Drawing up your personal income budget

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General advice warning:

The article below is general advice only.  It is not personal advice tailored to suit your individual needs and therefore, you should consider whether this advice is appropriate for you.

Here is one of many good business building tips Brisbane people can use.  The beauty of doing a household budget is that it gives you a good indication of how much money you must generate to finance the life you want for you and your family.  This financial wellbeing advice applies to employed people too.

Now I want you to sit down and prepare your own household budget!  It really isn’t that much different to doing a business budget.  If you have never done a budget before, it will take about an hour.

Before you start, get out your file of bills paid and also find your tax records for you and your partner.  If you are employed, go to your tax records or at least find a recent pay slip or PAYG summary; as well as any details of Centrelink payments, investments and any other income received.

You can use any good budget planner.  If you want to see (and use) a comprehensive personal budget planner, go to FIDO’s Budget Planner at:

http://www.asic.gov.au/fido/fido.nsf/byHeadline/Budget planner

As a start, I would do an annual budget, and break it down later to a monthly budget.   By doing an annual budget first, you should pick up all income and all expenses, including those once a year payments like home & contents insurance and vehicle registration, plus those quarterly bills like rates and water charges, together with your regular monthly commitments like mortgage repayments.

Start with income

The figure you need is Income after tax.   This comes from your most recent tax records, or if things have changed since then, you can make estimates using a recent pay slip or PAYG summary.  But remember, these employer generated documents represent tax deducted by your employer, not tax ultimately paid by you.

It may also be the case that other payments besides income tax, such as like superannuation and health insurance are also deducted by your employer from your gross salary.   Don’t count these expenses twice!

When you get to the relevant expense line item in your budget, make sure that you don’t deduct them again.  If you do, make sure you add those amounts back to your after tax (cash in the hand) salary.

Don’t forget Centrelink payments, rent from boarders and any part time income that you earn.  Include interest from bank accounts and term deposits, and dividends from shares etc.  If you are including rent from an investment house, you will have to deduct all associated expenses first.  These may or may not be more than the rental income.

If you are self-employed, you should probably consult last year’s tax records or ask your accountant to tell you.  It may not be immediately clear.  Please don’t confuse it with total money actually received or amounts that you take out of the business from time to time.

If you draw a salary from your own company, that is only part of the story.  There is still your profit (or loss) to consider as well.  Unless you have very good accounting skills, it is best to speak to your accountant.

For more Brisbane business building tips and financial wellbeing articles go to http://www.aikido-secrets-to-calm-success.com

Until next time!

Gary

Gary Weigh, Financial Planner, Director, Gary Weigh & Associates Pty Ltd ABN 41 084 228 679, Corporate Authorised Representative (No.256617) of The FinancialLink Group Pty Ltd ABN 12 055 622 967, Australian Financial Services No.240938

Start with a wealth grower’s budget

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General advice warning:

The article below is general advice only.  It is not intended to be personal advice tailored to suit your individual needs and therefore, you should consider whether this advice is appropriate for you.

Financial wellbeing starts with a household budget – what you earn after tax, in your hand, minus what you spend.  The budget is a simple and very effective financial strategy, but it gets bad press because people know that, like going on a diet, they must be disciplined.

People also assume that after the budgeting process is complete, they will have less money to do the things they want to do.  Nothing could be further from the truth.  It is likely that after you plug a few spending leaks, you will have more money available.

Budgeting is like losing weight.  If you treat it as going on a diet, the old habits will return as soon as you stop the diet.

The trick is to think of budgeting the same way as you would think of permanent weight loss.  That is, make some permanent lifestyle changes – small changes, bit by bit!

A useful business building tip in Brisbane is to prepare yourself a wealth grower’s budget!

So what is so special about it?

  • A wealth grower’s budget is a state of mind, not some new fangled budget tool that will instantly solve all your problems.  Actually any decent budget tool will suffice.
  • A wealth grower’s mind allows you to pin point those areas where you currently spend your money that has no meaningful effect on your life.  That money can be redirected to where it will have meaningful effect and positive impact on your life.
  • A wealth grower’s budget is not one that creates a bit more spending money.  It is one that gets you closer to your goals in life; those things that are really important to you.

For example, you might decide to spend less on eating out and divert that money to your ‘long term / not to be touched’ savings account.

Here’s another important point!  You must become a saver before you can become an investor!

Your wealth grower’s budget is the tool to help you do that.  If you have no savings, then you will be forced to borrow 100% of money you need to invest.  That strategy carries serious risk at the most dangerous level.

You will find a very good (and very comprehensive) budget planner (FIDO’s Budget Planner) at the ASIC website.

