saving money by repooling

Saving money by repooling your finances

29 Jul, 2016

One of the reasons people find saving money difficult is because of the way they view and organise their finances.


The difficulty with saving money

Typically, you receive your paycheque and then various monthly expenses eat away at it – insurance, loan repayments, childcare costs, etc. Once they’re all dealt with, we live off whatever is left over for the month. The next month we get paid again and the cycle continues. Our money is like a pool that’s constantly being drained and refilled – and saving money isn’t a priority.

So, what happens when one of your regular expenses changes? What if you get a discount on your car insurance, or your child starts school so you no longer have to fork out for childcare? Say you finally finish paying back a loan that was draining $200 a month from your ‘pool’ of money, what do you do now that extra cash is freed up? The answer, for most of us, is ‘nothing’. That extra $200 just ends up being used for groceries, petrol, clothes, and other living expenses, and by the end of the month it’s been drained away. You can’t really say where it went, but you know it’s not there anymore.


Proactive money management through repooling

This is where your attitude needs to change if you want to start saving money. If you do end up with some extra money in that pool each month, channel it into savings or investments rather than just letting it get used up on everyday things. You managed to live without it before, so you won’t notice if it’s simply being directed elsewhere.

The same applies if you get a pay rise: do something productive with that increase rather than letting it be absorbed into your daily living costs.

The beauty of this ‘repooling’ strategy is that you’re not required to tighten your belt in order to save; you just redirect any extra money that comes your way.

Even if you can’t face repooling ALL of the extra money you get from your raise or from reductions in other costs, at least commit to putting half aside in savings or investments. That little amount each month will really stack up over time, and you’ll find yourself growing your wealth with hardly any effort.


To recap:

  • The ‘repooling’ savings strategy makes use of any extra money added to your ‘pool’ of cash each month
  • If you find your monthly expenses reduced because you no longer have to make regular payments towards something, put the money you would have spent on that thing into savings or investments instead
  • The same goes if you get a pay rise: put the extra money straight into savings
  • You shouldn’t notice any difference in the way you live because you’re not changing your monthly budget, you’re just repooling your money


de-cluttering can make you money and save time

How de-cluttering can make you money and save your sanity

27 Jul, 2016

If you’re at home right now, just take a moment to look around you at all the stuff you have. Chances are you can pick out a few things that you don’t really use, or need, or want – and that’s before you start rummaging through all your drawers and cupboards. Could it be time for some de-cluttering?


It begins in your mind

If you’re going to be successful in this de-cluttering strategy, you first need to de-clutter your mind of the belief that your material possessions define who you are. Your friends won’t like you any less just because you don’t have the latest model of phone, and you don’t need a kitchen full of gadgets and appliances in order to keep your family fed.

When it comes to your clothes, have you considered simplifying with a capsule wardrobe?

Once you get yourself into a “less is more” frame of mind, it’s time to tackle your home. In the process of de-cluttering, you’ll identify some things you definitely want to keep, some that you can give away to family, friends or charity, some that you can sell online or at a garage sale, and some that really belong in the bin.

This might seem like a daunting task, but there are different ways you can approach it to make it more manageable.


De-cluttering techniques

One idea is to begin by walking through each room of your home with a notebook, making notes about the spaces you’re making good use of and those which need a good clear-out. You’ll be able to immediately identify some things you definitely want to keep, some things you should have got rid of a long time ago, and others which will need more careful consideration. Over the next few weeks and months, work your way through that list and start de-cluttering each space in your home, donating, selling or binning your excess possessions as you go.

Another approach is to take four boxes and mark them ‘keep’, ‘sell’, ‘donate’ and ‘throw’. Identify a space in your home – it could be a single drawer to start with – and place every item into one of the boxes according to what you’re going to do with it.

With your de-cluttering complete, you’ll have more space and more money – it’s surprising how much you can make from selling the stuff you don’t use any more. Also remember that any charitable contributions are tax deductible.

The important thing now is to stop yourself from accumulating more unnecessary stuff by keeping that “less is more” attitude at the front of your mind.


