S1: Hello and welcome to It All Adds up the podcast.
S1: So we chat about money, how to get it, how
S1: to spend it, and how to invest it. I'm money editor,
S1: dumb pal.
S2: And I'm senior economics writer Jess Vine, and I think
S2: we need to add how to save it to our
S2: opening spiel because that is the focus of our new
S2: Budgeting advice series. We're looking in particular at all the
S2: ways that you can save and keep ahead of rising
S2: costs of living and also interest rates, which we learned
S2: from Reserve Bank Governor Phil Lowe are going to continue
S2: to go up. So, Dom, you have graciously agreed to
S2: be our guinea pig and to kick off the season
S2: by letting us have a little look at your budget. Yeah, look, I'm.
S1: Feeling pretty scared about this, to be honest. You know,
S1: I've never had never had my finances so thoroughly displayed
S1: or analyzed, But I think it's the you know, the
S1: aim of this series is to sort of help you
S1: out by showing how we and others sort of think
S1: about money, which can then help you sort of think
S1: about it differently yourself. Our, you know, at the very least,
S1: even if it doesn't help you think differently, the total
S1: chaos of my finances might make you feel a little
S1: bit better about yours.
S2: You don't have to be scared. I will be very
S2: gentle in my feedback on your figures.
S1: Yeah. Otherwise it'll be, you know, highlighters at ten paces. I.
S2: I know because I am quite notoriously not backwards in
S2: coming forwards with my own figures. I post them all
S2: on my money with just Instagram accounts. So I think
S2: people probably have a pretty good idea about where my
S2: money goes if they care to, to have a look.
S2: And I sort of felt kind of embarrassed or like
S2: a little bit hesitant sharing that at first, but then just, well,
S2: the feedback of how useful it is to actually see
S2: somebody else's budget and how much they're spending on Internet
S2: or whatever is so useful. I mean, comparison can be
S2: the safe of joy and you can't you know, everyone's
S2: going to have a different set up. But I think
S2: it is genuinely very, very helpful to have these conversations
S2: about how much money was spent, how much stuff costs,
S2: and people can go, That takes more than me or
S2: Dom's doing what don't. You should not be spending that money.
S2: So I'm very much I've had a little sneak peek
S2: at your figures that I'm I'm very excited to to
S2: run through them and to give you my feedback.
S1: Yes, absolutely. And I think you're right. I think there's
S1: a sort of you know, we're sort of brought up
S1: in this culture of sort of not talking about money
S1: too much. And, you know, everyone's a bit secret, secretive
S1: about their pay and which obviously I totally understand a
S1: lot of situations. But, you know, I think you're right,
S1: talking about this sort of stuff can really help you
S1: think about it differently.
S2: Yes. So when you sort of laid out your figures,
S2: what's the bottom line? Are you actually in surplus or
S2: are you spending, you know, go to finance, spend less
S2: than you earn? Are you are you doing that?
S1: Well, in theory. So should we get into it? Yeah.
S1: All right, let's do it. So I've sort of broken
S1: into two categories. So we've got fixed monthly expenses and
S1: sort of variable monthly expenses. So just as the top line,
S1: my monthly income is around 5500. And of that, I
S1: have sort of have these, these fixed expenses. So I
S1: spent about just under 1500 on my mortgage each month,
S1: which as we mentioned, is fixed at the moment, which
S1: I'm thanking my lucky stars for because it won't be
S1: fixed for much longer. And by the start of next year,
S1: I'll have to go to a variable loan which will
S1: drastically increase my fixed expenses and then my body corporate
S1: every month is about $150. So that collectively is about
S1: $470 every quarter.
S2: That's the one that floors me. And I'm so jealous
S2: because my body corporate is about 8000, eight or $9,000
S2: a year. So yours is less than $2,000.
S1: Yeah. And I think it's insane that you also $8,000
S1: a year. But, you know, I think maybe this is
S1: the difference, difference between living in Melbourne and Sydney and
S1: like the size of our apartments. So it's not.
