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Simple Money

Simplicity is Sexy

learnaboutmoney moneybasics moneymadesimple Jul 03, 2022

OK, so simplicity isn’t exactly “sexy”, but it is simple!  That’s as profound as I’m going to get, I promise.

Recently I worked with a client and helped to unravel some very complicated financial set ups. There were bills paid late, and account fees upon account fees, not to mention a very loose budget.

Another example is from my personal experience.  My husband and I were looking to buy a house, and sat down with a mortgage broker, just to see what they had available. The first thing we were presented with was this “fabulous” loan that we could do “TEN splits” with!!  The broker looked so excited, and my husband and I just stared at him in amazement.  What on earth would we want 10 splits for!  We merely wanted a loan with a low interest rate, low to no fees or early payment penalties, and a redraw facility.  This turned out to be too simple for this mortgage broker.

There is something seriously wrong with our financial system where debt is that complicated.  All it does is bamboozle the client (who is the one doing all the PAYING, and taking on the risk), and more deeply line the pockets of the financial institutions.

Keeping things simple really is best when it comes to money.  The financial institutions have the upper hand anyway, as they are the ones creating these complex financial “instruments” (a fancier way of saying “loans"), and getting lawyers to write up all those confusing terms and conditions which we have no choice but to accept.

All you need to manage your day to day money (I’m not talking investments here, that is another discussion) is:

  • 1 working bank account (or offset account if you have a loan and choose to go down this path) – this where your salary/income goes
  • 1 loan account (if you have a home loan)
  • 2 savings account: 1) your "Emergency Fund"; and 2) your "Fun Fund"
  • 1 debit card (one of those that can be used like a credit card, but it isn’t actually a credit card), or maybe a credit card IF you are super-disciplined and pay off the entire balance each month
  • 1 Superannuation fund account (please, if you have multiple accounts, consolidate them, as you’re paying multiple fees).

That’s it!  Simple.

It’s never too late to simplify things.  It won’t take that much time and effort, and once it’s done you will feel so much better and you’ll likely save hundreds of dollars a year in fees!