WEBVTT - Saving on an inconsistent income 0:00:01.600 --> 0:00:03.960 Welcome to How Do They Afford That, The podcast that 0:00:04.000 --> 0:00:07.480 peaks into the financial lives of everyday Australians. I'm Michael Thompson. 0:00:07.520 --> 0:00:09.520 I'm an author and the co host of the podcast 0:00:09.520 --> 0:00:12.479 Fear and Greed Business news. As always, I'm with Canna Campbell, 0:00:12.920 --> 0:00:16.200 financial planner and founder of Sugar Mummer TV, the financial 0:00:16.239 --> 0:00:20.960 literacy platform covering YouTube, podcast books, Instagram, threads, TikTok and more. Hello, Canna, 0:00:21.079 --> 0:00:27.560 Good morning Cana. A lot of people don't work in stable, 0:00:27.960 --> 0:00:32.960 consistent jobs, right, and I think the rise of the 0:00:32.960 --> 0:00:35.480 gig economy. I mean, the gig economy has always been there, 0:00:35.880 --> 0:00:40.479 but the rise and the the prevalence of platforms like 0:00:40.560 --> 0:00:43.400 kind of Uber and air Tasker and things like that, 0:00:43.560 --> 0:00:47.760 right have just made it so much easier for people 0:00:47.880 --> 0:00:52.240 to build an income or multiple streams of income out 0:00:52.240 --> 0:00:55.240 of the gig economy. It's great, but it can be 0:00:55.280 --> 0:00:59.280 a little bit unpredictable. So my question for you today 0:00:59.680 --> 0:01:03.680 is how do you save when your income is a 0:01:03.760 --> 0:01:07.080 regular Because saving money matters. We know that you've got 0:01:07.080 --> 0:01:10.399 to build up your emergency fund, you've got to keep 0:01:10.400 --> 0:01:13.280 your budget kind of in the black, but also if 0:01:13.319 --> 0:01:15.560 you want to get ahead through investing and stuff. You 0:01:15.640 --> 0:01:19.399 need to be able to put money into that, right, 0:01:19.480 --> 0:01:22.640 So how do you do it? Okay, do you want 0:01:22.680 --> 0:01:23.920 me to narrow it down slightly? 0:01:24.000 --> 0:01:25.440 We should also point out you don't have to be 0:01:25.520 --> 0:01:27.680 necessarily as part of the gig economy to have this 0:01:27.800 --> 0:01:30.839 inconsistent income. You know, for example, people who are commission based, 0:01:30.880 --> 0:01:33.320 you know, they were going to sales job. You know, 0:01:33.800 --> 0:01:37.840 their income fluctuates, you know, real estate agents. You know, 0:01:38.200 --> 0:01:40.440 it's might be a quite a month or two and 0:01:40.440 --> 0:01:42.639 then they might be flush with cash. 0:01:42.760 --> 0:01:45.200 Yep. Casual workers in a whole range of different jobs. 0:01:45.280 --> 0:01:49.000 Yeah, even people working remotely, you know, seasonal work, you know, 0:01:49.040 --> 0:01:52.360 working in Santa Ski field, or people who work for say, 0:01:52.440 --> 0:01:56.040 cruise ships when they're on board, they're working, but when 0:01:56.040 --> 0:01:56.320 they're not. 0:01:56.440 --> 0:01:58.720 Yeah, any kind of freelance work, all that kind of thing. 0:01:58.760 --> 0:02:03.040 Okay, So not just excluding people here, not just gig economy. 0:02:03.160 --> 0:02:05.720 No, it is much much much bigger than that, wider 0:02:05.760 --> 0:02:09.120 than that. Yeah, Okay, in that case, since we are 0:02:09.160 --> 0:02:12.160 now talking big picture, right, let's start with the bigger picture. 0:02:14.000 --> 0:02:19.080 Is saving even more important when your income is unpredictable 0:02:19.080 --> 0:02:20.200 to give yourself that buffer? 0:02:20.480 --> 0:02:23.720 Absolutely, it is a non negotiable. It is an essential. 0:02:24.480 --> 0:02:27.639 It is that savings that you have set aside, well 0:02:27.639 --> 0:02:29.959 away from your everyday spending account, is that's going to 0:02:30.000 --> 0:02:34.000 help smooth out the highs and lows and will help 0:02:34.080 --> 0:02:38.200 you stay sane and safe during periods of time, maybe 0:02:38.280 --> 0:02:39.679 a couple of weeks, or maybe even a couple of 0:02:39.760 --> 0:02:41.679 months or even a year where that you have those 0:02:41.760 --> 0:02:43.000 really tight lean months. 