There are three versions to choose from

(a)    the online version (flash player required), or

(b)   the Excel spreadsheet version, or

(c)    the print version

Go to http://www.asic.gov.au/fido/fido.nsf/byHeadline/Budget planner

For more reading about financial wellbeing and for more useful business building tips in Brisbane, go to http://www.aikido-secrets-to-calm-success.com

Until next time!

Gary

Gary Weigh, Financial Planner, Director, Gary Weigh & Associates Pty Ltd ABN 41 084 228 679, Corporate Authorised Representative (No.256617) of The FinancialLink Group Pty Ltd ABN 12 055 622 967 Australian Financial Services No.240938

Think like a ‘wealth grower’

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I have said it before and I’ll say it again, there are a few positive money habits that you need to adopt before you launch headlong into planning your financial wellbeing.

Forget the millionaire mindset!  You shouldn’t think that you have to be a millionaire to achieve financial wellbeing.  Making small changes and taking small steps is what’s important.

Here’s a Brisbane business building tip! Just do what wealth growers do!  For a start, they don’t live on credit card debt while spending everything they earn.  While wealth growers are quietly growing their wealth crop they don’t splash money around and they don’t try to keep up with the Jones’s next door.

Wealth growers grow wealth by observing a few simple rules:

  1. They don’t spend more than they earn so they do not incur personal debt
  2. They are more comfortable with cash or a debit card rather than a credit card
  3. They don’t buy new; they seek out quality and quality secondhand is fine
  4. They do not succumb to social pressure, herd mentality and impulse buying
  5. They factor both the short term and the long term into their thinking
  6. They put money away regularly into long term fund and allow it to do its work
  7. If they want to buy cars and holidays etc in the shorter term, they start another savings / investment fund for that (i.e. they don’t dip into the long term fund)
  8. They don’t waste money on things that depreciate in value; They buy things that are likely to rise in value

Adopting the wealth growers’ rules will be your way forward also.   Start by paying off your credit card and cutting it up.  Get a debit card and re-introduce yourself to the concepts of cash and saving.

If you get into these simple habits, you will be well on your way to financial wellbeing.

To read more Brisbane business building tips on financial wellbeing, check out this article “Seek life’s broader wealth solution” at http://www.aikido-secrets-to-calm-success.com

If you want change to a calm martial mindset, then try Aikido at http://www.griffithaikido.com.au

Until next time!

Gary

Australians are waking up financially

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here’s a Brisbane business building tip!  The majority of Australians want advice without strings attached.  People simply want financial wellbeing without all the rigmarole. Because consumers are mistrustful of financial planners they are researching more and paying more attention to financial matters that they believe are relevant to them.

People are starting to take more notice and become more financially aware.  Whilst the majority of Australians are not financially trained or skilled, they are starting to ask questions and challenge the status quo.

Typically, people want to know:

  • How they can get a better superannuation deal and take advantage of government incentives to top up their retirement savings (after realising that their superannuation actually is their money)
  • More about the advantages and disadvantages of residential property
  • More about the risks associated with investments and how to choose investments that match their personal comfort level of risk
  • Ways to protect themselves and their financial future
  • How to qualify for the age pension and maximise the pension payments
  • How make their money last and how to pass their wealth on to their children whilst denying the opportunity to sons / daughters in law to walk away with their wealth in a divorce
  • How to retire with reasonable security

People of all ages want to know make their money go further and escape the financial rut.  Most people don’t aspire to be millionaires.  They just want to improve their lot to a level of reasonable comfort, do the very best they can for their children, and have a secure and peaceful retirement.   In other words, financial wellbeing!

The area of personal finances is not only about additional income and investments.  It is a broad knowledge base that includes protecting income and investments; making and / or saving money by having access to a professional who knows the hundreds of government rules that apply to this discipline.

For more business building tips Brisbane, and to read more on this subject read the article “The Irimi approach to personal finances” at http://www.aikido-secrets-to-calm-success.com

If you want to try Aikido, try Griffith Aikido at http://www.griffithaikido.com.au

Until next time!

Gary

What people really want from personal financial planners

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Another Brisbane business building tip!  It pays to see things from the customer’s point of view.

What do most customers really want when they seek personal financial planning services?  Although they want to achieve a desirable level of financial wellbeing, what they really want often differs from the services that most financial planners want to provide.

There is growing demand in Australia to make financial advice affordable, easily accessible, easily understood and deliverable in smaller portions (as apposed to large complex financial plans).

The industry is changing and this requires a complete change of thinking on the part of financial advice providers.

