WEBVTT - Why your budget isn’t working (and how to fix it) 0:00:01.639 --> 0:00:03.680 Welcome to How Do They Afford That? The podcast that 0:00:03.720 --> 0:00:06.520 peaks into the financial lives of everyday Australians. I'm Michael 0:00:06.559 --> 0:00:08.200 Thompson that I'm an author and the co host of 0:00:08.200 --> 0:00:11.080 the business news podcast Fear and Greed. As always, I'm 0:00:11.119 --> 0:00:14.600 with Canna Campbell, financial planner, founder of Sugar Mummer TV, 0:00:14.720 --> 0:00:21.080 the financial literacy platform covering like tiptoed over that financial 0:00:21.120 --> 0:00:26.200 literacy platform. It's a tongue twister, right, YouTube podcasts, Instagram threads, 0:00:26.600 --> 0:00:30.040 and books like our upcoming book very exciting. 0:00:30.240 --> 0:00:31.760 We have been a book. 0:00:31.440 --> 0:00:34.480 That's right, twelve Months of Financial Freedom. It is coming 0:00:34.560 --> 0:00:38.440 up in September. If you want to pre order a copy, 0:00:38.800 --> 0:00:40.600 you can do so online now put a link in 0:00:40.600 --> 0:00:43.320 the show notes as well. But we're very excited for 0:00:43.320 --> 0:00:45.840 that one to be published in September with Alan and Unwin. 0:00:46.240 --> 0:00:50.239 Twelve Months to Financial Freedom. On the back, there's a 0:00:50.240 --> 0:00:51.600 little picture of us, isn't there? 0:00:52.240 --> 0:00:54.160 Oh Calvin Client shoot, oh yes. 0:00:54.080 --> 0:00:56.000 Yeah, that was great fun. It's worth it just for 0:00:56.080 --> 0:01:01.000 that picture anyway. Hello, Canna, how are you? Yeah, I'm good. 0:01:01.040 --> 0:01:03.240 I'm a bit wary about today budgets. 0:01:03.800 --> 0:01:06.080 Yes, how's your budget looking? 0:01:06.720 --> 0:01:14.160 It's actually looking good sounded convincing. No, it's today isn't 0:01:14.280 --> 0:01:17.840 about how to make a budget, right, We're going to 0:01:17.880 --> 0:01:22.080 talk about why they don't work, which which sounds like 0:01:22.120 --> 0:01:24.520 we're going to be really negative, right, But we're going 0:01:24.560 --> 0:01:27.119 to look at some of the common kind of problems 0:01:27.160 --> 0:01:29.319 with a budget, because I think most people have had 0:01:29.360 --> 0:01:33.319 a crack at setting a budget, a household budget, you 0:01:33.480 --> 0:01:36.000 know roughly kind of what you're what you're earning, and 0:01:36.040 --> 0:01:39.880 what you're spending. But something doesn't work, the wheels fall off, 0:01:39.959 --> 0:01:43.880 it gets forgotten, you blow it out, blow it away, 0:01:44.640 --> 0:01:48.720 I don't know whatever. Yeah, yeah, anyway, it doesn't work. 0:01:48.800 --> 0:01:51.280 So we're going to fix it today. This isn't about 0:01:51.280 --> 0:01:53.920 creating the budget in the first place. It's about fixing 0:01:54.120 --> 0:01:57.600 what isn't working. Is that fair? Yeah? 0:01:57.600 --> 0:01:59.080 I think that's reasonable. 0:01:59.160 --> 0:02:02.600 Okay, all right? Why do so many people feel like 0:02:02.640 --> 0:02:05.760 their budget just doesn't actually work? 0:02:06.120 --> 0:02:08.160 So this is the problem. You know, they look great 0:02:08.240 --> 0:02:11.400 on paper, your budget. You know you've done written everything down, 0:02:11.880 --> 0:02:15.320 maybe even do as I recommend, which is checking your transactions, 0:02:15.360 --> 0:02:18.400 but they don't actually reflect the reality of your life. 0:02:18.440 --> 0:02:21.560 You know, they don't account for those irregular expenses, the 0:02:21.639 --> 0:02:25.239 price increases that we're experiencing on a almost daily basis, 0:02:25.720 --> 0:02:28.400 the natural human behavior, the habits that we might have, 0:02:28.520 --> 0:02:32.359 and the reality of our lives, and also the spontaneity 0:02:32.400 --> 0:02:34.680 that comes as well, when special opportunities come out of 0:02:34.680 --> 0:02:37.480 the blue that we go, wow, I want to do that. 0:02:37.480 --> 0:02:39.640 That's great, let's jump on that. Would it be a 0:02:39.639 --> 0:02:42.920 weekend away or constant tickets or something like that? 0:02:44.040 --> 0:02:47.440 Is it then, is it the numbers aren't working in 0:02:47.480 --> 0:02:51.840 a budget or is it the behavior that's behind the budget? 