Budgeting isn’t really that difficult. It’s all pretty simple stuff, really – as theory, that is. Keep track of your expenditure, plan ahead, and all that sort of thing.
But it all presupposes people follow that sort of logical reasoning process, and the longer that I do this work, it seems to me that logic and reason play a very, very small part in it all for very many people.
A former Prime Minister, known for his acerbic wit, once assailed a questioner with the question of ‘What part of ‘no’ don’t you understand?’. When someone can’t meet the credit contract payments on the washing machine, unless they give up the Chriscos, you would think it was a similar no-brainer, but for many it’s a whole lot more complicated than that. They want both things, so desperately, that they become totally blind to the reality that one outcome may well be that they end up with neither.
Joan’s new client
When Joan first became an adviser, she was very, very unsure of herself, and would phone me almost every night to ask my advice and check she was going the right way. One day I told her I had a new client for her, a solo dad, with a middling amount of debt, and while he looked ok as a case study, I had doubts as to whether she could make him into a success story in real life, but she said she liked a challenge.
From the beginning they seemed to have rapport, which we talk about a lot in training, and Joan worked out a cashflow for Lance which, if he stuck to it, would get him out of the mess. Lance would say to her ‘That’s okay, you’re the adviser, and I’ll do what you advise. I want to get out of this mess.’ She would suggest priorities, and he would adopt them; Joan was the adviser and she knew what she was doing. He kept the agreements, paid things when they were due, and got out of debt. He was a dream client, but this is all true.
Joan was good, like that, she saw her job as getting her clients to see reality first, to escape the fantasy and see things as they really were.
Finding the switch
He was chuffed, she was chuffed, and so were we all. But there’s a bit of a message here, to all of us. It’s not just the numbers, and the bits of paper, it’s getting others to see life through the same eyes, the same window as us.
It’s finding the switch, if you like, that turns people on, and if we can find this we’ve got it made. It’s a bit of a big word, ‘rapport’ and it means a lot of things. It’s a big world out there, and someone has got hopelessly lost, and we are the rescuers. Somehow we’ve got to get into others’ minds, to make them see that we can suggest solutions, we can lead them out of the wild. We are far more than ‘advisers’ we are expert guides, trip leader, the St Bernard finding the victims swept away in the avalanche, and every time we can make you see us this way, then other dreams come true. Happy dreams to all.
Change what you can
If your expenses exceed your income, you have to act now. The longer you leave things the bigger the mess. Don’t use credit or cards to cover shortfalls, don’t leave bills unpaid. Change what you can change, before others force changes on you.
Life involves choices, and choices can be very hard, but that’s life and you can’t have it all. If your house is on fire, you can only take the most precious and most important belongings. Budgeting is a bit like that. You have to be brutal, wield a razor. And most important of all, trust and listen to your rescuer.
Recently my partner and I were lucky enough to find ourselves basking in the glorious sun, sipping cocktails on a beach at a resort called Musket Cove in Fiji. What does that have to do with budgeting I hear you ask? Well quite a lot actually, so read on…
Setting the goal
It all started about 18 months earlier when we set ourselves the goal of a holiday in the Pacific Islands. A big part of goal setting is to set a time frame to achieve your goal, so we set the holiday goal for October 2013 as it was her birthday.
Next we needed to work out how much it might cost us, when we needed to have things like flights and accommodation paid for, and how much we could afford to save over the 18 months. This is where the budgeting came in.
Bagging a bargain
Both my partner and I receive modest incomes and we did not have a lot of savings to start with, so we were basically starting from scratch. We decided we would book the flights first – hopefully they would be cheaper and would arrange our accommodation second, leaving the final savings target for meals, entertainment and the all-important cocktails.
Being a budget adviser I was aware of a tool that we often use with our clients called a cashflow forecast. A cashflow is a way of mapping out your expected income and expenditure over a period of time. It helps you to make sure you have enough money set aside for things when they need to be paid for. I decided that using a cashflow forecast would be a good way to achieve our goal of a dream holiday.