0:02:43.320 --> 0:02:44.840 It is your lifeline. 0:02:45.919 --> 0:02:48.440 What, then, I suppose, is the biggest mistake that you 0:02:48.480 --> 0:02:52.079 see people making if they've gotten a regular income when 0:02:52.120 --> 0:02:55.600 it comes to saving. Is it not appreciating the importance 0:02:55.639 --> 0:02:57.799 of doing it when they've got a good week or 0:02:57.800 --> 0:02:58.320 a good month. 0:02:58.480 --> 0:03:01.400 Yes, so I see two of the most sort of 0:03:01.440 --> 0:03:05.960 common mistakes. Is number one is actually holding out thinking, 0:03:05.960 --> 0:03:07.520 you know what, we've had a really good month, or 0:03:07.520 --> 0:03:08.959 I've had a really good month this month, I'm just 0:03:08.960 --> 0:03:11.320 gonna spend a bit here and I'll save next month's 0:03:11.880 --> 0:03:14.760 you know, paypacket, And then you say the same thing 0:03:14.880 --> 0:03:17.400 the following month, and it never actually eventuates. You never 0:03:17.400 --> 0:03:20.800 actually start building up that safety money of that bar 0:03:20.880 --> 0:03:25.320 for a or that emergency fund. The other mistake I 0:03:25.360 --> 0:03:28.560 see is people assuming I guess it'd be like counting 0:03:28.600 --> 0:03:30.440 their chickens before their hatch. Is that the good times 0:03:30.440 --> 0:03:34.480 will just keep rolling and you know, their lifestyle just 0:03:34.520 --> 0:03:37.880 continues on and the lifestyle creep then kicks in and 0:03:37.920 --> 0:03:40.960 they don't actually realize their abnormal months or their abnormal 0:03:41.040 --> 0:03:44.280 successful periods of time that's not the norm. So they're 0:03:44.360 --> 0:03:47.720 the biggest mistakes I see, and they come with massive regret. 0:03:48.080 --> 0:03:50.400 Okay, how do you do it? Then? Is it a 0:03:50.440 --> 0:03:52.200 case of setting? And I want to talk to about 0:03:52.200 --> 0:03:54.080 budgeting as well. I will do that a little bit 0:03:54.120 --> 0:03:58.080 later on. But in terms of just saving, do you 0:03:58.160 --> 0:04:02.080 try to set a a specific dollar amount that you're 0:04:02.080 --> 0:04:04.200 going to save each month or does that not work 0:04:04.280 --> 0:04:05.640 when your income is variable? 0:04:05.960 --> 0:04:09.000 Look effects fixed amount is better than nothing at all, 0:04:09.120 --> 0:04:14.560 But I much prefer a flexible sort of dollar amount 0:04:15.520 --> 0:04:18.040 where you have sort of targets and any amount over 0:04:18.080 --> 0:04:21.919 this amount you normally own goes into this account. I 0:04:22.040 --> 0:04:25.760 have a big issue with these percentage systems. You know, 0:04:25.800 --> 0:04:29.720 the buckets, okay, like you know, spend fifty percent, save 0:04:29.800 --> 0:04:33.799 twenty percent, invest thirty percent. Like the hard and fast 0:04:33.880 --> 0:04:37.599 rules I find very limiting and leave people feeling like 0:04:37.920 --> 0:04:39.200 they've failed, and then they. 0:04:39.080 --> 0:04:40.600 Don't bother trying at all. 0:04:41.160 --> 0:04:44.479 You need, you know, if your income is fluid in 0:04:44.520 --> 0:04:48.200 that it is volatile. One month it's okay, next month 0:04:48.200 --> 0:04:51.840 it's averaged. In the following month it's miserable. But then 0:04:51.839 --> 0:04:53.839 you've got a great big paypack or a big check 0:04:53.880 --> 0:04:57.159 coming in. You've got to be keep your cash flow 0:04:57.240 --> 0:05:00.520 management fluid. It's why I like to talk about Yeah, 0:05:00.560 --> 0:05:03.239 and it's a really long analogy but which I won't 0:05:03.279 --> 0:05:05.320 go into in detail. But previously in other episodes I've 0:05:05.320 --> 0:05:07.920 spoken about being like a traffic control director