January 27, 2025 • 27 mins
Most people are stuck in a financial trap—and don’t even know it. Is that YOU? In this episode, we’re exposing:
🚨 The budgeting hack that could save you THOUSANDS (hint: it’s the 50-30-20 rule).
💳 The shocking truth about “good debt” vs. “bad debt” (yes, some debt makes you RICH).
⏳ Why delaying your retirement planning could cost you BIG.
🔥 How to escape the paycheck-to-paycheck cycle once and for all.
Unlock the secrets of mastering personal finance management and fundamentally change your financial future. Discover practical strategies to track expenses, set achievable goals, and manage your money wisely. By adopting tools like the 50-30-20 rule, you'll learn to allocate your income effectively into needs, wants, and savings. We also address the common misconceptions about budgeting, making it less tedious and more engaging with the help of digital tools. Prioritising debt repayment is crucial, and we provide insights into building a robust financial foundation that will support your goals for years to come.
Explore the fine line between good and bad debt, understanding how some borrowing can pave the way to wealth while others can trap you in a cycle of high-interest payments. From student loans to investment properties, learn how certain debts can actually enhance your financial health. This episode places a special emphasis on the power of compound interest, the importance of starting your retirement planning early, and seeking professional advice to secure a comfortable future. We uncover common financial pitfalls, like living paycheck to paycheck, and stress the need for better financial literacy and habits, empowering you to navigate the financial world with confidence and clarity.
For any enquiries or to connect with Oscar, Zeke, or their company, Asset Road, listeners can visit the following links:
The advice shared on The Finance Bible is general in nature and does not consider your individual circumstances. The Finance Bible exists purely for educational / entertainment purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.
🎧 Enjoyed this episode?
Follow us on Instagram @zekeguenthrothofficial @oscardonproperty and @assetroad for daily insights, property breakdowns, and behind-the-scenes updates.
Explore more at www.assetroad.com.au
Disclaimer:
The information provided in this podcast is general in nature and does not constitute personal financial advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Asset Road Pty Ltd recommends you seek independent financial, legal, taxation or other advice as required. All investments carry risk. Past performance is not indicative of future results.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Oscar Don (00:01):
When I first started managing my finances, I made
every mistake in the book maxingout credit cards, skipping
budgets and feeling overwhelmed.
But one day I stumbled upon thepower of tracking expenses and
setting small savings goals.
That simple shift changedeverything, and it can for you,
too.
In this episode, you'll learnthe essentials of budgeting,
(00:22):
discover how to build anemergency fund, get tips on
(00:44):
managing debt and uncover commonfinancial pitfalls to avoid
Stick around, because thesestrategies could be the game
changer you've been waiting for.
Welcome back to another episodeof the Finance Bible Podcast.
Zeke here and your co-host,oscar.
But before we get into it,please note that nothing in this
podcast should ever beconsidered as personal financial
advice.
Of course, if that is what youare seeking, reach out.
We'll get you in touch with thecorrect professionals and get
(01:06):
the job done properly.
Sit back, relax and enjoy theshow.
Let's get into it.
Welcome back to the FinanceBible Podcast.
Today we're diving into personalfinance, a topic that can
transform your life.
Let me ask you this to start itoff have you ever wondered
where your money really goeseach month?
(01:26):
Well, by the end of thisepisode, you will have a roadmap
to take control of yourfinances and build the future
you dream of.
Personal finance is essentialfor everyone, regardless of your
income level or financial goals.
In my eyes, how you set up yourpersonal finances and how you
manage ongoing debt, et cetera,and your income really sets you
(01:48):
up for not only tomorrow butnext year, in five years, 10
years, 20, 30, 40, 50 years,until you retire.
It sets you up for life,literally how you act now and
what you spend your money on ifit may be investments, or it
might be things which bring youvalue, or it might just be
things that you splurge on, likecoffees and going out shopping
(02:11):
or going out clubbing but whatyou spend your money on today
and for the next five years isgoing to have a direct impact on
your life.
So, before you spend money,think that is this going to
impact and make future me betterand put myself in a better
position to understand thebasics in personal finance.
(02:32):
I have said it many times inprevious episodes the budgeting.
Budgeting is the cornerstone offinancial health.
The purpose of a budget and toreally, you know, figure out why
budgeting is vital is it helpsyou understand and control your
money, where your money goes,what happens when it comes in,
and really actually figure outwhat you're doing and, if you
(02:53):
need to be on track, putyourself back on track.
A budget is vital, especiallyif you, like many people I know,
and especially in today's dayand age, with the cost of
livings increased.
You get paid and then all of asudden you've run out of money
before your next payslip andthen you dig into your savings.
Where did your money go?
Did 60% go to dining out?
(03:16):
Did 30% go to buying clothes orwhatever it may be, and did 10%
go to bills?
Like, where's your money gone?
And the issue is so manyAustralians and people all
around the world don't budgetbecause they think it's so
boring, takes forever and it'sjust an old school mentality way
(03:36):
of doing it.
But the thing is, yes, it canbe boring, but the impacts this
will have on your life if you'vegot goals that you want to
achieve financially, this willliterally catapult you into
those goals if you follow itaccordingly.
One budgeting tool which I'vementioned before and I did use I
still use from time to time isthe 50-30-20 rule.
(03:58):
So, depending on your rent, ifyou are paying rent, if you're
at home, even better, you don'thave to pay rent, but basically
what it means is 50% of your pay.
So this is when you get paidand your money comes in.
So 50% goes to needs.
So we're talking your rent,we're talking your groceries if
you need to go, get your owngroceries and also utilities so
(04:20):
rent, electricity, wi-fi, justbills, things that need to be
paid 30% goes for once.
What do you want to do?
So you may want to go out andhave dinner with your friends.
Well, a portion of that comesfrom the 30%.
You may want to go to themovies, or go on a date or go
let's just say, for example, goshopping on a Saturday afternoon
or go to the footy.
That's where that comes out ofthat 30% and the last 20%.
(04:45):
That goes towards your savings.
