When you're running a small business, admin and long-term goals can be overlooked. Landscaping business owner Ash shares why he finds the advice from Bravium Financial Planning invaluable.
Australians are a generous bunch, as highlighted by a report put out by the Financial Planning Association (FPA) to celebrate this year’s Financial Planning Week theme ‘Gifts that Give’.
Each year, as a nation we are spending $20 billion on gifts or, on average, $100 per month with Gen Y (ages 25 – 39) more likely to spend the most, and Gen X (ages 40 – 54) more likely to spend the least.
Whilst we’re generous gifters (Gen Y we’re looking at you), we aren’t great budgeters, with three quarters of the population not accounting for gifts in their household budget!
So are our gift-giving ways affordable?
Affordability (noun): Can I AfterPay that?
What each of us values weighs heavily into our feelings around what we can ‘afford’. When it comes to how much we spend on gifts, 81% of us feel we spend the right amount on gifts, whilst only 13% of us feel we spend too much.
So what qualifies as the ‘right amount’ and what qualifies as ‘too much’?
Regarding gifts, our clients spend approximately $105 per month, not too dissimilar to the national average. When considering the Average Weekly Earnings in the ACT, this equates to 1.8% of net income.
When comparing this to other discretionary expenses for our clients, Cafes/Restaurants & Takeaway accounts for 5.5% of net income, and Coffee accounts for 0.06% of net income.
So how can you stay on track with your spending? Well, to start with, you need to prioritise your discretionary (fun) spending, and understand how it fits in to your budget.
Budget (noun, verb): relationship-destroyer, time consuming, spreadsheets.
The 21st Century has arrived and ‘budgeting’ is not what it once was. Technology has evolved significantly and there is now an app for everything, including budgeting, which has not only made it dead simple, but also accurate and informative.
So what do you actually get out of budgeting?
Apart from providing you with a completely categorised breakdown of your expenses that is split into discretionary (e.g. travel) and non-discretionary (e.g. utilities) spending, the biggest thing budgeting can do for you is facilitate informed decision making.
Just as you know how much money is coming in, you will know how much money is going out, what it is being spent on, whether you are OK with that, and if you’re not, then you can implement change. Also, if you’re lucky, you will know how much is left over after your expenses are paid and then you can think about what you should be doing with that money to progress your financial position!
So where too next?
Savvy (noun, adjective): witty, canniness, intelligent.
It’s not a coincidence that Savvy is also the name of a budgeting app you can download off the Apple App Store or Google Play Store.
So what are you waiting for? Take the opportunity this Financial Planning Week to take a hold of your cash-flow so you can continue to give gifts without debt or regret! Oh, and there is only 18 weeks until Christmas…
Read the FPA’s research report at https://www.moneyandlife.com.au/wp-content/uploads/2019/08/FPA_Gifts-That-Give-Research-Report-2019_V3.0-Final.pdf
ABS data from May 2019 indicate the Average Weekly Ordinary Time Earnings for a full-time adult in the ACT are $1,811.
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