0:02:51.880 --> 0:02:54.760 Where is the fault or is it you're going to say, 0:02:55.160 --> 0:02:56.040 it's a bit of both. 0:02:56.960 --> 0:02:59.519 You know me too well, Yes, so of course the 0:02:59.639 --> 0:03:02.680 numbers have got to be correct, you know, then it's 0:03:02.720 --> 0:03:05.960 got to add up. But what's more important, though is 0:03:06.160 --> 0:03:10.080 the behavior, but also the attitude as to whether your 0:03:10.080 --> 0:03:12.080 budget's actually going to work for you, like, you know, 0:03:12.160 --> 0:03:16.959 understanding emotional spending, understanding the lifestyle creep, you know, the 0:03:17.400 --> 0:03:20.960 lack of consistency and checking your budget and transactions. You know, 0:03:21.400 --> 0:03:25.480 you can't out budget behavior or a toxic habit. You've 0:03:25.560 --> 0:03:27.480 got to sort of work with it and have that 0:03:27.520 --> 0:03:30.639 awareness and build certain steps around it so that you're 0:03:30.639 --> 0:03:31.320 in control. 0:03:32.120 --> 0:03:35.680 Okay, Then when we are talking about the numbers. You 0:03:35.800 --> 0:03:37.920 kind of alluded to this before, about the fact that 0:03:37.920 --> 0:03:40.120 how you're not not prepared if something good, like a 0:03:40.120 --> 0:03:46.119 big opportunity comes up. Do people make their budgets too strict? 0:03:46.240 --> 0:03:48.280 Are they just kind of stripping everything out and kind 0:03:48.320 --> 0:03:51.000 of it's like a best case scenario that this is 0:03:51.040 --> 0:03:53.720 what the budget is going to be. But there is 0:03:53.760 --> 0:03:57.200 a little unspoken assumption that as long as nothing goes 0:03:57.240 --> 0:03:59.839 wrong and prices don't ever go up and we never 0:03:59.880 --> 0:04:02.040 have to pay for anything that we haven't actually accounted 0:04:02.040 --> 0:04:05.280 for here. Or is it that they get a bit 0:04:05.320 --> 0:04:10.280 too optimistic about the financial outlook or is it just 0:04:10.280 --> 0:04:13.480 something super broad that it's not a budget built for 0:04:13.520 --> 0:04:14.120 real life. 0:04:14.600 --> 0:04:17.200 Well, to answer your question, you're right, it is a 0:04:17.200 --> 0:04:19.640 bit of everything. You know, a budget that's too strict, 0:04:19.680 --> 0:04:21.920 and I've seen people budget to the nearest sense like 0:04:22.320 --> 0:04:26.080 that is a fast way to fail. It's really they 0:04:26.200 --> 0:04:29.720 do that, yes, and I feel yes, it's kind of 0:04:29.800 --> 0:04:31.880 I was quite shocked when I do come across the 0:04:31.880 --> 0:04:33.480 sea this to the point like to the cent, like 0:04:33.560 --> 0:04:36.560 five cents. So the problem with that is is obviously 0:04:36.640 --> 0:04:41.400 extremely unrealistic. There is going there are too many price fluctuations, 0:04:41.560 --> 0:04:44.960 and it is going to make you feel really crap 0:04:45.040 --> 0:04:47.280 about the time that you have spent and invested during 0:04:47.279 --> 0:04:50.520 the budget because it's going to fall apart very very quickly, 0:04:50.560 --> 0:04:52.960 and can also add to an element of self destruction 0:04:53.080 --> 0:04:57.279 when your budget is just way too strict and rigid. 0:04:57.640 --> 0:04:59.520 Then there's, of course the other end of the spectrum 0:04:59.520 --> 0:05:01.919 where it's way too optimistic. You know, it's you know, 0:05:02.160 --> 0:05:05.120 people fall short of their goals because it wasn't ever 0:05:05.279 --> 0:05:08.320 really an honest budget in the first place. You know, 0:05:08.760 --> 0:05:12.040 it's where the budget becomes almost it sets you up 0:05:12.040 --> 0:05:16.400 for failure. I like to look at budgeting as a playground, 0:05:16.920 --> 0:05:19.480 like a kid's playground. Have you heard this analogy before? 