And if you have any debt, thatwill go towards your debt and in
my opinion, it will go towardsyour debt before it goes towards
your savings.
So you want to make sure youget rid of your debt before you
start saving, because what's thepoint of saving when you've got
debt makes no sense.
You may as well extinguish itand then start your saving.
(05:06):
Start fresh.
50, 30, 20.
People may sometimes flip the 30and the 20 around if you want
to save more money.
I personally used to do thatbecause I used to love saving.
It was quite exciting when youget your pay and then you see
your savings go up and thenthere's a new number in your
bank account and blah, blah,blah.
Everyone's different, butchange it.
It is flexible.
That's the basics of personalfinance and budgeting 101 and so
(05:32):
many tools online as well whichmakes you not have to actually
physically set up your ownbudget, because if you've got to
go physically set up your ownbudget could take a while.
You probably get bored and thenyou'll stop doing it and then
all of a sudden, you'll neverget back to it.
It's the good old act ofprocrastination.
So there's heaps of differentspreadsheets online.
All you got to do is justGoogle it budget template on
(05:55):
Excel and you can download it.
There's also different appslike YNAB and Mint you can
download and they're literallybudgets on your phone.
So in today's day and age, witheveryone on their phone, very
easy and probably a smart thingto do.
Actually, if you're wanting toget into it Now.
The first step to gainingfinancial awareness is simple,
(06:17):
but it's tracking your expenses.
Knowing your spending habits iscrucial.
For example, if you lovespending all your money on
shopping and buying clothes.
You need to figure that outsooner rather than later,
because if you figure that outyou can then put a stop to it or
restrict it.
It's literally the same asaddicts.
(06:39):
So let's say gambling addiction, for example.
If you're putting all yourmoney to gambling, you don't
realize.
And then you do your budget andthen you say, oh damn, I'm
putting 20 bucks a week, or 20bucks a day actually, into
gambling on Sportsbet.
I need to pull back becausethis is a bad spending habit.
This is where all my money'sgoing.
So you need to start trackingyour expenses and you may want
(07:02):
to start small, such as justtracking one category at a time.
You might want to do onecategory per week for the month,
so it may just be dining out.
You want to track how muchyou're dining out for the month
and then the next month you maywant to track how much money
you're spending on clothes.
So really figure out, based onyourself, what you feel you're
(07:24):
spending the most money on, anddefinitely track it, because
you're going to surpriseyourself.
But start small and thengradually add another one to the
month, add another and then allof a sudden you're tracking
every single expense for themonth in every single category,
and then you can figure out allright, let's push the spending
on going out down 200 bucks forthe month, let's put that money
(07:44):
into savings and blah, blah,blah.
So there's options to do it andit's so simple, but it just
takes time and it's a must ifyou do want to grow your
personal finances and achievethe goals that you want to set,
especially being in January.
I'm sure everyone's got theirown new year's resolutions, so
this is a vital if this is oneof your New Year's resolutions
(08:05):
of increasing your finances.
The next segment of yourpersonal finances is you must
build your financial foundations.
So when I think about financialfoundations, I think directly
to emergency fund, yourfinancial safety net.
An emergency fund, in simpleterms, is just a different bank
(08:26):
account or a little savingsaccount which covers unexpected
expenses such as car repairs.
You may have medical bills thatcome up out of nowhere.
Something might've happened toyour phone and it's fully broke.
You need to get another onebecause you need to communicate
to people.
So that's an emergency,whatever emergency you feel for
yourself, but it's just coveringthe unexpected expenses as
(08:50):
simple as that.
When you Google emergency fund.
There's so many differentlevels of what people recommend
having in your fund, but for you, just have a realistic goal.
You may want to have one monthof living expenses in your
emergency fund or have twomonths.
I personally think having atleast three months is a good
(09:10):
place to be in terms ofemergency funds.
So, for example, especially inCOVID, how a lot of people lost
their jobs and became redundant.
Having emergency funds at leastfor three months would have
helped a lot of thoseindividuals get back on their
feet, pay their rent if they hadto, pay their mortgage bills if
they had to, and search forjobs.
So you know, you may start withfive hundred dollars in there
(09:33):
or even one hundred dollars andadd to it every week for 12
months, for example, dependingon what goal you want to have.
But a tip to to building anemergency fund is you can just
automate a small percentage ofeach of your paycheck into a
high yield savings account,which will give you a bit of a
boost at the end of every monthas well due to the interest for
(09:57):
that.
So that's a tip for you if youhaven't built an emergency fund.
Another good reason for it ismentally.
It helps you in the back of themind.
So if you're getting stressedout about things coming up and
you might have to pay a bit morefor your car because it's
broken down, well, the good newsis you don't have to dig into
your savings.
You've already built up a fund.
(10:17):
So that's what it's there for.
It's there for emergencies,unexpected things, and to ease
the stress for yourself.
The next topic is debtmanagement, taking control of
your financial obligations.
So when I think about debtmanagement, I think about two
methods which people have spokenabout before in the industry.
(10:39):
So there's two ones.
There's one called the snowballor the debt snowball method,
and the other one's a debtavalanche method.
So we'll start with this debtsnowball.
So the debt snowball methodfocuses on building momentum by
eliminating your smaller debtsquickly.
So this will give youpsychological wins and give you
(11:00):
a bit of a sense ofaccomplishment.
So, for example, if you have adebt of 200 bucks or a thousand
and five thousand, you'd startwith the $200 debt first, even
if it has a lower interest rate,and then you'd make your way to
the $1,000 and then the $5,000.
So the smallest first and thenmake your way up.
On the other hand, the debtavalanche method.
(11:22):
This targets debts with thehighest interest rates first,
the reason being it minimizesthe overall cost of borrowing.
So, for example, if you have a$5,000 debt at 20% interest and
then the $1,000 debt at 5%interest, you tackle the $5,000
debt first.
But both methods are effective.
(11:43):
Choose the one that aligns withyour financial situation and,
most importantly, like whatmotivates you more.
So is like for my girlfriend.