To summarise:

  • The process of de-cluttering begins in your mind – stop believing that you’re defined by what you own
  • When you identify something you no longer need, use or value, decide whether to sell it, give it away, or bin it
  • You can tackle this process room by room or drawer by drawer – just keep working through your home steadily
  • Once your de-cluttering is complete, make a conscious decision to stop accumulating more ‘stuff’


save money everyday

Nine easy ways to save money by reducing expenses

25 Jul, 2016

Do you struggle to save money because you’re always spending it on something? Here are nine ways you can reduce your expenses so you have more free to save each month.


1. Only shop when you need to

How often do you head to the shops out of boredom and end up buying something you didn’t really need? By avoiding these unnecessary shopping trips you can save a surprising amount of cash. Make a list of the things you need and try to stick to it to avoid impulse buys.


2. Live within your means

If you want to buy something, make sure you can pay for it in cash. If you don’t have the cash, you’ll have to wait until you’ve saved enough, and by then you may have gone off the idea anyway.


3. Take care of your stuff

By taking good care of the things you have you can make them last that bit longer. Keep your tools clean, change the oil in your car regularly, and check the filters on your washer and dryer regularly.


4. Use and reuse

Before throwing something out, see if you can get just a bit more use out of it. Old clothes can become cleaning rags, and screws and cords saved from broken electricals might come in handy in the future.


5. Save money by doing it yourself

Don’t automatically turn to a professional with a hefty hourly rate when there’s a job to do. Check a YouTube tutorial or take an adult education class and then have a go at doing it yourself.


6. Plan ahead

You can save money on necessary purchases by watching out for bargains and seasonal sales. Sort out your child’s winter wardrobe for next year when everything is half price at the end of the previous season, or stock up on your favourite shampoo while there’s a multibuy offer on.


7. Do your research

Cheap doesn’t necessarily mean good value, so always research the quality and durability of an item before you buy, especially for big-ticket purchases. Ask friends about their experience with a particular brand or check consumer websites to help you make your decision.


8. Get a better deal

Whether it’s a tin of soup or a new TV, there’s always a deal to be had. Check mail-order discounters and discount stores, phone around different retailers, negotiate, and ask for discounts if you pay by cash.


9. Get it second-hand

Look around your local op shops and keep an eye out for garage sales where there are bargains galore. Just keep point number 1 in mind…


curb overspending habit

Nine ways to curb your overspending habit

22 Jul, 2016

If you often find yourself tempted to buy things you don’t really need, even though you know you don’t have the money to spare, it might be time to address your overspending habit.

Whether your vice is gadgets, clothes or entertainment, these strategies should help you fight temptation and get your spending habits in check:


1. Have a goal in mind

Think of an important financial goal that you want to achieve – it could be anything from buying your own house or getting a new car to putting your kids through university. Find a photo or drawing that illustrates your goal and put it in a small notebook. You’ll now carry this notebook with you everywhere you go, and when you are tempted to spend money, take out the picture and remind yourself how it’s going to feel to be driving around town in your new wheels or watching proudly at your son’s graduation ceremony. Now write down whatever it is you’ve decided not to buy and make a note of the value. Over time you’ll get great satisfaction from seeing how much money you’ve ‘saved’ towards your goal.


2. Find a distraction from overspending

Write down a list of things you really like to do (aside from spending money). Maybe it’s going for a walk in the park, reading a book, baking, or visiting art galleries. The idea is that every time you feel tempted to spend, you can turn to one of these activities to distract you and give you something else to enjoy.


3. Find a spending buddy

Or a not-spending buddy, as the case may be. Find someone who is happy to help you handle your compulsion to spend; it could be your partner, a friend, or a relative. They may even be struggling with an overspending problem themselves. Whenever you find yourself feeling the urge to go on a spending spree, call your buddy instead and let them take your mind off the urge to spend.


4. Stop, look, and listen

The idea of this strategy is to apply some rational thinking to your urges. You need to stop when the impulse hits you (deliberately not act on it), look at what it’s telling you to do (go now and spend money), and then listen to your more logical self (“I already have a suit that I can wear to the interview.”)