0:05:19.520 --> 0:05:20.839 I haven't not an analogy for a while. 0:05:21.080 --> 0:05:23.640 It's been far too long since one of your analogies, 0:05:23.680 --> 0:05:25.440 and I look forward to seeing how you make this 0:05:25.480 --> 0:05:26.000 one work. 0:05:26.560 --> 0:05:30.920 Okay, So my budget is not a street budget, it 0:05:31.000 --> 0:05:34.520 has it. I like think of my budget as spending boundaries. 0:05:34.880 --> 0:05:38.440 Okay, and where's the playgrounds? The playground within the boundaries 0:05:39.160 --> 0:05:40.000 a fence. 0:05:39.880 --> 0:05:41.680 You can play in the boundary. So think about a 0:05:41.760 --> 0:05:45.120 kid's playground at the park. Most playgrounds have a fence 0:05:45.200 --> 0:05:47.760 around it. You've got to lift up the latch to 0:05:47.800 --> 0:05:50.560 walk into the and once the children are in there, 0:05:50.680 --> 0:05:54.440 it's pretty safe. The ground foam for you. If they fall, 0:05:54.480 --> 0:05:55.960 they're not they're less like. I mean, yes, you can 0:05:55.960 --> 0:05:58.919 still injure yourself, but you know, it's the damage is 0:05:59.000 --> 0:06:02.120 kind of quarrente tanged to the playground. There's lots of 0:06:02.200 --> 0:06:04.560 equipment going on there. You can do lots of different things, 0:06:05.000 --> 0:06:07.040 but you are relatively safe. 0:06:07.120 --> 0:06:10.560 Yeah, like you could still get bald over by the swings, or. 0:06:10.680 --> 0:06:13.320 You could, but the swing is made with something that's 0:06:13.360 --> 0:06:15.600 not like metal and is going to you know. 0:06:15.880 --> 0:06:18.000 You could also rock it down the slide and take 0:06:18.040 --> 0:06:20.360 past a takeout a kid that's running past. At the 0:06:20.400 --> 0:06:21.600 same time, do. 0:06:21.520 --> 0:06:29.400 We have some unresolved child issues childhood? Sorry, I feel 0:06:29.440 --> 0:06:31.080 like something happened to you as a child that we 0:06:31.160 --> 0:06:34.680 need to explore here. But my point is you can 0:06:34.839 --> 0:06:39.440 have fun within the playground. You know, you can socialize, 0:06:39.480 --> 0:06:41.919 you can run, you can swing, you can jump, you 0:06:41.920 --> 0:06:44.480 can hop, you can swing from the monkey bars. You're 0:06:44.520 --> 0:06:46.200 not going to get into too much trouble. And that's 0:06:46.240 --> 0:06:48.479 the same concept as a budget that makes sense. So 0:06:48.560 --> 0:06:52.520 for example, I have an amount to spend at the supermarket. 0:06:53.120 --> 0:06:55.240 I can spend less if I want, but I can 0:06:55.240 --> 0:06:57.279 go up to that threshold. As long as I don't 0:06:57.279 --> 0:07:00.640 go beyond that threshold, I am safe. And the amount 0:07:00.640 --> 0:07:02.560 of people I have met, and I do so much 0:07:02.600 --> 0:07:05.200 coaching around this with you, one on one with people 0:07:05.839 --> 0:07:08.880 to turn up to a supermarket just don't actually have 0:07:08.920 --> 0:07:12.280 a threshold. And that's the whole point of having a reasonable, 0:07:12.320 --> 0:07:14.320 realistic threshold. So I don't just go and go, well, 0:07:14.320 --> 0:07:15.640 I'm going to buy. I've got a threshold of one 0:07:15.720 --> 0:07:17.440 hundred dollars for the week for a family of five. 0:07:17.800 --> 0:07:22.560 It's a realistic threshold, boundary, limit playground that reflects the 0:07:22.600 --> 0:07:25.600 reality of what I need to feed five people seven nights, 0:07:25.680 --> 0:07:28.080 seven days a week. And that's what I stick to. 0:07:28.360 --> 0:07:31.680 And so it doesn't I don't ever feel pressure or 0:07:32.160 --> 0:07:35.240 tension to stick to that because I've got it's safe, 0:07:35.240 --> 0:07:37.480 it's realistic. That doesn't mean I've got a massive buffer, 0:07:37.520 --> 0:07:40.080 like I've got the same stress and pressure as everybody else. 0:07:40.240 --> 0:07:41.760 But it just keeps me on track. 