Louise Brogan, founder of All Money Matters, studied and worked in the accounting and the stockbroking industries for 20 years, giving her extensive experience in investments, and choosing and managing investment portfolios.
She ran her own investment consultancy, and was one of five women members of the Australian Stock Exchange (now known as the Australian Securities Exchange).
This, plus years of counseling and psychotherapy study has given her a solid foundation for an integrated or holistic approach to money issues. Louise is an active investor, owning both property and shares. She encourages everyone to learn as much as possible about their own, unique investor profile, and find out what works best.
How do I start a budget from scratch?
Doing a cash flow statement is probably more helpful than a budget.
What’s the difference?
A budget estimates your future income and expenses. Yes, it can be based on past earnings statements and bills, however, in 90% of clients’ cases, the budget has been hastily put together and ‘played around with’ so it looks good – usually for my benefit! Once we delve deeper, the reality is that the budget is what is ‘hoped for’ rather than ‘what is’. Their first draft budget may really be more about their financial goals, and what they want to achieve with their finances; rather than reflecting their current reality.
A cash flow statement, on the other hand, records all actual income and expenditure for the last 12 months. This is real. This is something that can be used. Not only does it reflect your current money habits, but it will also show you exactly where you and the family (if any) needs to make changes; by how much, and which changes are the most urgent.
Now, that’s a very powerful piece of information!!
So, I invite you to prepare your cash flow statement – as soon as you possibly can. If you’re new to this, you may need some assistance as it can be a bit overwhelming to go through the last 12 months of your life to gather the information and then record it.
All Money Matters can assist with tools:
Firstly, on our web site www.allmoneymatters.com.au we have a cash flow template you can use (it’s on the ‘Free Resources’ page). It’s in an MS Excel spreadsheet format and is set up so you can record your daily expenses, which will flow into the monthly figures, which will then flow into the yearly totals.
If you don’t have any financial information – that is you haven’t kept your bills etc (and some people don’t) then I suggest you start to build your cash flow statement, starting from now.
Secondly, should you need further guidance, we have an excellent e-course which will take you through the process, step-by-step, again with a downloadable cash flow tool. The e-course is simple, straightforward and flexible. It will also give you access to the information for as long as you need it.
Thirdly, if you want encouragement and support, (and let’s face it, who doesn’t) we offer one-on-one coaching: face-to-face or by phone, and we would be delighted to assist you!
There is nothing more exciting than learning about what is happening with your money and making conscious choices about how you will spend, save and invest it. It is such and empowering, and freeing feeling!
Why can’t I live within my means?
We can have the best of intentions, and yet, when the time comes, when we’re at that mall or surfing our favourite shopping sites or watching the TV, it’s just so easy to buy ‘whatever’!
If you have just completed your cash flow statement (see question 1), you will have identified some, if not all, of your money habits, and the emotions behind those habits.
Some of your money habits and attitudes will be positive and helpful, and some will be negative and creating your financial problems. I strongly encourage you to get help in putting strategies in place. You need to turn those unhelpful habits around or let them go. Make no mistake, they will control you until you expand your awareness, and make the decision to create changes.
What we have found is that problem spending (and debting) or problems with money generally, always, lead back to some core belief(s).
Let me briefly share with you how this dynamic works.
Those very early years, from birth (or conception) to around two years old, are our ‘pre-cognitive’ years. In other words, we are not conscious of our thought processes; we don’t know what we’re thinking.
The problem arises if we don’t have the opportunity, or take the opportunity, to learn these skills.
This is where those of you who are parents and grandparents can be aware of the impressions your children or grand-children are taking in. Help them to process those impressions as positively as possible. You won’t catch them all, but you can make an enormous difference!
And remember, your children watch what you do and will copy you!
So, if you’re wondering why on earth you can’t change those negative money habits, it’s more than likely that they were formed a long time ago. They may well be difficult to shift, but they can be shifted – it’s your choice!
Use your cash flow statement as a starting point, and get professional support, if required.
Those habits and attitudes have been probably been with you most of your life, so give it time – and please, persist, it really is worth it!
Money management and being wealthy is a process; a process which you choose one day at a time, every day.
Try a wonderful meditation and visualization available on download at www.allmoneymatters.com.au
I’m in over my head with debt; where can I get help?
Deciding to get help is the most important step and will probably be the hardest step!
You’re possibly unable to afford assistance, so the Financial Counselors Association of New South Wales is a good option.
The Australian Securities and Investment Commission (ASIC) has a list of resources.
ASIC lists financial counseling organizations and their contact details, plus give tips and heaps of other good information. Even if you’re not having financial difficulties, check this out!