S2: For me to decide much in the pool, but if
S2: I have my time again and I was doing the
S2: property search, gosh, I would have paid a little bit
S2: closer attention to Strata face because I can be a
S2: major ongoing cost.
S1: Yeah, absolutely. My rates are about $130 a month, so
S1: just under $400 a quarter. I pay my car insurance monthly,
S1: which is about $100 or so, which I think is
S1: a bit expensive. But every time I've tried to get
S1: that down, I can't. So what type.
S2: Of car insurance do you have.
S1: So.
S2: Comprehensive? Okay. Yeah, I think I'm only paying about $600
S2: a year. Yeah, my comprehensive and yours is what, so
S2: 12 over $1,000 there? Yeah.
S1: My internet is $69 a month. I spend about $120
S1: on petrol a month for the car. Electricity is about
S1: $100 a month. Oh, and I should sort of preface
S1: all this. I'm a single person. I live by myself.
S1: I have no dependents. So 100 bucks a month for
S1: electricity I think is probably about fine.
S2: That's about what I pay. So I'm a single mother,
S2: so me and a little kid for half of the week.
S2: So I think actually a lot of our expenses are
S2: about the same with the electricity. I think we're both
S2: living in sort of old style, two bedroom flat. So yeah.
S1: So absolutely. My water is about $70 a month, so
S1: but I pay it quarterly, which is about. $200 a
S1: quarter on various subscriptions like streaming services, Spotify. I pay
S1: a little bit of every month for like extra data
S1: on my Google account that totals about 50 bucks a month.
S1: And then I also have a pool membership. So my
S1: local gym, but I just pay for the pool. And
S1: that's $70 a month. So those are my sort of fixed,
S1: fixed expenses. What do you what do you think, Jess?
S1: How am I going so far?
S2: I think that's looking pretty good. I don't think I
S2: can't see any obvious areas where you're bleeding money unnecessarily.
S2: And so, so far, so good. All right. Do you
S2: use the pool membership?
S1: Well, I do. Yeah. I was. I was really good
S1: about it last year. I've been a bit slack this year,
S1: but I was going about three times a week, so
S1: I think I get pretty good value out of it.
S2: Yeah, I pay about that much per week for my
S2: gym membership so that all the areas where I do
S2: spend quite a lot of money is on my CrossFit membership.
S2: But I get a lot of value out of it.
S1: So yeah, I think that's fair enough. I mean, if
S1: you can justify if you going like four or five
S1: times a week, that's fine. Like, you know. Yeah. So,
S1: so far we've made it without any glaring, glaring issues.
S2: Perhaps some glaring omissions, but I'm going to save that
S2: till later.
S1: All right. Well, sorry. That's a bit. Okay.
S2: But you fix that. A monthly bills? Yeah, the regular things. Okay. Yeah.
S1: And then on top of this is sort of the
S1: variable expenses like food. So I think I spend probably
S1: around 30 and $50 a month on food. Again, I'm
S1: a single guy living by myself, so food is not
S1: a massive expense for me. And then sort of the
S1: collective sort of eating out alcohol events, sort of, you know,
S1: fun activities, I probably spend about 400 ish a month,
S1: maybe a bit more on that. And then I spend
S1: about $200 on hobbies. I probably spend about 50 $200
S1: a month on clothes and things like that.
S2: So I for me, actually that was the really. Oh, dumb. Yeah. Well,
S2: you are you are always very nicely attired so I
S2: can't complain. But I went a whole year without spending
S2: any money on clothes which, you know, it is possible.
S2: Depends what the state of your wardrobe is like. But
S2: you know, up to $100, you know, so that's a
S2: new sort of item every month or so. I mean,
S2: maybe that I know I go to the extreme and
S2: I probably do need some more clothes.
S1: And then like probably 90 bucks on like public transport.
S1: And that's my variable monthly expenses. So you've said that
S1: I miss I might be missing some stuff. What do
S1: you think I'm missing?
S2: Yeah. So what did you add that all up to
S2: for your monthly expenses?
S1: Yes. So that's approximately $3,600 ish a month for my expenses.