She likes smashing the bigdebts first if she has to pay,
as opposed to the small ones.
So, depending on what you'rewanting to do, figure out which
method you have, and that's onlyif you've got debt.
(12:04):
You may not have any debt andmay not need this, so that's
also fine.
Now, when we talk about debt,there's two different types of
debt.
There's good debt and there'sbad debt.
So good debt, for example,student loans, investment
property mortgages and bad debt,high interest credit cards and,
pending where you sit on thefence, maybe an owner-occupier
(12:25):
mortgage.
We'll start with good debt.
I'll dive into it a little bitmore.
So good debt is really anyborrowing that contributes to
your long-term financial healthor helps you build your wealth.
So, for example, student loanssome people may see them as bad
debt, some as good, but let'sjust say, for example, it's good
debt because it may help youwith your financial health down
(12:47):
the track.
We're getting a good job, butthey often come with lower
interest rates and help increaseyour potential through
education.
And, at the same time, if we'reusing mortgages, for example
ideally an investment propertymortgage these enable your home
ownership as well as buildingyour equity over time and be
able to buy other properties andcontinue building that legacy
(13:11):
for yourself.
In contrast, bad debt isborrowing that does not provide
any lasting value and oftencomes with a high interest rate.
So credit card debt is thenumber one.
Payday loans and other forms ofhigh interest borrowing fall
into this category, reason beingthey can quickly spiral out of
control and drain your financialresources.
The key is to approachborrowing with caution.
(13:32):
So take on good debt only whenit aligns with your financial
goals and avoid bad debt byliving within your means and
paying off balances in fullwhenever you can, because that
is the most important,especially with credit cards.
If you start paying minimumrepayments and use a credit card
for everything, it creeps up onyou and then all of a sudden
(13:54):
you've got a big bill which youmay not be able to afford.
Try and avoid minimum paymentswhen you can and really tackle
the debt aggressively ifpossible, because that's how
you're going to get out of it.
So segment three what I've gotwritten here is growing wealth
over time.
Saving and investing Make yourmoney work for you.
The main thing when I thinkabout saving and investing is
(14:15):
compound growth, compoundinterest and how starting early
can significantly impact yourlong-term wealth.
First things first.
What is compound interest?
Definition, or one of thedefinitions, is the process of
earning interest on both theinitial principle and the
accumulated interest fromprevious periods.
For example, if you invest$1,000 at a 5% annual interest
(14:38):
rate, you'll earn $50 in thefirst year.
In the second year, you'll earninterest on the $1,050, and so
on.
So this creates growth overtime.
However, at the same time, inthe other side of the fence,
compound interest can also workagainst you, especially with
credit card debt.
So, for example, if you had$1,000 on your credit card with
(14:59):
a 20% annual interest rate, thiscan balloon rapidly if only
minimum payments are made.
So this highlights why it'scrucial to harness compound
interest through saving andinvesting and avoid it as a
liability in high interest debt.
The next thing I want to talkabout is retirement planning.
So when it comes to retirementplanning, the earlier the better
(15:22):
.
A lot of people we meet in ourroles are nearing retirement and
70 to 80% of them haven'treally planned for anything.
They have gone through theirlife which used to be okay, you
know, going to school, getting agood job, buying a house,
paying off the mortgage and thenrelying on their superannuation
(15:43):
to help them with theirretirement, and think the
government's going to, you know,fund their retirement, when
back in the day that was okay,you could live a comfortable
life.
But now it's virtuallyimpossible to live solely on the
government, especially on thepension.
You cannot live comfortably onthe pension.
So the main thing is you needto plan your retirement in your
(16:07):
30s, 40s or even earlier.
And when I say plan yourretirement, speak to a financial
advisor.
Let them know what you want todo.
Speak to a property investmentconsultant to help you build
wealth through property, becausein my eyes, that is the most
important and the most effectiveway to build wealth.
Over time, compound interest,compound growth, getting equity
(16:28):
reinvesting, building anabsolute empire.
That's what gets me excited,that's what gets our clients
excited who come to us, and thegood news is, generally speaking
, mortgages are 30 years, so ifyou start in your 20s or your
30s, well good news is, you canbuild an absolute empire and by
the time you want to retire, allyour property may be paid off
(16:49):
and you're literally living offthe rental income.
Start planning, becauseeverything has changed in terms
of government spending, thepension, what's going to happen
in the future?
You don't want to rely on thatbecause you're not going to live
a comfortable life and you maybe stuck working forever.
If you do so, set yourretirement goals.
How much do you need?
(17:10):
How will you get there?
So, if you are in your 50s ornearing retirement and you have
kids and a family, how much areyou making per week now?
Are you comfortable with theoverall income?
Are you just getting by?
So this will help you figureout do you want to replicate
your own income right now forretirement and replace that
(17:32):
income from rental income froman investment property, for
example, that income from rentalincome from an investment
property, for example?
And if you do, if it is, youknow $100,000, you may need $2.5
million worth of an asset baseto pay you 4% of that annually,
which is the average dividendand rent as well.
(17:52):
So that's what you may need,not financial advice nothing to
do with that, but just example.
So figure out how much you want, how much you need, and then
speak to a professional to helpyou get there.
Can't emphasize that enough.
Point four, or segment fourmindset and habits.
Cultivating good financialhabits is literally your key to
(18:16):
long-term success.
Yes, some weeks there may betimes when we splurge a little
bit more than we thought wewould or could afford to, but
it's all about over time.
You know, if you look at thestock market, for example, if
you zoom in for the 12-monthtimeline, you can see a lot of
up and downs, but if you zoomout over a 50-year period,
(18:37):
mostly you'll see an upwardtrend.
So this is all about the samewith good financial habits.
If you do it over time, you'regoing to increase.
But even if you look in on theweek and you may have some bad
days, that's all right.
Just continue to try and fixthat and build it over time.
So one of the points I want totalk about are automating your
(18:57):
savings and bill payments tomake financial discipline easier
, which makes it so you don'thave to think about it, it's
automated, you've got moneygoing to your savings money
going to your spending moneygoing to your bills, that's easy
.