5. Make some new habits

The only way to truly break your overspending habit is to replace it with some new, more financially healthy ones. Practice going against what your shopaholic self would do with some of these exercises:

  • Keep some money in your wallet for a whole month without spending it
  • Leave your credit cards at home for one week (and no, that doesn’t mean you can still use them for online shopping)
  • Give yourself a 24-hour cooling off period before buying anything over $10
  • If you’re planning to buy something costing more than $20, check the price in three different locations before making the purchase


6. Find a new way to make yourself feel good

In many cases, people over-spend because it makes them feel better – at least temporarily. If this is the case for you, find something else that can meet these needs, such as taking a course to learn a new skill, joining a special interest club or doing some volunteer work. As you find a new sense of purpose through these routes you will hopefully lose interest in all that spending.


7. Avoid overspending temptation

Know the situations in which you’re most likely to give in to your urges, and avoid them as best you can. If you find it hard to control your spending at the shopping mall, don’t go there unless necessary, and then only visit the stores for the items you need. If you know you get bored in the evenings and start browsing online shops, keep your computer off and find some other things to do with your time.


8. Keep a record of your progress

Every time you feel like you’ve taken a step forward by not giving in to temptation or by making a positive choice to avert your urges, write it down. The journey to better spending habits will take time, so it’s good to have a record of how far you’ve come.


9. Treat yourself

Allow yourself rewards when you hit certain milestones or accomplish particular tasks. If you manage to go without your credit card for a whole month, for example, you could celebrate with a night at the movies. You could even go for a shopping trip with a friend, as long as you make it slow and deliberate and you focus on enjoying the experience rather than the high you get from spending.

A combination of these strategies should see you well on the way to better financial management and, ultimately, greater wealth.


negotiate exit package

How to secure a better exit package at work

20 Jul, 2016

It’s an unfortunate reality of today’s workplace culture that you may, at some point in your career, face a layoff. It may be difficult to keep a clear head if this happens to you, but negotiating for a better exit package will make it less financially painful.


Ways to improve your exit package

  • Ask for more severance pay. At this point, you have nothing to lose. Perhaps your employer will be willing to up the one or two weeks stated in your contract to three, four, or even more.
  • See if there are any other benefits your company can offer to help you with the transition.
  • If you rely on a company health or life insurance policy, make sure you find coverage from another source (yes – this may be an expense initially but it protects you against big bills should anything happen to you).
  • If retirement is an option, get to grips with what your pension offers and understand the tax implications of everything you do, including receiving lump sum payments.
  • Get yourself a good reference before you leave. And if you can’t count on your boss to write one for you, write it yourself and get him or her to sign it. Also consider including a list of your accomplishments during your time at the company.

If you’re not retiring and instead need to return to the workforce, it could be wise to give yourself a short break before beginning the hunt for a new job – just like you would with a relationship. Once you start looking, don’t be too anxious about taking the first thing that comes along, despite the financial pressure you may be feeling. It’s better to hold out for the right position with a company and salary you’re happy with.


In short:

  • If you find yourself made redundant, do what you can to boost your finances short-term by asking for additional severance pay and extra benefits in your exit package
  • Check your health and life insurance policies to make sure they don’t lapse
  • If you’re planning to retire, understand your tax situation and your pension
  • Get your boss to write or sign a good reference before you leave
  • Give yourself a break before looking for a new job, and don’t just go for the first one offered to you


better-paying job

Tips for getting a better-paying job to boost your income

18 Jul, 2016

No matter how much you may love what you do, you can’t pretend that you’re not ultimately in it for the money. And that’s ok; we all need to make a living somehow. So doesn’t it make sense to ensure you’re getting the maximum benefits from the hours you put in by hunting for a better-paying job?

Even if you think you’ve got a pretty good deal with your current employer, it doesn’t hurt to take a look at the salaries and benefits that other companies are offering for the same role – you never know what you may find.


