Hi, and welcome to this week's episode of Money with Alpha. I'm going to touch on my Money Pie framework this week. It's come up in conversation quite a lot in the last week. I thought, I feel like I need to talk about this again, and a bit more. I think I've spoken about it probably a little bit before, but probably not as quite articulately, hopefully, as I'm going to today. So the Money Pie framework is something that, that I developed, I can't remember, years ago now I've been using it myself. I actually created it for me to start with. And then when I started working with clients, which sort of happened quite like, it just sort of came to me. You know, people were asking how I was doing, what I was doing, and so I started to explain it and like, oh, that sounds really cool. And then I adapted it and expanded it to sort of like business pies and personal pies and and it sort of evolved over time and the way that it works has evolved as well. So I wanted to share that because it's something that I found really resonates with people and has really worked. It really helps simplify. And that's, that's why I called my business Money Made simple is because we overcomplicate money tremendously. And that's just a product of, you know, confusion breeds, you know, fear, which then breeds, you know, people can sell you stuff and put you in products and, and do things for you, which then you just end up feeling even more anxious about because you don'. Really feel connected to what's going on in your own life. And I don't know if this resonates with you, but I'm speaking from personal experience because that's what set me down my path. I was like, oh, I really need some help in this space. Even though I started out as a corporate accountant it didn't really help me understand personal finances. So when I then, you know, this is a little bit of backstory for those who don't know it. I then started to kind of go, well, how do I learn about money? So I thought, oh, well, you know, financial advisors. And I had a friend who recommended one and, and, which is great. Like, I love recommendations. However, I didn't kind of know myself well enough yet. I hadn't done any values work. I hadn't really, you know, I was in my 20s, I was still trying to figure myself out and life and, you know, all of the things, you know, there's There's a lot, every decade brings different kind of realizations and personal growth. And I was on a personal development journey, but was still there in the early stages. Growth continues, but it's, you know, at a different level now. As I, as I was working with this financial planner and they're just going, there's a lot of questions that I don't have answers to. So I started asking them, couldn't answer them. And I thought, but if I'm paying you quite a lot of money to do this for me, you should be able to answer my questions. So I, I was like, oh, okay, right, let's, let's delve into this a bit more. And I thought, well, if you can't answer it, where do I get the answers from? So I studied financial planning and started to go down the path of becoming a financial planner. Because as I was doing the study I write, I was like, whoa, we are not taught all of this and we all need to know it. And then of course there's a lot more to being a financial planner. It's really more like done for you kind of services and about sort of growth and wealth and you have to have a certain amount of wealth before it's even worthwhile going down that path. And I thought, well, what about the education piece? Like, where does that happen? And so that's why I was like, I need to write a course. Everybody needs to know all this stuff. So I wrote it and it just kind of fizzled a little bit. And while everybody might need to know about money, not everybody really wants to because it's a bit confronting and it perceived that it's really complicated. So this is where like the money, the money pie concept, I was like, but this, you can do it simply. And that. So that's how it went. So the money pie sort of framework, it really has like three main kind of pillars to it. One is visibility, clarity and flexibility. So the visibility starts with actually putting eyeballs on your money, like knowing what's coming in, what's going out. And I know that sounds really basic, but for a lot of us it's, it's a little bit of an unknown. Especially if we're business owners. There's money coming all sort of like from different places. Especially, especially if you've got multiple streams of income, doesn't necessarily mean every one of them is profitable. And if you're a product based business, then you've got to look at more than just the money coming in. It's Looking at, you know, demand and then if you've got service based businesses this churn, there's, you know, there's revenue, there's so many, so many different metrics that you could follow. But ultimately you still need to know what money's coming in and also what money is going out. And so when I had just, just individuals, it is a little bit simpler but then you still have to have your eyeballs on it. So the visibility factor was still relevant. So understanding, you know, how much is coming in, what are you getting paid? Are you getting paid the right amount of superannuation as well? And if you're a business owner, are you even paying yourself