Welcome to How Do They Afford That, the podcast that peaks into the financial lives of everyday Australians. I'm Michael Thompson. I'm an author and the co host of the podcast Fear and Greed business News, and as always I'm with Canna Campbell, financial planner, founder of Sugar Mama TV, the financial literacy platform on podcast, books, Instagram, threads, TikTok, YouTube and more. Hello Canna, Hello, how are you? I am good? Thank you. Today's episode is about budgeting in a way, and it's actually pretty embarrassing. I feel like I embarrassed myself on this show a lot more than you do. I've mentioned in a previous episode how we recently saw a financial planner right and before that meeting, we wanted to go into it up to date with everything to make sure that we were informed and we had all the information ready to go, so that it was going to be a really detailed discussion. And it was a great discussion. But as part of that preparation, we revisited our household budget just so that we had our info in place, and the budget gave us a shock. It gave us quite a significant surprise because obviously life has gotten very expensive. Interest rates are high, mortgages is expensive, kids and school and a whole bunch of kind of other things going on that's all cost money. And our household expenses have crept up and up and up and up to the point that on paper at least, and I'll explain kind of how that happened, but on paper, at least, we were spending five hundred dollars per week more than we were bringing in, right, Yeah, it was. It was a bit of a shock, which explained then why suddenly we'd been eating into our savings and into our emergency money and all of these things. It hadn't hit crisis point or anything yet, because when I talk about it, we were spending that on paper, it was because a lot of big expenses that we had been budgeting for, and so we in the spreadsheet having been budgeted for hadn't actually come around yet. So they were things like kind of car rego and car insurance and annual home insurance and all of these big ticket items that would come in later in the year, but we were allocating a certain amount of money for them each week, notionally on this spreadsheet. That's why it then looked like we were actually spending five hundred dollars a week more than we're bringing in. I want to talk to you about this today, about this idea of kind of lifestyle creep budget creep. It's a problem. I suspect it's not a unique problem to our kind of household. What do we do? Please put me out of my misery and assure me that this is a common problem.

Welcome to How Do They Afford That, the podcast that peaks into the financial lives of everyday Australians. I'm Michael Thompson. I'm an author and the co host of the podcast Fear and Greed business News, and as always I'm with Canna Campbell, financial planner, founder of Sugar Mama TV, the financial literacy platform on podcast, books, Instagram, threads, TikTok, YouTube and more. Hello Canna, Hello, how are you? I am good? Thank you. Today's episode is about budgeting in a way, and it's actually pretty embarrassing. I feel like I embarrassed myself on this show a lot more than you do. I've mentioned in a previous episode how we recently saw a financial planner right and before that meeting, we wanted to go into it up to date with everything to make sure that we were informed and we had all the information ready to go, so that it was going to be a really detailed discussion. And it was a great discussion. But as part of that preparation, we revisited our household budget just so that we had our info in place, and the budget gave us a shock. It gave us quite a significant surprise because obviously life has gotten very expensive. Interest rates are high, mortgages is expensive, kids and school and a whole bunch of kind of other things going on that's all cost money. And our household expenses have crept up and up and up and up to the point that on paper at least, and I'll explain kind of how that happened, but on paper, at least, we were spending five hundred dollars per week more than we were bringing in, right, Yeah, it was. It was a bit of a shock, which explained then why suddenly we'd been eating into our savings and into our emergency money and all of these things. It hadn't hit crisis point or anything yet, because when I talk about it, we were spending that on paper, it was because a lot of big expenses that we had been budgeting for, and so we in the spreadsheet having been budgeted for hadn't actually come around yet. So they were things like kind of car rego and car insurance and annual home insurance and all of these big ticket items that would come in later in the year, but we were allocating a certain amount of money for them each week, notionally on this spreadsheet. That's why it then looked like we were actually spending five hundred dollars a week more than we're bringing in. I want to talk to you about this today, about this idea of kind of lifestyle creep budget creep. It's a problem. I suspect it's not a unique problem to our kind of household. What do we do? Please put me out of my misery and assure me that this is a common problem.

All right, stop right there. You do not need to beat yourself up about this. It is really common.

All right, stop right there. You do not need to beat yourself up about this. It is really common.

This is good news. I'm sorry, bad news to anyone else's I'm sorry.

This is good news. I'm sorry, bad news to anyone else's I'm sorry.

Is in the same boat as you.

Is in the same boat as you.

But welcome aboard. Come on to this sinking ship.

But welcome aboard. Come on to this sinking ship.

Particularly right now. You know the high cost of living, rising interest rates, and look if look at your situation, You've got two young children, you've got medical expenses, and we've got general inflation. Everything is just so expensive. So you know, those variables alone make it very easy for this to happen. And the other thing is people don't actually realize until their savings starts dwindling or they can't come up with the money to cover a big expense, like you know when your car read JEW and CTP comes at the same time it might be saying two thousand dollars. They didn't realize it until that bill comes in, that we've got a problem with our cash.