Got money going to your savingsmoney going to your spending
money going to your bills that'seasy.
(19:19):
Also, one of the problems I seeis when people increase their
income, they may get a pay riseor something exciting or a new
job.
A lot of individuals thenactually start looking at
upgrading their lifestyle, too,to match their new pay.
So if you're in a position, tryand keep what you're doing the
same.
If you're renting, you may wantto get a new place which is
based on your income In somecases.
(19:40):
Sometimes that's fine, butdon't really overextend, because
use your extra income to helpyou build more wealth, because
this will really give that extraoomph to push you up the ladder
.
Main one is educate yourselves.
You've got everything in frontof you.
We've got podcasts on ourphones, we've got eBooks.
We've got real books in paperform.
(20:02):
We've got TED Talks.
We've got online courses.
We've got people doing reelsabout investing on TikTok and
everything.
We've got people doing reelsabout investing on TikTok and
everything.
So educate yourselfcontinuously.
Read 10 pages a day at least.
Listen to one podcast a day,take courses and build your
mindset around this.
Now look, the last segment I'mgoing to talk about are really
(20:25):
probably the most important one,and it's ones that I've put
together from four years ofmeeting clients face-to-face and
figuring out what is the mostcommon mistakes which they have
brought up.
Simple as that.
What mistakes have they shownus consistently?
And a lot of these people haveit.
So it's the common mistakes toavoid.
(20:46):
So these are frequent financialpitfalls which many people fall
into it.
So these are frequent financialpitfalls which many people fall
into, but I'm sharing with youhow to actually avoid them.
Number one most common, and alot of people do this is living
paycheck to paycheck.
You may get paid and then atthe end of your pay cycle,
you've literally got no moneyand you're waiting for the next
pay to come in.
(21:06):
You're struggling, you'recounting down the days you can't
go out.
You tell your friends no, Ican't do it because I've spent
all my money.
The reason people do this isbecause they're not saving any
portion of their paycheck.
Spend it on things they want todo, just short-term things like
going out for dinner or goingclubbing or buying drinks.
It's not helping them down thetrack.
(21:27):
If you do wanna go out all thetime with your friends, that's
also fine, but put a smallportion of every paycheck into a
savings account.
I'm actually shocked by howmany people in their 30s have
less than $5,000 in theirsavings because in their 20s and
their 30s they have not beenputting any money in their
(21:47):
savings.
And it's just.
You need to do it, even if it's$50 a week or $10 a week.
Just start somewhere, because,same with the emergency fund,
it's going to help you mentallyas well when you look back and
you're stressed about something.
But you know you've got a bitof a backup, because that will
put you a long way and reduce alot of stress.
(22:07):
So it doesn't matter how small,but start putting some money
into your savings.
Another one is ignoring yourcredit scores.
So when you go for a loan,eventually if you do wanna buy a
house or if you're in theprocess of buying a house, you
need a good credit score becausethat's what the bank will look
at.
These scores will impact yourloan or impact your interest
(22:28):
rates and also your jobapplications.
Ways to improve your creditscore because it's very
important Main one is payingyour bills on time.
You need to pay your bills ontime, because if you don't, it
gets lodged and then it comes upon the system that you're not
very trusting with bills and youcan't really afford the
repayment.
So if you're going for a loan,they may decline it because of
(22:51):
that.
Another one is keeping yourcredit utilization low.
So how many credit cards areyou applying for?
How many credit cards do youhave that you pay off?
How many loans are you goingfor?
Online, like?
Make your inquiries low,because the more inquiries you
have, most of the time they'reactually lodged on the side.
So there's so many differentsites that you can actually
(23:11):
check your credit score.
If you did want to have a looklike, for example, just typed in
there, then you've got CreditSavvy, you've got ClearScore,
you've got GetCreditScore.
Equifax is like one of theofficial ones which banks use,
but there's so many there whichyou can look at.
And lastly, is failing to planfor taxes and insurance.
(23:32):
So, especially if you'reself-employed, you must set
aside money for your taxes,because it's a common thing a
lot of people forget about.
This is probably a directcorrelation to how around 80% of
small businesses fail withinthe first 12 months because they
don't really take into accountthe tax and then all of a sudden
, the tax comes around and theygot a big bill.
(23:53):
They got to front up.
Yeah, make sure you put moneyaside for taxes if you're
self-employed.
And then, even if you do knowyou're paying money back in
taxes if you're notself-employed if you spoke to
your accountant put that moneyaside as well.
So important Also insurance.
So ensure that you've gotadequate insurance cover.
So this really is literallyjust to protect against any
(24:15):
unexpected losses.
It's simple you want to makesure you're covered for anything
happening.
You might want health insurance, you may want life insurance or
your income protection,depending how old you are in
your job, and if you've got kidsor a family, you may want to
protect them.
But, yeah, you need to makesure that you've got all that
going and protecting yourselfand your future, because if it's
(24:37):
, for example, if you've got afamily and you're the main
provider, if you lose your job,everything's stuffed up.
You want to make sure thatyou've got insurance, you've got
your income protection.
So if anything does happen oryou can't work because of an
injury or something, things aresorted.
(24:58):
So they're the main threemistakes which a lot of
individuals have spoken to usabout, but I just wanted to
share them to you becausethey're not really talked about
much in the media.
As we all know, the media don'treally talk any personal
finances.
It's quite hard.
I'm still surprised, likeyou've got the schools, no one's
talking about them either.
You're learning about algebraand then Shakespeare and English
.
It's like what's the point?
(25:18):
You want to learn about thesethings because these are what's
important in life.
You eventually get to a stagewhen you have to learn about
this, so why not learn about itin school?
It's yeah, hopefully theychange it down the track, but
this is, yeah, basically thebasics and the most important
things about personal financesand mastering your money.
(25:39):
So I hope you guys have learnedsomething.
A bit of a longer episode thannormal, but there's a few points
I wanted to talk about.
So, if you're new to thispodcast, welcome.
We hope you enjoy our episodes.
