Get a life and have funds

How to manage your money in 10 minutes

If you hate using spreadsheets to manage your money or you find it tedious, then there's a solution that you can use which takes only 10 minutes.

It is the Barefoot Investor's 60-20-20 plan: 60% safety, 20% saving and 20% splurging.

This "I don't do budgets" method sounds great and you can check it out by clicking here.
Live for today as well as tomorrow

"People worry so much about what might happen in the future that they forget to live for today". This is what Wolfgang Peschke said when I interviewed him recently.

Does this mean you should spend all of your money living life now?  No, neither he nor I are saying to ONLY live for today, without caring or thinking about tomorrow. Wolfgang wanted people to remember to live life NOW as well as into the future.  

If possible it would be great to have spent most if not all of your money by the time you get to the end of your life. Trouble is that none of us know when that end is. It could be tomorrow or it could be in 80 years time.

While none of us can predict the future accurately, we have the 'the eighth wonder of the world' to help us build funds for the future.  This is sometimes referred to as the 'miracle of compounding interest."

You don't need to be a genius to understand this concept. It's all about putting a little bit aside now and leaving it alone for long enough, so it can pile up.

Most of us are aware that if we put money in the bank or invest it, we should get interest on it. If it is invested wisely or safely, it will keep earning interest over the years - not just on the original amount but also on top of the interest earned each year.  If you leave it alone, this money can keep growing - much like a snowball rolling down a hill it can get bigger and bigger and turn into an avalanche.

Because you want to live for today as well as tomorrow, I am not suggesting you set aside large wads of cash and then live on bread and water.  But, of course, you'll need to put a few dollars into the pot to get started. You don't need a large sum to begin with, especially if you have time on your side.

I suggest you have some fun on the SORTED calculators, so you can test this miracle for yourself.  Use your mouse and click on:

Once the webpage opens up, tap in an amount of money that you won't miss each week that you can regularly save.  Be realistic here - you're not going to pile up big sums on $1 per week.  Aim for at least $20 per week, and also accept that you need time for this to work. You're not going to grow a big stack of 'moolah' by saving $20 per week for just two years. You need to think long term - after all, you want to live many, many years - so stick in a time of at least 15 years. Once SORTED has calculated this, go back and change the amount of money saved and the length of time it will be saved for, to see what happens.

For example, saving $20 per week at a real rate of return of 2.50% per annum (and allowing for inflation) will add up to $33,340.87 after 20 years.

$20 per week for 20 years is the same contribution as $10 per week for 40 years.  However, if you have time on your side (i.e. 40 years) the amount you will accumulate is very different.  According to SORTED, if you saved $10 per week (at the same real rate of return and also allowing for inflation) for 40 years, your loot would add up to a much greater $56,874.76.  This is the miracle of compounding interest at work.

Even if you don't have 40 years to save, the important thing is to start saving now.  The earlier you start the more you'll have later. You won't miss a small amount per week now (so you can still live life fully today) and you'll build a nest egg to spend in the future.

To read more about Wolfgang's story click here.

This article is of a general nature and no substitute for personalised financial advice. For those wanting advice on their own financial situation, Eventful Woman strongly recommends you seek the help of a professional financial adviser

How To Get Financially Fit

Getting fit with your finances is a lot like getting fit or losing weight.  It should be easy, right?  Nah, it isn't.  

While we all know losing weight is about eating less and exercising more and getting rich is about spending less and saving more, it's not easy to do.  If it was, the world would be full of thin, rich people.

But, forget about the rest of the world and just concentrate on you. Is there a way to get financially fit? Yes, but there's no magic wand or 'ab blaster' for your financial muscles. However, there is still a way to shape your life and your money how you want it.

Check out some tips from that Aussie Scott Pape, also known as The Barefoot Investor. Click here to read more...

Do you have the moves but not the touch? 
Yep, I'm going all Shania Twain on you because she's right. There's no point knowing the moves if they don't get you anywhere or keep you warm at night.
You need to be a doer, or as Shania says, you gotta have 'the touch' if you want more from life.
Take Madeleine for example. She’s always dreamed of travelling to France, has learned to speak French and to cook French cuisine. She proudly tells everyone about her French ancestors, who arrived in Akaroa (near Christchurch in New Zealand) in the 1840s, and that she'll get to meet her Gallic cousins one day.
Madeleine is now in her 50s and is frustrated that she hasn't been to France.
When I met her I asked her how much money she’d put aside for the trip so far.
She replied, "Nothing yet."
"When will you start?"
 “Don't know.”  
"When do you want to go?"
“Next year, but I’ll never get there”.   
Madeleine was right about that. If she continues to do nothing she definitely won't be going anywhere.
Maybe Madeleine is happy just knowing about parlez vous Francais and Poulet Cordon Bleu. If so, that's fine and she should stop being frustrated about getting to France and, instead, stay here and do more French cooking.
However, if she is serious about travelling she needs to actually plan her trip and get her hands on some Euros.  
All she has to do is make a start, even if she only saves a few dollars a week. Any journey, even a long one, starts with just one step. Once Madeleine has taken that one step, she'll discover it is easier to take another and then another.  A few dollars saved will turn into a few thousand dollars, given enough time.
What do you dream about? What is the first step you can take, even if just a small one to reach your dreams? Can you do this today? What step can you take tomorrow? And, the day after?
For example, let's say you have a small goal - to make Duck à l'Orange - and you don't have a duck. You might think, like Madeleine's trip to France that you'll never make it. However, that canard is just one item. Don't stop because you don't initially have one. Find a way to make a start - maybe you could lay an egg?  (Only kidding!)  
Start with something you can do, such as finding a recipe. Of course, a recipe is not enough on its own. But, once you're on this quest, you'll take a few more steps such as tracking down other ingredients. Remember, though, if you've got everything but that "quacker", it's still not enough.  Madeleine was busy with the other ingredients and forgot about the ONE big thing that would make her trip happen - the money.
You've got to make a plan to catch the duck (or whatever it is you want) before you get to taste the dish. Everything else is just a move. But you will get to eat Duck à l'Orange if you turn your moves into a plan and then act on your plan.
So, will you be out for duck* or will it be bon appétit?