Particularly right now. You know the high cost of living, rising interest rates, and look if look at your situation, You've got two young children, you've got medical expenses, and we've got general inflation. Everything is just so expensive. So you know, those variables alone make it very easy for this to happen. And the other thing is people don't actually realize until their savings starts dwindling or they can't come up with the money to cover a big expense, like you know when your car read JEW and CTP comes at the same time it might be saying two thousand dollars. They didn't realize it until that bill comes in, that we've got a problem with our cash.

Flow, and that was that was it for us Catalyst. Yeah, the fact that there was this the savings had provided a buffer and the emergency money had provided a buffer. That probably meant that we didn't realize as soon as we would have if those big expenses had come in and suddenly just drained every account we have.

Flow, and that was that was it for us Catalyst. Yeah, the fact that there was this the savings had provided a buffer and the emergency money had provided a buffer. That probably meant that we didn't realize as soon as we would have if those big expenses had come in and suddenly just drained every account we have.

Well that's why I recommend a couple of different accounts, but we'll talk about that later. So, and the other thing is we've got you've got can't forget about, like we live in such a cashless society. We are tapping our phones. We don't even get our cards out of our wallets anymore. Most of us just tap on our phones. So we're living in this like digital payment world where we can very easily overspend without even realizing. And that's on top of you know, after pay and you know all those subscriptions that come out of our accounts or for our credit cards as well. And then we've also got constant distraction and temptation around us. So it is so easily done thank you. In fact, I bought a like I got certain ad on Instagram the other day and bought a cellul light massaging device which is still sitting in the box three weeks later. And here you go, And that was not in my budget.

Well that's why I recommend a couple of different accounts, but we'll talk about that later. So, and the other thing is we've got you've got can't forget about, like we live in such a cashless society. We are tapping our phones. We don't even get our cards out of our wallets anymore. Most of us just tap on our phones. So we're living in this like digital payment world where we can very easily overspend without even realizing. And that's on top of you know, after pay and you know all those subscriptions that come out of our accounts or for our credit cards as well. And then we've also got constant distraction and temptation around us. So it is so easily done thank you. In fact, I bought a like I got certain ad on Instagram the other day and bought a cellul light massaging device which is still sitting in the box three weeks later. And here you go, And that was not in my budget.

Man, I ask how much it was?

Man, I ask how much it was?

Well, one hundred and eighty dollars. I'm really embarrassed to admit this, but it's not uncommon.

Well, one hundred and eighty dollars. I'm really embarrassed to admit this, but it's not uncommon.

Okay, that does make me feel better. Just once again, I'm sorry. I'm just trying to bring people down to my level.

Okay, that does make me feel better. Just once again, I'm sorry. I'm just trying to bring people down to my level.

Back there. Even they can come even lower down to my.

Back there. Even they can come even lower down to my.

Level that you are very financially savvy, but even you can kind of get drawn into making what sounds a little bit like an impulse purchase.

Level that you are very financially savvy, but even you can kind of get drawn into making what sounds a little bit like an impulse purchase.

Jumped on it. I was like, oh, I'll give this a go. I want this, and it's so easy. I clicked on my phone. All I had to do is face recognition and even entering my credit card details and off I go on my doorset was this device that's still sitting.

Jumped on it. I was like, oh, I'll give this a go. I want this, and it's so easy. I clicked on my phone. All I had to do is face recognition and even entering my credit card details and off I go on my doorset was this device that's still sitting.

Yeah, when you certainly have Amazon kind of one click purchase, like can you just press one button and it's done and you're like, oh boy, that it's arriving tomorrow.

Yeah, when you certainly have Amazon kind of one click purchase, like can you just press one button and it's done and you're like, oh boy, that it's arriving tomorrow.

If you've got Amazon Prime.

If you've got Amazon Prime.

That was too easy, wasn't it? Okay, this kind of expense creep kind of thing, because it's not really lifestyle creep. It's not like in the traditional sense where we've talked about where you get a pay rise or something and your lifestyle just kind of gets a bit more extravagant and you spend more and it fills that gap that that that kind of buffer that you that you had. It's not that. It's almost kind of like a budget creep kind of thing, isn't it is it? Is it preventable? How easily preventable is it?

That was too easy, wasn't it? Okay, this kind of expense creep kind of thing, because it's not really lifestyle creep. It's not like in the traditional sense where we've talked about where you get a pay rise or something and your lifestyle just kind of gets a bit more extravagant and you spend more and it fills that gap that that that kind of buffer that you that you had. It's not that. It's almost kind of like a budget creep kind of thing, isn't it is it? Is it preventable? How easily preventable is it?

