I am a complete noob when it comes to anything financial except the basics. Who do I see if I want to maximize what little assets we do have and tax benefits? Would it be a financial advisor, or someone else? We don't have anything to invest really, but have a mortgage, kids, a full time and a part time wage but not really going anywhere. Has anyone used My Budget??
Who Do We See about Budgeting?
Sweet Potatoes on 23/02/2015 - 13:01
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How much are the fees?
I don't know anything about them, but their web site has set a bunch of alarm bells ringing in my head.I am about to leave soon because the fees are getting to expensive. All fees are different for each person depending on the level of service required. Mine is basic and stard ongoing fees are roughly $200 a month. But for the first 6 months there is a set up fee which I am not sure how much but I think it was about $1000 in total.
Ouch!
Surely that $1200 (setup plus first monthly fee) is better invested in paying off bills?To me, spending that much for a budget just seems insane. Do you find you're getting your money's worth in service?
Your question is all over the place and kind of indicates you might be vulnerable to bad advice if you got an unscrupulous advisor. As you currently have little, I would suggest some simple common sense things before you go to spend money on more sophisticated advice:
- review your spending. If everybody keeps a notebook for a week or a month of every expense, then sit down with the bank statements at the end of the month and see where your money is going.
- trim back unnecessary expenditure you have found through the expense review.
- look at your biggest expenses. Can you get a better rate on your mortgage? Are you spending lots on eating out? Childcare? Car payments? See which areas you can make savings. When you make a saving, transfer the equivalent to the saving into another account, or onto your mortgage, don't leave it to spend.
- look at your small expenses. I find $2 items on ebay add up, so am trying to ban myself from buying junk like HDMI cables, SD cards etc.
- give yourself and your spouse a set "allowance" each pay period for all personal expenses (e.g. lunches at work, clothing gifts for each other etc.). This step made the biggest difference in my house as all of a sudden there was no money for after work beers on Friday if I didn't pack lunches earlier in the week, for example.
- build up an emergency fund. Some say 6 months of expenses, but that is a fair chunk of cash to have uninvested so ideally find a easy to access home for your emergency fund (like a mortgage offset).The steps above will take a year to make much of a dent, but at the end of that period you will hopefully have a regular saving pattern set up, and some money put aside to start thinking about financial planning.
Then it will be time to start reading the money pages in the paper or money magazine or similar to up your financial literacy so you can usefully evaluate financial advice.
Good luck!Thank you! What you say is clear and makes sense. The $2 ebay items certainly strikes a chord with me!
And lunches.. (and smokes and beers)
Seriously, if you're buying lunch every day, do youself a favour and start packing a sandwich each day..
You'll cut your lunch expenses down to a quarter of your current expenditure and probably be healthier for it as well!!
We don't have anything to invest really, but have a mortgage, kids, a full time and a part time wage
Given your situation, reviewing your personal and household spending will hopefully net you some savings. If you take those savings and drop it straight in to the mortgage, that'll be the most risk free way of 'getting ahead'. My personal reminder when tempted to spend frivolously is every $1 I put in to my mortgage instead is actually $1 at 4.5% over the next however many years of the mortgage.
Rather then putting it into the mortgage, I'd investigate whether S.P's mortgage can be set up with a free offset account. Putting money in an offset is better as you can access it later if needed without having to redraw.
If you have a high interest savings account, you'll be earning 2-3% max on it (plus paying tax out of that too). Putting money in the offset because it's a saving and not a gain/income you'll be getting the equivalent of a higher interest rate as you're saving 4.5%.
What you can also do is place all your pay into the offset the day you get it, then as a bill comes in take it out of the offset on that day (so you'll gain a few extra days interest saving).
If you have a credit card or can trust yourself not to put non-needed items on the credit card, I'd put every single bill on the card, and then pay that off (in full) every month from the offset.
If you do currently have credit card debt, then paying that off asap would be beneficial. Try and get to the point of not getting charged interest and paying it off in full every month.
If you can't trust yourself with a CC, it may be better not to get one in the first place - for some people it works, for others it doesn't.
+1 By my quick calc that would be $3.75 over 30 years. If you spend $5 a day more on lunches than if you brought a pack lunch, that'd be $4,300 off the mortgage. Imagine the potential savings if you are a smoker or drinker.
I suggest that you do not spend a cent on advice or tools or books or whatever. There are plenty of people willing to help if you need it. The main think is to actually want it bad enough.
ps just reading below re offset account, if you have an offset account, that's great. If you have a mortgage you can redraw from, that's good too. If you can't redraw, it's a bit like super. You're kind of locking your savings away for a long time. For some, that's a good thing. I found it better to not have an ATM card on my mortgage. I'd rather have to consciously tfr funds to a transaction account to withdraw - the extra day or 2 provided a sanity check. You only spend money you really need to.
Be aware a financial advisor has no training in budgeting.
They would have no more expertise in budgets than posts here ;-)
I have heard good things about YNAB, but haven't used it.
The rules ShannonIngram linked to are useful.I've had ynab for about a month now but all it's done is reduce my spending by making me more concious about how much I spend. Not something for planning for the future.
It's a good start because many people are not aware of how they are spending their money. Once you've mastered that, then you might find you have some money left over. That's where you start planning for the future.