I know from experience that the majority of people:

  • Don’t always want huge, expensive and hard to read Statements of Advice containing complex advice that attempts to map out the rest of their lives. (Why?  Because life can change so quickly)
  • Appreciate an expert resource with a depth of knowledge and experience they can draw on
  • Would really like to talk to someone who would simply answer questions
  • Appreciate having risks and opportunities that are not obvious to them, drawn to their attention
  • Like to browse for factual and current information without sales pressure
  • Have a continuing love affair and well founded belief in direct property, particularly residential property, even though it is not commonly addressed or recommended by financial planners
  • Are not necessarily wanting to buy a financial product when they seek advice

People who seek financial advice crave it with no strings attached.  They are looking for guidance and advice that is independent any particular product, and not given by someone who is employed by a product provider.

For more business building tips in Brisbane and to read more on this subject read the article “Navigating Life” at http://www.aikido-secrets-to-calm-success.com

If you want to try Aikido, try Griffith Aikido at http://www.griffithaikido.com.au

Until next time!

Gary

Financial wellbeing – what is personal financial planning?

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The point of personal financial planning is to work out a way of achieving the things that are most important to you in life.  So what is important to you?  The answer is different for everyone.

For some it could be the dream of winning an Olympic gold medal or taking an around the world holiday.  For others it could be a house in the suburbs and a good education for the children, or saving for retirement.

Regardless of the broad range of individual goals, the common thread to goal achievement is financial wellbeing.  That means having enough money to do the things you really want to do, staying healthy and not having to sacrifice the fun in your life.

That is a long way from making the bland statement, “I want to be a millionaire!”  Accumulating money just for the sake of it is simply being greedy.  If your focus is 100% on being rich, then you are likely to be sacrificing your health and missing the fun in life.

For example, (and this example happens often) if your partner leaves you for someone else while you were always working on accumulating riches, where’s the fun in that?

What is the point of being rich if you are in poor health and having no fun?  Is that really what you want your life to be about?

Many people dream of riches but most would happily settle for enough money to do the things they want to do now, and the means of generating enough money to finance the future they want as it arrives.

In the process, you may or may not become a millionaire, but does that really matter?  These days, you can own 3 residential properties and be a millionaire on paper, but it is a meaningless concept.  You won’t be the first or the last millionaire who is desperately unhappy or unhealthy.

Financial wellbeing equates to balance in your life.  It means having focus on money to finance your life, leading a healthy life, and having fun in your life.

If the three can be combined in the same activity, that’s great!  But most often, they can’t.  So there must be room for all; and getting to where that balance feels right for you is the point of personal financial planning.

If you are looking for information on the calm positive mindset requires for financial wellbeing, check out http://www.aikido-secrets-to-calm-success.com

Until next time!

Gary

Financial wellbeing – the demand for financial advice in Australia

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Australians are becoming more concerned about their financial wellbeing and the demand for financial advice is changing.  In December 2010, ASIC (The Australian Securities and Investments Commission) released Report 224, titled ‘Access to Financial Advice in Australia’.

The report identifies a number of key issues that adversely impact access to advice.  They are:

  • Cost of advice – a significant gap exists between what consumers are prepared to pay for financial advice and how much it costs industry to provide advice
  • Scale of advice provided – Many Australians, particularly those who have never previously accessed financial advice, want piece-by-piece simple advice rather than holistic advice
  • Consumer perceptions that advice is out of their reach – evidence suggests that some people do not seek financial advice because they feel their financial circumstances do not warrant advice
  • Consumer mistrust of financial planners – lack of trust in financial planners to provide unbiased, professional advice limits the number of consumers who seek advice and the value they place of financial advice
  • Access to general advice and information – the provision of general advice or factual information is less extensive than it could and should be.  For many consumers general advice or factual information may be sufficient to meet their current advice needs
  • Financial literacy – gaps in financial literacy especially among certain demographics and in relation to certain financial topics, limits some consumers’ engagement with financial matters and so stops them from seeking advice

In a nutshell financial advice must be affordable, easily accessible, easily understood and delivered in smaller portions.

Check out http://www.aikido-secrets-to-calm-success.com

Until next time!

Gary

Be your own financial planner

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Looking for business building tips in Brisbane?  If you are really interested in your own financial wellbeing, become your own financial planner.  Sound impossible?  It’s not as difficult as you may think.

An extraordinary amount of knowledge is required to be a professional financial planner in Australia, but only a fraction of that knowledge is required when you only have one client – yourself!

Think about it!  With only one set of circumstances to understand and one set of goals to achieve (i.e. your own), and no compliance issues to worry about, you only need sufficient knowledge to plan your own financial future.

Let me say upfront that while it is desirable to be involved in the planning of your own financial future, it is dangerous to do the same for others because their circumstances and aspirations are different to yours.  Please refer them to a licensed professional.