Well, look, okay, it is preventable. It's not necessarily easily fixed. So yes, you are going to have to be a lot more pay a lot more attention to your budget, but not just your budget, your cash flow and tracking your transactions. It's great to have a budget, but if you're not sticking to the budget. But the budget is just basically a flimsy piece of paper, so you need to track that you are sticking to the budget. And this is why I teach a cash flow system for budgets in the Sugar Mamant Budget and Cashow Academy is Also, you're gonna have to be disciplined. You're going to have to keep your eye on the budget on a regular basis. I know for myself, I check our budget and our cash flow and transactions every Friday and every Sunday, twice a week. Twice a week. Yeah, because there's so many distractions, Like look at me, I went and bought a one hundred and eighty a little silly light machine that, for the record, really hurts to use.

Well, look, okay, it is preventable. It's not necessarily easily fixed. So yes, you are going to have to be a lot more pay a lot more attention to your budget, but not just your budget, your cash flow and tracking your transactions. It's great to have a budget, but if you're not sticking to the budget. But the budget is just basically a flimsy piece of paper, so you need to track that you are sticking to the budget. And this is why I teach a cash flow system for budgets in the Sugar Mamant Budget and Cashow Academy is Also, you're gonna have to be disciplined. You're going to have to keep your eye on the budget on a regular basis. I know for myself, I check our budget and our cash flow and transactions every Friday and every Sunday, twice a week. Twice a week. Yeah, because there's so many distractions, Like look at me, I went and bought a one hundred and eighty a little silly light machine that, for the record, really hurts to use.

I'm going to be honest, it sounds it sounds overwhelming, like that sounds like it is just a.

I'm going to be honest, it sounds it sounds overwhelming, like that sounds like it is just a.

Stop right there.

Stop right there.

A lot of work.

A lot of work.

So because because I'm checking it regularly, it literally takes me two minutes. I can do it, obviously not whilst driving the car, but I can do it in the car waiting at school pickup. And because I'm checking it so often, I don't need to go it back through a month's worth of transactions. I'm literally going back through what we spent on the weekend on Sunday afternoon or Sunday morning, and what we spent between Monday to Friday. But I'm checking it on Friday, so it literally takes me a few minutes.

So because because I'm checking it regularly, it literally takes me two minutes. I can do it, obviously not whilst driving the car, but I can do it in the car waiting at school pickup. And because I'm checking it so often, I don't need to go it back through a month's worth of transactions. I'm literally going back through what we spent on the weekend on Sunday afternoon or Sunday morning, and what we spent between Monday to Friday. But I'm checking it on Friday, so it literally takes me a few minutes.

And so what you're then comparing that against your budget, Yes, to make sure that you haven't overspent within a certain category.

And so what you're then comparing that against your budget, Yes, to make sure that you haven't overspent within a certain category.

Yes. And if I see something where I've slipped up, like the silly light machine, I know, Okay, well, I need to trim off other areas within our budget to help make up for that whoopsie that happened the other week. So it means that things don't spiral out of control and compound, because if I was checking it at the end of every month, you know, that could mean that we, you know, don't have the right amount of money in our account to pay for the groceries that week. That could be disastrous.

Yes. And if I see something where I've slipped up, like the silly light machine, I know, Okay, well, I need to trim off other areas within our budget to help make up for that whoopsie that happened the other week. So it means that things don't spiral out of control and compound, because if I was checking it at the end of every month, you know, that could mean that we, you know, don't have the right amount of money in our account to pay for the groceries that week. That could be disastrous.

Yeah, I don't mean to be so negative. I'm bringing a lot of neg Well, I don't mean to be, but I'm just naturally negative on this one in that it's all well and good to say, then just trim in other areas. But what if everything else is already trimmed. What if you are kind of just going, okay, well, we've cut everything else. We've kind of we've cut back to the kind of bare bones. What then, like.

Yeah, I don't mean to be so negative. I'm bringing a lot of neg Well, I don't mean to be, but I'm just naturally negative on this one in that it's all well and good to say, then just trim in other areas. But what if everything else is already trimmed. What if you are kind of just going, okay, well, we've cut everything else. We've kind of we've cut back to the kind of bare bones. What then, like.

It's trying to return the sea limits, it's just checking the return to policy. Okay, No, like and obviously this is the problem, and that's where you go, all right, what can I do to then bring in some money to replace that one hundred and eighty dollars that I just literally stupidly And you should never beat yourself up. We're all trying our best, But how do I replace that money? Because you know you may not be able to find the X amount of dollars you know from trimming? Okay, well I won't. I'll make sure we you know, don't buy meat this week. We'll have a vegetarian dish or you know we we normally maybe want some month go up for restaurant to dinner. We won't be doing that. There is sometimes you just can't do that.

It's trying to return the sea limits, it's just checking the return to policy. Okay, No, like and obviously this is the problem, and that's where you go, all right, what can I do to then bring in some money to replace that one hundred and eighty dollars that I just literally stupidly And you should never beat yourself up. We're all trying our best, But how do I replace that money? Because you know you may not be able to find the X amount of dollars you know from trimming? Okay, well I won't. I'll make sure we you know, don't buy meat this week. We'll have a vegetarian dish or you know we we normally maybe want some month go up for restaurant to dinner. We won't be doing that. There is sometimes you just can't do that.