with. 0:05:07.960 --> 0:05:08.599 Your cash foe. 0:05:09.279 --> 0:05:11.560 You've got to, you know, look at what the traffic 0:05:11.640 --> 0:05:13.960 is banking up. You've got to move traffic along. You've 0:05:14.000 --> 0:05:15.919 also got to work out whose turn is it to 0:05:16.000 --> 0:05:17.400 like sit and wait for a bit and let other 0:05:17.400 --> 0:05:19.520 people go past. You've kind of got to do that 0:05:19.600 --> 0:05:21.680 even more so, and that's one of the pressures that 0:05:21.720 --> 0:05:24.680 come with having a regular income and managing all of 0:05:24.720 --> 0:05:29.520 the expenses, because whilst your income fluctuates, our living expenses 0:05:29.520 --> 0:05:32.920 also fluctuate. We have expensive months, we have frugal months, 0:05:32.960 --> 0:05:36.839 we have low key months. We have unexpected expenses during months, 0:05:36.880 --> 0:05:40.120 So you know, you're juggling a lot, you've got to 0:05:40.120 --> 0:05:40.719 really stay. 0:05:40.560 --> 0:05:41.159 On top of it. 0:05:41.880 --> 0:05:45.400 Okay, Just to kind of paint a picture of how 0:05:45.480 --> 0:05:49.680 that that might work, let's do a little example an exercise, 0:05:49.880 --> 0:05:52.600 shall we. So to keep it really simple, let's say 0:05:54.040 --> 0:05:56.479 one week you earn a thousand dollars, yes, all right, 0:05:56.520 --> 0:05:58.920 and then the next week you earn ten thousand dollars. 0:05:58.960 --> 0:06:01.800 It's an absolute per week. That one me too. I 0:06:01.839 --> 0:06:04.279 like that second week. But this is the risk I 0:06:04.279 --> 0:06:07.880 suppose of the percentage system. It's in that one thousand 0:06:07.839 --> 0:06:09.960 dollars week, so you have fifty percent of it going 0:06:10.000 --> 0:06:13.719 to your mortgage or rent. So there's five hundred dollars gone, 0:06:14.040 --> 0:06:16.400 and then you say that, okay, my next thirty percent 0:06:16.480 --> 0:06:20.440 is going to groceries, and then the next ten percent 0:06:20.600 --> 0:06:23.360 is going towards other bills, and then the final ten 0:06:23.360 --> 0:06:25.919 percent is my savings. All right. So that's one hundred 0:06:25.960 --> 0:06:28.680 dollars going into your savings, one hundred dollars into your 0:06:28.680 --> 0:06:32.200 other bills, three hundred dollars going into your groceries, all right, Okay, 0:06:32.200 --> 0:06:35.039 So that means that then you are putting aside hundred 0:06:35.040 --> 0:06:39.279 dollars one hundred dollars. That means then that the following week, 0:06:39.480 --> 0:06:42.520 when you make ten thousand, that means that you are 0:06:42.600 --> 0:06:47.480 only then putting one thousand dollars into savings, and all 0:06:47.520 --> 0:06:50.400 the other ones are just completely blown out of all proportion. 0:06:50.800 --> 0:06:53.720 Whereas you would be better to say, you've got your 0:06:53.760 --> 0:06:57.000 five hundred dollars for your for your mortgage or your rent, 0:06:57.200 --> 0:06:59.320 your three hundred dollars that you still need for your 0:06:59.440 --> 0:07:01.760 for your gross, you hundred dollars for your other bills, 0:07:02.120 --> 0:07:05.680 and then everything north of that, yes, suddenly means that 0:07:06.080 --> 0:07:11.600 you are putting aside nine thousand, one hundred dollars into 0:07:11.640 --> 0:07:12.760 your savings exactly. 0:07:12.840 --> 0:07:15.120 And this is why I don't like these hard and 0:07:15.200 --> 0:07:19.600 fast percentage systems. I think they are Look most people 0:07:19.880 --> 0:07:23.320 I can't even fit into these percentage systems a financial planner. 