In many ways, budgeting is actually the trick to financial success – mapping out your income and your expenses, and accounting for every dollar. Graeme Holm has assisted his clients to implement the most beneficial account structure, this along with a well determined budget has allowed many to get ahead by paying down their mortgages in 7 – 10 years.
An average family in Sydney Metro might need $750per week (a median figure as not everyone has the same spending habits, e.g. pets, no alcohol or whatever) to operate on: $300 on groceries, $150 on fuel, $50 on coffee. Graeme suggests to separately add up your fixed expenses for utilities, car insurance, rego, etc as these should not be included in the weekly budget.
In summary, Graeme suggests to separate your weekly discretionary spending (as this is something that can be adjusted towards a realistic figure) and determines a set amount to be used as a weekly budget, outside of fixed bills and expenses. Graeme encourages all clients to have this budget amount entering a designated budget account, with this account being used for all discretionary spend. Here at Infinity Group Australia, our Personal Bankers track this spend and are able to keep clients further accountable for their spending.
Working out your budget helps with behaviour modification. It helps you develop good habits, because you have a target. Something tangible to aim for, and when you do go to spend extra money, this needs to be transferred into the budget account, making you even more accountable. This helps to curb unnecessary spending thats effectively slapping us in the face when we try to make financial progress.
Budgeting isn’t a dirty word. Graeme Holm emphasises that budgeting is an incredibly important and powerful tool that you should use. It’s not about making you live like a hermit or forcing you to eat mince prepared six different ways. It’s about giving you control over your spending, making you responsible for every outgoing dollar and encouraging wise decision making in accordance with your short and long term goals.
Graeme also emphasises that budgeting can’t be done after the fact.
‘Budgeting certainly doesn’t mean rocking up at your accountant’s office with a post-fact spreadsheet recording everything you overspent on over the last year so they can then perform some admin on it and submit that as a tax return. After you destroy your family financially all year, you go to them hoping they can wave a Harry Potter wand and fix all your financial screw ups post-fact. Seriously, people, what are you all doing?‘
Graeme states that a budget is a useful tool, it is a plan prepared in advance that, if adhered to, will leave you in a better place financially at the end than when you started. Budgeting properly gives every single incoming dollar a purpose. You’ll know exactly where it’s all going and, hopefully, more of it will be going on debt reduction than has been the case previously.
How does that happen? With the help of a trusted adviser. So, who are you relying on for your financial advice? Your accountant? Your bank manager? Your insurance broker? Who has ever helped you fix a budget? Who has helped you review it? Who is ready to hold your hand every step of the way to make your budget a success?
Most importantly, who has tried and tested long term proof over several years of a proven system and strategy that, once implemented, can repay an average family home loan in full within 7-10 years every time? Oh, that’s right – Graeme Holm, the original Money Mentor.
Seriously, take the time to go and read Graeme Holm’s book – The Money Mentor – How to Pay Off Your Mortgage in as Little as 7 years Without Becoming a Hermit.