And that's where the discipline comes in.

And that's where the discipline comes in.

And that's why that awareness and also that I will not go and do that again. Every time I see that box, I beat myself up. I'm so frustrated myself for being silly. And of course, again like it's not about punishing ourselves, it's about learning. And I can safely say and probably say, I have not want anymore things off Instagram since.

And that's why that awareness and also that I will not go and do that again. Every time I see that box, I beat myself up. I'm so frustrated myself for being silly. And of course, again like it's not about punishing ourselves, it's about learning. And I can safely say and probably say, I have not want anymore things off Instagram since.

I want to get to some more of those kind of practical steps, because that's a really good point about kind of tracking your transactions and comparing them against your budget. But just in terms of this idea of not beating yourself up about it, this and the difference between kind of lifestyle creep and essentially just the rising cost of living, because there is a difference between those two.

I want to get to some more of those kind of practical steps, because that's a really good point about kind of tracking your transactions and comparing them against your budget. But just in terms of this idea of not beating yourself up about it, this and the difference between kind of lifestyle creep and essentially just the rising cost of living, because there is a difference between those two.

It's a big difference when people get them mixed up. I think they're the same thing. They're not. So lifestyle creep is like earning more but spending more, so you know, it'd be nice to have that, so I'm going to buy it. And so when we earn more money, two things tend to happen. Typically we either buy the same thing, but the more expensive version the same thing, so we you know, we don't we buy maybe a more expensive car, or we buy more expensive clothes or accessories or makeup, or we go and buy more of the same things. So that's the lifestyle creep. And often it's disguised as you know, self care or treating yourself or working so hard as a reward. And you know, it can actually be avoidable with having awareness and intentional spending, but also having some financial goals to actually work on and direct your energy and focus to and if you go and do spend things using cash at all times, the rising cost of living is different. So that's where those same essential expenses, you know, the rand or mortgage, or the grocery bill, utilities, childcare, they are increasing without any necessary upgrade or value add to your lifestyle. And frustratingly, you know, this is the hardest thing about the rising costs of living is sometimes there, most of the time they're completely out of your control. So when inflation kicks in and you've got interest rates on the rise, it makes things really challenging and incredibly stressful because your dollar doesn't stretch as far and there's nothing left over sometimes, so you've really got to adapt and adjust your budget, not just cut out luxuries. You're in a fortune position. If you can cut out luxuries.

It's a big difference when people get them mixed up. I think they're the same thing. They're not. So lifestyle creep is like earning more but spending more, so you know, it'd be nice to have that, so I'm going to buy it. And so when we earn more money, two things tend to happen. Typically we either buy the same thing, but the more expensive version the same thing, so we you know, we don't we buy maybe a more expensive car, or we buy more expensive clothes or accessories or makeup, or we go and buy more of the same things. So that's the lifestyle creep. And often it's disguised as you know, self care or treating yourself or working so hard as a reward. And you know, it can actually be avoidable with having awareness and intentional spending, but also having some financial goals to actually work on and direct your energy and focus to and if you go and do spend things using cash at all times, the rising cost of living is different. So that's where those same essential expenses, you know, the rand or mortgage, or the grocery bill, utilities, childcare, they are increasing without any necessary upgrade or value add to your lifestyle. And frustratingly, you know, this is the hardest thing about the rising costs of living is sometimes there, most of the time they're completely out of your control. So when inflation kicks in and you've got interest rates on the rise, it makes things really challenging and incredibly stressful because your dollar doesn't stretch as far and there's nothing left over sometimes, so you've really got to adapt and adjust your budget, not just cut out luxuries. You're in a fortune position. If you can cut out luxuries.

I reckon you've hit the nail on the head there with the fact that this is frustrating, because it seems frustrating for so many people that they are working and working and working as hard as they possibly can, right and they are trying to be responsible with their money and trying to kind of save money where they can, and yet they are still having to do the grocery shopping and they seem to be getting less and less and less for the money that they have to spend, and it just feels as though no matter what you do, you just can't get ahead.

I reckon you've hit the nail on the head there with the fact that this is frustrating, because it seems frustrating for so many people that they are working and working and working as hard as they possibly can, right and they are trying to be responsible with their money and trying to kind of save money where they can, and yet they are still having to do the grocery shopping and they seem to be getting less and less and less for the money that they have to spend, and it just feels as though no matter what you do, you just can't get ahead.

Yeah, it's like you're just constantly treading water, but only just keepping your head aub off water. And it's exhausting, it's draining, it takes a toll on your mental health, and it just gets hard to see light at the end of the tunnel.

Yeah, it's like you're just constantly treading water, but only just keepping your head aub off water. And it's exhausting, it's draining, it takes a toll on your mental health, and it just gets hard to see light at the end of the tunnel.