0:07:42.160 --> 0:07:46.040 Is that then, really the biggest mistake that people make 0:07:46.120 --> 0:07:48.880 then that the budget almost feels like a punishment that 0:07:49.000 --> 0:07:53.160 it is too restrictive. I really like, I know I 0:07:53.200 --> 0:07:56.320 was making fun of you. That is my default setting. 0:07:56.400 --> 0:08:00.000 But the playground analogy actually works. And in the second 0:08:00.240 --> 0:08:02.280 part of this episode, after we take a quick break, 0:08:02.360 --> 0:08:04.120 we might talk about how to kind of set up 0:08:04.440 --> 0:08:07.760 that playground structure, because I think that's kind of cool. 0:08:08.200 --> 0:08:11.800 But is it about If you set your budget too tight, 0:08:11.960 --> 0:08:16.040 too extreme, you are setting yourself up to fail definitely. 0:08:16.800 --> 0:08:19.320 And this is where to answer your question. This is 0:08:19.320 --> 0:08:23.000 where that respect of a budget because when you see that, 0:08:23.080 --> 0:08:25.560 you're when you have a budget, and it's actually the 0:08:25.600 --> 0:08:28.160 cash flow sys really that helps make a budget work 0:08:28.200 --> 0:08:29.560 for you and actually stick to it. But when you 0:08:29.920 --> 0:08:33.000 get through a pay cycle, going wow, I got through 0:08:33.000 --> 0:08:35.320 my whole entire pay cycle without running out of money 0:08:35.360 --> 0:08:36.920 or having to lean on a credit card or pinch 0:08:36.960 --> 0:08:39.640 from a redraw facility or an offset account or some 0:08:39.679 --> 0:08:41.839 savings that was email for something else, you go, wow, 0:08:41.880 --> 0:08:45.120 I've actually correctly rationed my money out through the pay cycle. 0:08:46.160 --> 0:08:50.240 It feels really good, and you start to have this 0:08:50.400 --> 0:08:54.120 profound respect of your cash flow and your budget. You 0:08:54.160 --> 0:08:56.000 don't want to mess with it because you're just creating 0:08:56.080 --> 0:08:58.760 unnecessary stress in your life. When you disrespect it. And 0:08:59.160 --> 0:09:01.080 you know, as I said, I've coached so many people 0:09:01.120 --> 0:09:05.640 around this and they become like fiercely protective of their budget. 0:09:05.640 --> 0:09:08.079 And they a will say to me, because I've seen 0:09:08.760 --> 0:09:11.840 how much my financial situation has transformed simply by being 0:09:11.960 --> 0:09:15.720 better at managing my money and cash flow, I don't 0:09:15.840 --> 0:09:19.000 want anything to mess with it and jeopardize how good 0:09:19.040 --> 0:09:21.680 it makes me feel. And this is where the endorphins 0:09:21.760 --> 0:09:25.480 come in of you know, the dopamine of going Wow, 0:09:25.679 --> 0:09:28.360 I like, I've got money in my account, I met 0:09:28.360 --> 0:09:31.000 that bill, that bill's not overdue, that you know, that 0:09:31.040 --> 0:09:33.040 bill came in and I wasn't stressed or worried about 0:09:33.040 --> 0:09:34.439 where I'm going to find that money because it's already 0:09:34.480 --> 0:09:36.559 ready to go in my other special account, which we'll 0:09:36.559 --> 0:09:40.720 talk about in a second. It's very empowering, and you 0:09:40.880 --> 0:09:47.360 just you it takes away also that I guess that erratic, spontaneous, 0:09:47.600 --> 0:09:50.800 you know, splurge spending that we can do if we 0:09:50.840 --> 0:09:52.680 don't actually have a budget that we respect. 