0:07:23.640 --> 0:07:26.640 But when you look at a dollar amount and you say, okay, 0:07:26.680 --> 0:07:28.360 well we need this much to pay for the rent, 0:07:28.440 --> 0:07:32.440 this much for groceries, this much for utilities and transport, 0:07:33.280 --> 0:07:35.800 and then we can sect like, look at what's left 0:07:35.800 --> 0:07:38.520 over and then divvy it up as a dollar amount, 0:07:38.800 --> 0:07:40.960 that's great. And then if you have another bumper of 0:07:40.960 --> 0:07:42.960 a month, you can keep adjusting it and have sort 0:07:42.960 --> 0:07:45.720 of goals that you work around it. So it is 0:07:46.320 --> 0:07:49.840 really important that you create something that is a boundary 0:07:49.840 --> 0:07:53.120 that is right for you and what you need, and 0:07:53.280 --> 0:07:56.000 can actually work with you to build that consistency and 0:07:56.040 --> 0:07:57.080 smooth out your cash flow. 0:07:58.200 --> 0:08:01.800 That doing that little exercise, I think probably illustrated it 0:08:01.880 --> 0:08:04.440 for me more than anything else that I've heard, because 0:08:04.440 --> 0:08:08.400 all of a sudden, you have built yourself up a 0:08:08.520 --> 0:08:13.040 very very nice buffer rather than just spending it because 0:08:13.040 --> 0:08:14.640 you think you can, because you're doing it on a 0:08:14.640 --> 0:08:16.000 percentage basis. 0:08:15.760 --> 0:08:18.960 And it feels really nice having emergency money. It is 0:08:19.640 --> 0:08:22.520 a great night sleep knowing I've got fifty thousand dollars 0:08:22.560 --> 0:08:25.000 in a separate savings account in case I have a 0:08:25.000 --> 0:08:27.200 few bad months, or if I lose my job or 0:08:27.680 --> 0:08:30.120 you know something, you know, my work drives up. 0:08:30.240 --> 0:08:34.480 Yeah, is the key to this discipline, because otherwise how 0:08:34.480 --> 0:08:36.520 do you kind of stop yourself from going into panic 0:08:36.559 --> 0:08:39.959 mode I suppose in lean months and then over spending 0:08:40.040 --> 0:08:42.520 in the good months. Is it just about being really 0:08:42.559 --> 0:08:44.280 really strict with yourself. 0:08:44.040 --> 0:08:47.200 Yes, self control, But also it's about having a good memory, 0:08:47.280 --> 0:08:51.520 not necessarily a good memory of bad things that happened 0:08:51.520 --> 0:08:55.520 to you, but witnessing other people. So remembering God, I remember, 0:08:55.600 --> 0:08:57.800 you know, my best friend went through a really hard time, 0:08:57.880 --> 0:09:00.719 and you know, he or she didn't have an emergency 0:09:00.760 --> 0:09:03.440 money and they had to move back home or they 0:09:03.480 --> 0:09:05.599 had to sell their house. You know, those sorts of 0:09:05.640 --> 0:09:10.280 things like capitalizing on someone else's lesson can be really 0:09:10.920 --> 0:09:13.880 powerful and helping you stay focused and motivated and having 0:09:14.040 --> 0:09:15.880 that sense of discipline because you build a sense of 0:09:15.960 --> 0:09:19.920 respect just to what that buffer account or that emergency money, 0:09:19.960 --> 0:09:23.760 whatever you want to call it, provides you, and it 0:09:23.840 --> 0:09:27.000 will help you take away that temptation where you go 0:09:27.040 --> 0:09:28.480 to spend it because you're like, no, I don't want 0:09:28.520 --> 0:09:31.080 to end up like that personal I remember this happened 0:09:31.080 --> 0:09:33.280 to me a few years ago, and I was so stressed. 0:09:33.280 --> 0:09:35.240 I was so anxious. I'm never going to let that 0:09:35.280 --> 0:09:35.760 happen again. 0:09:36.040 --> 0:09:39.520 I'm learning, I'm growing, I'm leaving that behind in my past. 0:09:39.559 --> 0:09:42.600 So it really is about focusing on the benefit of 0:09:42.679 --> 0:09:45.080 that money so that it's not even a temptation. 0:09:45.360 --> 0:09:46.840 It's no negotiable. 0:09:46.880 --> 0:09:49.560 As I said, Okay, we're going to take a quick break. 0:09:49.960 --> 0:09:51.360 When we come back, I want to talk to you 0:09:51.400 --> 0:09:54.199 about budgeting methods. I want to talk about the idea 0:09:54.200 --> 0:09:56.440 of setting yourself a pretend salary. 