Budgeting and managing your money can be really
quite difficult. I found it really difficult for a number of years, even just wrapping
my head around what kind of bills I had and how to best manage my money, what I need to
focus on and what I need to automate. So in this episode I want to share with you exactly
how I managed my money. So we’re going to look at how I create a budget for the year.
We’re going to talk about how I have a weekly discretionary spending fund and basically
look at how I manage my different bank accounts as well as saving accounts and what I’m trying
to achieve. So this will be an insight into how I’ve found works for me to manage my money.
But this may help for you as well. If you’ve been struggling with budgeting and trying
to work out a system that works for you, you might be able to steal some of these ideas. Hey, I’m Ryan from on-property dot com dot.
A U helping you achieve financial freedom. And in order to achieve financial freedom,
you do need to get your budget. In order us. Okay, so let’s jump on the computer and we’re
going to look through the way that I organize my bank accounts and we’re also going to look
through how I actually go about setting a budget for a year, so I have a spreadsheet
where I put the figures in for the big bills for a year and that helps me to really manage
things. So I just want to say from the outset that this is just one way of doing things.
I tried a whole bunch of different ways to budget over the years. I really struggled
with a lot of them are not very good at budgeting. This one I found works for me for the primary
reason that it automates a lot of the decision making. It automates saving for all of those bills
that come up during the year. Everything from your regular monthly bills like phone bills,
internet, car insurance, stuff like that, as well as saving for those bigger bills that
come up less frequently. We’re talking car registration, we’re talking health insurance.
For me, it’s private schooling as well because my kids go to a Montessori school here in
Sydney now, so it really automates all of that so I don’t need to think about it and
then I can just focus on how much money am I spending each week and then I can focus
on my business and earning extra money. So let’s go ahead and jump on the computer now
and how, look at how I arrange my bank accounts. I will just say before we jump into it, I
am recording and my mum’s house today, so you’ll see the kitchen in the background. It’s a little bit messy, but check out this
view of Cronulla. Absolutely awesome. Mum’s got the best place and I think it goes without
saying that this is not to be considered financial advice. This is how I manage my bank accounts.
What you do is up to you and seek professional advice if you do need help. Okay, so here
we’re looking at my bank accounts. All right, we’ve got the two bank accounts up the top,
the pot and everyday spending and I’ve blocked off how much is in them for privacy reasons
as well as the account details because I know so many of you out there, it will send me
millions of dollars if you know them jokes. Obviously no one’s going to do that. But just
for privacy reasons, I’ve closed those out. So I worked two main bank accounts that actually
have cards attached to them. So these ones I can actually go out and I
can spend money on, I can pay bills on. And then I have online savings accounts as well,
which you can see here. Splurge, holidays, happiness, fire hydrant, big bill savings,
and the thousand dollar project, which we’ll talk about all of those as well. So basically
the way that it works is that all of my income goes into the pot. So I call it the pot because
it’s like a big stirring pot. Everything goes in there and everything kind of comes out
of there as well. So my income, which gets paid weekly from my business, goes into the
pot from the part, I then have automatic payments set up to send money where it needs to go.
So automatically each week money goes from the pot into the everyday spending account.
So that everyday spending account is where I actually spend my weekly money. So I have a weekly discretionary budget. I
did an entire video on that, which I’ll link up in the description down below. But this
is where things like petrol, groceries, clothes for myself or for the kids, I’m going out
entertainment, all of that sort of stuff. Even presence would fit in there as well,
except maybe for Christmas. So each week I have a set amount of money that I’m allowed
to spend. And so that money on a Sunday gets moved from the pot into everyday spending.
And so then what I have is just one card with everyday spending and on my phone I’ve got
an ing app that can show me exactly how much money’s left in there. So I don’t need to
add things into a budgeting APP. I don’t need to track things. I have my everyday spending
account each Sunday that gets renewed and when I log onto ing I can see how much is
left for the week. So there’s no guesswork in how I’m going towards
my budget. And if I go over, well then my everyday spending gets declined and then I
have to make a decision what to do, where I’m going to pull money from, or if I’ll just
stop spending for the week. Money also goes from the pot into these different savings
accounts. So big bills is to pay for the bills throughout the year that are less frequent.
So it’ll pay for things like car insurance, it’ll pay for things like registration, it’ll
pay for school fees, it’ll pay for health insurance, that sort of stuff. So basically
I work out how much that’s gonna cost me per year and each week a set amount goes into
big bills. Fire hydrant is the amount of money that I’m putting towards paying off debt as
well as once debt’s paid off. That will be going towards investing. Holidays and happiness is putting towards
holidays or things that are going to make me happy. Splurge is just things that you
could splurge on. And then, um, this savings account I don’t use, but I’ve set it up and
the thousand dollar project is things that I do outside of my regular budget to generate
little chance of income I put into there. And then that’s going to be used to either
pay off debt or to invest. So let’s go ahead and have a look at how I actually work out,
how much money is going to go into each of these accounts by doing my annual budget.
So here we have the spreadsheet and this is the spreadsheet that I use to work out how
much money I’m going to be spending throughout the year. And then as a result of that, I
can work out, okay, well how much money do I need each week? So the idea here is that you go through and
you feel this out and it’s going to give us a weekly and an annual figure. And for most
of us that needs to then line up with obviously how much we are earning. And so that’s the
goal here is you, you go through this and you move stuff around and you work out can
I afford to live and where am I willing to spend my money? So you’ve got things like
rent here. Um, weekly rent. So let’s say maybe $500. I moved to Sydney, now I’ve got three
kids, school fees. If you pay for private school then you can put that in registration
for cars. That might be $1,000 electricity, maybe $50 per week. Uh, insurances, probably
another thousand dollars, I guess. Car Servicing at least another thousand health insurance.