S2: Yeah. So to me, that just seems like. Well, that is,
S2: you're doing pretty well if you're keeping it that low.
S2: And but from what you've said, you think maybe that
S2: might not be an accurate representation of how much you're
S2: actually saving?
S1: Absolutely not. Because according to this, I say I could
S1: do that. If you look, if I don't take it
S1: on face value, I should be saving nearly $2,000 a month,
S1: which I absolutely I'm not. No way. Not even close.
S1: So this is the thing, I think, which is it's
S1: is good for us to talk about, which is clearly
S1: like despite the fact that I think that I'm moderately
S1: well regimented when it comes to budgeting, obviously, I'm leaking
S1: funds here like I'm spending and I know I do this.
S1: I spend money on little, little bits here, a little
S1: thing there, or, you know, like last week I spent
S1: $200 on a little attachments that I wanted for my
S1: my speaker system. And that doesn't fall into any part
S1: of my budget. That's just something that I just spend
S1: money on sort of thing. So like, so it's sort
S1: of a it is a leaky it's not a it's
S1: not a water tight budget. Like, Yeah.
S2: And I love it because it's such a classic example
S2: of like, you know, we're all told you need a budget,
S2: write yourself a budget, stick to it. Done. And people
S2: do their very best and you try to rack your
S2: brain and think of most of the things and you like,
S2: right them my expenses and then maybe track it for
S2: a month and you get to the end of the
S2: month and are they but not my expenses. I have
S2: no idea what is happening. And that's sort of what
S2: inspired me when I did my sort of amazing exercise
S2: of going through the Bureau of Statistics Household Expenditure Survey,
S2: which has about 7000 things that you can spend money
S2: on grouped by category. And I rearranged them all just
S2: the myriad of things that can come up that, you know,
S2: if you're not expecting them, then you think you've failed
S2: because you set your budget. And it wasn't realistic. But
S2: I mean, so some obvious sort of things that I
S2: wondered about is do you ever go on holidays? Because
S2: you probably will. And this is the thing at things
S2: that you don't go every month unless you live in
S2: a great life, but there's sort of these irregular sort
S2: of once a year or once every quarter sort of
S2: expenses that you might need to sort of if you're
S2: looking at how much you're spending, maybe you need to
S2: save at least 100 or $200 a month to sort
S2: of be putting aside into a holiday fund unless you're
S2: not taking holidays.
S1: No, I mean, I know. No, I do. I do
S1: take holidays. I had a lovely holiday last year to
S1: Vietnam for about three weeks, which was lovely. But the
S1: thing is that like when they know. I want to
S1: do that. I like I start saving for it. Like
S1: it's idea for me. It's like a very like a Oh,
S1: I'm going on a holiday to X or Y this year.
S1: I better start and like, you know, months ahead, I'll
S1: be like, well, I need to start saving for that.
S1: So that's when I'll start putting money aside. I don't
S1: do it on like a regular basis, so that makes sense.
S2: Yeah, but whereas I do, because I sit down at
S2: the start of each year and I go, Well, how
S2: much is my holiday budget? This is what I think
S2: is reasonable. And then I try to keep sort of
S2: within that envelope and I set aside a certain amount
S2: each month to contribute to that, which is actually sort
S2: of a prompt for me to go. Just don't forget
S2: to book a holiday cause it's actually good for you to, to,
S2: to take the risks. Some other little areas. Do you
S2: have any home insurance?
S1: Oh, yes. So while home insurance falls underneath under my body, corporate.
S2: So all that contents insurance.
S1: Yeah. So I should have mentioned a condo insurance for
S1: me costs $170 a year. So on a monthly basis,
S1: that's pretty negligible.
S2: Yeah. And then I did wonder about your car expenses
S2: because we had the insurance there. But I mean, car
S2: is one thing that just catches everybody out because the
S2: I presume you would have annual reg, so you would
S2: be servicing that car at least once a year and the.
S1: Car is currently due for a service. So I need
S1: to that will cost me about 500 bucks. So that's
S1: something that I need to to prepare for. And yeah,
S1: my Reg, I was like I think a pretty standard
S1: range of like eight 800 to $900 a year.