In financial planning, the big knowledge areas are taxation, insurance, superannuation, retirement, Centrelink & DVA payments, and estate planning mainly because each is a broad area and there are so many rules to understand.  The other important knowledge area and one that causes a lot of frustration for people, is ‘investment’.

There are so many products and so many options that even the most knowledgeable financial planner does not know them all.  Also, people assume that if a financial planner recommends an investment product, it is guaranteed to make money.  Such is not the case as the GFC has recently demonstrated.

Therefore, if you are seeking to improve your financial wellbeing, it is important to understand the concept of risk.  Risk exists in all investments, bar none.  The value of investments can go up and they can go down.  There are different types of investments and different types of risk, so the real skill is to uncover and understand the risks that are relevant to your particular investment.

Understanding risk requires thorough research – deeper than the glossy brochure.  Also, the closer you are to managing the investment yourself, the clearer the risks are likely to become.  However, that requires some experience.

For more business building tips in Brisbane, check out my Aikido Secrets blog site at http://www.aikido-secrets-to-calm-success.com

Next time – Starting with a budget

Gary

…. And here are another seven (7) operational threats to think about!

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If you are already in business or seriously thinking of starting up a business, I would like to further highlight and emphasise the need for business planning.

If you thought the previous seven (7) threats to your business (read my previous post) were the only ones you need to consider, well here’s another seven (7) for you to think about.

  1. Management incompetence (lack of knowledge, experience or financial skills)
  2. Rogue staff member (with intent to damage reputation, sets up in competition)
  3. Breach of security (deliberate / accidental leaking, online hacking, viruses)
  4. Over-gearing (too much borrowed money, worsened by rising interest rates)
  5. Litigation (by customer, competitor, supplier, bank, Tax office)
  6. Market downturn (e.g. economic, monopolistic activity, lack of demand shift)
  7. Product obsolescence (failure to follow demand and/or keep up with technology)

And it doesn’t stop there!

Yes there are many more operational threats to think about, so if you haven’t done any planning lately, it’s never too late to start.

Business planning is not only for those starting up a business.  It is also for those who are already in business and who so far have led a charmed life.

The typical Aussie retort, “She’ll be right mate!” doesn’t cut it these days. Business is far too knowledge based and technology based.  ‘Not keeping up’ is a big risk.

Whilst the customer is still King (or Queen), there is so much to know and do these days away from the cash register, that one could be forgiven for thinking that the customer is a mere hindrance.

It only takes one of these threats to obliterate or seriously damage your business – not all of them!    So take my advice and get professional advice!

Check my other blog site http://www.aikido-secrets-to-calm-success.com and learn how the secrets of Aikido can be applied to your business.

If you want to learn the secrets of Aikido for yourself visit http://www.griffithaikido.com.au

Until next time!

Gary

Starting up a business – seven (7) operational threats to your business!

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It is not my intention to sound like a profit of doom but it pays to be cautious and examine all conceivable scenarios.  So I am playing the devils’ advocate!

When starting up a business, it is normal to do some serious planning before jumping in.  One of the tradition planning tools is SWOT analysis – i.e. Strengths, Weaknesses, Opportunities, and Threats.

It is important to identify weaknesses, just as it is important to know your strengths.  However, weaknesses aren’t generally fatal – at least not in the short term.  They may cause you problems and probably slow you down.  However, threats are potentially fatal in the short term.  So it is worth spending a little more time on potential threats.

Regardless of the business you are in, here are seven (7) potential threats that could prove fatal to your business.

  1. Putting all your eggs in one basket (e.g. relying on one customer or supplier)
  2. Growing too fast (i.e. too much business to handle, insufficient resources)
  3. Negative cash flow (e.g. from poor pricing, poor costing or unfunded expansion)
  4. Failure to innovate (i.e. not keeping up with technology or competitor products)
  5. Going it alone (i.e. trying to do everything yourself and doing nothing well)
  6. Non responsive to communication (e.g. customer requests, feedback, criticism, complaints, creditors)
  7. Loss of power and / or connectivity (e.g. power outages / surges, internet / telephone problems, failure to back up)

Note that all the threats listed above are operational threats.  And there are more!   Unlike threats posed by natural disasters, these are well within your control.   More importantly, they can all be planned for.  In fact, avoiding these pitfalls is what business planning is all about.

So if you fall victim to one of these threats, it is of your own making.  The fact that you didn’t know that the threat was even possible simply means that you didn’t do enough research before starting up a business.  Any competent business coach or adviser could list these threats.  Get advice!

Check my other blog site http://www.aikido-secrets-to-calm-success.com and learn how Aikido could make a life changing difference to the way you run your business.

If you want to learn the magic of Aikido visit http://www.griffithaikido.com.au

Until next time!

Gary