Saving It.

When you think of RICH does the image of money and wealth immediately spring to mind?  For most people it does, but did you know that the dictionary has many definitions of the word RICH and only one has to do with actual money.

However, by following these 3 simple rules, you can become financially rich.

Rule Number 1:  Do Not Live Above Your Means.
I think everybody knows their income should be higher than their spending to be able to achieve financial stability. Certainly, my philosophy of making my cash work hard for me has been the cornerstone of creating my “Sunshine Cash” lifestyle

Rule 2: Save Up and Invest
Again the common thinking is to save the balance between your income and outgoings and invest to create further income.  Planning income for your future self is a wise decision if you do not to be still working 9-5 well into your 80’s.

Rule 3:  Improve on Rules 1 & 2.
It is easy to plan and budget your expenses. The issue comes in the practice.  So many have the greatest intentions only to slip back to bad habits in a month or two.  It is VITALLY important to keep checking in with yourself and keep yourself on track to achieve your long term goals.

Rule 4:  Do Not Apply These Rules to Just Your Money.
To have a truly RICH life, every area of life needs to follow the first 2 rules.
Let’s see how this can be applied to the 8 life areas..

 

Life Area	Rule 1: “Do Not Live Above Your Means”	Rule 2: “Save Up and Invest”
Financial Wealth	Spend less than you Earn	Save and Invest the left over money after expenses
Home and Environment	Have a home that suits your lifestyle	Maintain your home to keep it in good condition.
Family & Friends	Have hundreds of “Friends”	Nurture and protect true friendships that see you through thick and thin.
Romance / Partner	Be too busy to give your partner time. Taking them for granted	Taking time to connect on a personal level often to keep the spark alive.
Health & Wellbeing	Overeat and don’t exercise	Have regular check-ups with health professionals.
Career & Business	Jumping from one job to the next often.	Creating a long term career that creates job satisfaction.
Personal Growth	Being constantly stressed and busy	Allowing some “Me Time” to create balance and unwind.
Fun & Recreation	Being constantly stressed and busy	Finding time to have fun, engage in a hobby or just relax with friends

Take some time and consider how can you apply the 2 rules to your life in all areas.

If you want to explore deeper how YOU can create your RICH life.    Check out my Rise to RICH course.

 

 

?Does that number strike a feeling of panic and dread, or are you ready for the holiday season?

I have to admit, I am one of “those” annoying people who does not stress about Christmas or the cost of giving gifts.  And, yes, I have just about finished my Christmas Gift shopping  ?

Why??  Well because I buy all throughout the year 🙂

I am fairly lucky in the fact that we do not have a huge family so I only need to buy around 20 gifts.

My husband know that I cannot pass by a sale table or dump bin 🙂   Invariably I see something and think “Oh! S would like that” or “Wow! That would be great for M”

I have one shelf in a cupboard that we call the “present cupboard” On the inside of the cupboard door is a small whiteboard with all the names written down one side in permanent marker.  Then I fill in the gifts as I buy them in whiteboard marker.  That way it is a simple matter to erase the gifts as they get given.

I also know that some of the best gifts can be bought at a bargain price at certain times of the year.

• Anything “Christmas-y” can be bought for a tiny fraction of the price just after Christmas.  I always buy Christmas paper and cards in the last week of December, often at up to 90% off.  Look for such items as paper, cards, decorations for the tree, themed tableware like plates, bowls, glasses etc.  I like to have a supply of Christmas themes plates, cups or glasses that I can use as part of a gift.  Make a cake or batch of cookies and display on a Christmas plate, or simply place chocolates into a Christmas mug and wrap with cellophane.
• The lead up to New Years Eve often brings up good specials on Champagne, Wine and other Alcohol.  It can be a good time to buy for birthdays early in the year.
• January is the best time to buy stationary, school supplies and office equipment in the “back to school” sales.  This is  a good time to buy plain coloured kids clothing  and running shoes.
• February is the time to buy chocolates in the after Valentines Day sales.
• March -April is Easter, and again after Easter is the time for chocolate and “Easter-y” decorations.
• May is Mother’s Day. This is a good time to pick up perfumes, bath sets, soaps, and kitchen appliances.
• June – July is a time to keep an eye for End of Financial Year Sales. This is often the best time to buy big appliance or cars. Any big ticket items often have sales targets to reach and you can very often drive a hard bargain the closer it gets to June 30.  Also at this time of year the Christmas Toy Sales start with the option to purchase on a 6 month lay-by.
• August is usually quiet with no major sales happening.
• September is Fathers Day and Football grand finals.   Fathers Day is time to pick up gift sets of male toiletries, hardware, BBQ accessories and food sets ( think BBQ sauces and rubs etc), tools, car related things and the ubiquitous alcohol.
  The last weeks of September are another time to stock up on alcohol as the stores prepare for football grand final parties.
• October is the Bathurst Car Race weekend, so again there are car related accessories on sale.
• November- December brings sales in the lead up to Christmas.