S2: Yeah. And then every so often every three years ago
S2: or so, your battery's going to go and that's a
S2: couple of hundred dollars and then your tires are going
S2: to go. So I do set aside money each month
S2: for my car Future Fund, and I think I added
S2: up the running. My car costs may something in the
S2: region of $5,000 a year or something. It's when you
S2: add up all the insurance and the reg over and
S2: that includes that petrol as well. So that might be
S2: that might be something that you need to consider. And then,
S2: you know, you look fit and healthy. But medical expenses,
S2: do you go to the dentist maybe once or twice
S2: a year? I should you should know, maybe that's getting
S2: too personal.
S1: No, no, no. I like I definitely try to I
S1: think it's one of those things that I always forget about,
S1: but like I have, I do try and go the
S1: nineties once a year. I'm definitely due for a checkup
S1: this year. I did go at the start of last year,
S1: so I'm probably about 12 months in.
S2: Some people completely forget to factor in on even like
S2: medicines if you need some antibiotics every so often I
S2: put suncream under medicine as well. Like if you need
S2: new contact lenses or glasses, you know, seeing the GP,
S2: seeing the dentist, that is something that can really derail
S2: people's budgets again. So I again I sit down and
S2: I set aside about $1,000 for dental and GP and
S2: I and I put the little amounts aside each month
S2: to cover things like that. So yeah, I mean the other,
S2: the other, the other thing I thought is like gifts
S2: and you know, Christmas time or even just like when
S2: you're going to someone's house for dinner and you need
S2: to take a bottle of wine, that's one thing I've
S2: realised that I, I don't want to be the very
S2: stingy friend, although I completely am. But like, it's nice
S2: to give people things, you know, on the rig, like
S2: just go to the house. So you buying something for
S2: all the people? So people sometimes get to factor in
S2: that as well. And I think once we add up
S2: all of that, maybe that might be where your money's going. Yeah.
S1: And I think well, I think I think on the
S1: medical side of things, like I'm like, I don't want to,
S1: you know, I'm it's sort of quite a healthy person. Like,
S1: I don't go to the doctor very often. I don't
S1: have that many sort of things that go wrong with me.
S1: So I'm pretty I'm pretty. Okay from from that perspective
S1: when it comes to like, things like gifts and stuff,
S1: like if I'm going to a friend's house, I'd be
S1: buying like a bring like a bottle of wine that
S1: sort of comes in to like the alcohol budget. For me,
S1: that makes sense because I'll probably drink some of that wine.
S1: So therefore, that's, you know, I mean, we could we
S1: can talk about like how I split up my, my
S1: funds by pay, if that helps in terms of the
S1: actual way I do.
S2: But I wonder how you do cope. Sort of, yeah.
S2: When you have some of those bigger expenses, get rid
S2: of them. How do you how do you structure your
S2: sort of money to account for sure.
S1: So I have my phone in front of me right now,
S1: which has my banking app, which has spoken about a
S1: few times and I love my banking app. But basically
S1: what what happens every fortnight when I get my pay,
S1: it is automatically split into ten different accounts and I'll
S1: read through these accounts. So my first account is called beans.
S1: I don't know why I called it this like a long,
S1: long time ago, but basically it's just my generic savings account.
S1: I call it sort of my savings slush fund where
S1: like a decent chunk of my of my salary goes
S1: into this account. And it's just money that I could
S1: spend for a one off, like, let's say, like a
S1: car service or something like that or a gift for
S1: someone or something unexpected that I'm not budgeting for. That's
S1: where I typically take that money out of. And I
S1: have my play account, which is just sort of like alcohol.
S1: That's what the one I mentioned before, like events going out,
S1: that sort of stuff.
S2: So you're putting aside the sort of two, was it
S2: 400 or so a month.
S1: $200 a fortnight ish. Yeah. It go into and.
S2: Then if you reach the max of that do you
S2: just stop going out or do you.