All right, now that everyone's feeling nice and miserable, we're going to take a quick break, Probably the worst time to take a quick break. But on the other side, the promise is that we've got some more tips, yes, and some more advice on how to turn that situation around.

All right, now that everyone's feeling nice and miserable, we're going to take a quick break, Probably the worst time to take a quick break. But on the other side, the promise is that we've got some more tips, yes, and some more advice on how to turn that situation around.

I'm going to share some hacks.

I'm going to share some hacks.

Well, great, we'll be back in a second. We are talking about budgeting and the rising cost of living and this realization that on paper, at least our household was spending five hundred dollars more than we were earning a week. Because of all of these expenses, we want to know the hacks, the trip, the tips and the tricks and things to try and get this back under control. We talked about the first step is the first step to really just make sure your budget is accurate, but then to track your spending. A case is that step number one.

Well, great, we'll be back in a second. We are talking about budgeting and the rising cost of living and this realization that on paper, at least our household was spending five hundred dollars more than we were earning a week. Because of all of these expenses, we want to know the hacks, the trip, the tips and the tricks and things to try and get this back under control. We talked about the first step is the first step to really just make sure your budget is accurate, but then to track your spending. A case is that step number one.

Okay, Step number one is more actually about your mindset.

Okay, Step number one is more actually about your mindset.

One knew it was going to be about mindset, And as soon as started talking, I'm like, I've definitely stuff.

One knew it was going to be about mindset, And as soon as started talking, I'm like, I've definitely stuff.

This stuff is going to be no to your credit. You have actually just jumped ahead, which is my Ford thinker. So I actually think you just need to acknowledge the numbers. You know, five hundred dollars per week is a lot of money. Think about that's over two thousand dollars per month, and think about that over a year.

This stuff is going to be no to your credit. You have actually just jumped ahead, which is my Ford thinker. So I actually think you just need to acknowledge the numbers. You know, five hundred dollars per week is a lot of money. Think about that's over two thousand dollars per month, and think about that over a year.

Yeah, there's a lot of money.

Yeah, there's a lot of money.

That's a new car.

That's a new car.

Car.

Car.

Yeah, So you've got to take this. That is your reason for taking this very very seriously. You've got to go beyond the budget. You've actually got to start tracking your spending and tracking those transactions for at least the last three months. You can really see what's going on. And this is a very confronting experience because you and I say this all the time. We really downplay, including myself, how much money we really do spend. We like to tell ourselves, oh, look, I'm pretty good with money. I don't buy this, I don't buy that. But when you look at your transactions, it off and tells a very different story if you have a deficit, particularly like the one you've got, So you need to then obviously identify the essential and the non essential spending and cut out those the leaks to the bucket, so the subscriptions, the takeouts, that spontaneous shopping like cellulin machines.

Yeah, So you've got to take this. That is your reason for taking this very very seriously. You've got to go beyond the budget. You've actually got to start tracking your spending and tracking those transactions for at least the last three months. You can really see what's going on. And this is a very confronting experience because you and I say this all the time. We really downplay, including myself, how much money we really do spend. We like to tell ourselves, oh, look, I'm pretty good with money. I don't buy this, I don't buy that. But when you look at your transactions, it off and tells a very different story if you have a deficit, particularly like the one you've got, So you need to then obviously identify the essential and the non essential spending and cut out those the leaks to the bucket, so the subscriptions, the takeouts, that spontaneous shopping like cellulin machines.

If only it was as easy as kind of having something sitting there that you're like, okay, this was kind of one of those things. But all of a sudden you're looking at kind of all of these things like they have value, they have purpose. But so it's about making some hard decisions. How do you make those cuts though, without feeling deprived that you were just cutting all of the joy and the important stuff out of your life.

If only it was as easy as kind of having something sitting there that you're like, okay, this was kind of one of those things. But all of a sudden you're looking at kind of all of these things like they have value, they have purpose. But so it's about making some hard decisions. How do you make those cuts though, without feeling deprived that you were just cutting all of the joy and the important stuff out of your life.

Well, this is why I say, look at the reality of the numbers. This is quite serious. You know, that's a large deficit and it's only going to compound and get worse with the lifestyle creep and you know, the rising cost of living. So by having that, taking this serious is not about depriving, It's actually about fixing your financial well being, which something to feel proud, to feel empowered to actually step up and take ownership and know that, Okay, we're going to fix the hole in this bucket so that we're not put in a financially compromised or putting ourselves in financial jeopardy because we're blowing money that we really shouldn't be blowing and we don't actually really have. We're going backwards financially. So it is not about depriving. It's about getting real and getting authentic as to what your family really need and how you can creatively find ways to save money.