Tips for finding a better-paying job

Here are some tips to help you along in your search for a better-paying job:

  • Get your name out there. Wouldn’t it be great to land the perfect job through being head-hunted, instead of having to go through the process of sending numerous applications and attending endless interviews? Well, that’s not going to happen unless people know about you. Join some professional networking groups that are relevant to your skills. Do some volunteer work. Take every opportunity to meet new people and talk about what you do, planting seeds all the way.
  • Be specific in your search. There’s no point applying for every single job you come across that might be even vaguely suitable for you. This will waste your time and increase your stress levels – both things you want to avoid, especially if you’re still holding down a full-time job. So, be selective in what you apply for. Use all the contacts you’ve made to narrow down the companies you’re interested in, and then research them further to find out whether they would really suit you and meet your expectations.
  • Let your resume do the work. Most potential employers will get to know you from your resume before they meet you in person, so make sure it’s good enough to get you through that initial stage. Keep it short and focused; imagine it as a sales pitch in which you are the product. Be clear about what you have to offer and how you can benefit the company.
  • Protect your information. Yes, everyone is recruiting online these days, but you need to be careful about how much information you share with the world. It’s a really bad idea to openly post a resume containing personal details such as your home address and salary history. Remember, anyone can come along and read it so unless it’s the kind of information you’d be happy disclosing to a stranger, don’t include it.

If you really have no desire to switch jobs, at least make sure you’re getting everything you can from your current employer. Read our tips for getting better benefits and a pay rise.



  • Keep an eye out for better-paying jobs even if you’re not desperate for a change; you never know what might be out there and what kind of salary and benefits you could be missing out on
  • Get your name out there by networking and attending events in your sector
  • Don’t apply for jobs just for the sake of it; be selective about which companies you really want to work for
  • Sell yourself with your resume by showing what you have to offer the company
  • Be careful about how much personal information you post online, especially on an open platform


increasing your income

Is there such a thing as increasing your income the easy way?

13 Jul, 2016

There are two ways that you can increase your net worth: increasing your income or cutting your expenses. For now we’re going to focus on the former.

So, how can you increase your income? Work more hours? Work harder in the hope that your employer will notice and give you a decent pay rise? Study some more, assuming that a new qualification will land you a higher-paid job?

Gone are the days when graduating from university guaranteed you a secure job where if you worked hard you could move your way up the corporate ladder and reap the benefits later in life.

Well, it may still work that way for a few, but in reality we have a workforce that is underemployed, overworked, and generally dissatisfied with their career choice and/or work-life balance.


Another way of increasing your income

If that sounds like you and you’re wondering if there is another way, we have good news! Increasing your income doesn’t have to mean working harder for a bigger paycheque. It doesn’t have to mean slaving away your whole life at a 9-5 job without receiving the recognition you deserve. In fact many experts argue that receiving income only for the work you do is the worst way to go about becoming financially independent. Why?

First of all, let’s look at the three kinds of income that can potentially add to your net worth:

  • Earned income comes in the form of a paycheque and the amount paid is directly proportional to the hours worked
  • Portfolio income comes from stocks, bonds, mutual funds, and other investments
  • Passive income comes from things you own, such as property, patents, license agreements, and businesses

And when it comes to earning this income, there are four main (and legal) ways you can go about it:

  • Work for someone
  • Be self-employed
  • Have your own business(es)
  • Be an investor

To connect these two lists, we can say that employees and the self-employed receive earned income, business owners receive passive income, and investors receive portfolio income.

One of the keys to financial independence is having as much portfolio and passive income as possible, with the ultimate aim being to have enough from these sources that earned income is no longer necessary. In the dream scenario, you can quit your day job and still be able to live comfortably from income earned by your investments, businesses, properties, etc.

One of the benefits of portfolio and passive income is they are not taxed as heavily as income in the form of a salary. When you’re working for a salary, you never see a large chunk of the money because it gets whisked away by the government. Other sources of income offer better opportunities for tax breaks.

But perhaps the biggest thing going for portfolio and passive income is the fact that they are not limited by the hours you put in. So, increasing your income doesn’t have to mean increasing your workload.


Working for every dollar

When you work for a company, you get paid in proportion to the hours worked, whether you’re on an hourly rate or a salary. If you work more hours, you get more money (unless you have a ruthless employer who expects you to work overtime for nothing).