It’s vital that you keep in touch with your creditors on a regular basis, updating them with where you’re at and how you intend to repay the debt. If you are behind with a repayment, call and let them know. Tell them when you’ll be able to make that missed payment and how you’ll manage from there. A financial counselor will, of course, assist you to do this should you wish.
Nothing gets a creditor more annoyed, and likely to take further legal action, than if they feel they are being ignored by a person or business that owes them money.
The person or business to whom you originally owed the money (the creditor) have either their own credit management department or they have contracted a specialist debt collection business or agency. So the person you originally dealt with may no longer be in charge of your debt.
The credit department or agency will now contact you and find out your plans for repayment etc. These departments and/or agencies are usually reasonable and open to assisting you work out a repayment plan. I have represented a number of clients and have found every creditor I dealt with helpful and flexible (yes, including the banks and the Tax Office!)
Unfortunately, at times however, you may come across an aggressive person or agency. If you are finding that you’re being harassed with multiple phone calls daily, or weekly, or late at night, then take action and report them. No-one should be hounded and/or verbally abused - no matter what.
So please, don’t put up with this sort of behaviour, thinking that you deserve it because you owe them money. That couldn’t be further from the truth! Your financial counsellor or ASIC can help.
I encourage you to work through this tough time and repay the debt in preference to declaring bankruptcy. I assure you, you will learn an enormous amount about money management and hone your skills and financial knowledge.
At times, of course, it’s just not possible to avoid bankruptcy, but that must be a last resort. If you do need to go down that path, make sure you have good legal representation. There is a legal aid service and again, your financial counselor can help you access it.
I also want to impress upon you that you need to understand what happened, how you ended up in this situation and what you can do to make sure it doesn’t happen again. This means you do have to look at your money habits and attitudes, at some point.
How can I make realistic goals for myself for this year?
Making realistic goals for the year starts with doing your cash flow statement. Once this is complete, you will know what you can, and can’t achieve for the year and beyond. Your completed cash flow statement will show you what to do: repay consumer debt? Cut down expenses? Start a savings or investment plan? Salary sacrifice? And it can show you how much in $ terms. This will keep your goals realistic and ‘do-able’.
What else can I do to put my money back on track?
Expand your awareness of your money habits and attitudes
This is an ongoing process and you will find that your choices will continually be influenced by your habits and attitudes.
Again, habits and attitudes can be both positive and negative, so look on this as an interesting exercise. A way to do this is to regularly play the CASHFLOW game. Robert Kiyosaki put this game together to simulate what you do, financially, in real life. It’s fun and not too confrontational or competitive. It highlights your financial habits and attitudes for you.
For those of you in Sydney, New South Wales, we run CASHFLOW days – see the dates. Visit allmoneymatters.com
This is a great way to grow your financial intelligence!
Keep in touch with your investments
“But I don’t have any investments!”
Well, you have super, don’t you? That’s an important investment, and you need to follow what your fund is investing in, and how it’s performing. Read the reports sent to you. Now, what are you going to choose? Stay in your ‘old’ mentality of ‘I can’t do that’ or embrace something new and decide it’s time to learn.
This is a wonderful opportunity to grow your financial literacy.
For those owning shares or property or fixed interest securities, such as debentures or bonds, keep reading the reports sent by the companies involved. If you own rental property, go and visit that property(ies) at least once a year. I do and I find out things about the property that only a visit can tell me. I also speak with the managing agents regularly, at least quarterly, and have a face-to-face meeting once a year. If you don’t give your investments attention and energy, they can’t perform their best for you!
Keep learning
Oh boy, how important is this! It doesn’t matter how experienced an investor we are, we can always learn more.
This is true for everyone.
So keep learning. Read the newspaper and relevant magazines, sign up to some investing newsletters online, join in blog conversations, do courses. There are some excellent online courses. Yes, All Money Matters has some too! They are specifically designed to take you step by step through the fundamentals.
The ASX (Australian Securities Exchange) asx.com.au has some good online courses on shares – from beginners to experienced – plus they have the online Stock Exchange Game. This is a good way to test your skills and knowledge before you outlay your money.
The Australian Shareholders Association http://www.asa.asn.au/ has some good educational material, and runs courses and workshops throughout Australia.
Get some good financial coaching!
Yes, I couldn’t help myself! There is nothing like ongoing coaching to help you keep on track.
We offer different services tailored to suit your needs and budget. We also have an excellent network of professionals, all specialists in their area, so when you’re ready, we can refer you to them, knowing that you are in the best of hands.
Have a look at our web site www.allmoneymatters.com.au and email us with any questions, or, give us a call on 61 2 9974 5128.