Hi, and welcome to this week's episode of Money with Alpha. This one's going to be a very short, sharp, pragmatic episode and it's in relation to things like end of month. I get asked this question quite a lot "How do I stick to my budget?" What do you do each month? How much time do you spend working on your money?" And to be honest, it has shortened substantially over the years. I've managed to sort of refine the process to such an extent that I get it done pretty quickly now. And end of month is also slightly different from end of quarter. So I I do, sort of, little bits at the end of every month, and then at the end of the quarter, which is when I lodge my Business Activity Statement, which, if you're in Australia, that's just one of the quarterly compliance things we need to do as a business. And I do something different at the end of the quarter. Ultimately, my sort of goal is to, with the business, prepare myself for financial years as well as just general business health, but then also, personally, it's just to make sure that I'm sticking to what I had intended to stick to and that all the other plans and things that I've made and more over time are actually being met. So yeah. So I have my, like bigger goals that I have for sort of longer-term life, and then I have sort of like more my year, and these things will change. Like they're not set in stone. I do once a year, do sort of more of an overall overhaul of what I'm doing but then I will tweak and change things as I go, depending on what opportunities come up, you know? At the beginning of the year, you can map out all of the conferences that you want to go to or trips that you want to take, but then something will come up. Like recently something came up in Sydney that I want to go to, so now I'm having a bit of a bleasure trip, as Emma Lovell would call it, down to Sydney, 'cause I'm bringing my mum and my daughter, and we're turning it into a bit of a holiday where I get to catch up with some cousins and friends too. So this is what I then do at the end of... So I have sort of my business personality or persona, and then I have my personal persona, and ultimately, you know, my personal persona is where the magic happens, where life and enjoyment really happens. I mean, I love my business too so at least the work I do I love, and then the financial side of that then helps support what I then will do in my personal life, and the fun that I get to enjoy and just life in general. And it's it's been a bit of a ride the last few months 'cause I've been navigating not just my own finances, but also my dad's estate after he passed, and still that's ongoing, so trying to... So my budget didn't extend to looking after that, because even though there's some money in my dad's estate, it's His assets have been frozen while the whole probate thing and everything happened, so any of his costs I have to wear until all of that gets resolved. So when I was doing my budget review at the beginning of the year, I hadn't planned on that, but thankfully I have buffers in place to help with the unexpected, and this definitely was that. So I'm just... I'm very, very grateful that I have that buffer, because if I didn't, it would make this entire process even worse. it's been quite an emotional rollercoaster of a journey, and I would not want financial stress to be placed on top of that. So just as a... I know I've spoken about this in previous episodes 'cause it's very topical for me at the moment, but please have those buffers in place. It just makes life a lot easier. Okay. So back to what I was wanting to talk about in this episode. So at the at the end of every month... And you can do this in the beginning of the month. To be honest, I kind of do it more, like almost ten days after the end of the month, because it takes time for all of the data to kind of come through and for all of the, you know, immediate things to sort of come together, so I tend to do it around the 10th of the following month, looking at the previous month particularly for business, and then I do my personal alongside it, just 'cause it's all, like done in one little date. And I tend to pick Fridays. I don't know why, but Friday mornings seem to work the best for me. But you you have to do what works for you, so pick a day and a time that you can have the time and space and headspace to do your little money date. So the first thing I will do is I've prepared a, like a metrics dashboard for my business where I've got all, like my key metrics in one place. So I just... I go into all the various places, you know, the... You know, my website dashboard, Google Analytics, and into all the social dashboards, and then I update that just so I can get a bit of a view for how things are going revenue wise as well average sales, all that kind of thing. So you sort of have have a little... Update the metrics dashboard. And then if it's the end of the quarter, I'll update I have another spreadsheet that I... I like my spreadsheets. I had a spreadsheet set up that I do my Business Activity Statement, but I've designed it in a way that I can use that to input into my tax return at the end of the financial year as well, 'cause I'm my own accountant, for the most part. Sometimes I'll go and get extra advice if I need it but for the most part I just... I sit with the sort of systems and structures that I've set up and I like to keep on top of it, sort of monthly, quarterly, annually like that, because it just makes things a bit easier at the end of the year when I come to do everything. I was like, "Oh, I'll just take this spreadsheet, and this one, and