Well, this is why I say, look at the reality of the numbers. This is quite serious. You know, that's a large deficit and it's only going to compound and get worse with the lifestyle creep and you know, the rising cost of living. So by having that, taking this serious is not about depriving, It's actually about fixing your financial well being, which something to feel proud, to feel empowered to actually step up and take ownership and know that, Okay, we're going to fix the hole in this bucket so that we're not put in a financially compromised or putting ourselves in financial jeopardy because we're blowing money that we really shouldn't be blowing and we don't actually really have. We're going backwards financially. So it is not about depriving. It's about getting real and getting authentic as to what your family really need and how you can creatively find ways to save money.

How do you keep your family on board then with a leaner budget like that.

How do you keep your family on board then with a leaner budget like that.

So communication, I think you know and I don't hold back with Obviously I'm not going to go dump our financial worries on my children, but I let the children know we have a budget and this is why it's important that we stick to it, because we don't want to stress each other out. We want to make sure that we have money for Christmas, time to buy gifts that we can afford, to be able to throw a birthday party. So everyone understands their all in the position in the family in making us all accountable and obviously you're also there's an element of financial for the children. They can benefit from this as well. Obviously you want to go and to stress them out and make them anxious, but empowering them to be a part of this. You know, my children, they love Kmart and I've started to say no, we're saving up to make to do things, special things to the house. So now they tell me off for spending money and make me accountable. So it's become a really nice kind of bonding experience. So and just because you can't get takeout doesn't mean the fun is gone. I mean you can do picnics, you can have friends over, you can you know, do something. Maybe it's not once a week getting a take out, it's once a month. So you've been then value and honor that special treat even more so, our society is filled with this over consumption. And I know there are a lot of people who are not doing that and doing it tough and hon a really tight budget. But we need to be honest with us ourselves. And if we go in with the mindset of this is going to be this is going to suck, this is going to be boring and dull. I can't have this. I can't have that. That's not going to service in any way, and it's not going to make this process enjoyable, and we're probably not going to see the results were capable of achieving. But if you go all right, there's a bit of short term pain because we need to fix this. But once we've fixed it, we'll be back on track again and we'll see our emergency money rebuilding and we'll be able to start setting some really exciting goals like a regular savings plan for a holiday overseas every year. So you've got to look to the big picture and see the light at the end of the tunnel. Short, short term pain, long term gain.

So communication, I think you know and I don't hold back with Obviously I'm not going to go dump our financial worries on my children, but I let the children know we have a budget and this is why it's important that we stick to it, because we don't want to stress each other out. We want to make sure that we have money for Christmas, time to buy gifts that we can afford, to be able to throw a birthday party. So everyone understands their all in the position in the family in making us all accountable and obviously you're also there's an element of financial for the children. They can benefit from this as well. Obviously you want to go and to stress them out and make them anxious, but empowering them to be a part of this. You know, my children, they love Kmart and I've started to say no, we're saving up to make to do things, special things to the house. So now they tell me off for spending money and make me accountable. So it's become a really nice kind of bonding experience. So and just because you can't get takeout doesn't mean the fun is gone. I mean you can do picnics, you can have friends over, you can you know, do something. Maybe it's not once a week getting a take out, it's once a month. So you've been then value and honor that special treat even more so, our society is filled with this over consumption. And I know there are a lot of people who are not doing that and doing it tough and hon a really tight budget. But we need to be honest with us ourselves. And if we go in with the mindset of this is going to be this is going to suck, this is going to be boring and dull. I can't have this. I can't have that. That's not going to service in any way, and it's not going to make this process enjoyable, and we're probably not going to see the results were capable of achieving. But if you go all right, there's a bit of short term pain because we need to fix this. But once we've fixed it, we'll be back on track again and we'll see our emergency money rebuilding and we'll be able to start setting some really exciting goals like a regular savings plan for a holiday overseas every year. So you've got to look to the big picture and see the light at the end of the tunnel. Short, short term pain, long term gain.

Okay, when this is my last question, when is cutting back not enough? When do you need to actually just go okay, we need to rethink our financial goals here.

Okay, when this is my last question, when is cutting back not enough? When do you need to actually just go okay, we need to rethink our financial goals here.

Yeah, and that is when you can't take away anymore. You're down to the bare bones of your budget. This is the sign to look into, all right, where can we bring in more money, because at the end of the day, we've got to live. We need food, we need to accommodation, we need to be able to move around to get to our jobs and get our kids to school. So this is where you go, all right, how can we work smarter not harder? Can we change our hours? Perhaps you can change your shifts to make to earn over time. Can you look at a pay rise or is this now the time to get a new job. We know that the biggest and best pay rises you get are when you change jobs. Perhaps the sign that okay, I need to look at a different career path or I need to look at applying for a new job. You know, what are some things? Can I do some additional courses and training that increase my qualification so I go up a different paid grade. This is where you need to look at solutions beyond the budgeting, earning extra money? You know, do we need to do a big declutter, Like you've got young children but they're growing. Surely there'd be toys or sporting equipment that they don't fit into anymore, or they're too small for wa.