super, let alone a good amount? What kind of structure are you in? So it's just, you know, in terms of you a sole trader, you're a business business, corporate trustee, partnership, all the, there's so many different sort of options out there and it is really very individuals, which is why I'm like go chat to your accountant, which is hopefully linked to a lawyer. And you can nut that part out because there's tax consequences, but there's also legal liability consequences. So you really need your team to be working with you in that space. So that's where, you know, I'm kind of asking the questions and there might be really valid answers for the reason that you're in the structure that you're in. But it's important that you understand those. I was literally just reading a book yesterday where it talked about how the accountant was. Because there's two, two different ways of doing your accounting. There's cash and accruals. I'm not gonna get into the technicality behind that, but let's just say the timing of your money is quite different. How you account for it and then also how you pay tax on it. This person ended up quite a large tax bill because they were officially reporting one way, but the accountant was calculating it the other way. And they ended up with this massive tax bill which of course they didn't expect and created a lot of stress and anxiety around. And I was like, so you need to understand enough to be able to have that visibility of what's going on. And also if you're a business owner, have the separation between your business and personal finances. I did an episode on that a few weeks ago. So if you want to hear more about that I'll, I'll link the, that show into the show notes. So visibility is really, really important. Bank accounts and also not making, making sure you don't have too many. I mean the, the money pie framework does have a certain number of bank accounts that sit in personal and, and and business. But there is such a thing as too many. I have a client at the moment, has 21 bank accounts across business and personal. And I was like, whoa, that's like, that's a bit of a mind blow blowing thing because how on earth do you keep track of that many business account, like bank accounts? You know, there was an account for like minute little things. Like, I don't know if you really need an account just for that. You can, you can track it, you can still have visibility of it in, you know, in this, in the frame, in the system that you build. But you don't really need a bank account for just that. So there's, there's a balance and it's also understanding what works best for you. So, but I've rarely seen anybody, I think, where 21 bank accounts makes things easier. So having that visibility is important. The clarity piece is really, really important too. You kind of almost need the visibility first because then the clarity gives you more clarity on that. Otherwise you'd be going back again. I often start with vision and values and that, that is extremely important. And it's, it's, it's a little bit of a chicken and egg when it comes to the money pie framework itself. We sort of do the vision and values, the clarity parts sort of sometimes. Second, because you're like, okay, we'll have a little bit of, we'll dabble a little bit in the visibility. Then let's actually have a look at what you're, what you're truly heading towards. Like, what is it that then we can go back to the numbers and go, is that ever going to get you there? And let's just like have a little bit of a deep dive. And sometimes it's a bit of like, well, maybe that, that worked. Whatever you were doing worked for you maybe five, ten years ago, but it doesn't necessarily work now. Partly because, you know, maybe you've got married in that time or maybe you've had children or maybe your relationship has broken down or you've received an inheritance or there's so many things that can change in a five to ten year period. And life can change like that. Just recently I lost my father and it was quite unexpected. Well, I shouldn't say completely unexpected, but it was, the timing was, was very like, it was a shock. So I was like, whoa. That anything can happen at any moment. So And things change then at any moment. So you have to. Not that you need to be prepared and live your life like everything could change at any moment, but you just need to keep track of how things are changing and what that's doing for you. And that's why it's important to have a system that's flexible, which is the last part. You know, the flexibility part is really, really important so that you can flex and change your money pie around your lifestyle and the changes that are happening and your growth as a human and your clarity might be increasing. You might start to go, you know what? I actually don't want to aim for all the things that I thought I did at the beginning. Now that I'm actually becoming a bit more comfortable than my money journey, I might actually want something a bit simpler. I had clients years ago where the lady came to me and she was, she's like, I want you to help me get ready to leave my husband. And I was like, oh, oh, oh, okay. All right. That, that's a that's a slightly new one. I don't know if I really want to help you kind of get ready to flee, but. And it was, it's a bit of a dramatic word, but it