0:09:53.200 --> 0:09:55.520 Can I ask you one quick other question, And I 0:09:55.559 --> 0:09:57.960 don't want to be too negative, but I think I 0:09:58.080 --> 0:10:00.760 represent a lot of people that have battle with budgets 0:10:00.760 --> 0:10:02.719 in the past. Where all of a sudden, you just 0:10:03.120 --> 0:10:06.080 it becomes a drag and you don't get to that 0:10:06.200 --> 0:10:09.400 point that you've just said where you suddenly feel the 0:10:09.480 --> 0:10:14.960 benefits of the budget. But tracking spending, and you've talked 0:10:14.960 --> 0:10:17.400 about this a bit in the past about checking in 0:10:17.440 --> 0:10:19.200 with your budget kind of every week and checking to 0:10:19.200 --> 0:10:24.000 make sure that you're spending aligned with what you have forecast, 0:10:24.559 --> 0:10:28.480 it feels like there is a danger in trying to 0:10:28.520 --> 0:10:32.480 track everything perfectly. Yes, and it feels like it can 0:10:32.559 --> 0:10:34.280 become a drag. 0:10:34.520 --> 0:10:36.720 Well, it's time consuming, so of course it feels like 0:10:36.720 --> 0:10:40.640 a drag. But also I don't really I'm not really 0:10:40.679 --> 0:10:44.440 a fan of tracking. I'm a fan of reviewing, but 0:10:44.559 --> 0:10:48.119 not tracking where you literally write in an Excel spreadsheet 0:10:48.160 --> 0:10:51.080 or a journal or a app every time you spend money, 0:10:51.080 --> 0:10:54.079 because it's not empowering at all. The horses already bolted. 0:10:54.120 --> 0:10:55.320 You're just putting in there that you just spend one 0:10:55.400 --> 0:10:58.000 hundred and fifty dollars on a new pair of shoes 0:10:58.000 --> 0:10:59.960 that you didn't really need. Does that make you feel good? No, 0:11:00.160 --> 0:11:02.120 makes you feel really crap and embarrassed and a shame 0:11:02.200 --> 0:11:05.440 that you've blown your budget again. So that's why I 0:11:05.480 --> 0:11:08.080 don't really like it. There are occasions, though, where I 0:11:08.120 --> 0:11:11.080 do think it's healthy, particularly if someone's trying to hone 0:11:11.080 --> 0:11:15.400 in on toxic habits and really understand perhaps what their 0:11:15.520 --> 0:11:21.400 triggers are behind, you know, squandalous spending, impulse spending, perhaps 0:11:21.440 --> 0:11:25.800 gambling or you know, but purchasing alcohol something like that. 0:11:25.800 --> 0:11:28.680 That can sometimes really help create that awareness so that 0:11:28.720 --> 0:11:31.079 you know what to do to then break that habit down. 0:11:31.520 --> 0:11:34.560 But no, I don't you know. I have a system 0:11:34.559 --> 0:11:36.920 where we check it on a two times a week. 0:11:36.960 --> 0:11:39.720 I check the family budget and because it's two times 0:11:39.760 --> 0:11:41.760 per week, I'm only having to go back, you know, 0:11:41.880 --> 0:11:44.240 maximum of five days, so it's really quick and easy 0:11:44.280 --> 0:11:46.839 to do. I can do it on my phone, sitting 0:11:46.920 --> 0:11:49.920 on the bus, on the train, you know, in the 0:11:50.000 --> 0:11:51.080 school pickup line. 0:11:51.320 --> 0:11:54.160 This is why I liked using a platform that we 0:11:54.559 --> 0:11:57.360 have talked about previously and they you might have heard 0:11:57.400 --> 0:12:01.280 ads for it Socket Smith on this podcast earlier in 0:12:01.320 --> 0:12:04.880 this year, because it took some of the kind of 0:12:04.880 --> 0:12:06.840 the grunt work out of having to do it, and 0:12:06.880 --> 0:12:08.720 so it's just good for visibility. You want to know 0:12:08.760 --> 0:12:11.440 how much you're spending on groceries in a week, just 0:12:11.480 --> 0:12:13.760 groups them together and all of a sudden, Okay, all right, 0:12:13.800 --> 0:12:16.040 that's it. That's what I need to then set as 0:12:16.080 --> 0:12:18.680 my target or my budget for the future. So there 0:12:18.720 --> 0:12:21.679 are platforms and apps and things that can help manage 0:12:21.920 --> 0:12:24.240 that process to make that a little bit easier. 0:12:24.360 --> 0:12:27.080 And I have to say this, once you've done the 0:12:27.120 --> 0:12:30.680 bulk of your budget, it actually you've done it for 0:12:30.880 --> 0:12:32.439 that will serve you for a long period of time, 0:12:32.440 --> 0:12:35.400 particularly if you are reviewing and on a regular basis. 