A couple of other ways to think about your expenses:
Cut Back - what expenses could you cut back on? eg eating out
Cut Down - what expenses could you get better deals on - eg car insurance.
Cut Out - what expenses could you cut out altogether, eg Foxtel?You could almost put any item in any category, eg - eating out:
Cut Back - eat out less often,
Cut Down - eat at less expensive places,
Cut Out - ok, maybe not completely! -Or Car Insurance if it's on 2nd car - you could Cut Down your cost by shopping around - but then maybe you could cut it out altogether if you don't use it that much. (Difficult in some situations, but just as an example)
Or Foxtel
Cut Back - reduce from the Mega-Platinum package to the basic package
Cut Down - call them up and ask if there are any better deals/discounts compared to what you are currently on
Cut Out - cancel your subscription. Plenty of free tv/catch up tv/go for a walk!/Netflix/Stan (later two isn't really cutting out - but replacing with cheaper service)
Agree the My Budget is probably for people with more serious money problems - credit cards/other creditors chasing them.
If you're not in this situation, I think taking mskeggs and others points will help - Although, in regards to recording where your money is going so you can figure out your current costs - If you are paying cash for things, you nearly need to record it daily, otherwise you get the end of the week/month and go "umm.. I had x dollars, but I don't know where I spent it" Other items purchased on card/bank it's a bit easier to track and do it weekly/monthly.
RE You Need a Budget software - Note it's USD$60 - so going to be a bit more in AUD now.
Also, they have 34 day fully featured trial so you could try before buying. But you could just do it on a spreadsheet - even good ole pen and paper!Sound like vultures to me. People seeking help budgeting can often be vulnerable. My brother in law went to a mob to help him get out of debt. He had to come up with $1000s for these guys to go and talk to his creditors to reduce the debt or stretch out the terms.
He should have gone to a competitor and had them talk down the vulture's fees!A little off topic, but I once bought a book on investing. I took it to the Australian Open, thinking I'd have time to have a read, and left it under my seat. Somebody might have taken that book and gone on to make millions, but the lesson I learned is people who pay for help end up worse off.
This is a free resource which was developed by a group NFP organisations to support ASIC's National Financial Literacy Strategy. http://www.moneyminded.com.au/
It appears to go over the core areas required and is free so why not give it a go?
Edit: Don't forget to check out the Tools, they have lots stuff which is good including budget planners etc.
All great advice here.
Also to truly understand where you are to start with, look at this;
https://www.moneysmart.gov.au/tools-and-resources/calculator…
Figure out your inputs and outputs to know your starting point. Best of luck!
I came across this app. Haven't tried it myself as I don't have a need for it, but it looks pretty awesome. It links to your bank as well. https://getpocketbook.com/
We use http://www.anz.com.au/ANZ-MoneyManager as it has many more banking institutes on its books. We have it linked to all our accounts and I run off reports each month to see where our spending has gone.
Try budgeting software to track expenses. I personally have used YNAB for almost 4 years and it's been great for managing our money, and self control. :)
The first thing a financial planner would do would make sure you had the right level of personal insurance (death/TPD/trauma/income protection). With kids and a mortgage this would be a good thing. Most financial planners will have expertise in risk insurance advice but it will be very hard to find one who is also a budgeting specialist. I would check out their websites first before making an appointment.
In my experience financial advisors tend to be a nice way of saying insurance salesmen. I have been to a couple and they have not helped with how to get wealthy, only how to protect what you have by buying insurance.
I can't upvote this comment enough.
I see friends who are astonishingly over insured after consulting financial advisors. Insurance is to remove some of the pain of a catastrophe, not be a possible lottery payout.And on the flips side the 'advice' they had offered was going to make me poorer and them richer through excessive premiums
In my view, at the very least OP should consider buying income protection cover of 75% of his wage. The insurance companies won't let you over-insure on income protection.
Also the retail policies sold by insurance salesmen are vastly superior to the direct offer policies or super fund policies.
@Cheap Steve:
Don't disagree, but beware the financial advisor. Don't go in blind and you'll be fine. My eyes have been opened and the last one we went to was great, saved us quite a bit on our insurance products. The previous one seemed to want to take food off our table to pay for 'just in case'
Paying a service (MyBudget or a Financial Advisor) based on your information seems counter productive to me. So much great (free) advice above. It'll take a little time at the start but taking responsibility for knowing where your money's going will give you control over your spending. Everyone spends their money in different ways so what might be essential to one person may not to another. You need to work out what's important to your family and which expenses can be reined in. I love the idea of cut back/down/out.
Then, once you know where your money is going and where you want it to go, the most important thing is to STICK TO IT! Make your budget a priority for a while. There will always be expenses that pop up - some essential, some not so important. Learn to say no and it will make a big difference in the end.
Importantly, make sure you both agree on the budget you've set. There's no point you trying really hard to save and the other half spending like before (or visaversa).
I'd recommend https://www.moneysmart.gov.au and if you are finding it tough the govt funds financial counselling through Salvation Army and mission australia (and others). A good place for referrals to these is your local centrelink office - and you can also check out any possible entitlements to payments that might make life easier.
I currently use MyBudget and all they do is help to manage your current expenses. They dont help with any tax advice or anything like that.