0:09:56.600 --> 0:09:59.520 Well, you're talking about my drip feed technique, so that 0:10:00.120 --> 0:10:02.440 you get ready for that helpful. 0:10:02.200 --> 0:10:05.400 Drip feed, and then also this idea of automatic savings 0:10:05.440 --> 0:10:08.200 transfers and whether you can kind of automate the process 0:10:08.240 --> 0:10:10.360 so that you don't have to think about it and 0:10:10.360 --> 0:10:13.680 don't stress too much. There's actually a lot to get through, 0:10:13.840 --> 0:10:15.800 isn't there. We'll take a quick break and come back 0:10:15.800 --> 0:10:24.160 in a moment and do that. Can We're talking about 0:10:24.160 --> 0:10:26.679 how to save when your income is unpredictable, And as 0:10:26.720 --> 0:10:28.800 you said, this is bigger than the gig economy. This 0:10:28.960 --> 0:10:32.280 is any kind of freelancers or anyone on commission based work, 0:10:32.360 --> 0:10:34.880 or anyone in casual work or anything where your shifts 0:10:34.920 --> 0:10:37.480 might vary and your income might vary. So this is 0:10:37.520 --> 0:10:42.520 actually a lot of people budgeting methods. Okay, is there 0:10:42.720 --> 0:10:49.040 anything that works better for say, for gig workers, freelancers, 0:10:49.040 --> 0:10:49.480 et cetera. 0:10:49.920 --> 0:10:55.199 So welcome to my lesson on my drip feed technique. 0:10:55.920 --> 0:10:58.720 So what you do is you put all of your 0:10:58.760 --> 0:11:01.800 income into the one account, and you know it doesn't 0:11:01.800 --> 0:11:04.320 matter where it's come from, you know who from how 0:11:04.360 --> 0:11:07.120 much it all goes into the one account. You would 0:11:07.160 --> 0:11:12.880 then pay yourself initially a small set salary per week, 0:11:13.000 --> 0:11:16.400 per fortnite, per month, whatever you would prefer to help 0:11:16.440 --> 0:11:20.560 you manage your cash flow, and that obviously accounts also 0:11:20.600 --> 0:11:23.640 for tax as well if you are self employed. But 0:11:23.880 --> 0:11:27.480 it basically it takes it creates almost like a fake 0:11:27.720 --> 0:11:31.320 salary for yourself, but it creates consistency in your income, 0:11:31.360 --> 0:11:33.000 which for a lot of people will make it a 0:11:33.040 --> 0:11:36.360 lot more a lot easier to actually manage the cash flow, 0:11:36.400 --> 0:11:39.800 which is one of the key foundations of actually financial 0:11:39.800 --> 0:11:41.040 good financial management. 0:11:41.320 --> 0:11:44.480 And so you're pretending then that this set salary is 0:11:45.640 --> 0:11:47.520 what then goes on to pay for all of your 0:11:47.559 --> 0:11:48.200 other bills. 0:11:48.120 --> 0:11:51.000 Ess all the normal all your normal living expenses and bills. 0:11:51.000 --> 0:11:53.680 And I recommend people started off as low as they 0:11:53.840 --> 0:11:57.160 can to help build up that account because it may 0:11:57.240 --> 0:11:58.800 take a couple of months to actually build up a 0:11:58.840 --> 0:12:03.200 decent balance, but you and then you can review it, 0:12:03.240 --> 0:12:04.679 so you might go, okay, well, I'm going to take 0:12:04.679 --> 0:12:07.760 five thousand dollars per month as a net salary and 0:12:07.800 --> 0:12:09.800 obviously accounting for a pay as you go tax depending 0:12:09.960 --> 0:12:12.520 on your if you're self employed or not. So then 0:12:12.640 --> 0:12:14.040 you would sit with that for a couple of months 0:12:14.120 --> 0:12:16.360 learning how to live off with that as a set salary. 