But, yeah, if you have anyfriends or family who you think
will benefit from this, share itto them.
Send them a text, send itthrough them on TikTok, whatever
(26:00):
you do or how you listen to thepodcast, share it through.
But just remember that as longas you get 1% better every day,
you may start budgeting with onecategory, for example.
But as long as you're savingeven $5 a week, you're improving
.
Keep going.
You're going to get there oneday and even if you're close to
it perfect.
(26:21):
Or if you're there alreadyawesome Help others around you.
But these tips are vital andeven if you need to come back to
this episode a few times andremember some parts, please do.
But, yeah, make sure that youtake on the advice, take on the
action.
It's not personal advice, it'sjust general advice about life
and personal finances, but takeit on.
(26:43):
Improve your life, get yourfinances on track and share it
with your friends.
Speak next time.
We hope you enjoyed the episode.
As always, we know exactly whatto do.
Hit that follow button,subscribe whatever platform you
listen to this podcast on.
Also, share it to your friends,family, co-workers, wherever
(27:04):
you think may benefit from it.
But unfortunately, that's theend.
We'll see you next week.
When I first started managing my finances, I made
every mistake in the book maxingout credit cards, skipping
budgets and feeling overwhelmed.
But one day I stumbled upon thepower of tracking expenses and
setting small savings goals.
That simple shift changedeverything, and it can for you,
too.
In this episode, you'll learnthe essentials of budgeting,
(00:22):
discover how to build anemergency fund, get tips on
(00:44):
managing debt and uncover commonfinancial pitfalls to avoid
Stick around, because thesestrategies could be the game
changer you've been waiting for.
Welcome back to another episodeof the Finance Bible Podcast.
Zeke here and your co-host,oscar.
But before we get into it,please note that nothing in this
podcast should ever beconsidered as personal financial
advice.
Of course, if that is what youare seeking, reach out.
We'll get you in touch with thecorrect professionals and get
(01:06):
the job done properly.
Sit back, relax and enjoy theshow.
Let's get into it.
Welcome back to the FinanceBible Podcast.
Today we're diving into personalfinance, a topic that can
transform your life.
Let me ask you this to start itoff have you ever wondered
where your money really goeseach month?
(01:26):
Well, by the end of thisepisode, you will have a roadmap
to take control of yourfinances and build the future
you dream of.
Personal finance is essentialfor everyone, regardless of your
income level or financial goals.
In my eyes, how you set up yourpersonal finances and how you
manage ongoing debt, et cetera,and your income really sets you
(01:48):
up for not only tomorrow butnext year, in five years, 10
years, 20, 30, 40, 50 years,until you retire.
It sets you up for life,literally how you act now and
what you spend your money on ifit may be investments, or it
might be things which bring youvalue, or it might just be
things that you splurge on, likecoffees and going out shopping
(02:11):
or going out clubbing but whatyou spend your money on today
and for the next five years isgoing to have a direct impact on
your life.
So, before you spend money,think that is this going to
impact and make future me betterand put myself in a better
position to understand thebasics in personal finance.
(02:32):
I have said it many times inprevious episodes the budgeting.
Budgeting is the cornerstone offinancial health.
The purpose of a budget and toreally, you know, figure out why
budgeting is vital is it helpsyou understand and control your
money, where your money goes,what happens when it comes in,
and really actually figure outwhat you're doing and, if you
(02:53):
need to be on track, putyourself back on track.
A budget is vital, especiallyif you, like many people I know,
and especially in today's dayand age, with the cost of
livings increased.
You get paid and then all of asudden you've run out of money
before your next payslip andthen you dig into your savings.
Where did your money go?
Did 60% go to dining out?
(03:16):
Did 30% go to buying clothes orwhatever it may be, and did 10%
go to bills?
Like, where's your money gone?
And the issue is so manyAustralians and people all
around the world don't budgetbecause they think it's so
boring, takes forever and it'sjust an old school mentality way
(03:36):
of doing it.
But the thing is, yes, it canbe boring, but the impacts this
will have on your life if you'vegot goals that you want to
achieve financially, this willliterally catapult you into
those goals if you follow itaccordingly.
One budgeting tool which I'vementioned before and I did use I
still use from time to time isthe 50-30-20 rule.
(03:58):
So, depending on your rent, ifyou are paying rent, if you're
at home, even better, you don'thave to pay rent, but basically
what it means is 50% of your pay.
So this is when you get paidand your money comes in.
So 50% goes to needs.
So we're talking your rent,we're talking your groceries if
you need to go, get your owngroceries and also utilities so
(04:20):
rent, electricity, wi-fi, justbills, things that need to be
paid 30% goes for once.
What do you want to do?
So you may want to go out andhave dinner with your friends.
Well, a portion of that comesfrom the 30%.
You may want to go to themovies, or go on a date or go
let's just say, for example, goshopping on a Saturday afternoon
or go to the footy.
That's where that comes out ofthat 30% and the last 20%.
(04:45):
That goes towards your savings.
And if you have any debt, thatwill go towards your debt and in
my opinion, it will go towardsyour debt before it goes towards
your savings.
So you want to make sure youget rid of your debt before you
start saving, because what's thepoint of saving when you've got
debt makes no sense.
You may as well extinguish itand then start your saving.
(05:06):
Start fresh.
50, 30, 20.
People may sometimes flip the 30and the 20 around if you want
to save more money.
I personally used to do thatbecause I used to love saving.
It was quite exciting when youget your pay and then you see
your savings go up and thenthere's a new number in your
bank account and blah, blah,blah.
Everyone's different, butchange it.
It is flexible.
That's the basics of personalfinance and budgeting 101 and so
(05:32):
many tools online as well whichmakes you not have to actually
physically set up your ownbudget, because if you've got to
go physically set up your ownbudget could take a while.
You probably get bored and thenyou'll stop doing it and then
all of a sudden, you'll neverget back to it.
It's the good old act ofprocrastination.
So there's heaps of differentspreadsheets online.
All you got to do is justGoogle it budget template on
(05:55):
Excel and you can download it.