I find that by purchasing gifts throughout the year, the strain on the budget is minimal. Our family has a dollar figure to work to for gift giving, so I can regularly spend the recommended amount but give a much higher value gift – eg a $50 gift budget, can result in a $100 value when that gift is bought at 50% off.

How to you plan for gift giving?  ??

Did you read my recent post on what “they” say is the amount of money needed to retire?  (it is here)

When this was originally reported, I said to my husband, “I am sure we could live on the pension as well as Mum & Dad.”

So, we decided to try it.  Before making any sort of budget, I tracked our spending for 3 months to see exactly what we were spending, it was surprisingly low ?

For our “live on the pension plan” we have not taken into consideration our mortgage or my husband’s car.  We are working on the assumption that, like our parents, our home will be fully paid off and we will have just one car, which we will have no debt on, but will need funds to update it regularly.

Every week I allocate the correct amount for cash for our budget needs within the confines of only having the amount for the current aged pension for a couple to live on. Bills are direct deposited to their relevant accounts (eg: I send $50 per week to our council for Rates, $50 a week to the Power company etc)

We have lived this way for the past 3 years or so and have not felt we have missed out on much at all. By not spending, we have seen a huge reduction in our debts. (BONUS)

This has spurred us on further to keep going with “living on the pension” for the next few years. We are aiming to be completely debt free in the next 2 years and then sell our businesses and be able to retire early.  This of course will require a fairly decent amount of money in the bank, as we are both quite a way off being able to receive the actual pension.

My life of living a “Champagne Life on a (lite) Beer Budget” has been heavily worked with this way of living.   Both my husband and I have our own businesses and they both do very well.   From the outside, it appears we might splash cash around quite readily, but in reality, we live within our “pension” budget.

I drive a new BMW which my business provides the funds for, there is money put aside in the “pension” budget to upgrade the car. Hubby’s business has work utes that we do not spend a lot on, as they are – well – work utes ?

We plan on updating the BMW as often as we can well into retirement.  We have found that the price of updating while the car has low mileage and is reasonably “new” is quite affordable and within our budget, especially when spread out over 3 years or so.

I love to travel, but our businesses are such that we can really only get away for the odd weekend, Easter and Christmas.   I often find great deals for weekends away on daily deals sites that allow us to get away at a reasonable price.  I also keep an eye on the airline deals and have been able to snag great deals on flights.

We both enjoy eating out and have a subscription to the Entertainment book each year.  Using the vouchers, we can eat at more expensive restaurants than we would normally for half price.  We also enjoy cooking, looking at restaurant menus and cooking similar meals at home for a fraction of the cost makes for an afternoon of culinary fun at home.  A well stocked pantry and a good bulk butcher nearby, keeps our grocery budget to a manageable level.  It is the “grocery” section of the budget that I often find has a built-up surplus. This surplus gets either transferred to savings or put aside for meals out.

Like our parents, we do not “need” anything, so when asked what we want for a gift at birthday and Christmas, I often ask for experience type gifts. Vouchers for cafes, spa treatments etc are happily accepted.

