Overview of the 7 steps
Step 1 – Move all expenses from your bank accounts into a spreadsheet.
Preferably download all payments over the last twelve months from your internet banking so you can capture all your annual payments.
Time estimate – 1-2 hours.
Step 2 – Move all your expenses under the various categories.
The more motivated you are to improve your money management, the more detail you should go into with regards to the number of categories.
Time estimate – 1-2 hours.
Step 3 – Define the buckets you will use and the categories within each bucket!
‘Grow’, ‘Life’, ‘Fun’ and anything else that takes your fancy!
If you’re in a relationship, this exercise may involve a bottle of wine or a pot of tea and a healthy dose of compromise!
Step 4 – Document where you will cut back expenditure!
Now outline the specific areas where you plan to trim your expenditure and by how much! Anyone for another glass of wine?
Time estimate – 30 – 120 minutes (please drink responsibly!).
Step 5 – Set Money Goal’s for the monthly expenditure of each bucket account.
Your net income less your new ‘bucket – Money Goals’ will determine your ‘Surplus Cash Flow – Money Goal’ each month which may need to factor in your next property purchase if it’s going to occur within the next year.
Time estimate – 30 minutes.
Step 6 – Decide how you’ll transact on the ‘bucket’ accounts.
Will you use a credit card or debit card for your ‘Life’ and ‘Fun’ accounts?
Do you have the courage to place stickers on the appropriate cards to ensure you use the right buckets when it comes to making payments?
You might feel a bit self-conscious, but I can assure you that is will help to ensure that your system will be much more effective as the correct expenditure is done from the right bucket!
Time estimate – 10 minutes.
Step 7 – Set up your new mortgage strategy and banking arrangements.
You may be itching to get started, but if you’re refinancing, it makes sense to finalise your mortgage strategy before setting everything up. Your mortgage strategy will interrelate with your Money Management System.
You’ll need to have finalised the following with your Strategic Mortgage Broker and/or Property Planner:
• Your preferred ‘Offset Strategy’.
• Your repayment strategy.
Once you have your mortgage strategy and banking in place, you can set up all your direct debits, salary credits to your ‘Grow’ offset and transfer the budgeted amount into the ‘Life’ and ‘Fun’ accounts and you’re ready to go! Good luck!
Time estimate – 1 – 2 hours.
Do you need help with implementing these seven steps?
Contact us today to book in a free confidential property planning, strategic mortgage broking, money management or property select meeting.