I started filling out my cashflow by entering how much I expected to be able to save every pay period for 18 months, and then when I thought I would need to pay for things. The first time I entered how much I expected to pay for flights into my cashflow, I discovered that I wouldn’t have enough money. This left me with two options. Split the payments and pay for the flights I could afford at the time and pay the rest later. Or delay paying and pay for the whole lot when I did have enough money. I decided to go with the first option and paid for the international flights first and the domestic flights a couple of months later.
With the flights organised I could now concentrate on booking the accommodation and again I referred to my cashflow forecast to see when I could afford this. The cashflow showed me the accommodation would be saved for with 4 months to spare, leaving me plenty of time to save for meals and those cocktails I was looking forward to so much.
She’ll be right…
Now I knew our goal was achievable and so we could set about making it happen, and happen it did. However being a kiwi with a ‘she’ll be right’ attitude I didn’t allow for the unexpected…
As always with budgeting, unexpected things can happen and my cashflow forecast had not allowed for terrible weather in Wellington the day we flew out, which resulted in us having to pay for an extra night of accommodation that I had not budgeted for. I knew we could cut back on a little entertainment on the island and so this wouldn’t be a problem. Lesson learned and if I plan a trip again I’ll include travel insurance in my planning.
If you are planning a trip like I did, or simply want to try and better manage your income and expenditure there is an electronic cashflow plan available for download on this website: www.familybudgeting.org.nz/get-budgeting-advice/budgeting-resources
Andrew is the Assistant Manager and a budget adviser with the Dunedin Budget Advisory Service, motivated by empowering clients to make good financial decisions. He says that although he cannot help everyone with their personal budgeting issues, it makes a really big difference to how successful we can be if the client is willing to engage in the process and be open to suggestions.
If you are among the millions of consumers who buy products online it can be very tempting to purchase what looks like a bargain, but the product inside the packaging may not be up to the quality you expect. I have learned this from experience, having purchased skincare from an eBay store which turned out to have gone off – definitely a false economy! Or perhaps the ‘original’ price was never what the website claims. Fake goods can also be a problem on sites like TradeMe and eBay, and the old saying, “If it looks too good to be true then it probably is,” certainly is good advice. But here are a few things you can do to inform your decision:
Investigate the seller
Read the negative feedback
Even TradeMe/eBay sellers with 98% positive feedback could be selling counterfeit goods – many people don’t realise that the goods they have received are fake. You need to read through the few negative comments to see if anyone else has noticed anything dodgy, and be careful not to get carried away with what seems like a bargain.
Read the background story/profile of the seller or the about us section on the website
Do you believe their story? Another way to spot suspicious sellers is if they have vast amounts of brand-named goods at exceptionally cheap prices. If in doubt, make your purchase from a trusted retailer – you can usually find a list of these on the brand’s website.
Find the best price
Once you have decided on your purchase there are a few ways of checking whether you’re really getting the best price. Use www.megashopbot.com, a tool which will use all the biggest shopping comparison sites to save you time and help find you the lowest price.
For Amazon shoppers you can search for discounted products using an Amazon discount finder, I like this one: www.moneysavingexpert.com/shopping/cheap-amazon-loopholes
You can then check if the discount is genuine by visiting www.camelcamelcamel.com, a website which allows customers to see the price history of a wide variety of products. They offer a price tracking service that contacts the customer once the price of a product has reached a specified level.
If you’re buying from an auction site check the completed listings; search for your item, then refine it and see what it has recently sold for to give you a better idea of what it’s actually worth. Don’t start bidding until close to the end of an auction as you don’t want to get into a bidding war and drive up the price. You can set alerts for the site to let you know when an item you want is coming to a close.
Use a couponing website
These sites not only aggregate coupons but also information on sales, free delivery, newsletter offers and student discounts. It’s easy to search by store, so if there is a genuine discount available you will see it listed there.
About the author:
Emma Matthews is a blogger and an Editor at Flipit, a global couponing portal which offers money advice and coupon codes to readers across 18 countries. Emma has a BSc in Marketing and enjoys travelling, home-baking and crafting.
Changes have been made to the Consumer Guarantees Act. Click here to see how it might affect the way you shop.