How to Manage your Money in 10 Minutes a Month (On Parenthood Podcast) Part 2

Well , this week it's the second part of the conversation that I had with her and we covered a whole range of topics , including how to use an offset account effectively , why a debit card will ensure you spend less than you earn , we revisit the basics of the seven day float and how impactful that can be , and we also talked about why not to sell the goose

that lays the golden egg . Folks , I thoroughly enjoyed the conversation . It is the conclusion of the two part conversation I had with Leonie . Let's cut to the interview now .

You talk a lot about how we should be very clear on our budget , our expenditure , and really I mean I heard even in your last episode you said , yeah , of course interest rates are rising , we're paying $27 for a capsicum these days , or whatever it looks like , but at the end of the day , there are things that are happening outside of our control and you've

got tools and more than happy for you to talk about those as well which help you better manage your day-to-day expenditure and understand where your money is going .

I would love for you to give us to appease the anxiety a little bit , because I know there's a lot of anxiety out there with where things are going at the moment , with inflation and interest rates , et cetera .

Let's get back to basics the core things that we can be doing in our households now to better manage our finances and put us in a better position to purchase that house .

If they let that get out of control it becomes a debt spiral that you can't get out of . Number one is make sure that you're living within your means . You are spending less than what you earn Kind of basic , but let's make sure we tick the box . Number one Then . Number two is we wrote a book called Make Money Simple Again .

Anyone can go to makemoneysimpleagaincomau and get the free copy of it . Right , you can just download it .

Generally speaking , most of our biggest expense is usually going towards the roof overhead and the mortgage , so ignoring that fundamental fact I think is a missed opportunity , despite the fact , everything else in that book is wonderful .

So what we did in our book is we said well , here's a really basic system where if you were to use your offset account and bring everything into that so your salary , your wages , birthday money , lotto win , if you've got dividends , rent received every single bit of inflow needs to go into your offset account .

That is , against your most expensive bit , which is typically our home , because we're the only one paying off for it . Everything goes in there and then that becomes the central hub from which everything comes out of All the money in , all the money out . So think about the primary account . Number one .

Number two you need a simple debit card , All right , and that debit card is how you pay yourself on a weekly basis . So let's say you spend 250 bucks a week on entertainment , groceries , whatever it is .

It could be 500 for some , 100 for others , but just let's just use 250 bucks is what you spend every seven days within your family to live your best version of that next seven days . I would say consider that as when you get paid right . So my wife and I , we paid out of our offset account on a Thursday .

It goes into our debit card and then all we've got to do for the next seven days is manage that balance . We don't have to micro manage where it's gone , we don't have to put it into an app . And so I spent that much on a latte and that much on a newspaper and that much on a movie and that much on a piece of steak .

We just say our only job for seven days is to swim between the flag and only spend what we've allocated based on a budget . And if we do that it's a successful win , and if we don't , we will go into the trap of losing our surplus . So that's number one . Number two is have a credit card .

Now a little disclaimer if you're an average money manager or below , don't get a credit card because you don't need one . If that is a temptation , that is too great for you . But if you're an average money manager or better , you can use a credit card .

And what you do with that is , you get it automatically swept every month on the due date , the amount that's due . So you don't have to commit to memory , you don't have to accidentally forget the payment , it just is automatic . Ring the bank , go online , do whatever it takes to get that automatically paid .

And then what you do with the credit card is you do not use it for discretionary spending at all . So what you do is you get your mobile phone bill , get it automatically direct debit it onto your credit card . Get your insurance , whatever your bills and payments are , you put it onto the credit card .

The reason you do that is because you've got up to 55 days interest free . So that means that more money is sitting on your offset account . Interest is calculated daily , paid monthly , so it's reducing the balance for longer . You're actually using the bank's money for up to 55 days and if you're disciplined , you never use that for discretionary .

It's automatically swept , so you're never paying interest on it and you're maximizing and optimizing the amount of money that's sitting on your offset account . And then basically , what you do then is you have passive loan accounts . So the mortgage that comes out of the primary account I have in other investment properties .

So I've got other loans , they come in and out of the primary account . That is it . That's all you do Now .