this," and then I just sort of combine it all. And I know that sounds sort of super-duper, sort of simple, and something that you may not be able to do, but trust me, it's literally just if you... You've got your... And you can even just keep this in your accounting system, or you can just take some of your numbers. So if you've got a cloud-based accounting system, it's going to calculate your Business Activity Statement for you anyway. I just like to look at it monthly so that I can make sure I'm putting the tax component aside, so that if I go, "Okay, revenue is this," and you can you can take a percentage of...... the revenue line. Or you can, if you've got your income and your expenses, you can do like a monthly profit and loss. You can then take the percentage off the net or the net profit. Because your, your tax is not going to be on your revenue. It's going to be on your taxable income, which has your revenue minus your expenses, provided they're tax deductible expenses. So if you wanted to be sort of somewhat conservative, you could increase the percentage that you take of that net profit, just in case some of those expenses aren't tax deductible. And that is where your accountant will help you. But hopefully everything going into your accounting system through your business is just for your business and is tax deductible. the only, sometimes where this will change is if you've got equipment where you have to depreciate it bit by bit over time. You might not be able to deduct the whole 100%. So again, something to check with your accountant on that. But you can always just use the highest company, if you're set up as a company, tax rate, which in Australia at the moment it's 25%. That's just conservative. You get to keep, like you put that extra money into a separate bank account, and then at the end of the tax year once you see if there's any more tax to pay that's from that account, you can always pay yourself a refund if you wanted to. Or you could just keep it in there to help you cover your tax costs for the next financial year. Im conservative so I tend to do that but that's entirely up to, up to you and how closely you want to manage your cash flow. So yeah, so I, I have a look at my, you know, what's come in, what's gone out. And then I use my money pie concept which I've gone through in a previous episode, where I'll put some money aside for profit, I'll put some money aside for tax. Tax first and then profit. And then my salary, which I keep steady. And then any other kind of sort of extra funds that you want to keep aside just to... Businesses are cyclical, they go up and down, so having, having something in there to help you for when things are perhaps in a down cycle, or if you want to go on holidays. And that kind of almost becomes a bit like your annual leave fund as well, or your sick leave fund, or whatever it is that you need. Making sure also that you're paying yourself superannuation, or putting money into your retirement fund. So that's they're, they're sort of like the things that I will do at the end of the month. So my metrics, then I'll have a look at my my money pie. So I'll sort of keep an eye on what revenue's coming in, expenses going out, and then take my, base my money pie off the, the net revenue. And if it's the end of a quarter, I'll be actually sort of putting the a view of the business activity statement together. Even if you have it in your accounting system, please look through it yourself. I know the, the accountant will be there to look at it, but the amount of times I've heard of people ending up with tax debt because they haven't accounted for or haven't understood the, what the accountant's been doing. If you don't understand it, ask them. If they can't explain it, then see how you feel from there if it's the right accountant for you. And maybe there's a separate arrangement. maybe it's just a matter of, you know, they need to charge you a bit more if they're going to have to explain it. Which it, that's okay 'cause it's their time, their knowledge, their experience and expertise. But just to make sure that both you and your accountant are clear on the expectations that you have of each other. So that's pretty much the, the business side of it. I mean, there's a lot of sort of decision-making that happens as a result of knowing those numbers, but the actual physical mechanics of managing the money itself, that is pretty sort of straightforward and simplistic, and not too time-consuming. It's then what you do from there that, that that does require a bit of extra time and thought and planning. Now on the income side then, I... Oh sorry, on the personal side then, I take a look at what's coming in as my salary, and then having a look to make sure that it covers everything that I need it to cover. Some months things go a bit further up, like for instance the January seems to be a month where all of my insurance has come in So I'm I feel like I, I spend the year saving for January. And if we go overseas to visit family, January seems to be when we book our flights and, and any accommodations. So yeah, January I feel like every year I say to my husband, I say, "Can we, can we just like book the trip in February so I can like spread the cash flow out a little bit?" But now I just, I've just had to get used to January's just that spiking month of, of expenses. And because a lot of my insurances I pay annually, they... it's quite a chunk when it all comes in together. So yeah. So there's, there's planning for that, and that's where my money pie comes in. And I will make adjustments to that as I need to. Generally I