was more a case of, well, all right. I think what you really need to be is just comfortable in your own level of financial self reliance and independence. Let's, let's just work on that first. Let's keep the, you know, the emotional motivation behind set aside for the moment. And so we just focused on what it is that she wanted in life. And because it's not something she thought of for so long, she's like, I'm starting to tap back into me. You know, she'd become a mum. So things change. You tend to subjugate your identity for a little while until you kind of get sick of it and go, you know what? I used to be my own person. Where did that person go? And that person's not there anymore anyway, so now I need to really figure this out from scratch. Oh my goodness. And it feels quite overwhelming at that moment. But then little by little, you start to kind of piece your puzzle back together and you become, you know, more whole than you were. Again, I'm speaking from personal experience, so hopefully this will, you can relate to this too. So that flexibility becomes really important. And in that particular case, once she kind of got all her like ducks in a row and started to see where everything was the level of calmness that came over her because she now could see how financially stable she was able to be an independent. She then didn't feel a desire to leave her husband anymore, and they're still married. This was. This was a few years back. So I was just like, yay. I feel like I almost saved a relationship that. That was here. Which is a really lovely feeling, I have to say. But equally, some things don't end up that way either. And which is totally okay, too. And there are reasons for all sorts of breakdowns. But that flexibility then becomes important. So when you've got your money pie, and that's literally just going, you know, what, What's. What are my values? What's important to me? What do I need to make sure that I'm. I'm putting money aside for. And there's a few things that I think are absolute musts on, on, on. I'll start with the personal money pie. Things like having a buffer or emergency, rainy day, fire extinguisher, whatever you want to call it. Fund. Fund is important. I had a podcast episode on this not long ago as well. So you have to have a fund, fund, fund. Try and say that fast. Investing investing. And this is outside of. Of a retirement fund. So whether it's superannuation or 401k or RSA. Well, whatever it is, you've got to have some investing, I think, outside of that. So they're just. They're three pie slices already. Then I've got one for my daughter. So that's to cover school fees extracurricular activities, Christmas, birthday presents, like so many other. Like, there's a lot of costs to go with having kids. So I have a separate account just for her. So that's. That's another one. For a while there, I had a car. Fund Because my car was very old, like 20 years old, and by the time it completely kind of died, it was 22 years old. I'd had it for 20 years, so I knew it was coming to an end. So I'd had money put aside for a few years to buy a new car. So that was a car. But then we got the car, and then that car fund went away. And then you can replace it. You have to replace it with something because otherwise that money disappears. Experienced that one too. Then it could be Oh, you could have money for charity. Like, I have a client who has a. Has a pie slice specifically for charity. It could be anything, really. You know, it could be buying a jet Ski or buying a boat or buying investment property or whatever it is. But you have, you have your slices. And these are all separate bank accounts, saving high interest savings accounts that some money can go into. If you have a mortgage and you have multiple offset possibilities, you can have the offset split because a lot of banks will do that nowadays so that you have the money still offsetting your interest, but you've got the visibility of what that money is earmarked for. So that when a bill comes in or when you want to do something in that space, you're like, oh, I've got the money for that right there. Feel a lot more organized and planned and also less guilty about spending it because you're like, well, I've saved it for that. I'm using it for that. So I feel totally okay because I've earmarked that for spending or you marked it for something else. So that's, that's in the personal. So that's where the, the money pie for the personal comes in. Really, really handy. Your money pie in the business then obviously allows you to, to do things like you can hire staff, you can hire, you can buy your equipment when you need it, you can pay bills in the months where things are a bit slower. You can pay. Your tax is really important. So you have to have a tax fund. That's probably like one of the first ones. Because one thing I hear from pretty much every single business client that I have is they've had some sort of tax debt at some point and it is debilitating the feeling of a regard, I mean, obviously higher that the higher it is, the worse it feels. But any kind of tax debt feels like a business failure. And while it isn't, because there's different reasons why it happens, and the accounting system is not really necessarily geared to help you understand that and sort of put money aside for it. And there's