episode 37
“Accounting for Life”
with Rebecca Pritchard
Rebecca Pritchard (Senior Financial Planner at Rising Tide Financial Services) @menopausespecialist
There is no doubt that the cost of living has made actually living a stretch for the majority. With scary statistics such as it’s currently 8.5 times the average income to buy a house in the Australian housing market, the average median earnings (according to The Australian Bureau of statistics) is approx $1,300 per week, yet the average cost of a standard supermarket shop has increased by 33% within the last 3 years. So then add on the living expenses beyond a roof over your head, and food for nourishment such as social norms like gifts for special occasions, holiday events such as Easter or Christmas that usually include banquets and gifting gestures, clothing, or enjoying activities beyond work eg. Travel and entertainment. So we decided to tackle the ‘B’ word - Budget - with our favourite Financial Guru - Rebecca Pritchard. Where do you start when it’s time to review what’s coming in and what’s going out? How do you decide where the money goes in order of priority? And how do we prepare for the most expensive time of year - Christmas / Summer Holidays.
In the last 10 years of having conversations with clients about this, grocery shopping can make or break your financial plan”
TOP RESOURCES
MoneySmart
In terms of resources MoneySmart is generally the best starting point for developing your cashflow (a government resource, so no-one feels like they’re getting sold to).
National Debt Helpline
For those people who cannot find a way through their debt, or the overwhelm is too heavy, Rebecca strongly recommends contacting the National Debt Helpline.
TOP TIPS
Top tips for Creating a cash flow plan
Note: When creating a cashflow plan, remember that future you is not perfect - the plan must be sustainable or you are setting yourself up to fail.
Take the time to sit down and understand where you are at financially at that moment. Make the plan from what you have, not with what you would like to have!
Write out and review your expenses to understand your non-negotiable list and negotiable.
- Fixed expenses (Mortgage, utilities, tuition fees etc)
- Variable expenses (groceries, clothing, petrol etc)
- Consumer/ Consumption spending (going out to eat, activities, travel etc)Decide on your objective and goals by reviewing your values. Eg. more of a kitty for fresh groceries daily OR regular adventures? Ability to buy clothing brands OR weekly classes for activities/hobbies? Find what will make the day to day enjoyable, but work out where you are okay to cut back?
Start to label/rename accounts within your preferred bank to connect with your spending from those accounts. Gifts Acc, Travel Acc, House Acc, Baby Acc etc.
Automate what you can from the appropriate labelled accounts for direct debit wherever you can. Make it easier, so your time can be put to reviewing and management rather than spending it processing individual transactions.
Live your new cash flow plan for at least 8-12 weeks to watch it flow through and understand how it is or isn’t working for you before you change the plan again.
READ/LISTEN:
Same as Ever by Morgan Housel
‘Timeless Lessons on Risk, Opportunity and Living a Good Life’
If you're feeling philosophical, I recommend Same as Ever, a read about our relationships with money, what risk actually is, how our expectations impact happiness and how our view of ourneighbours changes everything.
Good with Money by Emma Edwards
If you want a book that speaks to your soul as a woman born in the 80s, coming of age with sitcoms and Cosmo magazine, Rebecca cannot rave harder about this book!
The Year of Less by Cait Flanders
How I Stopped Shopping, Gave Away My Belongings, and Discovered Life Is Worth More Than Anything You Can Buy in a Store