S1: Oh no. Absolutely not. Then. Then, then it comes out
S1: of the, then it comes out of the slush fund
S1: and then I have a similar account for food, which
S1: is again about $200 a fortnight. I have a account
S1: for bills which and all of these I've, I've calculated
S1: to sort of match up to pretty much the exact
S1: amount of money I spend on that thing each month.
S1: So the idea is that I shouldn't have like I
S1: should run it to zero every fortnight.
S2: For each of the accounts.
S1: For, well, for each of the accounts that aren't, that
S1: are sort of on a fortnightly basis. So bills I
S1: have an account for that, I have an account for
S1: hobbies as well. And then I have my mortgage account,
S1: which obviously that's the one where the most amount of
S1: money goes in each fortnight, which takes exactly half of
S1: every fortnight. Exactly half of my mortgage goes into that
S1: account to split into that account. And then I have
S1: a sort of body corporate bills which covers things like
S1: petty corporate fees and rates. And then I have sort
S1: of my goal saver account, right? So this is something
S1: that I'm specifically saving towards currently, I'm saving towards a
S1: a ski pass for for the year. So I'm I've
S1: got a it's got a little emoji of someone skiing
S1: because that's what I'm sort of saving towards.
S2: Yeah, that can be a powerful motivator if you've got
S2: a savings going. A little picture there and you're putting
S2: the money in, that must feel good to watch that.
S1: Exactly. And my app gives me like little notifications, like
S1: I've saved 25% towards this. I feel it's, you know,
S1: it's like a little little sort of serotonin hit. And
S1: then I have my final sort of major savings account,
S1: which is like, you know, emergency things sort of really
S1: big long term things like any renovations I'd want to
S1: get done or anything like that, which is sort of
S1: where the bulk of my savings sits.
S2: Yeah. And I wonder is, is this a are these
S2: offset accounts or are they just separate because you've got
S2: a fixed loan? That might not that means something that
S2: you don't have a mortgage offset.
S1: None of these offsets, these are just these are just
S1: sort of separate savers within my within my bank. And
S1: then anything else that doesn't go into that just gets
S1: put into my access account, which is just sort of the,
S1: you know, everyday spending sort of stuff. But the idea
S1: is that every time I spend on something that that
S1: is categorized into one of those accounts, I then move it,
S1: move the money in and out sort of thing.
S2: Yes, that's okay. No, that's I mean, I think overall
S2: you're doing so well like you do. You have massive
S2: credit card debt.
S1: So I don't I don't have a credit card.
S2: No credit card. Yeah. I also don't have credit card debt.
S2: That's the one. I think that's sort of the canary
S2: in the coal mine for a lot of people. If
S2: you've got quite a large credit card debt that you
S2: keep rolling over, I think you need a budget and
S2: I think you need a bit of a plan to
S2: be paying off those debt. But I would love to
S2: say if you don't, because we bought shares together on
S2: one of those. Oh, yeah. Have you been doing any
S2: regular investing since then?
S1: Not yet, but I plan to this year. That's, that's
S1: on the cards.
S2: Because, I mean, I get I love my budget and
S2: I love it precisely for the reason that at the
S2: end of each month, you know, I have a budget
S2: that I sort of my idea of what I'm going
S2: to spend in the not track, what I actually spend.
S2: And then I do look at my expenses and my
S2: income and I invest the difference. And I feel just
S2: so empowered when I do that, when I go, oh, yes,
S2: you saved 600 bucks this month. Whatever it is, it
S2: gets transferred straight into the share trading account because that
S2: is my strategy at the moment. You could be investing
S2: it in extra super or paying off the mortgage faster. But,
S2: you know, I mean, I just want to spread that
S2: joy with everybody, you know, the joy of savings to
S2: feel that sense of accomplishment. So I don't know if
S2: we will get you to that budget ninja level where
S2: you want to actually.
S1: We'll say, I don't know. That's I don't know. That's
S1: like I think my my sort of I'm just I'm
S1: just sort of fast and loose about it, you know,
S1: like I'm freestyle in and out here.
S2: And you seem to you seem to be doing.
