take it
on face value, I should be saving nearly $2,000 a month,
which I absolutely I'm not. No way. Not even close.
So this is the thing, I think, which is it's
is good for us to talk about, which is clearly
like despite the fact that I think that I'm moderately
well regimented when it comes to budgeting, obviously, I'm leaking
(08:15):
funds here like I'm spending and I know I do this.
I spend money on little, little bits here, a little
thing there, or, you know, like last week I spent
$200 on a little attachments that I wanted for my
my speaker system. And that doesn't fall into any part
of my budget. That's just something that I just spend
money on sort of thing. So like, so it's sort
of a it is a leaky it's not a it's
not a water tight budget. Like, Yeah.
S2 (08:35):
And I love it because it's such a classic example
of like, you know, we're all told you need a budget,
write yourself a budget, stick to it. Done. And people
do their very best and you try to rack your
brain and think of most of the things and you like,
right them my expenses and then maybe track it for
a month and you get to the end of the
month and are they but not my expenses. I have
no idea what is happening. And that's sort of what
(08:58):
inspired me when I did my sort of amazing exercise
of going through the Bureau of Statistics Household Expenditure Survey,
which has about 7000 things that you can spend money
on grouped by category. And I rearranged them all just
the myriad of things that can come up that, you know,
if you're not expecting them, then you think you've failed
because you set your budget. And it wasn't realistic. But
(09:21):
I mean, so some obvious sort of things that I
wondered about is do you ever go on holidays? Because
you probably will. And this is the thing at things
that you don't go every month unless you live in
a great life, but there's sort of these irregular sort
of once a year or once every quarter sort of
expenses that you might need to sort of if you're
(09:41):
looking at how much you're spending, maybe you need to
save at least 100 or $200 a month to sort
of be putting aside into a holiday fund unless you're
not taking holidays.
S1 (09:53):
No, I mean, I know. No, I do. I do
take holidays. I had a lovely holiday last year to
Vietnam for about three weeks, which was lovely. But the
thing is that like when they know. I want to
do that. I like I start saving for it. Like
it's idea for me. It's like a very like a Oh,
I'm going on a holiday to X or Y this year.
I better start and like, you know, months ahead, I'll
be like, well, I need to start saving for that.
(10:14):
So that's when I'll start putting money aside. I don't
do it on like a regular basis, so that makes sense.
S2 (10:20):
Yeah, but whereas I do, because I sit down at
the start of each year and I go, Well, how
much is my holiday budget? This is what I think
is reasonable. And then I try to keep sort of
within that envelope and I set aside a certain amount
each month to contribute to that, which is actually sort
of a prompt for me to go. Just don't forget
to book a holiday cause it's actually good for you to, to,
to take the risks. Some other little areas. Do you
(10:41):
have any home insurance?
S1 (10:42):
Oh, yes. So while home insurance falls underneath under my body, corporate.
S2 (10:47):
So all that contents insurance.
S1 (10:49):
Yeah. So I should have mentioned a condo insurance for
me costs $170 a year. So on a monthly basis,
that's pretty negligible.
S2 (10:56):
Yeah. And then I did wonder about your car expenses
because we had the insurance there. But I mean, car
is one thing that just catches everybody out because the
I presume you would have annual reg, so you would
be servicing that car at least once a year and the.
S1 (11:12):
Car is currently due for a service. So I need
to that will cost me about 500 bucks. So that's
something that I need to to prepare for. And yeah,
my Reg, I was like I think a pretty standard
range of like eight 800 to $900 a year.
S2 (11:25):
Yeah. And then every so often every three years ago
or so, your battery's going to go and that's a
couple of hundred dollars and then your tires are going
to go. So I do set aside money each month
for my car Future Fund, and I think I added
up the running. My car costs may something in the
region of $5,000 a year or something. It's when you
(11:47):
add up all the insurance and the reg over and
that includes that petrol as well. So that might be
that might be something that you need to consider. And then,
you know, you look fit and healthy. But medical expenses,
do you go to the dentist maybe once or twice
a year? I should you should know, maybe that's getting
too personal.
S1 (12:08):
No, no, no. I like I definitely try to I
think it's one of those things that I always forget about,
but like I have, I do try and go the
nineties once a year. I'm definitely due for a checkup
this year. I did go at the start of last year,
so I'm probably about 12 months in.
S2 (12:21):
Some people completely forget to factor in on even like
medicines if you need some antibiotics every so often I
put suncream under medicine as well. Like if you need
new contact lenses or glasses, you know, seeing the GP,
seeing the dentist, that is something that can really derail
people's budgets again. So I again I sit down and
(12:42):
I set aside about $1,000 for dental and GP and
I and I put the little amounts aside each month
to cover things like that. So yeah, I mean the other,
the other, the other thing I thought is like gifts
and you know, Christmas time or even just like when
you're going to someone's house for dinner and you need
to take a bottle of wine, that's one thing I've
(13:02):
realised that I, I don't want to be the very
stingy friend, although I completely am. But like, it's nice
to give people things, you know, on the rig, like
just go to the house. So you buying something for
all the people? So people sometimes get to factor in
that as well. And I think once we add up
all of that, maybe that might be where your money's going. Yeah.
