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This podcast is for education and entertainment purposes. It's not financial advice and doesn't take into account your objectives, financial situation or needs. You should consider if the information in this podcast is appropriate for you and contact a professional financial adviser. If you are seeking financial advice. Hello and a very warm welcome to the Teachers Mutual Bank Better Money Management Podcast.
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I'm Alan Waugh from Teachers Mutual Bank and joining me today. And for all three episodes of our Better Money Management series is financial wellness coach Betsy Westcott. Betsy is greatest wish that every Australian enjoys financial well-being. She believes that the more skill and knowledge we have around money, the better choices we can make to live a happy, independent life.
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That's why she's dedicated her career to helping people make the most of their money. Betsy holds qualifications. Is financial advice, home lending and money coaching. Hello and welcome, Betsy. It's great to have you with us. Hi, Alan. I am absolutely thrilled to be joining you. Fantastic. Now, for many of us, prioritizing our financial well-being can be a bit of a challenge, especially if you're working long hours and juggling the demands of day to day expenses that go hand in hand with a busy working life.
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That's why we're here to help. And the information, tools and tips you need to boost your financial well-being and get the most from your pay and work towards the life goals that matter to you the most. Across our three part series will be looking at three key aspects of good money management budgeting, saving and being healthy. And we're looking forward to that.
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But before we get started, we'd like to acknowledge the traditional custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander people. Let's move on to today's episode and we're going to be talking about budgeting some exciting stuff and it's why it's such an important piece in improving our overall financial well-being, isn't it, Betsy?
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That's right. Alan Love it or not, all roads to financial wellness begin with budgeting. The old byword. But today I'm going to help you see that it's actually something that can be really empowering and really fun and something that's really going to bolster your financial well-being and throughout the episode today, we're going to talk through some of the common challenges, bust a few budgeting myths, talk about why budgeting is so essential to financial well-being as well as go through some practical tips on how to set one up and how to really optimize it.
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With a couple of my sneaky but fabulous tips around making your budget a true success. Fantastic. But really looking forward to that. But first, let's talk about some of the challenges our teachers might face when they come up against when it comes to their finances. So managing your finances can be really challenging as a teacher, especially if you're a casual teacher or someone that's working on a contract.
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Your income can be a little bit up and down. Sometimes you might have periods during the school holiday or when a contract ends well, you know, earning any income. So you've really got to manage your money well to ensure that you have the means to pay your bills during those breaks in income. But even if you're in a permanent role, it can still be really challenging because there's not a lot of wage growth and your income can be quite flat in teaching.
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It's unfortunate reality. So this is why having a really good budget can be so helpful for optimizing your financial well-being and ensuring that you're going to hit and smash all those life goals. Absolutely. And I think that for most of our listeners, whether or not they have some sort of budgeting tool that they use currently, everyone wants to manage their finances a little bit better.
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So budgeting can still be a little bit tricky that it can be. I think for a lot of us it's like, where do I even begin with a budget? There's also this misperception that having a budget means restriction and no fun and no one really finds that exciting. And then again, that's a lot of association with the word finance and budget that it's a chore and it's something that we have to do, not something that we get to do.
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And it's not seen as something empowering when in fact it really is. It helps you make a plan for your money and it helps give your money a job aligned with your goals and with your values. So we hopefully can show you today how to take some of that overwhelm and that stress out of budgeting and make it something really enjoyable.
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So, Betsy, given all of that you've just spoken about, why should we budget? Well, it's as we've kind of said, it's the foundation of your financial well-being. It's really essential to know what money's coming in, what money's going out. And when you have a good view of that and it helps ease financial stress, it makes you feel confident that you're on track to not only meeting your day to day needs for yourself and your family, but actually moving towards those long term life goals, which is super exciting.
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It helps you plan for the short term, helps you plan for the long term, and it can also help you get on top of debt and free yourself from debt, which is a really nice feeling when we can achieve that. So it's really essential if you want to own a home or if you want to go on a holiday or if you just want to meet your day to day needs, you're going to have to embrace that budget.
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It's the only way to make it happen. Now we've got a bit of an idea how budgeting can help us. Can we talk about what budgeting actually is? You know, for one of our listeners, do they have to use a spreadsheet? Do they use an Excel calculator? What do they how can they do it? Well, there's many ways to skin this can if you are a spreadsheet kind of gal or guy, that's absolutely okay.