It’s a similar picture with self-employment. Although the idea of being your own boss and setting your own working hours may seem like a dream come true, the fact remains that you still have to put in the hours if you want to make money. Over time you may be able to increase your hourly rate or apply a bigger mark-up to your products, but your income is still limited by the amount of work you can physically do.

Self-employment can also be risky; inexperience and lack of capital cause many entrepreneurial ventures to fail within a few years. And if you do succeed, you find yourself having to work harder and put in more hours to sustain that level of operation.


Self-employment vs. business ownership

Let’s not confuse self-employment with business ownership. Whereas a self-employed person is working solo, using their own expertise to make money, a business owner has a team of people working for them.

A self-employed person stops earning if they take a break, because there is nobody else to keep things going in their absence. A business owner, however, has a self-sufficient operation which they can leave for periods of time without risk of it collapsing.

A self-employed person’s income is tied to their time and time, sadly, is finite. Say you charge $50 an hour for your time. If you work 8 hours a day, five days a week, you have the capacity to earn $400 a day and $2,000 a week. If you want to increase your income, unless you can get away with increasing your rate, you have to work more hours. You could work yourself to the ground doing a 60-hour week and make $3,000, but that’s hardly sustainable. You have few options for increasing your income beyond this point.

A business owner, on the other hand, doesn’t find their income restricted by the hours in a day because if they want to make more money from their business, they can increase their capacity by hiring more staff and expanding their operations.

Let us acknowledge that this is a somewhat aspirational view of business ownership; there are countless business owners who find themselves tied to their desks and unable to take time off, whether because of poor staffing, inefficient operations, an inability to let go, or a combination of the three.


The path to passive and portfolio income

If you wish to escape the rat run of earned income, there are really two ways to go about it: start to build up an investment portfolio immediately, or become a business owner and then embark on the investment path.

If you start your own business first, and get it to the point where it is up and running on its own, you will have more time free to research potential investments as well as the cash flow needed to build your portfolio. It’s also likely that, in the process of establishing your own business, you will gain knowledge and experience that helps you pick out good investments in the future.

The thing is, as mentioned earlier, starting a business is a high-risk strategy which has the potential for you to lose everything and even come out saddled with debt as a result of your efforts. Even if you can make it work, it may be many years before you’re at the self-sufficient stage where you can focus your attention (and money) elsewhere.

Bearing this in mind, it may be safer to head straight for the portfolio income option and build up your investments over time. You can accelerate this process by cutting your expenses and pumping the money saved into your investments. With some careful management and perhaps a bit of luck, you can get to the point where your portfolio is generating enough income for you to cut back your hours at work or even quit your job completely.


Let’s recap

  • Increasing your income is an important element of building your net worth
  • There are three categories of income: earned (from employment or self-employment); portfolio (from shares, bonds, etc.); and passive (through ownership of properties, businesses, etc.)
  • Financial freedom comes more readily through passive and portfolio income
  • Starting your own business has the potential to be a lucrative source of income, but comes with a very high level of risk
  • Building up an investment portfolio while continuing with earned income may prove to be the best balance for most people


financial goals

How to set financial goals (and why it matters)

11 Jul, 2016

Sorry to go all annual review/life coach on you, but we need to talk about how you set yourself financial goals.

Simply stating “I want to be rich!” is not a goal; it’s a fantasy. You have almost no more chance of achieving that than you do of finding a pot of gold at the end of a rainbow.

If you’re going to give yourself a fair chance at meeting your financial goals, you need to make them SMART. You may have come across this approach to setting goals before, perhaps at work or school.