0:12:16.960 --> 0:12:20.280 Then say in a month or two time or next quarter, 0:12:20.320 --> 0:12:21.600 you look at that and go, can I give myself 0:12:21.600 --> 0:12:24.079 a pay rise? Perhaps I can afford to actually give 0:12:24.080 --> 0:12:27.480 myself now six thousand dollars per month. Again, you've got 0:12:27.520 --> 0:12:29.440 to account for the increase in tax that you can 0:12:29.520 --> 0:12:31.840 prepay to the ATO if you want, or put into 0:12:31.880 --> 0:12:35.800 a separate savings account, so that you are allowing giving 0:12:35.800 --> 0:12:39.680 that account the time to actually build up, so that 0:12:39.720 --> 0:12:43.120 you have a decent amount set aside, and that money 0:12:43.200 --> 0:12:45.160 keeps on flowing. And again you can review it. You 0:12:45.240 --> 0:12:47.199 might need to slightly tweak it and change it as 0:12:47.200 --> 0:12:50.280 your situation changes, your needs change. But it is a 0:12:50.280 --> 0:12:55.040 great way of taking away that sense of instability that 0:12:55.120 --> 0:12:59.240 comes from an irregular, volatile income stream. 0:12:59.080 --> 0:13:01.600 A cash flow, all right, And at the same time, 0:13:01.640 --> 0:13:05.959 this float essentially would be expanding. 0:13:06.280 --> 0:13:08.640 Yes, yes, And that's when if you see, for example, 0:13:08.679 --> 0:13:10.000 I might do this for a couple of months and 0:13:10.040 --> 0:13:11.840 I think, I see, okay, well I've actually now I've 0:13:11.840 --> 0:13:15.040 got instead of having say fifty thousand dollars in savings 0:13:15.080 --> 0:13:17.600 for my drip feed technique, I don't need as much 0:13:17.600 --> 0:13:20.200 as that I might reduce it accordingly, or am I going? 0:13:20.200 --> 0:13:22.360 You know what? I know that there's some really tight 0:13:22.400 --> 0:13:24.480 months coming up, and I could be without a job 0:13:24.520 --> 0:13:26.600 for a lot longer than I initially thought. I actually 0:13:26.600 --> 0:13:29.559 need that base amount to be a lot higher, around 0:13:29.559 --> 0:13:32.560 say seventy thousand. But the point is you're regularly engaging 0:13:32.600 --> 0:13:36.440 with it, but you're creating almost like a pretend salary 0:13:36.600 --> 0:13:37.360 for yourself. 0:13:39.760 --> 0:13:43.720 I really like that. The problem that I see with 0:13:43.840 --> 0:13:49.560 it is the potential to dip into that float when, if, 0:13:49.600 --> 0:13:53.800 and when you need it. And I suppose this probably 0:13:53.880 --> 0:13:55.600 comes back to a discipline thing. 0:13:56.000 --> 0:13:58.920 Well, that's about to say like it is a big 0:13:58.960 --> 0:14:02.240 responsibility to manage your cash flow. It is not something 0:14:02.280 --> 0:14:07.840 to be disregarded. You do need to track and regularly 0:14:07.920 --> 0:14:11.120 check your cash flow, and you really need to connect 0:14:11.120 --> 0:14:13.880 with your why, which is why I refer to learning 0:14:13.920 --> 0:14:17.640 from previous mistakes, or learning from other people's previous mistakes, 0:14:17.960 --> 0:14:21.120 so that you can take on some wisdom here. And 0:14:21.280 --> 0:14:24.000 you know, a great way to stay motivated is to 0:14:24.040 --> 0:14:24.800 look at. 0:14:25.520 --> 0:14:27.040 Making it as visual as possible. 0:14:27.200 --> 0:14:29.480 And I see this a lot in the debt free community, 0:14:30.040 --> 0:14:33.680 where people have created like charts and graphs and envelopes 0:14:33.720 --> 0:14:37.000 and stickers and you know, really made it incredibly visual 0:14:37.040 --> 0:14:37.760 and colorful. 0:14:38.200 --> 0:14:38.360 You know. 0:14:38.400 --> 0:14:40.280 And they've done it in a digital way through canber 0:14:40.360 --> 0:14:43.520 or they've got stuff on the fridge to help them 0:14:43.840 --> 0:14:46.640 see their progress. And I always say, like progress fuel success. 