S1 (13:22):
And I think well, I think I think on the
medical side of things, like I'm like, I don't want to,
you know, I'm it's sort of quite a healthy person. Like,
I don't go to the doctor very often. I don't
have that many sort of things that go wrong with me.
So I'm pretty I'm pretty. Okay from from that perspective
when it comes to like, things like gifts and stuff,
like if I'm going to a friend's house, I'd be
buying like a bring like a bottle of wine that
(13:43):
sort of comes in to like the alcohol budget. For me,
that makes sense because I'll probably drink some of that wine.
So therefore, that's, you know, I mean, we could we
can talk about like how I split up my, my
funds by pay, if that helps in terms of the
actual way I do.
S2 (13:58):
But I wonder how you do cope. Sort of, yeah.
When you have some of those bigger expenses, get rid
of them. How do you how do you structure your
sort of money to account for sure.
S1 (14:08):
So I have my phone in front of me right now,
which has my banking app, which has spoken about a
few times and I love my banking app. But basically
what what happens every fortnight when I get my pay,
it is automatically split into ten different accounts and I'll
read through these accounts. So my first account is called beans.
(14:32):
I don't know why I called it this like a long,
long time ago, but basically it's just my generic savings account.
I call it sort of my savings slush fund where
like a decent chunk of my of my salary goes
into this account. And it's just money that I could
spend for a one off, like, let's say, like a
car service or something like that or a gift for
someone or something unexpected that I'm not budgeting for. That's
(14:55):
where I typically take that money out of. And I
have my play account, which is just sort of like alcohol.
That's what the one I mentioned before, like events going out,
that sort of stuff.
S2 (15:06):
So you're putting aside the sort of two, was it
400 or so a month.
S1 (15:10):
$200 a fortnight ish. Yeah. It go into and.
S2 (15:13):
Then if you reach the max of that do you
just stop going out or do you.
S1 (15:17):
Oh no. Absolutely not. Then. Then, then it comes out
of the, then it comes out of the slush fund
and then I have a similar account for food, which
is again about $200 a fortnight. I have a account
for bills which and all of these I've, I've calculated
to sort of match up to pretty much the exact
amount of money I spend on that thing each month.
(15:38):
So the idea is that I shouldn't have like I
should run it to zero every fortnight.
S2 (15:42):
For each of the accounts.
S1 (15:44):
For, well, for each of the accounts that aren't, that
are sort of on a fortnightly basis. So bills I
have an account for that, I have an account for
hobbies as well. And then I have my mortgage account,
which obviously that's the one where the most amount of
money goes in each fortnight, which takes exactly half of
every fortnight. Exactly half of my mortgage goes into that
(16:04):
account to split into that account. And then I have
a sort of body corporate bills which covers things like
petty corporate fees and rates. And then I have sort
of my goal saver account, right? So this is something
that I'm specifically saving towards currently, I'm saving towards a
a ski pass for for the year. So I'm I've
got a it's got a little emoji of someone skiing
(16:26):
because that's what I'm sort of saving towards.
S2 (16:28):
Yeah, that can be a powerful motivator if you've got
a savings going. A little picture there and you're putting
the money in, that must feel good to watch that.
S1 (16:36):
Exactly. And my app gives me like little notifications, like
I've saved 25% towards this. I feel it's, you know,
it's like a little little sort of serotonin hit. And
then I have my final sort of major savings account,
which is like, you know, emergency things sort of really
big long term things like any renovations I'd want to
get done or anything like that, which is sort of
where the bulk of my savings sits.
S2 (16:59):
Yeah. And I wonder is, is this a are these
offset accounts or are they just separate because you've got
a fixed loan? That might not that means something that
you don't have a mortgage offset.
S1 (17:09):
None of these offsets, these are just these are just
sort of separate savers within my within my bank. And
then anything else that doesn't go into that just gets
put into my access account, which is just sort of the,
you know, everyday spending sort of stuff. But the idea
is that every time I spend on something that that
is categorized into one of those accounts, I then move it,
move the money in and out sort of thing.
S2 (17:30):
Yes, that's okay. No, that's I mean, I think overall
you're doing so well like you do. You have massive
credit card debt.
S1 (17:37):
So I don't I don't have a credit card.
S2 (17:38):
No credit card. Yeah. I also don't have credit card debt.
That's the one. I think that's sort of the canary
in the coal mine for a lot of people. If
you've got quite a large credit card debt that you
keep rolling over, I think you need a budget and
I think you need a bit of a plan to
be paying off those debt. But I would love to
say if you don't, because we bought shares together on
one of those. Oh, yeah. Have you been doing any
(18:00):
regular investing since then?
S1 (18:02):
Not yet, but I plan to this year. That's, that's
on the cards.