The lessons we have learned from living within the pension amount, is that, for us, it is achievable without any huge sacrifices.  Our budget does not include any pension discounts from expenses such as utilities, registration, rates etc, so those will be bonuses if we receive them.  We are blessed with good health and are conscious that chronic illness which requires long periods of expensive medications would be a burden on the budget.

Why not look at your own budget and decide if you could live on the pension.

 

Quite some time ago I read a news report debating whether or not the Australian aged pension is “enough” to live on in today’s economy.

As expected, the comments were mixed with a lot of people saying they can NOT live on the amount received from the government.

(I must admit, I do find it amazing when I see these types of reports where we see a woman complaining that she does not have enough money for electricity to keep warm, but she is being interviewed in a thin cotton top. – Put a jumper on!!)

Both my parents and my in-laws are retired, and I have seen them live a happy and activity filled retirement over the last 15-20 years.  They are not having any trouble at all living successfully on the pension.  My parents are  in between the “modest” and “comfortable” category and just simply cannot spend it all.   In-laws are on the aged pension only and live as well as we do, if not more socially.  My Father recently passed away and Mum is now on a single pension with a small superannuation top up, and still, the bank account keeps rising.

The number one thing I have noticed that has led to living comfortably on the pension is to own the roof over your head.  Most reports show that housing is the number one cost of retirees.  Retiring with no debt, a small nest egg and a low maintenance home has shown itself to be a huge benefit to both sets of parents.

Also, retirement is not all about how much money you have.  How many of us “young’uns” just wish for time to do what we want.  Retirees will often say, they don’t know how they had time to work. Gardening, craft, reading a good book or magazine are things that often get somewhat neglected in the hustle and bustle of a busy working life.

This table proposes the amounts supposedly needed for varying levels of retirement.

http://www.superguru.com.au/retiring/how-much-super-will-i-need

One  thing that the “gurus” neglect to think of is peer groups.
If retirees are surrounded by other high income retirees who travel overseas often then yes, they may need a much higher figure.

My parents were in a caravan club so they travelled quite extensively. They are not interested in international travel (apart from NZ where we have some family – does NZ even count as international???)

The in-laws love train travel and have done the Spirit of the Outback few times  We looked at doing the Outback with them one trip but without the pensioner discount it is REALLY expensive.

Both parents eat out ALL THE TIME. We regularly get answering machine because they are out to dinner. Usually clubs , but certainly not restricted to the “seniors specials” , because that is what they like to eat.  None of them are into “towers of no food” as my Dad called “better” restaurants.
Both Mothers have overflowing pantries that we joke will feed us for years when we eventually have to clean out the houses.  Regular catch ups with friends over a new cake or biscuit recipe and a cuppa are commonplace.

Both parents have always had late model cars that are regularly maintained.  Because of the van, Dad had a fairly new 4×4 since his passing this has been sold, Mum does not drive so that  vehicle expense is now partly taken up with community bus fares.   The in-laws have not long upgraded their car to a late model small 4cyl Toyota.

All drink bottled wine, bought beer, spirits, sherry and port.

Clothes, the men are men and don’t really care . The Mums just buy clothes and they wear them. The Mothers are both well dressed from Rockmans, Millers, Noni B etc so Reasonable clothes. (Although neither woman was a “designer clothes” wearer)

All get their hair cut at local hairdressers and look neat and tidy at all times.

As mentioned previously, they have active social lives filled with leisure activities.  Cinema outings, meals with friends and craft group outings feature regularly on the calendar.

Houses are both fully owned, modern homes that are standard 4/2/2 and are in good condition. Neither house will need new kitchens or bathrooms in their lifetime.

Neither have health insurance and have not needed it. There has been some serious illness (1 cancer, 2 diabetics, 1 aortic aneurism op) and of course all have glasses. The public system has been FANTASTIC and none of us can complain about the quality or timeliness of treatment.  In the last year of Dad’s life, he had multiple trips to hospital and weekly visits to his GP, all in the public system.  Nothing could have been done any differently in the Private system to make his last year any different.

Watching our parents age has been a wonderful learning experience for my husband and I.  We are not worried about our level of comfort in retirement at all.  We are working on setting ourselves up now, and look forward to our golden years.