There's also different appslike YNAB and Mint you can
download and they're literallybudgets on your phone.
So in today's day and age, witheveryone on their phone, very
easy and probably a smart thingto do.
Actually, if you're wanting toget into it Now.
The first step to gainingfinancial awareness is simple,
(06:17):
but it's tracking your expenses.
Knowing your spending habits iscrucial.
For example, if you lovespending all your money on
shopping and buying clothes.
You need to figure that outsooner rather than later,
because if you figure that outyou can then put a stop to it or
restrict it.
It's literally the same asaddicts.
(06:39):
So let's say gambling addiction, for example.
If you're putting all yourmoney to gambling, you don't
realize.
And then you do your budget andthen you say, oh damn, I'm
putting 20 bucks a week, or 20bucks a day actually, into
gambling on Sportsbet.
I need to pull back becausethis is a bad spending habit.
This is where all my money'sgoing.
So you need to start trackingyour expenses and you may want
(07:02):
to start small, such as justtracking one category at a time.
You might want to do onecategory per week for the month,
so it may just be dining out.
You want to track how muchyou're dining out for the month
and then the next month you maywant to track how much money
you're spending on clothes.
So really figure out, based onyourself, what you feel you're
(07:24):
spending the most money on, anddefinitely track it, because
you're going to surpriseyourself.
But start small and thengradually add another one to the
month, add another and then allof a sudden you're tracking
every single expense for themonth in every single category,
and then you can figure out allright, let's push the spending
on going out down 200 bucks forthe month, let's put that money
(07:44):
into savings and blah, blah,blah.
So there's options to do it andit's so simple, but it just
takes time and it's a must ifyou do want to grow your
personal finances and achievethe goals that you want to set,
especially being in January.
I'm sure everyone's got theirown new year's resolutions, so
this is a vital if this is oneof your New Year's resolutions
(08:05):
of increasing your finances.
The next segment of yourpersonal finances is you must
build your financial foundations.
So when I think about financialfoundations, I think directly
to emergency fund, yourfinancial safety net.
An emergency fund, in simpleterms, is just a different bank
(08:26):
account or a little savingsaccount which covers unexpected
expenses such as car repairs.
You may have medical bills thatcome up out of nowhere.
Something might've happened toyour phone and it's fully broke.
You need to get another onebecause you need to communicate
to people.
So that's an emergency,whatever emergency you feel for
yourself, but it's just coveringthe unexpected expenses as
(08:50):
simple as that.
When you Google emergency fund.
There's so many differentlevels of what people recommend
having in your fund, but for you, just have a realistic goal.
You may want to have one monthof living expenses in your
emergency fund or have twomonths.
I personally think having atleast three months is a good
(09:10):
place to be in terms ofemergency funds.
So, for example, especially inCOVID, how a lot of people lost
their jobs and became redundant.
Having emergency funds at leastfor three months would have
helped a lot of thoseindividuals get back on their
feet, pay their rent if they hadto, pay their mortgage bills if
they had to, and search forjobs.
So you know, you may start withfive hundred dollars in there
(09:33):
or even one hundred dollars andadd to it every week for 12
months, for example, dependingon what goal you want to have.
But a tip to to building anemergency fund is you can just
automate a small percentage ofeach of your paycheck into a
high yield savings account,which will give you a bit of a
boost at the end of every monthas well due to the interest for
(09:57):
that.
So that's a tip for you if youhaven't built an emergency fund.
Another good reason for it ismentally.
It helps you in the back of themind.
So if you're getting stressedout about things coming up and
you might have to pay a bit morefor your car because it's
broken down, well, the good newsis you don't have to dig into
your savings.
You've already built up a fund.
(10:17):
So that's what it's there for.
It's there for emergencies,unexpected things, and to ease
the stress for yourself.
The next topic is debtmanagement, taking control of
your financial obligations.
So when I think about debtmanagement, I think about two
methods which people have spokenabout before in the industry.
(10:39):
So there's two ones.
There's one called the snowballor the debt snowball method,
and the other one's a debtavalanche method.
So we'll start with this debtsnowball.
So the debt snowball methodfocuses on building momentum by
eliminating your smaller debtsquickly.
So this will give youpsychological wins and give you
(11:00):
a bit of a sense ofaccomplishment.
So, for example, if you have adebt of 200 bucks or a thousand
and five thousand, you'd startwith the $200 debt first, even
if it has a lower interest rate,and then you'd make your way to
the $1,000 and then the $5,000.
So the smallest first and thenmake your way up.
On the other hand, the debtavalanche method.
(11:22):
This targets debts with thehighest interest rates first,
the reason being it minimizesthe overall cost of borrowing.
So, for example, if you have a$5,000 debt at 20% interest and
then the $1,000 debt at 5%interest, you tackle the $5,000
debt first.
But both methods are effective.
(11:43):
Choose the one that aligns withyour financial situation and,
most importantly, like whatmotivates you more.
So is like for my girlfriend.
She likes smashing the bigdebts first if she has to pay,
as opposed to the small ones.
So, depending on what you'rewanting to do, figure out which
method you have, and that's onlyif you've got debt.
(12:04):
You may not have any debt andmay not need this, so that's
also fine.
Now, when we talk about debt,there's two different types of
debt.
There's good debt and there'sbad debt.
So good debt, for example,student loans, investment
property mortgages and bad debt,high interest credit cards and,
pending where you sit on thefence, maybe an owner-occupier
(12:25):
mortgage.
We'll start with good debt.
I'll dive into it a little bitmore.
So good debt is really anyborrowing that contributes to
your long-term financial healthor helps you build your wealth.
So, for example, student loanssome people may see them as bad
debt, some as good, but let'sjust say, for example, it's good
debt because it may help youwith your financial health down
(12:47):
the track.
We're getting a good job, butthey often come with lower
interest rates and help increaseyour potential through
education.
And, at the same time, if we'reusing mortgages, for example
ideally an investment propertymortgage these enable your home
ownership as well as buildingyour equity over time and be
able to buy other properties andcontinue building that legacy
(13:11):
for yourself.