S2 (18:04):
Because, I mean, I get I love my budget and
I love it precisely for the reason that at the
end of each month, you know, I have a budget
that I sort of my idea of what I'm going
to spend in the not track, what I actually spend.
And then I do look at my expenses and my
income and I invest the difference. And I feel just
so empowered when I do that, when I go, oh, yes,
you saved 600 bucks this month. Whatever it is, it
(18:27):
gets transferred straight into the share trading account because that
is my strategy at the moment. You could be investing
it in extra super or paying off the mortgage faster. But,
you know, I mean, I just want to spread that
joy with everybody, you know, the joy of savings to
feel that sense of accomplishment. So I don't know if
we will get you to that budget ninja level where
you want to actually.
S1 (18:48):
We'll say, I don't know. That's I don't know. That's
like I think my my sort of I'm just I'm
just sort of fast and loose about it, you know,
like I'm freestyle in and out here.
S2 (18:57):
And you seem to you seem to be doing.
S1 (18:59):
Good. Yeah. Well, apart from the fact that there's like
a you know, it is a just spend a sort
of money on things every month that I don't know
where it goes. So I'd like to get on top
of that. So that's my goal to sort of work
out these sort of extraneous expenses that I can't really track.
But I suppose, you know, what's the what's your overall thoughts, Jess?
How do you how do you write my my budgeting
and finances out of ten?
S2 (19:19):
Don't I think you've done really well full points for
effort as we say. I did notice some things that
maybe you have forgotten to pop in your budget. I
would definitely be thinking about those car expenses that can
really torpedo a lot of budgets when suddenly you've got
to put the car in the service and particularly parts
and repairs can can derail you. I think I'd love
(19:39):
to see you setting aside a little bit extra for
your holidays funds so that she can look forward to that.
And then maybe some of those medical expenses. It's it's
always prudent to have that in mind when you're putting
together your budget. But I think I mean, just full
points for even having a stab at putting something on paper,
I think that's the first step is just to really
(20:00):
have a stab at estimating what your expense. And then
it's going to be something that's going to evolve over
time as as now things come up. You go, Oh, yeah,
I didn't think about that when I first had the go.
And you can begin to incorporate the reality of your life,
and then eventually your budget starts to match your reality
in a way that can be really empowering. And I
(20:20):
think just knowing what your expenses are that can help you,
it can help you apply for loans. They always ask
you all these questions. You know, if if people need
to apply for a first home loan or something, having
some idea of your expenses helps. Having some idea of
how much you need to save for retirement. So what
your expenses are going to be at that end of
life can be so helpful. And and I would love
(20:41):
to see you working towards having an emergency savings fund.
You know, people talk about 3 to 6 months of
living expenses. That may seem like a lot from now
from where you are now, but I think that's something
that can provide a lot of peace of mind for people.
So I think that gives people a really solid idea of,
you know, if you were going to take a stab
at having a budget, you know, that's the sort of
(21:03):
things you should think about. And if anyone does want
to follow me on Instagram, I've got a heap of
worksheets and I've got an annual Excel spreadsheet where you
can sort of go through my categories and think of
all the things that you might have missed. And I
think we're going to be encouraging anyone who is listening
and who wants to to have that experience of us
looking through the figures and seeing if there's any obvious
(21:24):
leaks in the ship. We're still keen for people to
get in touch with us.
S1 (21:28):
Yes, send us an email too. It all adds up
at o'clock today. You you can just sort of say
hi and then will be in touch to ask you
some details, like your monthly expenses, just like I've I've
revealed today. And tell us what sort of budgeting strategies
you use along with any long term goals or any
things that you're struggling with sort of financial sticking points.
And then we'll get back in touch and find out
(21:50):
a few details and then we can run through them
on the pod and let you know what we think.
S2 (21:54):
I love looking through everyone's budget, so do do send
them in. Obviously, we can't give you with financial advice.
We're not licensed to do that. But I do just
think that it can be helpful to share figures and
we can point out some areas where you might just be,
you know, obviously missing some things in your budget like
you've forgotten to put in your holidays or whatever, or
if we do see an expenses that look particularly large,
(22:17):
we might be able to delve into some common ways
to save in that sort of area, which may be
of help to you.
S1 (22:24):
Thanks for listening, as always, and we'll see you next week.
S2 (22:27):
And well done, Dom. I think that was very brave
of you to share your figures and I think you've
done a good job. Well, thank you.
S1 (22:32):
Just.
S2 (22:33):
Thank you. See?
S1 (22:39):
This episode of It All Adds Up was produced by
Chee Wong. The information discussed is general in nature and
does not take into account your personal financial situation, goals
or objectives. You should always do your own research or
get professional advice before making any major financial decisions. If
you like today's episode, hit, follow your podcast app. Leave
a review and recommend it to all your friends. You
(23:00):
can also submit your listen to questions in text or
audio form at. It all adds up at 9:00 PM today.
Thanks for listening.
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