Happy New Year!! Welcome back to 2017. I hope that it brings you all sorts of great things.

Did you find a moment in your no doubt busy holiday schedule to ponder your most important measurables? If not, it might be worth doing now, before the year well and truly kicks back into business (or life) as usual.

Yearly planning

Each year people spend a lot of early January thinking about what they want their future to look like and plan new homes, holidays, cars, businesses, etc and lamenting that they should be able to afford it, but they’re not really sure where all their money goes. Failing to plan is planning to fail, or at least usually incurring greater levels of debt and that’s a spiral that can get out of control pretty easily.

When you spend the kind of time looking at people’s numbers like we do, certain things pop out at you as things that might not have been a ‘necessary’ spend item. Now, I’m certainly not judging here at all as I’m sure there are many things that both I personally and the Mason Lloyd business purchases each year that are ‘nice to have’ items rather than ‘absolute necessity’ items.

The difference is that we look at where all the money goes. As in really, really look. And so can you. In fact we’d suggest having a firm grip on your personal finances is mandatory. But when it’s personal and not running a business, how do you do that?

Really looking at your finances

Rest assured it is possible. Someone we know spent last year tracking every cent that went through her family’s budget to figure out where it all went – not for any other reason than she wanted to know – really know. Now that sounds both scary and very time consuming, but it wasn’t either.

She used a free Australian app called PocketBook, which just like Xero for business, syncs with your bank account (all very heavily encrypted and secure) and records all your spending. Then once a week, month, quarter you tell it where the line items should go – i.e. Woolworths = groceries (or whatever you decide to call it). Then the next time you shop at Woolworths, it automatically records that spend to groceries (you can go in and change that to something else if you’re not shopping for groceries as a one-off).

Now whilst you can’t do too much about finding savings on your mortgage, short of a refinance, (you’ll get to see just how big a chunk of your income this is), what our friend discovered was that there were some glaring places for significant savings. Her (and her family’s) love of coffee/cafes/snacks was costing them nearly > <000 a year. That’s not meals out, that’s a snack or coffee. Think pizza, not 3-course meals and absolutely none of which were at all memorable. As she told me later, “if you’re going to spend > gotta stop now!”

The things everyone forgets to look at

And then she noted that there were things that everyone forgets to take into account when they’re thinking about their budget. Trips to the dentist, chiro, chemist for medicines, presents that they buy for friends and family, a pair of shoes here, some aftershave there. Not many of which are expensive in and of themselves, but over the course of a year, they really begin to add up.

Then there was the gym membership that got used maybe 20x and forgotten about that came in at another styleK. On top of that there were the budget items that tend to blow out, like a garden overhaul or small renovation – none of which ever seem to go according to initial budget or plan – lesson learned. “Add 50% to the proposed budget and then a bit more,” she said.

This year, she has a very clear idea of where, how, when and on what they spend money. So she’s set herself the task to reign her family’s spending in by $5000. Instead, she’s planning on using that for a lovely holiday. I mean, if you’re going to spend $5K, would you rather spend it on creating holiday memories for a week or fritter it on random stuff you don’t even remember. She figures it won’t be too terribly hard and she’s started already.

Just as it is in business, the trick is all in the tracking. What gets monitored, gets managed. And she’s just found a way to manage her family’s personal finances better. I’m looking forward to seeing the holiday pics.

Of course, if you’re looking for someone to help you plan for more money in 2017 by finding you tax savings, setting up an SMSF or putting financial systems in place so you can better monitor your business, we’d love to chat.  You can call us on 6023 1700 or get in touch via the form below.