If you don't have a mortgage , instead of having a that primary account attached to your mortgage , you just go and get the highest interest savings account that you can get your hands on with the lowest fees , and that's how you can build up the deposit so you can get into the market . I mean , if you have a mortgage , you have an offset account .

It is super simple . We lay it out . There's even a picture in the book that you can download and set it up and then you can just get some piece around how to manage your money and get on with doing what you're doing .

Because if you just focus on the seven we call it a seven day float and if you pay on a Thursday and come had a good weekend , come to Tuesday and you run them thin . Here's what most people do . When they run thin on a Tuesday , they walk down .

You're at South Yarra there , so you'll walk down to Chapel Street or one of the main streets there and you'll go to the IGA or you go to Coles or you go to macro foods or whatever , and you'll tap Because Tuesday you ran out of and you'll tap it or go on the credit card and that's where it blows out , whereas someone who's got a system that they manage .

They go Tuesday , right , I'm not getting paid again until Thursday . I've got a choice here . I've run out of money on my debit card , which is my money . It's not the bank's money . The debit card is my money . I've run out of money . I've got two choices . What I do is I chop back home and I open the pantry and I open the fridge and I go .

You know what . I can actually make a meal out of that and I can actually do that tomorrow and I can actually get myself through to Thursday because I don't get paid on Thursday . Or you can do what the most of the population do is they'll go and tap and get some more groceries , but at least you do it consciously .

Then you get into a flow where it's been a while since I've had nobody in that account . I don't even have a credit card . I've got a one for work , but I just don't have one . I just think it's so simple to just say , well , I've got $100 to spend for the week or whatever it looks like . Go over that , then that's it .

Rather than sitting there , as you said , I had spreadsheets . I was like , oh , that's how much I'm spending at Bar Carolina on a Friday night with my girlfriends having coxs out . Oh , better put that in a highlighted yellow so I know not to spend that much again . And now it's just like well , whatever's in the account is what I've got left . So I love that .

For everyone listening , I will pop the details of your book in the episode notes . I would love you to give us a very quick exec , some version of your more potential app . I know it's online at the moment . Tell us a little bit about it .

So if you go to morecomau , you can actually get access to it for free , and so what it does is it takes the principles within the make money simple again book and makes it super simple . So you put your details in . The book , shows you that with about 90 minutes to two hours worth of upfront work , you can then manage your money in 10 minutes a month .

So the book shows you how to set it up and the more platform allows you to do it on a regular basis . No more spreadsheets , no more trying to work out how it works . And then , excitingly , we're recording this .

In August , hopefully , we'll release the mobile version , because currently it's just desktop , but nobody takes their desktop with them when they're at the grocery store or anything . So we understand the market is demanding the mobile app . It's been something that we've been super excited . We've been building it all year and hopefully that comes out .

So thanks for the opportunity . I think there's value that we can add to your listeners , because the make money simple again book is free .

The mobile app , the version that implements the book , will always be free , so that people can actually bring the theory and the practice together and make it real at the point of where it matters , when we're , when we're making transactions . With this statement , the budgets don't work and everyone goes what do you mean ?

Of course budgets work and it's like well , the subline is budgets alone don't work . But here's the deal . We all do our budget . Back to the point of the question for people who are struggling with increased costs , we always do our budget at the beginning of the month and at the bottom it says it's in the green , we've got some surplus .

Let's just say the surplus was going to be 500 bucks . What happens is we get to the end of the month , stuff got in the way , all the stuff you and I were talking about before . Tap and go , blow out all this stuff . And we go oh , I plan to have 500 , but I've only got 20 .

But it's still green , it's still positive , so that was a win and move on . But we slid , we lost the 480 . And in the context of the question from your listener , we've lost that 480 , which can then compound up to build up a deposit , and then that deposit allows us to get into the property market .

Because what I do know and what I do want to say to your audience is I've seen thousands , and that's not exaggeration , but let's just keep it at 100 .