0:14:46.640 --> 0:14:49.280 When you can see, okay, we're building up that buffer amount, 0:14:49.400 --> 0:14:51.440 or you know, we're ready to take a bit of 0:14:51.440 --> 0:14:55.320 a salary increase from our drip feed technique, you can 0:14:55.360 --> 0:14:57.120 actually see that it's working. The debts are coming down, 0:14:57.240 --> 0:14:59.280 you're actually engaging with your finances. You're a lot more 0:14:59.400 --> 0:15:00.760 You've got a lot more skin in the game, You're 0:15:00.760 --> 0:15:05.280 a lot more emotionally engaged, committed connected. You can see 0:15:05.360 --> 0:15:07.640 it's working. The hard work's paying off. That's only going 0:15:07.680 --> 0:15:11.440 to fuel that determination and commitment to keep it going 0:15:11.480 --> 0:15:13.400 and make sure this continues on working for you. 0:15:13.560 --> 0:15:18.600 Okay, And does that big float from which you pay 0:15:18.640 --> 0:15:22.280 that that drip feed kind of salary, does that replace 0:15:22.640 --> 0:15:26.320 the emergency fund or are you separately feeding into an 0:15:26.360 --> 0:15:27.160 emergency fund. 0:15:27.720 --> 0:15:30.720 Look, it really depends on your situation and what your 0:15:30.880 --> 0:15:35.280 financial responsibilities are. Ideally, in a perfect world, you have 0:15:35.600 --> 0:15:39.720 emergency money separate as well as your drip feed float 0:15:39.840 --> 0:15:42.880 system happening as well. So yes, they are different, and 0:15:43.560 --> 0:15:46.320 I probably confuse the listeners and yourself Michael by Court 0:15:46.360 --> 0:15:50.320 referring it maybe as an emergency money. Technically they are separate. 0:15:51.080 --> 0:15:55.080 This is to help manage your the inconsistency of your income, 0:15:55.880 --> 0:15:58.880 and I rarely see it well. To be honest, I 0:15:58.920 --> 0:16:03.040 have never seen anyone be able to manage irregular income 0:16:03.720 --> 0:16:05.520 successfully without this technique. 0:16:06.080 --> 0:16:07.840 Okay, so that's how important. 0:16:08.080 --> 0:16:11.160 So I smoke up my own ass. But yes, that's 0:16:11.200 --> 0:16:12.240 quite the image, isn't that? 0:16:12.760 --> 0:16:14.960 But because I know it works, and I know with myself, 0:16:15.160 --> 0:16:19.840 especially when I started my own business years ago, like 0:16:20.240 --> 0:16:22.440 I was, I was twenty six, twenty seven, and I 0:16:22.440 --> 0:16:24.360 had a mortgage. I had a lot of risk on 0:16:24.400 --> 0:16:28.720 my shoulders and I was paid quarterly. Wow yeah, and 0:16:28.760 --> 0:16:31.120 it took three months before I got my first paycheck. 0:16:31.200 --> 0:16:34.200 So this is what I did, and it worked, and 0:16:34.240 --> 0:16:35.640 I still swear by it today. 0:16:36.040 --> 0:16:40.160 I have experienced this as well in book publishing. Yes, 0:16:40.520 --> 0:16:44.720 when I published my first novel in twenty twenty three, 0:16:45.560 --> 0:16:52.120 and it is essentially payments related to that, I staggered 0:16:52.160 --> 0:16:56.640 almost over not two and a half years, which means 0:16:56.640 --> 0:17:00.440 that you have to budget and manage that cash, which 0:17:00.480 --> 0:17:02.360 is just such a challenging thing to. 0:17:02.280 --> 0:17:04.920 Do, and it's also time consuming as well. That's why 0:17:04.920 --> 0:17:06.560 I like the system is because all the money goes 0:17:06.600 --> 0:17:07.399 into the one bucket. 0:17:07.440 --> 0:17:07.919 There's none of this. 0:17:07.960 --> 0:17:10.720 Okay, when I get this check from here, I'll put 0:17:10.720 --> 0:17:12.840 it to that, When I get this deposit here, when 0:17:12.840 --> 0:17:14.520 that money comes in on when that gets paid, I'll 0:17:14.520 --> 0:17:15.280 put it here and there. 0:17:15.320 --> 0:17:17.040 It just put it simplifies it. 0:17:17.560 --> 0:17:21.159 And you know, if you are juggling multiple jobs like 0:17:21.200 --> 0:17:23.640 it's the gig economy, or you're juggling lots of things 0:17:23.680 --> 0:17:25.479 in life, as we all are, this just makes it 0:17:25.520 --> 0:17:29.280 really clean and really simple. And I think that's what 0:17:29.600 --> 0:17:33.120 we over complicate things by having multiple accounts. I'm looking 0:17:33.160 --> 0:17:36.119 at you, Michael, and you know we don't need to 0:17:36.400 --> 0:17:38.600 just keep it simple so that you were engaged with it, 0:17:38.640 --> 0:17:40.640 and you don't because it's easy to understand. You don't 0:17:40.640 --> 0:17:41.359 put it off either. 