0:12:35.800 --> 0:12:38.959 But that is the blueprint you can use. And also 0:12:39.160 --> 0:12:42.080 you can put your goals into your budgets so that 0:12:42.160 --> 0:12:44.680 you prioritize those goals actually happening rather than just thinking 0:12:44.720 --> 0:12:45.800 about them and talking about them. 0:12:45.920 --> 0:12:48.320 All right, super fast break on the other side, how 0:12:48.320 --> 0:12:58.520 to fix a broken budget? Can I were talking today 0:12:58.520 --> 0:13:02.080 about budgets, why you'reudget isn't working? And then how to 0:13:02.120 --> 0:13:07.600 fix it? Assume that I have a broken budget, please, 0:13:07.640 --> 0:13:11.240 I know that's going to really stretch your imagination. How 0:13:11.240 --> 0:13:11.960 do I fix it? 0:13:12.840 --> 0:13:15.080 So the first thing I would recommend you do is 0:13:15.280 --> 0:13:18.760 obviously print off it's not the planet. I'm sorry, We'll 0:13:18.760 --> 0:13:20.440 print off. Well, maybe if you can have maybe on 0:13:20.520 --> 0:13:24.000 separate screens your transactions you can see the truth and 0:13:24.120 --> 0:13:27.480 reality of what things actually cost, how much they've increased, 0:13:28.000 --> 0:13:31.680 and where the potential wastage is a lot of people 0:13:31.760 --> 0:13:34.480 will do a budget at with numbers over their own head, 0:13:34.520 --> 0:13:37.240 and that's where they really miss the detail and they 0:13:37.280 --> 0:13:39.760 convince themselves, at including myself, but that we spend less 0:13:39.760 --> 0:13:41.440 than what we really do. And it's not until you 0:13:41.520 --> 0:13:43.760 can see the numbers in black and white, because you 0:13:43.800 --> 0:13:46.360 can't hide. And of course, if you're using cash, you're 0:13:46.360 --> 0:13:47.720 also got to be very careful of that because they 0:13:47.760 --> 0:13:51.319 may not necessarily be captured in those transactions. 0:13:51.520 --> 0:13:53.280 You Know, what I find is the biggest stitch up 0:13:53.320 --> 0:13:55.880 with the budget Amazon and things, because all of a 0:13:55.920 --> 0:13:58.000 sudden you go into your transactions and there's a whole 0:13:58.040 --> 0:14:01.000 bunch of things from Amazon. Okay, all right. Some of 0:14:01.000 --> 0:14:04.720 those are technically within groceries. Some of those are maybe clothes, 0:14:04.800 --> 0:14:07.640 some of those are household items, some are sports, some 0:14:07.679 --> 0:14:12.240 are for school things. And it's just like it's so nondescript, 0:14:12.600 --> 0:14:16.000 all right, And as a result, there's just this big 0:14:17.000 --> 0:14:19.120 hazy blur in my budget. 0:14:19.240 --> 0:14:21.720 Perhaps we need to put in that case, because I'm 0:14:21.720 --> 0:14:24.520 a solutions person, a line in your budget that's purely 0:14:24.560 --> 0:14:27.320 for Amazon purchases, So you have, for example, a two 0:14:27.360 --> 0:14:33.000 hundred dollars per month Amazon allowance, because then it's you 0:14:33.400 --> 0:14:36.360 know where the leakage is or where the money goes. 0:14:36.560 --> 0:14:39.280 Yeah, yeah, and you will actually then see probably that 0:14:39.320 --> 0:14:41.840 would then come off say the clothing spend or the 0:14:41.880 --> 0:14:44.920 grocery spend or something, because it's and at least then 0:14:45.280 --> 0:14:47.040 it's still all accounted for, right. 0:14:46.920 --> 0:14:48.520 And perhaps you say, well, I'm going to you know, 0:14:48.760 --> 0:14:51.400 maximize or not max I'm going to cap myself at 0:14:51.400 --> 0:14:56.320 this level on groceries of part of the overall Amazon spend. 0:14:56.400 --> 0:14:58.520 So you might have two hundred dollar per month Amazon budget, 0:14:58.520 --> 0:15:04.280 but then seventy doll per month is for groceries within that, yes, 0:15:04.400 --> 0:15:05.600 within that turned it all limits. 