In contrast, bad debt isborrowing that does not provide
any lasting value and oftencomes with a high interest rate.
So credit card debt is thenumber one.
Payday loans and other forms ofhigh interest borrowing fall
into this category, reason beingthey can quickly spiral out of
control and drain your financialresources.
The key is to approachborrowing with caution.
(13:32):
So take on good debt only whenit aligns with your financial
goals and avoid bad debt byliving within your means and
paying off balances in fullwhenever you can, because that
is the most important,especially with credit cards.
If you start paying minimumrepayments and use a credit card
for everything, it creeps up onyou and then all of a sudden
(13:54):
you've got a big bill which youmay not be able to afford.
Try and avoid minimum paymentswhen you can and really tackle
the debt aggressively ifpossible, because that's how
you're going to get out of it.
So segment three what I've gotwritten here is growing wealth
over time.
Saving and investing Make yourmoney work for you.
The main thing when I thinkabout saving and investing is
(14:15):
compound growth, compoundinterest and how starting early
can significantly impact yourlong-term wealth.
First things first.
What is compound interest?
Definition, or one of thedefinitions, is the process of
earning interest on both theinitial principle and the
accumulated interest fromprevious periods.
For example, if you invest$1,000 at a 5% annual interest
(14:38):
rate, you'll earn $50 in thefirst year.
In the second year, you'll earninterest on the $1,050, and so
on.
So this creates growth overtime.
However, at the same time, inthe other side of the fence,
compound interest can also workagainst you, especially with
credit card debt.
So, for example, if you had$1,000 on your credit card with
(14:59):
a 20% annual interest rate, thiscan balloon rapidly if only
minimum payments are made.
So this highlights why it'scrucial to harness compound
interest through saving andinvesting and avoid it as a
liability in high interest debt.
The next thing I want to talkabout is retirement planning.
So when it comes to retirementplanning, the earlier the better
(15:22):
.
A lot of people we meet in ourroles are nearing retirement and
70 to 80% of them haven'treally planned for anything.
They have gone through theirlife which used to be okay, you
know, going to school, getting agood job, buying a house,
paying off the mortgage and thenrelying on their superannuation
(15:43):
to help them with theirretirement, and think the
government's going to, you know,fund their retirement, when
back in the day that was okay,you could live a comfortable
life.
But now it's virtuallyimpossible to live solely on the
government, especially on thepension.
You cannot live comfortably onthe pension.
So the main thing is you needto plan your retirement in your
(16:07):
30s, 40s or even earlier.
And when I say plan yourretirement, speak to a financial
advisor.
Let them know what you want todo.
Speak to a property investmentconsultant to help you build
wealth through property, becausein my eyes, that is the most
important and the most effectiveway to build wealth.
Over time, compound interest,compound growth, getting equity
(16:28):
reinvesting, building anabsolute empire.
That's what gets me excited,that's what gets our clients
excited who come to us, and thegood news is, generally speaking
, mortgages are 30 years, so ifyou start in your 20s or your
30s, well good news is, you canbuild an absolute empire and by
the time you want to retire, allyour property may be paid off
(16:49):
and you're literally living offthe rental income.
Start planning, becauseeverything has changed in terms
of government spending, thepension, what's going to happen
in the future?
You don't want to rely on thatbecause you're not going to live
a comfortable life and you maybe stuck working forever.
If you do so, set yourretirement goals.
How much do you need?
(17:10):
How will you get there?
So, if you are in your 50s ornearing retirement and you have
kids and a family, how much areyou making per week now?
Are you comfortable with theoverall income?
Are you just getting by?
So this will help you figureout do you want to replicate
your own income right now forretirement and replace that
(17:32):
income from rental income froman investment property, for
example, that income from rentalincome from an investment
property, for example?
And if you do, if it is, youknow $100,000, you may need $2.5
million worth of an asset baseto pay you 4% of that annually,
which is the average dividendand rent as well.
(17:52):
So that's what you may need,not financial advice nothing to
do with that, but just example.
So figure out how much you want, how much you need, and then
speak to a professional to helpyou get there.
Can't emphasize that enough.
Point four, or segment fourmindset and habits.
Cultivating good financialhabits is literally your key to
(18:16):
long-term success.
Yes, some weeks there may betimes when we splurge a little
bit more than we thought wewould or could afford to, but
it's all about over time.
You know, if you look at thestock market, for example, if
you zoom in for the 12-monthtimeline, you can see a lot of
up and downs, but if you zoomout over a 50-year period,
(18:37):
mostly you'll see an upwardtrend.
So this is all about the samewith good financial habits.
If you do it over time, you'regoing to increase.
But even if you look in on theweek and you may have some bad
days, that's all right.
Just continue to try and fixthat and build it over time.
So one of the points I want totalk about are automating your
(18:57):
savings and bill payments tomake financial discipline easier
, which makes it so you don'thave to think about it, it's
automated, you've got moneygoing to your savings money
going to your spending moneygoing to your bills, that's easy
.
Got money going to your savingsmoney going to your spending
money going to your bills that'seasy.
(19:19):
Also, one of the problems I seeis when people increase their
income, they may get a pay riseor something exciting or a new
job.
A lot of individuals thenactually start looking at
upgrading their lifestyle, too,to match their new pay.
So if you're in a position, tryand keep what you're doing the
same.
If you're renting, you may wantto get a new place which is
based on your income In somecases.
(19:40):
Sometimes that's fine, butdon't really overextend, because
use your extra income to helpyou build more wealth, because
this will really give that extraoomph to push you up the ladder
.
Main one is educate yourselves.
You've got everything in frontof you.
We've got podcasts on ourphones, we've got eBooks.
We've got real books in paperform.
(20:02):
We've got TED Talks.
We've got online courses.
We've got people doing reelsabout investing on TikTok and
everything.
We've got people doing reelsabout investing on TikTok and
everything.
So educate yourselfcontinuously.
Read 10 pages a day at least.
Listen to one podcast a day,take courses and build your
mindset around this.