Yeah, and that is when you can't take away anymore. You're down to the bare bones of your budget. This is the sign to look into, all right, where can we bring in more money, because at the end of the day, we've got to live. We need food, we need to accommodation, we need to be able to move around to get to our jobs and get our kids to school. So this is where you go, all right, how can we work smarter not harder? Can we change our hours? Perhaps you can change your shifts to make to earn over time. Can you look at a pay rise or is this now the time to get a new job. We know that the biggest and best pay rises you get are when you change jobs. Perhaps the sign that okay, I need to look at a different career path or I need to look at applying for a new job. You know, what are some things? Can I do some additional courses and training that increase my qualification so I go up a different paid grade. This is where you need to look at solutions beyond the budgeting, earning extra money? You know, do we need to do a big declutter, Like you've got young children but they're growing. Surely there'd be toys or sporting equipment that they don't fit into anymore, or they're too small for wa.

Houses are overflowing with toys.

Houses are overflowing with toys.

There you go. Well, according to Gumtree, and this report came out a couple of years ago, so it may not be it actually might be even more, but the average Australian household has around just over five thousand dollars worth of unused items that could be sold.

There you go. Well, according to Gumtree, and this report came out a couple of years ago, so it may not be it actually might be even more, but the average Australian household has around just over five thousand dollars worth of unused items that could be sold.

So there is you know, it's ten weeks.

So there is you know, it's ten weeks.

Yeah yeah, see, so it's not all the end of the world. But you do need to put your thinking cap. You do need to get creative. There is going to be hard work. You've got to pull your sleeves up, but you will come out of it not just fixing the situation, but so much more responsible with money and so much more respectful with money. You won't want that to happen again because it's the pain you've had to go through that. This is writ talk about the gestation period with money is the period has made you never want to repeat that again. But how long it's taken to fix that problem.

Yeah yeah, see, so it's not all the end of the world. But you do need to put your thinking cap. You do need to get creative. There is going to be hard work. You've got to pull your sleeves up, but you will come out of it not just fixing the situation, but so much more responsible with money and so much more respectful with money. You won't want that to happen again because it's the pain you've had to go through that. This is writ talk about the gestation period with money is the period has made you never want to repeat that again. But how long it's taken to fix that problem.

It actually made me feel pretty good about this.

It actually made me feel pretty good about this.

Oh I think you can. I show you some cash flow tips now please?

Oh I think you can. I show you some cash flow tips now please?

Oh yeah sure, okay, yeah.

Oh yeah sure, okay, yeah.

So I recommend that people have a couple of different accounts. And this is the problem where budgets are really hard to stick to because we get most of us get paid consistently, you know, for example, once a fortnite and once a month, and it's a set amount. Now that's easy to manage because we know exactly what we're going to get and how much. But the problem is, and this is why I think you know this got went on for a while before you realized it is our living expenses dramatically vary from month to month throughout the year. Christmas is an expensive time, you know, school holidays are expensive time. Getting your REDGIRO and CTP, you know, is an expensive time. When you understand how they are scattered throughout a three hundred and sixty five day year, you realize that you actually have to manage your cash flow differently to what your budget says. So I recommend you have your money paid to one key account and that is called your everyday account, and that is to pay for all your short term expenses, so that you know, the food, the mobile phone, the gym membership takeaways, that's your short term living expense. You then have a second account, which is called your life sash financial float account. This is money that when you get paid, you put a certain amount in, say each month when you get paid, to help stockpile your cash flow so that when that rego came through, is not coming out of emergency money is coming out of that account. Christmas time buying gifts. If that's what you celebrate, it would come out of that. Then on top of you have your emergency money, which can sit in a redoor facility or an offset account. So if you put a mortgage, which you do so that will help you save interest in the meantime, but you're actually adding to each of those three accounts to help manage your money, so when things do come up, you've actually got that allocated. Now what you do is you there's a bit of short term pain to this, because you must have your financial float sitting at a decent level so that if you have a particular time of the year where a lot of those expenses, those irregular ad hoc expenses coincide, your financial float can actually handle all of them without you having to dip into other accounts like your emergency money. So what you would do is go aggressively for say three months, to build up your financial float so that it has enough money to account for everything. And then going forward, you put a set amount of money into each of those three accounts, and you can tweak it adjut accordingly as to how much money you need an emergency, how much you need in your float, and of course what's going on in your short term living expense account. It's what I do, is what I've always done, and it's really satisfying because I don't even own a credit card, so I have to make sure I'm on top of our cash flow. Because there is no credit card to lean on. It means that we don't things don't bounce, they don't default. I'm on top of everything. And I because I'm not using credit cards, I never really with the exception of the machine, don't go and blow things. And I'm checking the accounts regularly and I go to I've got three accounts to check really just too. To be honest, I.