SMART financial goals

  • S is for specific. Your goal should be explicit and precise. As noted above, saying “I want to be rich” is not sufficient. To make this specific, you could say “I want to have a net worth of $1 million by the time I’m 50”.
  • M is for measurable. How will you know that you have achieved your goal? “I will save more money” shows the right intentions but is difficult to measure. Pin your financial goals down with numbers that will leave no doubt as to whether or not you have reached them.
  • A is for attainable. While there’s nothing wrong with ambitious goals, they still need to be achievable for you. The ‘millionaire by 50’ goal may not check this box if you’re already 49 and have a pile of debt. If you’re still in your 20s, however, and already have a small investment portfolio, you stand a chance of making it.
  • R is for relevant. Does the goal align with your values and desires? Wanting to buy a 5-bedroom house would make good sense for a large family, but might be a strange goal for a single retiree. This is your reality check to make sure you’re not just making decisions on a whim.
  • T is for time-based. If you don’t put a date on your goals, you’re not giving yourself much incentive to achieve them. The ‘I’ll do it one day’ attitude won’t help you here, so set yourself a realistic deadline for each of your goals.

Here are a few examples of SMART financial goals:

  • I will pay back a minimum of $200 a month on my loan until it’s paid in full
  • I will only get takeaway once a week for the next year
  • I will pay off my credit card balance in full every month
  • I want to save up a $100,000 deposit for a home by the time I’m 35

If you’ve already been through the process of setting yourself a budget and calculating your net worth and cash flow, you may well already have set yourself some financial goals. Now you just need to go back through them and make sure they meet the above criteria.

Some research suggests that people who write their goals down are more successful in achieving them, so don’t stop at just having a good think about these. Once you’ve worked out some SMART goals for yourself, get them in writing. Tuck them away somewhere safe or put them on post-it notes all over your house if you feel like it, but keep them in mind and check back occasionally to see how you’re doing with them.

One last thing to remember is that your goals don’t need to stay fixed for life. As you get older your priorities will change, as will your financial status, so revisit your goals from time to time and make sure they are still relevant and attainable – if not, adjust them or make some new ones.



  • For your financial goals to work, they should be SMART: specific, measurable, attainable, relevant and time-bound
  • Use a budget and calculate your net worth and cash flow to help you determine your goals
  • Writing your goals down can help you remember them and stick to them
  • Re-visit your goals periodically and add to them or adjust them if necessary


evaluate cash flow

Evaluating your cash flow for better money management

08 Jul, 2016

Just as your net worth can be calculated by subtracting what you owe from what you earn, your cash flow is what you earn minus what you spend:

Cash Flow = $ Earned – $ Spent

It’s important to know your cash flow because it largely determines your net worth over time. If you earn more than you spend, you have money spare to pay off your debts or increase your investments, thus growing your net worth. Conversely, if you spend more than you earn, your net worth will be depleted over time through running down your savings or taking on additional debt. It’s not rocket science, really.

Ultimately, a healthy net worth depends on effective management of your cash flow.


Calculating your income

Of the two numbers needed to calculate your cash flow, income is the easier to obtain. Gather together your pay slips, tax records, dividend statements, and anything else where your income is recorded. Remember to include all of the following if applicable: 

  • Your salary
  • Your spouse’s salary
  • Pensions
  • Centrelink payments
  • Income from rental property
  • Investment dividends
  • Interest income
  • Income from capital gains
  • Business income
  • All the income reported in your last tax return
  • All the income not reported in your last tax return (even if it should have been)


Calculating your expenses

This part is a bit harder. It’s no good estimating your expenses, because you’ll almost certainly underestimate your true living costs. That annual insurance payment might slip your mind, and it’s near impossible to mentally add up how much you spend on little things like the chewing gum at the cash register or the after-work drinks.

The only way to do this properly is to start keeping a record of everything you spend – and we mean EVERYTHING.


Tracking your spending

How you choose to do this is up to you, but the important thing is that you don’t miss anything out. It doesn’t matter if it’s one dollar or one hundred dollars; it goes on the record. If you feel embarrassed about writing down how much you’ve spent on a particular thing, you’re already learning something about your spending habits (but yes, you still have to write it down).

There are three main ways for you to track your spending:

1. Good old-fashioned pen and paper

Get in the habit of carrying a notebook with you everywhere you go and writing down everything you spend – whether you pay by cash, cheque or card. Another option is to use index cards and take out a new one each day. At the end of each week you’ll need to sit down and compile your records, sorting them by spending category (see below for some suggestions). This could be done on a spreadsheet or by hand.