(*Note for readers not familiar with the sport of cricket: 'Out for a duck' means that the player does not score at all before being bowled out of the game.)
This article is of a general nature and no substitute for personalised financial advice. For those wanting advice on their own financial situation, Eventful Woman strongly recommends you seek the help of a professional financial adviser.
How to Get Free Cars for Life

I bet that heading got your attention!

I read a lot of material about financial planning and how you can get ahead. I then share the best of what I've learned with YOU -  Eventful Woman readers.

One man that consistently writes great stuff is the Australian, Scott Pape (also known as The Barefoot Investor). He has devised a plan to help you get free cars for life.

This what Scott has to say:

Most people know that I’m not a car guy, especially when I arrive at an investment meeting in my ute. Yet like any good advisor I never let my prejudices affect my financial advice.

Last week I met up with a young couple that were hell bent on buying a brand spanking new Commodore – and I set them up on a plan that will eventually provide them with free cars for life. That’s no misprint. (And no, it won’t be ‘free Kia Rios for life’). 

The plan I put in place will have them consistently driving late model Commodores.


Eve dreams of travel

You can achieve almost anything you dream of, if you stop dreaming and start going for it.  Taking charge of your own destiny is something I've always believed in. 

You don't have to win Lotto to live your dreams and this is (unintentionally) backed up by the New Zealand Lotteries (NZL).

I recently read "This is not a Dream", a booklet that NZL gives to big winners. NZL interviewed previous winners (with prizes ranging from $400,000 to $15 million) about how they spent or shared their prize and what advice they'd give to new winners.

What they spent or shared:
  • 91.6% gave money to their family
  • 57% gave money to charity
  • Wine/food was the first thing that 23.6% of winners spent their winnings on - commonly bottles of champagne and flash dinners.  One bought bread and milk because that was what she needed.
  • First big purchases were usually a house or a car or paying off a mortgage at 26.4%, then appliances/furniture at 9.7%.
  • More unusual purchases were fertility treatment, a gastric bypass, Prada shoes, equipment for the local hospital, bagpipes and a buffalo-hunting trip.
For most of you who dream of giving up your job, you'll be interested to know that 58% of winners still worked and only 9.7% stopped working because of the win. (18% were already retired). It would have been useful to know why people still worked - it could be because people liked their jobs or having some structure in their day OR it could have been because they had blown the money and they had to keep working just to pay the bills.  Obviously, NZL would not want to reveal that unpalatable truth, especially when they always promote that Lotto will change your life.

The answer about why people still work might lie in the advice that previous winners wanted to give new winners.  56% said they'd do things differently, such as:
  •  Not tell anybody
  • Spend a bit more on themselves
  • Invest for longer
  • Buy property straight away
  • Go on a holiday
  • Help more people.
The first four items on this list might provide clues as to why people still work. That is, most of the money had gone on others, rather than on themselves and they wished they had invested for the long term and bought a house immediately. 

However, I could speculate on the behaviour of Lotto winners forever.  What it has confirmed for me is that winning Lotto does not guarantee you'll live your dreams.  So, why pin your hopes and dreams - not to mention you hard-earned cash - on winning Lotto? 

You'll probably be better off thinking about what you really want in life and then putting a plan in place to do just that.

Don't know where to start?  Not sure if you'll have the time? Take Eventful Woman's 4-minute quiz to get you going.  Answer the following and take no more than one minute for each:

       1. What's my idea of a dream life?
       2. Is there someone I want to share this life with? If so, who?
       3. What is the one thing can I do today to make a start?
       4. What can I do tomorrow and the next day (and the next day, etc) to keep it going?

Remember, each journey starts with just one step.  What will yours be?

Posted by Eventful Woman ©
21 July 2011

Note: This article is of a general nature and no substitute for personalised financial advice. For those wanting advice on their own financial situation, Eventful Woman strongly recommends you seek the help of a professional financial adviser.