I've seen hundreds and hundreds of people who have through their journey 20s , 30s , 40s , 50s , getting to retirement and , without fail , the people who don't own their own home in retirement are usually the ones that are at a significant disadvantage , because if they haven't set up their any form of income in those later years other than the pension and they don't

have a roof over the head , that is a world of pain . So I cannot encourage more the idea of prioritizing getting a roof over your head . Now used to be Jack and Jill went up the hill to get a Petra Vale Award , and now it's Jack and Jill went down the lift to fetch a baby Chino .

Right , our quarter acre block in suburbia is not whatever one can get anymore . Right ? There is a spectrum . So it might mean the families do need to buy a two bedroom apartment and invest in that and build in the equity and slowly move up the ladder or whatever it takes .

Some people might need to who are living in South Yarra might need to consider something like okay , I love South Yarra , this is not you but someone else . I love South Yarra , but I can only ever afford to rent here .

You might need to think about okay , why wouldn't I consider going to Geelong or Ballarat or Bendigo or something like that or further out , so that you can actually get onto the property ladder ?

Because again , looking over the horizon , when you reach an age where you no longer can trade your labor for income just because of the life cycle , you will be 100% grateful that you've got a roof over your head at that point in time , because I've seen people , you experienced it earlier . They don't have that .

I guess would that be another option for this .

So , yes , you may consider then the option of rent vesting , which , for those who don't understand what that means , I'm going to rent my current lifestyle and I'm going to invest my money whether it's in shares , crypto , property , whatever your thing is but you're investing your money that you ordinarily would have put into a mortgage and into your own home elsewhere

, and I got no problem with that , with one exception that people need to be aware of , and that's it's very difficult to change that strategy . So let's play that out . We're in South Yarra , we've got a nice lifestyle going on , we've bought an investment property , to your point , say , down in Geelong , everything's going great .

Then , all of a sudden , you go from one child and then you find out that you're having twins , so you go from one child to three , and then it's just not realistic for you to do that .

And then some of your friends have also moved out of South Yarra and they've decided it's all of a sudden the things that we're keeping you there and no longer there some five , six , seven years down the track .

If you want to pivot your strategy it's difficult because you've put a lot of money and energy into going down that path Then if you want to stop and pivot as you know , buying your own home takes a lot of results For a lot of people . They're paying principal and interest .

I pay interest only on a mortgage when I was at mortgage on my home , which is a topic for another time but a lot of people have principal and interest . That commitment is extensive .

If you're going to end this path rent-vesting , no problem and then all of a sudden you want to pivot that and try and get over here , it can set you back significantly , trying to get back into the space , because your plan for accumulating assets will be stopped , because you will spend the next decade putting your resources into the principal place of residence ,

which rewind 10 minutes ago . It's not about idea because of the fact of having a roof over your head , but if you've gone down the rent-vesting strategy and your income isn't a phenomenal income you're on an average or just better than average income that will be something that you'll need to think about .

We plan to pass them over to the children . So you don't want to give the tax man , the real estate agent , a big chunk of your hard work . But these are options the only these are options that you've got , which is why rent-vesting is better than not investing at all . Right , but it's just something that you don't want to take lightly .

If you go well , I'll go down that path and then oh , but I'll just change my mind and buy my own home , if that's , there is some planning that comes around that . So that's why we always recommend people get a plan on paper . Do these scenarios ? You mentioned this into the podcast .

We had a winter series just recently with a guy who wanted to buy a house on the beach in Adelaide . So we went through that scenario and then he goes . Well . Once I tested on paper and I ran the numbers and we did the calculations and we did all the what-if analysis . I changed my mind because it's not what I wanted .

So then we decided to scale back what that looked like . I bought a different house . I was super excited , super happy , which means that they could then go and add another couple of investment properties to the portfolio .

If you pay for the postage , I'll send you the book for free , but that's kind of the- . The second book we wrote was the prequel , which said well , trap the money first and then , once you've trapped it , you then put it into For me , I bought my first investment property in 1999 .

So we've been investing now this is my third decade , which is where all the fun happens with the growth . So I've got a clear bias around investing in property . But some of your listeners may love shares , or they may love crypto , they may love art .

So my thing is put your money into the asset that you like , that you're comfortable with , that appeals to you .