0:15:05.640 --> 0:15:09.640 Okay, look, asking for a friend, how many accounts am 0:15:09.640 --> 0:15:14.320 I allowed to have as part of a budget, because okay, 0:15:14.320 --> 0:15:15.920 I'm not asking for a friend, I'm asking for me. 0:15:16.320 --> 0:15:20.920 Well really, oh subtle, wasn't it? Look this was long 0:15:20.960 --> 0:15:23.280 ago and early in the podcast we used to talk 0:15:23.320 --> 0:15:26.160 about how many accounts I have, which was twenty six 0:15:26.360 --> 0:15:29.760 I think twenty six accounts, and that's those those are 0:15:29.800 --> 0:15:34.800 long gone. That's that's the old Michael. But a simple 0:15:34.840 --> 0:15:39.280 budget is a visible budget, and twenty six accounts is 0:15:39.320 --> 0:15:41.120 not visible. You can't see it all at once, you 0:15:41.120 --> 0:15:44.440 can't compare, you can't kind of track everything. What's the 0:15:44.480 --> 0:15:45.320 ideal number here? 0:15:46.120 --> 0:15:49.400 Look, it really comes down to what you're trying to achieve. 0:15:49.480 --> 0:15:53.080 But so nineteen or so now, the two. 0:15:53.000 --> 0:15:56.320 Most important accounts are what your everyday account and then 0:15:56.320 --> 0:15:59.400 what I call your financial float account. You don't those 0:15:59.680 --> 0:16:02.240 the They do eighty percent of the heavy lifting for 0:16:02.280 --> 0:16:05.440 you in the cash flow mechanics, helping you stick to 0:16:05.480 --> 0:16:07.280 a budget, also helping make sure that you're prepared for 0:16:07.320 --> 0:16:10.200 those all those irregular ones that catch you by surprise 0:16:10.320 --> 0:16:11.840 or that we conveniently forgot about. 0:16:11.960 --> 0:16:12.160 Yep. 0:16:12.520 --> 0:16:15.800 So the answer is too. But then you can give 0:16:16.000 --> 0:16:18.320 You can have other accounts, but you must give those 0:16:18.320 --> 0:16:22.000 accounts a job. For example, you have a holiday savings account, 0:16:22.240 --> 0:16:24.760 you have a financial account, which perhaps is where you 0:16:24.760 --> 0:16:28.000 start saving whilst you're learning about where you want to invest. 0:16:28.360 --> 0:16:30.800 Perhaps you have an emergency savings account. So you can 0:16:30.880 --> 0:16:35.320 have additional accounts. Obviously, it's like juggling balls. You don't 0:16:35.320 --> 0:16:36.960 want too many. You want to keep make sure that 0:16:37.000 --> 0:16:39.800 you can view them all within the one screen ideally, and. 0:16:39.760 --> 0:16:42.840 They all need a really clearly defined purpose and. 0:16:42.800 --> 0:16:46.760 Name absolutely, and everything should be nicknamed so that you 0:16:46.800 --> 0:16:50.640 can see how you're tracking within a matter of seconds. 0:16:50.720 --> 0:16:54.480 Okay, what role does automation play in all of this, 0:16:54.720 --> 0:16:59.120 because I suspect I'm not alone in going The biggest 0:16:59.640 --> 0:17:03.440 barrier I have here is time. I just don't have 0:17:03.520 --> 0:17:06.800 the time to go through everything and to make sure 0:17:06.840 --> 0:17:09.679 that everything is going where it needs to be. So 0:17:10.280 --> 0:17:13.280 if you tell me that automation is great, then I'm there. 0:17:13.520 --> 0:17:16.719 Automation is great, done and I have, but you've got 0:17:16.760 --> 0:17:18.480 to also be careful with automation. There's a bit of 0:17:18.520 --> 0:17:20.720 a lazy man's trap within automation. 0:17:20.960 --> 0:17:22.320 Go on for this. 0:17:22.640 --> 0:17:25.000 Automation is great physical thing. It's like direct debits, you know, 0:17:25.040 --> 0:17:27.439 And I don't own a credit card. Well technically I 0:17:27.480 --> 0:17:29.639 do have a credit card, but that's it's linked to 0:17:29.640 --> 0:17:32.560 a business account for Tom's business as an emergency, and 0:17:32.600 --> 0:17:35.359 I be honest, I don't even know if I've activated it. 0:17:35.400 --> 0:17:38.440 Sits with my passport. But other than that, I don't 0:17:38.480 --> 0:17:40.720 have a credit card. Everything is on direct debit, which 0:17:40.760 --> 0:17:42.320 is an element of automation. So I don't need to 0:17:42.320 --> 0:17:44.439 worry about paying any bills. It automatically comes out of 0:17:44.440 --> 0:17:49.040 our family everyday living account. Also, I have extra mortgage 0:17:49.040 --> 0:17:52.280 repayments to help pay off our home loan, and that 0:17:52.440 --> 0:17:55.280 also is a sense of automation because it's a separate, 0:17:55.880 --> 0:17:59.960 regular extra mortgage repayment. There's also an extra savings autom 0:18:00.440 --> 0:18:02.960 of putting money away for a renovation as well, so 0:18:03.000 --> 0:18:06.200 there are automation is great. So instead of thinking about it, 0:18:06.280 --> 0:18:08.760 I've removed that friction. I just is just done automatically. 