Now look, the last segment I'mgoing to talk about are really
(20:25):
probably the most important one,and it's ones that I've put
together from four years ofmeeting clients face-to-face and
figuring out what is the mostcommon mistakes which they have
brought up.
Simple as that.
What mistakes have they shownus consistently?
And a lot of these people haveit.
So it's the common mistakes toavoid.
(20:46):
So these are frequent financialpitfalls which many people fall
into it.
So these are frequent financialpitfalls which many people fall
into, but I'm sharing with youhow to actually avoid them.
Number one most common, and alot of people do this is living
paycheck to paycheck.
You may get paid and then atthe end of your pay cycle,
you've literally got no moneyand you're waiting for the next
pay to come in.
(21:06):
You're struggling, you'recounting down the days you can't
go out.
You tell your friends no, Ican't do it because I've spent
all my money.
The reason people do this isbecause they're not saving any
portion of their paycheck.
Spend it on things they want todo, just short-term things like
going out for dinner or goingclubbing or buying drinks.
It's not helping them down thetrack.
(21:27):
If you do wanna go out all thetime with your friends, that's
also fine, but put a smallportion of every paycheck into a
savings account.
I'm actually shocked by howmany people in their 30s have
less than $5,000 in theirsavings because in their 20s and
their 30s they have not beenputting any money in their
(21:47):
savings.
And it's just.
You need to do it, even if it's$50 a week or $10 a week.
Just start somewhere, because,same with the emergency fund,
it's going to help you mentallyas well when you look back and
you're stressed about something.
But you know you've got a bitof a backup, because that will
put you a long way and reduce alot of stress.
(22:07):
So it doesn't matter how small,but start putting some money
into your savings.
Another one is ignoring yourcredit scores.
So when you go for a loan,eventually if you do wanna buy a
house or if you're in theprocess of buying a house, you
need a good credit score becausethat's what the bank will look
at.
These scores will impact yourloan or impact your interest
(22:28):
rates and also your jobapplications.
Ways to improve your creditscore because it's very
important Main one is payingyour bills on time.
You need to pay your bills ontime, because if you don't, it
gets lodged and then it comes upon the system that you're not
very trusting with bills and youcan't really afford the
repayment.
So if you're going for a loan,they may decline it because of
(22:51):
that.
Another one is keeping yourcredit utilization low.
So how many credit cards areyou applying for?
How many credit cards do youhave that you pay off?
How many loans are you goingfor?
Online, like?
Make your inquiries low,because the more inquiries you
have, most of the time they'reactually lodged on the side.
So there's so many differentsites that you can actually
(23:11):
check your credit score.
If you did want to have a looklike, for example, just typed in
there, then you've got CreditSavvy, you've got ClearScore,
you've got GetCreditScore.
Equifax is like one of theofficial ones which banks use,
but there's so many there whichyou can look at.
And lastly, is failing to planfor taxes and insurance.
(23:32):
So, especially if you'reself-employed, you must set
aside money for your taxes,because it's a common thing a
lot of people forget about.
This is probably a directcorrelation to how around 80% of
small businesses fail withinthe first 12 months because they
don't really take into accountthe tax and then all of a sudden
, the tax comes around and theygot a big bill.
(23:53):
They got to front up.
Yeah, make sure you put moneyaside for taxes if you're
self-employed.
And then, even if you do knowyou're paying money back in
taxes if you're notself-employed if you spoke to
your accountant put that moneyaside as well.
So important Also insurance.
So ensure that you've gotadequate insurance cover.
So this really is literallyjust to protect against any
(24:15):
unexpected losses.
It's simple you want to makesure you're covered for anything
happening.
You might want health insurance, you may want life insurance or
your income protection,depending how old you are in
your job, and if you've got kidsor a family, you may want to
protect them.
But, yeah, you need to makesure that you've got all that
going and protecting yourselfand your future, because if it's
(24:37):
, for example, if you've got afamily and you're the main
provider, if you lose your job,everything's stuffed up.
You want to make sure thatyou've got insurance, you've got
your income protection.
So if anything does happen oryou can't work because of an
injury or something, things aresorted.
(24:58):
So they're the main threemistakes which a lot of
individuals have spoken to usabout, but I just wanted to
share them to you becausethey're not really talked about
much in the media.
As we all know, the media don'treally talk any personal
finances.
It's quite hard.
I'm still surprised, likeyou've got the schools, no one's
talking about them either.
You're learning about algebraand then Shakespeare and English
.
It's like what's the point?
(25:18):
You want to learn about thesethings because these are what's
important in life.
You eventually get to a stagewhen you have to learn about
this, so why not learn about itin school?
It's yeah, hopefully theychange it down the track, but
this is, yeah, basically thebasics and the most important
things about personal financesand mastering your money.
(25:39):
So I hope you guys have learnedsomething.
A bit of a longer episode thannormal, but there's a few points
I wanted to talk about.
So, if you're new to thispodcast, welcome.
We hope you enjoy our episodes.
But, yeah, if you have anyfriends or family who you think
will benefit from this, share itto them.
Send them a text, send itthrough them on TikTok, whatever
(26:00):
you do or how you listen to thepodcast, share it through.
But just remember that as longas you get 1% better every day,
you may start budgeting with onecategory, for example.
But as long as you're savingeven $5 a week, you're improving
.
Keep going.
You're going to get there oneday and even if you're close to
it perfect.
(26:21):
Or if you're there alreadyawesome Help others around you.
But these tips are vital andeven if you need to come back to
this episode a few times andremember some parts, please do.
But, yeah, make sure that youtake on the advice, take on the
action.
It's not personal advice, it'sjust general advice about life
and personal finances, but takeit on.
(26:43):
Improve your life, get yourfinances on track and share it
with your friends.
Speak next time.
We hope you enjoyed the episode.
As always, we know exactly whatto do.
Hit that follow button,subscribe whatever platform you
listen to this podcast on.
Also, share it to your friends,family, co-workers, wherever
(27:04):
you think may benefit from it.
But unfortunately, that's theend.
We'll see you next week.
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