Bolster Risk Management – Simplifying financial risk, insurance and investments for you.

MONEY: Buckets & Automation


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It is easy to think that good money management is all about numbers and spreadsheets. Honestly, that is only about 10% of the whole gig. The rest, yes all the rest, is made up with our behaviours and attitudes around money. How do I know? I’ve been there in the worst of times.

If you have been following me for a while, you’ll know that I really believe everyone can change their financial position. It may take a while and it may be hard work at times. But there are some key concepts that could change your life.

We know many people struggle with basic money behaviours. There are many books, articles and podcasts from many sources that can help you. Here are a few…

Common themes from the reading list below:

  • Split your income & automate what you can
  • Live within your means & save what you can
  • Get advice & set your money to work for you
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Barefoot Investor – Scott Pape

The ‘Aussie guy next door’, yes, Australian, but close enough to home to make it relevant to the New Zealand market. The basic concepts are the same throughout other books and guides. Split up your money into separate amounts, create automatic transfers so that you don’t even have to think about it, then get on with living life. Small actions repeated consistently can create massive change (this is a central theme in personal finance).

Use ‘3 buckets’; Blow, Mojo and Grow

In the Blow account, split your after-tax income across a few accounts*.

·        60% for essential expenses

·        20% for additional debt repayments

·        10% for fun money (Splurge)

·        10% for long term goals (family holiday, car, new curtains)

[*if these percentages don’t work for, don’t worry, split your money in a way that works for you]

The Mojo bucket is a spare lump of money tucked away, that can be called on in an emergency. Some people talk about 3-6 months of expenses, Pape suggests starting with around $2,000 (if you can). It helps when the water heater starts leaking, or the car needs new tyres – those unexpected costs. You have a lump of money that takes the stress out of the situation.

Grow, is basically using your KiwiSaver, increasing your contributions and/or investing in low-cost index funds.

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Automatic Millionaire – David Bach

We meet ‘Jim and Sue’ who teach the English financial adviser a thing or two.

  • You don’t need have to earn a lot of money to be rich
  • You don’t need discipline
  • You don’t need to be your own boss
  • You can build a fortune on a few dollars a day
  • The rich get rich because they pay themselves first
  • Above, you need to automate as much as you can

A key theme for Jim and Sue is “If we didn’t have enough cash to buy something, we didn’t buy it”.

And the ‘automatic’ bit…? If you don’t have to think about your actions, you won’t change or stop what you are doing ‘for something better’. So remove the temptation – “protect yourself from yourself”. Automate your spending so that you forget that you are even doing it. This is key.

Focal PointBrian Tracy

Not usually known for his money advice, Brian is prolific writer and teacher of small business success, distilling complex ideas into easy-to-digest concepts. Focal Point is a case in point. Tracy only devotes 13 pages to money with his opening sentence starting with this: “Money is like food. When you have enough of it you don’t think about it at all. But when you are deprived of it for any period of time, you think of nothing else.”

  1. Examine every purchase before you make it. Delay it if you can. Put off making the purchase, perhaps you will change your mind and forego the expense entirely
  2. Set clear goals and targets for the amount you intend to earn and keep. Measure the results against these – ‘what gets measured gets done’
  3. Look for ways to reduce your monthly expenditure, save the money instead. Cut out as many non-essential expenses as possible.
  4. Take all opportunities to increase your value and earning ability. Upgrade your knowledge and skills. Do more, be more.

The Richest Man in Babylon – George S. Clason

This small book sets out a nice narrative showing people how to build and protect wealth. There are two overlapping themes in the book “Seven Cures for a Lean Purse” and “Five Laws of Gold’. It is an old classic by George S. Clason from 1926 that helps to cement the idea that wealth must be grown from the inside first. We need to develop ourselves so that we become ‘worthy’ of the wealth we ultimately receive. The two themes can be summarised as below.

  1. Pay yourself first – i.e. save at least 10% of your income.
  2. Live within your means.
  3. Put your money to work.
  4. Keep your money safe.
  5. Insure your future income.
  6. Improve your skills to earn more.

Cashflow Quadrant  – Robert Kyosaki

This book changed my life. Two decades ago, I didn’t know anything about money until I read this book.

  • The flow of money, as an employee versus an investor (who controls the flow?)
  • How to read a financial statement
  • Pay your self first, before everyone takes their cut (notice a common theme here?)
  • Change your thinking (rich dad/poor dad) to change your behaviours
Your Money Matters

Your Money MattersDominic Bish

Recently I wrote a short book and developed a 7-Day online course “Your Money Matters”.

  1. Understand General Concepts
  2. Automate Behaviours
  3. Protect against Risk
  4. Find Value in retirement
  5. Build Wealth
  6. Get Advice
  7. Take Action

There are plenty of common themes and concepts with the previous books. You need to understand the basics of money, even just some of the language around money, to give you a fighting chance. Behaviours are crucial to how we do everything. It stands to reason that behaviours impact how we deal with money. One solution – automate as much as possible so that our behaviours do not sabotage our efforts.

Protect against risk is the same as ‘keeping your money safe’. Pape talks about protecting your income earning ability. Without your income life gets tough. You can get affordable insurance for that.

Retirement planning and wealth creation may appear to be the same thing, and they might be for you. But, they may also have different timeframes, different requirements and therefore require different instruments and methodologies. Essentially they require slightly different investments plans.

Getting advice is crucial. You don’t need to wait until you have $1m before you get advice. If you get advice on which phone to buy, or what Burger Fuel burger is best, why not get advice on your money? If you go to the doctor because you know you need some help, why not get some financial help from a professional. Would you lay a brick wall if you’re not a brick layer? Would you pull your own teeth if you’re not a dentist?

Take action – this is where the rubber meets the road. You will need to do something. Start with an idea of how things might be better. Then use some of the concepts above to help your journey. You could even follow some of the links and read the books mentioned. Change your thinking and you change your life – trust me, I know this first-hand.

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There are other authors, but for brevity I cannot show all of them, Mary Holm and Martin Hawes are homegrown Kiwis for instance, and have a range of good books covering all things personal money.

What ever you do, if you are not where you want to be financially, you are not alone. If nothing else, make a start, do something. Ask for help; chat with me or another professional. Look through a book or article, do a course, listen to a podcast.

It might change your life.

If reading is not your thing...

Dominic Bish

Dominic started Bolster Risk Management to help people along their personal finance journey.

He believes that personal insurance is the bedrock to financial security and wealth creation. You have to protect your greatest asset, your ability to earn an income. 

Underpinning this is a philosophy that says Your Money Matters.