0:18:08.840 --> 0:18:10.920 And I recommend if you're going to do automation, try 0:18:10.920 --> 0:18:13.040 and get it as close to your payday as possible, 0:18:13.040 --> 0:18:15.720 within a couple of days, so that it comes out 0:18:16.240 --> 0:18:19.160 the money's taken out before you can actually spend it. 0:18:19.160 --> 0:18:22.040 It is good. The only problem is, and you're only 0:18:22.040 --> 0:18:24.640 going to fall victim to this is if you don't 0:18:24.680 --> 0:18:28.119 review your budget because things like pay rises, you know, 0:18:28.240 --> 0:18:33.359 new jobs, debts being paid off where those direct debits 0:18:33.359 --> 0:18:35.560 are now finished because they've paid off that debt, you 0:18:35.600 --> 0:18:37.639 can then be subjects to the lifestyle creep when that 0:18:37.640 --> 0:18:39.720 money can get spend elsewhere. So reviewing it on a 0:18:39.760 --> 0:18:42.040 regular base and going wow, I've paid off all my 0:18:42.040 --> 0:18:43.879 buy now pay later. I now have a spare hundred 0:18:43.880 --> 0:18:46.080 dollars per month. You want to make sure that then 0:18:46.160 --> 0:18:49.480 you shift that automation and give that money a job 0:18:49.520 --> 0:18:54.200 somewhere else. So that's why it's important that regular check 0:18:54.240 --> 0:18:57.240 in as to how the cash flow is going, not 0:18:57.280 --> 0:19:00.879 the budget. The cash flow is really really important. And 0:19:01.119 --> 0:19:04.760 the thing about a budget is it's about helping you 0:19:05.440 --> 0:19:09.959 when things go wrong. You know, budgets. It's great when 0:19:10.160 --> 0:19:14.359 everything's perfect, everything's consistent, everything's very simple. But that's not 0:19:14.440 --> 0:19:18.000 what our world looks like anymore. Our world is increasingly expensive. 0:19:18.080 --> 0:19:21.520 We're time poor, we're frustrated. There are a lot of 0:19:22.240 --> 0:19:25.880 challenges and blocks and issues around us that we're all 0:19:25.880 --> 0:19:28.000 trying to navigate at the same time, as well as 0:19:28.000 --> 0:19:30.800 all the other pressures of life and family and jobs 0:19:30.840 --> 0:19:34.560 and relationships and health. So your budget is there to 0:19:34.680 --> 0:19:39.240 support you, like when things are challenging, it's there to 0:19:39.280 --> 0:19:41.159 catch you so that you don't fall. 0:19:41.680 --> 0:19:45.480 Just like that playground, you brought it back to the playground. 0:19:46.080 --> 0:19:50.640 That is possibly your greatest analogy effort ever. You started 0:19:51.080 --> 0:19:55.680 and then you finished on this epic sermon and brought 0:19:55.680 --> 0:19:56.840 it back to the playground. 0:19:57.040 --> 0:19:59.840 Well, I probably might undo the completion of this because 0:19:59.840 --> 0:20:04.960 I have a quote by It's often attributed to Marilyn Monroe. Okay, okay, 0:20:05.560 --> 0:20:08.720 and it makes this is how I feel about budgets. 0:20:09.040 --> 0:20:12.520 So you know that famous saying if you can't handle me, 0:20:13.119 --> 0:20:14.439 I say this to Tom all the time. If you 0:20:14.440 --> 0:20:16.359 can't addle me on my worst day, you're sure as 0:20:16.400 --> 0:20:20.240 hell don't deserve me on my best. And I think 0:20:20.280 --> 0:20:22.480 this really, I know you look at going can I 0:20:22.680 --> 0:20:24.840 you are to mental? Poor Tom? How does he put 0:20:24.920 --> 0:20:28.080 up with me? But think about it like this applies 0:20:28.119 --> 0:20:31.159 to your budget as well. You know you don't need 0:20:31.240 --> 0:20:35.440