Apex Advice’s money management philosophy to help you save money more rapidly
[Edited transcript below]
So today we’re going to show you how our Apex Advice money management philosophy can help you to implement an automated savings system that will help you save more faster. Essentially, when it comes to saving money or using cash, you have two options. You can allocate it to today, or you can allocate it to the future.
Now this can essentially be money or savings that you have sitting in the bank, and it could also be surplus income. And with the future spending, essentially you’re putting money away to compound it and grow it over the long-term. This can be done by shares, managed funds or ETFs. It can be done through property, crypto, or even superannuation (a.k.a. retirement).
The key to getting good, consistent results when investing is to make sure that you never send it to future, and then have to bring it back to today. Basically you want to just consistently add money and invest money for future, so that you can compound and grow it over time. So to make sure that what you carve off for the future can stay there, you need to ensure you have all the things in the today side of the ledger accounted for. So that’s things like your fixed costs, it’s your spending for day to day, it’s debt – repaying money, it’s your lifestyle. So again fixed costs are essentially rent, bills, all the boring stuff, and spending is clothes, smashed avo, and goats cheese, shoes, beer money, coffee, whatever. Debt, that’s everyone’s least favourite category, that’s essentially paying money back, generally to the bank. And lifestyle, that might be saving for a holiday or travel, and also doubles as an emergency pot.
The B word [budget]
Now, a plan around spending, and I’m not a big advocate of the B word, but essentially when we allocate funds between these four different categories, we can determine how much is left over for future investing. And that’s essentially what our budget is all about. You need to find balance between the left and the right side. Often savings is considered to be the most important thing, but often comes last. If you do this process well, you can even determine different savings rates using a good compounding tool or something like that, how much progress or success you can make to get ahead, and then if you get it, do it really well, you can, with great accuracy, plan out your spending, savings and investing into the future. Now it’s all well and good to have great ideas and people often do, but we often fall down in terms of the execution and actually getting traction and success. So a clear banking structure that supports good spending and savings habits is the key, and how we do this is we have our income. This is it in practice, and we have that flow into a central cash hub. Then, from that central cash hub, we can then filter money into all these categories as we see fit. And what you end up with is an automated, disciplined, structure or framework, that helps you accelerate your savings and investing, but also plan out your spending with great confidence. When I set these filters up into the categories, I like to do it weekly because I live weekly. And so the key benefits, are that you can hack your behaviours and psychology, and therefore, you know, often I’ve thought since I’ve been doing this, that I just knew it works, but the more research you do around behavioural finance, you’ll note that having isolated accounts for isolated purposes and then automating the flow of money really helps hack a lot of those behaviours instead of trying to spend money, then save it later. It also helps with automation and is very easy to implement and review. And then more importantly, it helps with time. So it’ll save you a lot of time, once it’s all set up and it helps you make rock solid decisions. So that again, you can plan out your spending, savings and investing with ultra confidence. You know exactly where your money’s gone and helped you plan for less certain periods, even with income. Hope that helps, any questions sing out. We’re here to help. Thank you.
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Please remember that the information above is provided as general advice only. The contents have been prepared without taking into account your personal objectives, financial situation or needs. You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.