2. Credit or debit card statements

If you and your card are inseparable and you use this payment method wherever possible, you’ll find that your statements already have most of the information you need to track your spending. Make the majority of your purchases by card, and when you have to pay by cash, keep the receipt. It’s also handy to keep your receipts for larger shops where you combine different categories of spending, for example a trip around the supermarket that includes a box of chocolates for a friend’s birthday.

If you have online access to your records you can check these at your convenience to categorise your spending. Alternatively, wait until your statement arrives in the post and set aside some time to work it all out.

One word of caution: credit cards = interest if you don’t pay off the balance in full each month. If this isn’t a route you want to go down, use a debit card instead as this only lets you spend the money you already have in your account.

3. A computer or mobile app

If you’d rather keep things electronic, you can download an app or computer program to track your spending and automatically categorise it for you. The benefit of using your phone is you have it with you all the time and it’s easy to just pop the numbers in every time you go shopping. With a computer program, you may still need to keep a record on paper when you’re out and about to help you remember every little thing you’ve spent money on.

Whichever option works for you, you should keep it up for at least one month and be completely honest about your outgoings. It might seem like a lot of hard work, but the only way to grow your net worth is to spend less than you earn, and to do this you need an accurate picture of how much you spend.

You may even find that this process in itself changes your spending habits for the better. Once you see the true cost of one or two coffees a day, for example, you might decide it’s worth making your own.


Suggested spending categories

Use the table below as a guide as you organise your spending into categories. Add or remove rows to suit your own personal situation.


Property insurance Tuition
Property taxes Room and board
Utilities (gas, electric, oil, water) Books
Lawn care School-related expenses (class dues, parties, fundraisers, etc.)
House cleaning HEALTH
Rubbish collection Non-reimbursed visits to doctors
Pest control Health insurance
Baby-sitter Non-reimbursed pharmaceuticals
Other (pet-related expenses, house sitter, etc.) Gym membership, home fitness equipment
Car/lease payments Holidays
Car repair and maintenance Entertainment (cost of going out to movies,

theatre, etc.)

Car insurance and tax Entertaining (cost of parties, dining in your


Fuel Books, newspapers, magazine subscriptions, club memberships
Commuting costs (train tickets, bus passes, etc.) GIFTS
Parking Charitable contributions
FOOD/SUNDRIES Gifts to friends, family, and so on.
Drugstore expenses Insurance (life, disability, etc.)
Take-out meals Maintenance, child support
Restaurant meals Child care
Habits (alcohol, cigarettes, etc.) Credit card, loan payments
CLOTHING Retirement contributions
Clothes Savings account contributions
Shoes Investments
Dry cleaning, laundry expenses Religious contributions


Sample monthly cash flow statement

Below is a table you can use to calculate your cash flow based on the income and expenses you’ve recorded. If you have already set yourself a budget, enter this in the ‘planned’ column and see how closely you actually stick to it. Again, feel free to adjust the categories to suit your own situation.

Income Planned Actual Difference
Interest income      
Rental property      
Total income      
Regular payments      
Total Expenses      
Income – Expenses      


What now?

Now you have an accurate idea of your cash flow, it’s time to act on all that valuable information you’ve gathered. If you got a shock from seeing the amount you spend on takeaways, for example, perhaps you need to set yourself some limits. If the holidays cost a whole lot more than you’d planned for last year, try not to get quite so carried away this year.

If your household doesn’t already keep a budget, now could be a good time to start one as this is one of the most effective tools you can use to help you stay in control of your money.

Identify some areas you can cut back on to get your cash flowing more strongly in the right direction, and then work out what you can do to make that extra money work harder for you, whether it’s paying off your debts or exploring your investment options.


Calculating your cash flow in short:

  • In order to build your wealth, you need to be earning more than you spend and using those excess funds effectively
  • To build an accurate picture of your cash flow you need to track your spending for a month or more. Use a pen and notebook, a computer program or app, or refer to your card statements to track your spending and then categorise it
  • Identify areas where you have the potential to cut back on your spending and therefore improve your cash flow
  • Creating a budget will help you manage your money more effectively and optimise your cash flow