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But there's various methods that you can use. But let's kind of talk about what is a budget anyway. It's essentially a plan for what you're going to do with your money when you receive it. It's assessing what's the money coming in versus what's the money going out and giving it a job to do, making it work for you, making it aligned to your goals and so forth.
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So and when you have a budget, it's really helpful so that you can, you know, if you've fallen off the bandwagon with your finances, helps you get back on track. It helps you get on top of debt. It helps you meet your day to day expenses and it helps you sort of work towards those life goals. And like I said, you don't have to use a spreadsheet, but if that's your jam, you might be the math teacher or something like that.
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That is that's absolutely okay. But you can use a bucket system, you can use financial apps and tools, you can use a money tracker, whatever works for you, just as long as you have a budget. And there's actually a great budget planner on the Teachers Mutual Bank website that you can make use of. So be sure to take a look at that, too.
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There certainly is. But let's get started. Okay. What's the first step? Well, the first step is really understanding where we are right now. What is the money coming in and what's the money going out? Where are we spending all of our money now? It's really important that we try to capture accurately all of our various types of income as well as our expenses.
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And another hot tip is, as you're writing these things down, try and put them in the same sort of frequency. So if you get paid monthly, try to categorize your expenses monthly, or if you get paid fortnightly, categorise expenses fortnightly, which might require a little bit of math when you're looking at those expenses that arrive quarterly or annually.
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But by putting them in the same category, it's very easy then to have a good view of what's coming in, what's going out, and are we actually having some money left over at the end of our pay cycle or are we going into the red now? It can be helpful to kind of think about what is all the money going at?
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Is it our petrol, is it quarterly bills, takeaway meals, parking, entertainment, childcare, rent, home loan repayments? There's a constant stream of outgoings, if you like. How do I actually capture all of these? Well, the best place to start is going through a few months of your banking transactions. I mean, if you can go through a whole year, that's ideal.
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But certainly looking at a few months just to see what are those regular recurring expenses and hopefully within a few months you capture some of those irregular expenses, like those quarterly bills. Some of the expenses will be fairly similar. So what about grouping our expenses? Sort of what's the best way to do that? Yeah, so we can give them into different categories and this will really be up to you as to how granular you want to get with your grouping.
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I'm a little bit lazy with my budget. I kind of group them into just three categories, which is fixed expenses, flexible expenses and money. That's going towards goals, but you might want a little bit more detail than that. So you might group it between things like my entertainment, retail therapy, subscriptions, groceries and food. That might be a great way to kind of group them together.
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But again, however you group them and you do you, it's just really important that you capture them accurately and you have a good view of what's coming in, what's going out, the good, the bad, the ugly, no judgment. We just want it to be accurate. So can you give our listeners a bit of an idea what should be included in some of those categories?
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In some of the categories. So, for example, if it was like entertainment, that might be the lunches that we buy, the dinners with friends, the gifts for people, if it was our subscriptions category, that might be your Netflix and Amazon and all the fun things as well. But then it's also important to have a category like bills which captures might capture your rent and your mortgage or utility bills, your insurances, things like that.
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So that's an example of a couple of categories that you might have that. Okay. So now that we've got a clearer picture of our financial situation, some might be pleasantly surprised about it, others might be just truly horrified and don't know how they got into this position. So what's the next thing that our listeners should do? Okay. Yeah.
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So again, we've captured all of the information. Now we want to look at it and go, How am I actually doing with my budget currently? Do I have leftover money at the end of a pay cycle or am I actually spending more than I earn? Which means the budget's in deficit. Now this is our opportunity to decide does our budget make sense to us?
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Are we on track and spending in alignment with our goals, or can we improve in some ways? And a lot of times we talk about cutting things out of our budget, but it might be just a matter of reprioritizing where we're spending our money. And even if you're in surplus with your budget, that doesn't mean that you're done and there's nothing more to do.
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There could be room for you to reprioritize where you're spending money and create more of a surplus that you can then put towards your goals. Okay, so what about if we're not in surplus and we're actually behind in deficit? Do we do we need to panic? Is there is there anything we can do? What about if we if we if we get a spending plan and balance the books that way or even get back into surplus, you absolutely can get back into service.
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Now, if you are spending more than you earn, you do really need to take it seriously because you're really heading to a bad financial position. If you're spending more than you earn, it means that you're probably borrowing money to meet your day to day needs. And then if you're doing that again month on month, every pay cycle, you then start to head towards a bit of a debt spiral, which is not ideal.