S1: Good. Yeah. Well, apart from the fact that there's like
S1: a you know, it is a just spend a sort
S1: of money on things every month that I don't know
S1: where it goes. So I'd like to get on top
S1: of that. So that's my goal to sort of work
S1: out these sort of extraneous expenses that I can't really track.
S1: But I suppose, you know, what's the what's your overall thoughts, Jess?
S1: How do you how do you write my my budgeting
S1: and finances out of ten?
S2: Don't I think you've done really well full points for
S2: effort as we say. I did notice some things that
S2: maybe you have forgotten to pop in your budget. I
S2: would definitely be thinking about those car expenses that can
S2: really torpedo a lot of budgets when suddenly you've got
S2: to put the car in the service and particularly parts
S2: and repairs can can derail you. I think I'd love
S2: to see you setting aside a little bit extra for
S2: your holidays funds so that she can look forward to that.
S2: And then maybe some of those medical expenses. It's it's
S2: always prudent to have that in mind when you're putting
S2: together your budget. But I think I mean, just full
S2: points for even having a stab at putting something on paper,
S2: I think that's the first step is just to really
S2: have a stab at estimating what your expense. And then
S2: it's going to be something that's going to evolve over
S2: time as as now things come up. You go, Oh, yeah,
S2: I didn't think about that when I first had the go.
S2: And you can begin to incorporate the reality of your life,
S2: and then eventually your budget starts to match your reality
S2: in a way that can be really empowering. And I
S2: think just knowing what your expenses are that can help you,
S2: it can help you apply for loans. They always ask
S2: you all these questions. You know, if if people need
S2: to apply for a first home loan or something, having
S2: some idea of your expenses helps. Having some idea of
S2: how much you need to save for retirement. So what
S2: your expenses are going to be at that end of
S2: life can be so helpful. And and I would love
S2: to see you working towards having an emergency savings fund.
S2: You know, people talk about 3 to 6 months of
S2: living expenses. That may seem like a lot from now
S2: from where you are now, but I think that's something
S2: that can provide a lot of peace of mind for people.
S2: So I think that gives people a really solid idea of,
S2: you know, if you were going to take a stab
S2: at having a budget, you know, that's the sort of
S2: things you should think about. And if anyone does want
S2: to follow me on Instagram, I've got a heap of
S2: worksheets and I've got an annual Excel spreadsheet where you
S2: can sort of go through my categories and think of
S2: all the things that you might have missed. And I
S2: think we're going to be encouraging anyone who is listening
S2: and who wants to to have that experience of us
S2: looking through the figures and seeing if there's any obvious
S2: leaks in the ship. We're still keen for people to
S2: get in touch with us.
S1: Yes, send us an email too. It all adds up
S1: at o'clock today. You you can just sort of say
S1: hi and then will be in touch to ask you
S1: some details, like your monthly expenses, just like I've I've
S1: revealed today. And tell us what sort of budgeting strategies
S1: you use along with any long term goals or any
S1: things that you're struggling with sort of financial sticking points.
S1: And then we'll get back in touch and find out
S1: a few details and then we can run through them
S1: on the pod and let you know what we think.
S2: I love looking through everyone's budget, so do do send
S2: them in. Obviously, we can't give you with financial advice.
S2: We're not licensed to do that. But I do just
S2: think that it can be helpful to share figures and
S2: we can point out some areas where you might just be,
S2: you know, obviously missing some things in your budget like
S2: you've forgotten to put in your holidays or whatever, or
S2: if we do see an expenses that look particularly large,
S2: we might be able to delve into some common ways
S2: to save in that sort of area, which may be
S2: of help to you.
S1: Thanks for listening, as always, and we'll see you next week.
S2: And well done, Dom. I think that was very brave
S2: of you to share your figures and I think you've
S2: done a good job. Well, thank you.
S1: Just.
S2: Thank you. See?
S1: This episode of It All Adds Up was produced by
S1: Chee Wong. The information discussed is general in nature and
S1: does not take into account your personal financial situation, goals
S1: or objectives. You should always do your own research or
S1: get professional advice before making any major financial decisions. If
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S1: Thanks for listening.