will do a review of it once a year, unless something extra has happened, something out of the ordinary has happened to, to make, to, to change that. So that, that's going to be Yeah. That, that'll, that, that's how I do that review. But it just, it makes it really, really simple then. It's, you know, money coming in. You know, I'll have some investments dividends, and then my, you know, income from the business, and sometimes there might be some other bits and pieces that come in as well. And then go through my expenses. If I'm... generally speaking, I will just run at quite a high level to start with, so I'll just look at the outgoings. I just, I've got one transaction account and one credit card. And between the two of them, I can pretty easily see. And I try and run everything through the credit card so that that's where the expenses are, and then my personal account just transfers over. that is the one downside with the cash side of things. It's not as visible. So I then try and make sure that I only take the cash out once a month so I can actually see what that expense is. So I, I liked, I don't always like to use my credit card, so when I go to the farmer's market and some other suppliers, I then pay cash. So but I need to be able to track it as an expense 'cause it's still an expense.So then I, I just basically look at the headline numbers there, and if they're a bit higher than they usually are, then I'll start to delve into the detail. But I'm not one of these people who will just go every single month, like, looking line by line at what I'm spending. I just, I don't enjoy that. I know some people do actually. Some of my clients actually like to do their reviews weekly which is totally okay. Whatever works for you, seriously. It's, if it's gonna work, then do it. But that's just how I run it. So I'll do that at the end of the month and if I go into the detail and I'm not really liking what I'm seeing, then I need to make some adjustments to the next month. Or it might just be because, you know, some months I don't, I go to Costco every three months, so every third month my grocery bill spikes . But then it's quite low the other two months. And some months I might have to go to Costco more frequently than that, so it really just depends. So as long as I'm just aware. I don't, I don't want to micromanage my money, and I'm, you know, that's just the way I prefer to do it. I don't like to micromanage anything really . So if I can, like, set up the system and let the system run, then I don't have to micromanage. But if something doesn't work and something breaks, that's when I need to delve into the detail. But generally speaking, I often don't need to. And then that's when my money pie transfers will happen, and I, I could automate them. I do suggest this to a lot of my clients to do that, and but I personally like to do the, the transfers myself, because then I'm, I get that, I don't know, there's a little bit of a dopamine rush that comes with it where I'm like, "Ooh, yeah, look at that. Oh, look at that balance, and oh, look at that balance." And then I just do a bit of a a view of that. But I do a proper quarterly performance report for myself, where I, I go into other investments that I've got and I see how things have gone, dividends paid, what's growing, all of that. So it's, it's just a bit of a touchpoint so I can just sort of see where everything's at and make sure that I'm doing the right things and that what I'm planning to achieve is actually happening and that, you know, it's just all going the way I want it to go. And so then I can go, "Yay, I can have the money for that trip." You know, if I, or if I have an extra idea of something I want to do, I know I have the funds to do it. But it just, it's an enabler rather than a constrainer in that regard. So that's where that real mindset shift becomes important. Doing these reports is not a, it's not a report card, it's not a judgment, it's not a reflection on how successful or unsuccessful you are with money. It's a point in time where you just look at how things are going and are they supporting what you want to do? If they're not, then you just need to get clear on what it is that you want to do and why you want to do it, and then just have a little bit of a look at why the money's not supporting. And that, that way you can look at the numbers and not at you personally, because that's not what this is about. This isn't about to find, this is not about finding fault with you. It's about looking at how your money can enable the life that you want, but you've gotta be clear on that first. So I hope that helps give you a little bit of insight. So look at your metrics as a business owner. Know what's coming in and going out, run your money pie through it, do your bank transfers. They're your business steps. Then your personal steps are know what's coming in, know what's going out, run your money pie through it, and do your transfers. And very much the same system, and that's pretty much all I do at the end of each month, with the extra quarter kind of built in on the business and personal side to sort of run the bigger, the bigger view. So yeah. I hope that helped. I realize that was a bit there to take in, so you may need to listen to that again. I will write out those steps in the show notes as well, just so that you have them there and you don't... If you're driving and you can't take notes, then you don't have to do it later. It's there for you. But please reach out if you have any questions. I'm happy to answer any questions that you have. And yeah. So with that, have a wonderful week.