So I recommend that people have a couple of different accounts. And this is the problem where budgets are really hard to stick to because we get most of us get paid consistently, you know, for example, once a fortnite and once a month, and it's a set amount. Now that's easy to manage because we know exactly what we're going to get and how much. But the problem is, and this is why I think you know this got went on for a while before you realized it is our living expenses dramatically vary from month to month throughout the year. Christmas is an expensive time, you know, school holidays are expensive time. Getting your REDGIRO and CTP, you know, is an expensive time. When you understand how they are scattered throughout a three hundred and sixty five day year, you realize that you actually have to manage your cash flow differently to what your budget says. So I recommend you have your money paid to one key account and that is called your everyday account, and that is to pay for all your short term expenses, so that you know, the food, the mobile phone, the gym membership takeaways, that's your short term living expense. You then have a second account, which is called your life sash financial float account. This is money that when you get paid, you put a certain amount in, say each month when you get paid, to help stockpile your cash flow so that when that rego came through, is not coming out of emergency money is coming out of that account. Christmas time buying gifts. If that's what you celebrate, it would come out of that. Then on top of you have your emergency money, which can sit in a redoor facility or an offset account. So if you put a mortgage, which you do so that will help you save interest in the meantime, but you're actually adding to each of those three accounts to help manage your money, so when things do come up, you've actually got that allocated. Now what you do is you there's a bit of short term pain to this, because you must have your financial float sitting at a decent level so that if you have a particular time of the year where a lot of those expenses, those irregular ad hoc expenses coincide, your financial float can actually handle all of them without you having to dip into other accounts like your emergency money. So what you would do is go aggressively for say three months, to build up your financial float so that it has enough money to account for everything. And then going forward, you put a set amount of money into each of those three accounts, and you can tweak it adjut accordingly as to how much money you need an emergency, how much you need in your float, and of course what's going on in your short term living expense account. It's what I do, is what I've always done, and it's really satisfying because I don't even own a credit card, so I have to make sure I'm on top of our cash flow. Because there is no credit card to lean on. It means that we don't things don't bounce, they don't default. I'm on top of everything. And I because I'm not using credit cards, I never really with the exception of the machine, don't go and blow things. And I'm checking the accounts regularly and I go to I've got three accounts to check really just too. To be honest, I.

Think that is actually very inspiring.

Think that is actually very inspiring.

Thank you. I can do this, and I even do one on one sessions with people.

Thank you. I can do this, and I even do one on one sessions with people.

This I feel like I've just had a one on one session.

This I feel like I've just had a one on one session.

Oh no, this goes into way more detail.

Oh no, this goes into way more detail.

Okay, I might have to explore this because you know that. I mean, we talked many many moons ago about our first episode about the fact that I have twenty six bank accounts and you are here just talking about three. Yeah, And I cut a whole stack of accounts out and I got down to like eighteen or so, which is still six times. It's still six times more than you're recommending. Yeah, okay, I've got some work to do.

Okay, I might have to explore this because you know that. I mean, we talked many many moons ago about our first episode about the fact that I have twenty six bank accounts and you are here just talking about three. Yeah, And I cut a whole stack of accounts out and I got down to like eighteen or so, which is still six times. It's still six times more than you're recommending. Yeah, okay, I've got some work to do.

But do have a holiday savings account and we do have a financial goal account as well. Oh so there's technically five. If you really want to be honest.

But do have a holiday savings account and we do have a financial goal account as well. Oh so there's technically five. If you really want to be honest.

I'll see you. You're misleading me.

I'll see you. You're misleading me.

No, but they're the key functioning ones for a cash flow and budgeting for busy people.

No, but they're the key functioning ones for a cash flow and budgeting for busy people.

Still, it sounds great. It actually sounds like it would provide enormous clarity and just visibility over your spending and makes that process of as we talked about at the start, going back tracking your spending comparing it to the budget with make it's so much easier because it's just all in kind of one of two places those expenses coming out exactly. All right, that is great. Anyone wanting more information from you, where do they track you?

Still, it sounds great. It actually sounds like it would provide enormous clarity and just visibility over your spending and makes that process of as we talked about at the start, going back tracking your spending comparing it to the budget with make it's so much easier because it's just all in kind of one of two places those expenses coming out exactly. All right, that is great. Anyone wanting more information from you, where do they track you?

Send me a DM on Instagram, can a cable official sugar Mame TV, and I can send you the details.

Send me a DM on Instagram, can a cable official sugar Mame TV, and I can send you the details.

And you can hear me every day with Sean Aylmer on Fear and Greed Daily business news for people who make their own decisions. Thank you for listening to how do they afford that? Remembered follow on the podcast, and the very best thing you can do is tell somebody else or send them this link to this episode and spread the word about how do they afford that. Thank you for your company. Join us again next week.

And you can hear me every day with Sean Aylmer on Fear and Greed Daily business news for people who make their own decisions. Thank you for listening to how do they afford that? Remembered follow on the podcast, and the very best thing you can do is tell somebody else or send them this link to this episode and spread the word about how do they afford that. Thank you for your company. Join us again next week.