0:17:42.680 --> 0:17:44.840 You are going to be so proud of me. I 0:17:44.960 --> 0:17:50.040 have not told you this recently, please the under seventeen 0:17:50.320 --> 0:17:52.200 because in the past we've talked about the fact that 0:17:52.280 --> 0:17:55.199 I had twenty six bank accounts, right and then you 0:17:55.320 --> 0:17:58.480 got that. You put me on a bank account diet 0:17:58.520 --> 0:18:00.320 and told me I wasn't allowed to open any more, 0:18:00.880 --> 0:18:02.800 and I got it down to what I thought was nineteen, 0:18:02.880 --> 0:18:04.359 and then it went back up to twenty two because 0:18:04.359 --> 0:18:10.719 I found some more. The other day, I consolidated a 0:18:10.760 --> 0:18:15.760 whole bunch of bank accounts and I am now down 0:18:15.800 --> 0:18:20.200 to let me it is fifteen. 0:18:23.040 --> 0:18:24.920 I am really proud of you right now. 0:18:25.080 --> 0:18:26.920 It is. In fact, it could actually be better than 0:18:26.920 --> 0:18:28.680 that because. 0:18:28.520 --> 0:18:32.400 I see progress, feel success. So you are evidence. 0:18:32.600 --> 0:18:35.520 Yeah, it is, and it is all about just trying 0:18:35.520 --> 0:18:38.280 to improve that cash flow, the visibility over cash flow. 0:18:38.440 --> 0:18:42.879 And so this has been a really interesting process talking 0:18:42.880 --> 0:18:46.960 through the drip feed system. I mentioned automatic savings transfers. 0:18:47.160 --> 0:18:50.280 Really you can part of this is automated, then, isn't it. 0:18:50.280 --> 0:18:52.159 If you are doing this drip feed system, then you 0:18:52.160 --> 0:18:56.120 are paying yourself that same salary every single week, which 0:18:56.160 --> 0:18:57.560 is an automated thing you. 0:18:57.560 --> 0:19:00.439 Can set up automated. But this is the thing, and 0:19:00.480 --> 0:19:02.520 you did ask me this question which we haven't touched on, 0:19:02.600 --> 0:19:07.520 but the automation. Automation is great because it obviously takes 0:19:07.560 --> 0:19:08.760 it's one less thing for you to have to do, 0:19:08.880 --> 0:19:13.400 but it also can make us maybe a little bit lazy, okay, 0:19:13.760 --> 0:19:17.600 and hold us back from actually achieving our true potential. So, 0:19:17.720 --> 0:19:21.000 for example, say I have you know, two hundred dollars 0:19:21.119 --> 0:19:24.080 per month regular savings plan to build up you know, 0:19:24.200 --> 0:19:29.359 my my emergency money. For example, if I have an 0:19:29.400 --> 0:19:36.280 irregular income stream, I could potentially save more so and 0:19:36.400 --> 0:19:38.840 which means I could build up my emergency money number 0:19:39.200 --> 0:19:42.800 a lot faster. So by having that money staying in 0:19:42.840 --> 0:19:44.840 my account, I could be actually transferring three hundred dollars 0:19:44.840 --> 0:19:46.520 per month or four hundred dolls per month. But I 0:19:46.520 --> 0:19:48.479 don't I to stick to this automated system of two 0:19:48.520 --> 0:19:50.600 hundred dolls per month. I'm probably gonna go and spend 0:19:50.600 --> 0:19:52.480 that one hundred two hundred dollars a month that I 0:19:52.520 --> 0:19:55.760 actually could afford to put aside. And that's where I 0:19:55.800 --> 0:19:58.200 think the danger lies because. 0:19:58.040 --> 0:20:00.800 To get into that that the challenges with the percentage 0:20:00.800 --> 0:20:02.320 system that we talked in the first part. 0:20:02.680 --> 0:20:05.240 It but also we don't actually look at our numbers, 0:20:05.359 --> 0:20:06.880 and that's what we need to be doing. We need 0:20:06.920 --> 0:20:08.520 to be checking our accounts, we need to be checking 0:20:08.520 --> 0:20:10.560 our transactions, and we need to be making sure that 0:20:10.600 --> 0:20:14.000