Then hold it for the long term , because I like saying Warren Buffett is the most famous investor in the world , but he's actually not the best investor in the world 22% on average return each year , which is phenomenal , right , but there's a guy by the name of James Simons who is worth a mere 21 billion compared to Warren's 119 billion , and he's getting 66% per

year returns , which is just insane . But nobody's really heard of him , and the reason being is Warren's been doing it since he was a teenager . He's been investing 99% of his wealth after his 50th birthday .

So there's so many books written about Warren Buffett and people are trying to work out what's his tip and what's his technique and what's his latest , but they're missing the fundamental , all important thing , which is time . He's just played the time game more than anyone , and so that's what I encourage . So in our business , we say to people get your home .

If you can buy three investment properties , hold them for the long term . Set and forget , enjoy life along the way , plan for some really cool things , and then you won't be one of those people that gets a retirement with no roof over your head and , importantly , no form of income that's passive , that can fund your lifestyle going along .

So I get the question from your listener it's hard to get in . It's always been hard . If you go and talk to your grandparents , they'll tell you how hard it was for them to get in . So nothing's changed in terms of servicing alone . What I will acknowledge has changed a fair bit since our grandparents is stumping up .

That deposit is actually getting harder Because 10% or 20% of the prices that is actually a challenge . So what you and I have been chatting now for the last half an hour or so is around getting the house in order , trapping surplus , looking for ways to minimize costs On the mall platform .

You can do some analysis to go I'm spending this much on electricity how does that compare to my peers in this state , in this country ? Or I'm spending this much on groceries how much does that compare ? So it allows you to get a little sharper . One of the biggest wins you can do is if you do have a mortgage .

Our mortgage-breaking team is getting lots of review work from our clients , where we have a conversation and go hey look , it's a fact that most banks treat new customers better than they do existing ones because of margin creep .

So if you can actually go and look for a better deal on your loan or actually be prepared to swap lenders , that means that you might find an opportunity to get some savings as well . So that's a big opportunity for our podcast listeners and even yours .

But go and speak to someone , like our clients are doing with our mortgage-breaking team because they can get sharper on rates and save that money and put it back in your pocket .

I want to thank you so much , bryce , for coming on today , honest , and all for all of the work that you and Ben do , that your podcast was probably my very first property podcast that I ever listened to , and I'm not usually super loyal , but I'm so loyal , like we have 400 episodes in and I'm like where's the next episode coming ?

And look , I love it because you just give so much away . And you guys say this all the time . You're like you know this , you know , why are you giving your book away for free ? Like , why are you doing ? Why is more available for free ? And I mean , I'm sure there'll be different iterations where there might be subscriptions , but certainly the foundation .

You guys are so passionate in just educating anyone who will listen about being better investors , and particularly around the property market in Australia . So I just want to thank you wholeheartedly for all that you do .

Hopefully there was something in it for everyone and if they want to get access to some of those resources , I'm sure you'll , I'm sure you put them in the show .

If you're new to our community , I want to encourage you to listen to our very first 20 episodes , as the concepts we share in EPS One through 20 , are foundational principles , pillars and frameworks that you need to know for you to get the best value from our content week to week on our show . My little tip is to listen to it at one and a half speed .

Now , for those of you that are time poor and don't have the option to go back to the beginning , don't worry , because we've got you covered as well . We've created a binge guide that summarized these foundational episodes into one easy to digest booklet so that you can get up to speed super fast .

So go to the show description on whatever device you're listening to now and simply click on the first 20 episodes link to download it straight away .

Oh and , by the way , whilst you're there , you'll find a few extra goodies for you , including a link to download our lifestyle by design app more , the home of Wealthspeed and Wealthcock , and our hugely popular MoneySmart's money management system , as well as how to get free copies of our best selling books .

Now just a reminder that anything we cover on this podcast is not considered to be financial advice , and we certainly recommend that you seek out expert advice tailored to your unique circumstances , and everything we talk about is general in nature .

Folks , I want to encourage you again to click on the show description , wherever you are listening , to access all the free goodies we have for you Until next week .