If you have that, you can go ahead and put it in as well. Phone and Internet, you can put in that a
lot of people spend about a hundred bucks a month on phone and internet. I think I spend
more like $30 and $40 per month. And then as well you can go through and these are the
more discretionary items. And so you got your investing, you’ve got your saving, and so
barefoot investor recommends that you put 20% towards that. So depending on your income,
you could then adjust your interests and savings. But let’s just say for this one, we’re going
to put $500 a month, so $6,000 per year. Uh, we can also put money aside for holidays and
things like that. So for holidays, I think I was doing, you know, $50 per week putting
aside, um, I don’t, how much is that per year? 25002000600 okay. So let’s say we’re doing
that. Okay. And so basically this is going to give us a total bills figure and these
are our big bills that were saving towards. Then we’ve got our weekly expenses as well.
And how much are you going to be spending each week? Now, if I was a single person and
didn’t have any kids, then this could be a really affordable figure if I wanted it to
be. So somewhere probably around, I would imagine a $200 or something like that. I’ve
got three kids. So let’s call it $500 so we’re talking petrol, we’re talking food, we’re
talking close, we’re talking pharmaceuticals. If someone gets sick, all of that sort of
stuff. So $500 per week and then that’s going to give us our total here. Now that total
should ideally be equal to or less than income after tax or less. So then when we’re going
to do from this to make things automatic, it was we’re going to look at our weekly expenses
and we’re also going to look at yes the total bills but more so we’re money needs to move. So back into ing, we saw that my weekly expenses
is $500 so I get paid from the business, I send money across on Thursday so that I know
it arrives in my bank account on a Friday. And then I have the transfers each week reset
on a Sunday. So what I then do within ing is, and you can do it within any bank account,
is to set up automatic transfers. So automatically on Sunday from the pot to everyday spending,
$500 is going to move across there. So as we saw weekly spending was a $500 so each
Sunday it’s going to move across there. We can also look at this spreadsheet and see
that rent is $500 per week. So each Sunday rent would then be paid automatically via
bank transfer to my rental manager. So $500 would go across to them. Then as well, we
have money saving into big bills. So the total of this column here, which at
the moment is about $155 so $155 would go across two big bills. Now I have, I pay for
private school as well, so the money that I need to move across the big bills is actually
higher than this. But yeah, you would work out your amount and then basically each week
you would move that money across into big bills. Okay. You would also move the money
that you wanted to say for your holidays into holidays and happiness you and move the money
that you wanted to use towards paying off debt or investing into the fire hydrant. And
this is in line with what bear for it invest our talks about. So the splurge, um, he calls
it the smile account and the fire hydrant or in line with that. So if you want to understand
that more, I will link up down below to my barefoot in best invest our bank accounts. Explain so you can understand that in more
detail. But yeah, so each week money automatically goes from the pot into my everyday spending.
This is where I focus on my weekly discretionary income and also money moves into my splurge
account, my holiday savings, my paying off debt or investing account as well as saving
for big bills. And that is basically how I manage my money. Everything moves across.
I just live off the everyday spending account. And then when a build needs to be paid, because
these ones down here, just online savings accounts, I can’t actually send money, other
bank accounts. So big bills will accumulate over time, become bigger and bigger. And then
a big bill might come in. So it might be health insurance or it might be school phase or registrations
up. And so whatever the amount of the bill is, I will transfer it from big bills back
into the pot and then I will pay money out of the pot. I do also leave some money in the pot because
things like car insurance come out by direct debit. So I don’t move that into big bills.
I just kind of leave some extra money in the pot to make sure that when car insurance comes
out, there’s money for it there. But as you can see, everything is basically automated
with the exception of what I spend my money on each week. So yeah, so that is how I manage
my finances. I hope that this has been interesting and insightful to you. I know it kind of sounds
pretty complicated and it was, I guess it’s not super complex to start up and to get running,
but it did take a few steps, but now that it’s up and it’s going, it’s really easy and
as my life changes, it’s really easy to adjust as well as at the moment I’m not paying rent,
so just canceled that rent payment. At the moment I am saving to pay off debt
so then that payment is actually higher than what it previously was as well. So more money’s
going towards paying off debt then is going to my weekly discretionary money than in the
past. So I can adjust those things I had. I just simply go in and adjust those automatic
transfers and change them to what I want them to be and yeah, that is how I manage my finances.
If you enjoyed this video, then please don’t forget to subscribe to the channel. Also,
go ahead and check out the videos that I talked about, the one on my weekly discretionary
budget where I talk more about that as well as the barefoot investor bank accounts explained.
I’ll link those up in the description down below so you can check them out or go to today’s
episode, which is on property.com dot a u four slash six 30 and I will link up over
there. So if you’re listening to the podcast on property.com to you forced her six 30 and
that will link to those other two videos I talked about. Really key to get on top of
your finances this year. This is something that’s worked for me. If you’ve been struggling
with managing your money, managing your budgeting, then this might be something for you to try
it as well. I wish you the best in your personal finance journey and your journey towards financial
freedom, and until next time, stay positive.