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So you might need to consider, well, if you've already accumulated some debt, maybe prioritize paying that off very quickly. Consider even consolidating that debt into something that's more affordable, like a loan. And we can talk a little bit more about debt consolidation. But there's also some options on the website. If you type debt consolidation into the search bar and really helpful information about that.
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But you do want to prioritize tidying up that budget so that you're going to have you're at least meeting your day to day needs if not having some in surplus each pay cycle. All right. So if we are in the red and let's face it, we've all we've all been there, what can our listeners do to get their budget back into better shape?
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Yeah. So we just need to have a look at where is our money actually going. Often we have money league, so we are mindlessly spending money and even just tightening that up can make a big difference to our budget. So kind of looking at our expenses and categorizing them into what are our needs, the things that are kind of essential, not negotiable.
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And then where are the ones in terms of our spending, what are the things that are discretionary and that we can reprioritize in order to put our budget back into surplus? So where could we trim our spending? And this is where a mobile app with a spending tracker can be really helpful just to kind of show us like what are the times of day or what are the types of expenses that we sort of losing money out to.
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So it might be that, you know, you're coming home from a long day and you're feeling really tired and instead of making dinner, which you know you should do, you just dial up the takeaway and get it delivered and spending. Yeah, so much easier. Well, look, we've all been there but is about instead of doing that, maybe five nights a week, maybe you just do that one night a week and then you implement some meal planning and stuff to keep you on track.
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Other areas that we can look to trim our spending is often in like subscriptions or our bills negotiating better, right? We don't want to be paying the lazy tax, which is when we have existing bills that we just let roll over each year. I had an example myself this year with my car insurance. I haven't really reviewed it for a couple of years and I was like, oh, just see what else is available.
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And did a little bit of comparison online. Save myself $240. It's a very common thing, so common. So that's also a great way to be able to tidy up our budget, bring it back into spending, and then other things can be emotional spending. Like sometimes. I was working with a client recently and she's very generous gift giver love, loves love, love buying people things, except she was being way too generous with her gift giving and there was no need for it.
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And she's recently put it into a practice way of making gifts for friends and spending less, but making it more personalized, which the gift receive is absolutely love. And it's also really helping support her budget. So there are just a couple of ways you might reprioritize your budget to get it back into surplus again. Okay, so now we're going to a spending plan in place.
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A budget's got to be moving into better shape, hopefully going a bit left over at the end of the month so we can start putting away for other things that we want to have. So how do we actually stick to that budget? Not just once, but month after month, because it's very easy to start. But then something comes up and again, you know, Christmas, all these sort of things come up.
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So how do we how do we stick to it long term? Yeah, I know it's a bit like a diet. We all start out well and we're eating really healthy and then, you know, we fall off the bandwagon, then we have kids. So first things first is don't make your budget too restrictive. Don't budget out the fun. Be really realistic with the kind of spending limits that you put in place with your budget plan.
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Second thing is, is to set up your accounts to support your budget. So often we'll just have this one account that we receive our income into. We pay our bills out, we do our lifestyle expenses, and it's all sloshing around in there together. And it's really tricky to keep track of things. So even consider having one account for your discretionary spending, one account for bills, one account for your savings, and your goals.
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You can have more, if you like, particularly with the fee free accounts. Great. So setting up your account structure to support your budget. The second thing that can be really helpful is automating your budget. So when your pay comes in, if you know what needs to go to bills and what needs to go to discretionary and what needs to go to your goals, automating those transfers.
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So that you're not tempted to kind of stray, stray from your budget and then making sure that you check in with your budget, life changing circumstances change, sometimes for the better. Like we get a pay rise or something, we might get a windfall. We like those, don't we? Yeah, or our budgets. Or sorry, our circumstances might change and become a little bit more challenging if there's an interest rate rise in our home loan increases.
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Or maybe we're welcoming a new member to the family and our incomes decreasing, those are really good triggers for checking in with your budget and making sure it's still appropriate for your current circumstances and making tweaks if it's not to make it more aligned with your real circumstances. There. And then thanks, Betsy. There's some fantastic tips there for our listeners and just for our listeners.
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Our spending tracker on the Teachers Mutual Bank app allows you to track your spending. So there's some great tools within our mobile banking app. Thanks, Betsy, for joining us today. So I very much appreciate them. I'm not sure our listeners got a lot out of it. My pleasure. Thank you. And thank you, too, for joining us. Make sure you tune in to episode two in our Better Money management series with Betsy will be giving us the lowdown on saving and saving strategies.
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And don't forget to make the most of our online budget planner tool. Just talk budget planner in the search bar on our website.
END OF EPISODE