often payment systems, you know, we, in Australia, we have a pay G, so pay as you go. And you get a bill every quarter and you pay that bill and you think, yay, I've prepaid my tax. And then at the end of the year, you get a $10,000 bill and you're like, well, where did that come from? It's something that you've got to sort of calculate. And that's where a system comes into play and where the money pie framework helps you then put the structure around putting that money aside. So they're, they're. It's It's a bit of an overview really, but the money pie framework is really, really easy to manage then. So once you've got that visibility over the detail, and if you're feeling okay with the detail, like if you have a feeling that there's some overspending happening, you need to go back into, to step one or phase one, which is that visibility, and go, okay, well, why is there, why is there less at the end of every month? To be honest, at the moment that's probably inflation. But interestingly enough, the two areas that I see this the most, where costs have gone. One is insurances, and that is genuine, like inflation. And there's different ways that you can, you can reduce that. I think I've done an episode on that not too long ago as well. But I, I'm doing, I do a full review of my insurances every 12 months because there's always room for movement and reduction there and quite substantial too, which I'm always surprised about. And then the second one is eating out. Eating out. It's gotten more expensive too. But the the convenience factor, because we're also exhausted, we're just like, oh, we'll just Uber it or we'll just get, you know, what are the delivery or. I don't really, we don't really get. Take very often. So. Because I actually do like cooking and I also like to know what's in my food and the stuff I eat. You can't really like salads and stuff. They don't really work very well for eating out and there's not many places to do them anyway, so. Yeah, but they're the two areas. So if you're going to delve into your visibility of your, of your expenses, especially in the personal space, they're the two areas I would say delve into first. Groceries is another one. But that, yeah. And that, but if you look at your groceries and you're eating out together quite often, you think, oh, but my groceries should be lower because I'm eating out more. Not my experience, not with what I see. And then that clarity is really, really helpful because once you have the clarity over what it is that you want and you've, you've got your money pies set up and you're like, okay, I'm going to impulse buy less because I have a purpose. My money has a purpose. Each of those pie slices gives my money a purpose and I want them to go up as quickly as possible. So I don't really need that widget thing that I'm being sold on, whichever platform I happen to be on right now while I'm scrolling because I'm tired, I don't really want to go to bed yet, you know, that sort of thing. So I actually don't really get too many things because I don't, I don't really doom scroll much anyway. And I don't, I get some sponsored things, but it's more events. It's like business networking and professional development or personal development events. So the algorithms have figured out that if I'm going to buy anything, that's probably what it'll be. So that's what they sell me. They don't sell me the widgets or the, you know, the latest skincare because I make my own now. And all the other stuff because I'm not interested. And it's my phone, which is over there's, probably listening to me right now, will start to send me more and more of these events. Because even though it's on sleep mode, it will be hearing me, which is a bit scary. Anyway so that clarity makes it really, really easy to stick to the money pie framework and then the flexibility of it. Like, you want to add a pie slice, you want to delete a pie slice, move it around, it's really, really easy to do. And you do it at that macro level so that when you actually come to sort of managing your money, you're like, oh, huh, this is really cool. I can now put money there. I added a pie slice to my money pie earlier this year because I was like, I really need to dial up what I'm putting aside for my D. And I'm surprised how easy it was. Not surprised. I shouldn't say that, but I was, I was like, it's so seamless and easy. I still have money to pay bills. I still have the same amount of money going into the other pie slices. I've just somehow managed to create extra space for this extra pie slice. So somehow my consumption is reduced to make room for it. I I do know why, because I do the, I do the analysis. But it's just amazing how, how easy it can be to actually do that. And that's the flexibility that the money pie framework gives you. And then the freedom to do what you want without guilt, feel comfortable and confident you're going to get where you need to go and it's simple to manage. So that's really, really cool. If you're interested in finding out more about the money pie framework and how I I work with it. And if you wanted to work more on it, please book in for a clarity chat. I can explain it to you and see if it's something that you'd like to pursue, but in the meantime, hopefully, that was helpful. So have a wonderful week, and I will catch you next week.
