Just use the 50/20/30 rule

The 50/20/30 rule is one of the simplest ways to ensure you don’t spend all your money on espresso martinis.

US Senator & financial expert Elizabeth Warren claims that your pay cheque should be split three ways:

50% should go to living expenses (rent, groceries, etc)
20% to financial goals (savings) and
30% to non-essentials (travel and meals out)

Following this simple rule will get you fiscally fit in no time!

It’s like living on the tips of the tiny branches and blowing in the wind.

You look at me. I’m waiting, too.

I say I’m waiting for the shops to open. I’m waiting for another hour. I’m waiting for the bananas to go down in price. They’re too expensive right now. I know they’ll be cheaper soon so I won’t get them now. I want to save a couple dollars. I’m waiting for a good deal. I’m waiting for a lull in foot traffic. It’s really busy this time in the afternoon. It’s really hot. I’ll sweat right through my t-shirt and everyone will see and everyone will laugh. I can’t bear the crowds. I’m not familiar with that cashier.

You say you are waiting for some better weather. You wanted to go to the beach on Saturday but it was too sunny, and then Sunday was too cloudy and then you had to work again on Monday. You’re too busy right now. Work has you flat. All that studying is crushing you. You’re waiting for the workday to end, for the lecturer to release you from boring topics. You’re waiting for exams to finish. They’ll be over soon, you’re sure. Then you’ll finally have time for fun things.

I am waiting to graduate. This tertiary education will end sometime and then I’ll get a real job with a Christmas bonus and paid holiday leave and then I can save. I’m waiting to travel overseas. Not right now – I can’t afford it. Besides, I’m waiting for someone to travel with me. I’m waiting for someone to share my experiences. I’m waiting for love. I’m waiting for that person over there to look at me and realise I’m the one and make a move. If they don’t, then that’s okay, and I’ll do nothing because I’ll wait for the next person to do it instead.

You are waiting for a better job. You’ll look at other options soon, but in the meantime, you still get paid here even if it’s boring. You probably won’t leave. The health benefits are good enough. You are not settling. You’re waiting for your retirement scheme. Then, you can relax. Then, you can finally have some time for yourself. Maybe you might even get a club membership at that resort.

Maybe you might start swimming.

I’m waiting to buy a coffin. I can’t decide between cremation and burial. I’m waiting for my granite headstone. I’m sure it will have a beautiful quote and tasteful accolades of all the things I could have been. I’m waiting for my eloquent obituary in the local paper that nobody will read. I’m waiting for the people who kind of knew me to be notified months after I’m gone that I left the same way I lived: silent and hesitant.

We are waiting for our lives to end, or maybe even to begin.

What are you waiting for now?

There’s so much emphasis these days on being physically fit, which is fabulous, but what about other types of fitness!

For women, at any and all stages of our lives, it’s really important to be fiscally fit. We need to be making provisions for our future, building nest eggs, investing, and being engaged with our Super.

Otherwise, it’s likely that you’ll end up fiscally f***ed – and we don’t want that.

It doesn’t take much to get started – just like your physical fitness, the biggest hurdle is usually starting. Making that decision that you’re going to things differently and then deciding how you’ll do it.

Just like you’d start out with a personal trainer to learn the right and wrong ways of doing things in the gym, recruiting a wealth adviser or financial planner, reading or doing courses is a great starting point for improving your fiscal fitness.

Just like in the gym, you need to take stock of where you are now. What’s your debt? How’s your cashflow? Is more going out than coming in? Are you better at paying off than saving? What would happen if you reduced your spending by 20%? What if you had a great savings plan? Could you buy an investment property? Could you invest in shares? How much are you paying in fees – to the bank and Super fund? How many Super funds do you have?

There’s a whole lot of questions to ask, but we can break it down and keep it simple and manageable until you get into the swing of things.

What provisions are you making for the future? How will your finances pan out if you never marry? Or if your partner dies? Or if you get divorced? What will happen to your Super if you take time out of the workforce to have kids?

Marriage, inheritance and lottery wins are not financial plans.

Putting your head in the sand and hoping for the best is a pretty sure fire way to end up in trouble – living below the poverty line and even homeless once you are no longer earning money.

Current figures show that to retire “comfortably”, the average single person will need at least $590,000, with couples needing at least $615,000. But wouldn’t it be fabulous if we could really kick our heels up in retirement!

It’s time to get off the couch and into the finance gym and I can help you – through my book, online learning or face to face.

Just do something. And the sooner you start, the sooner you will reap the rewards.

No one wants to be fiscally f***ed.

Whatever the thingamajig is, here’s how to stretch $500 into $2000 in 12 months time.

Whether it’s a $2000 handbag, a holiday, or dare I say it, a Thermomix, money goals mean something different to all of us but mostly they can be a stretch to obtain.

Whatever that thingamajig is, here’s how you can get there by just starting with that $500.

Lisa Barber, Hillross wealth coach and author of the book A woman’s guide to wealth – what my mother needed to know says to achieve short-term money goals, forget about investing in the share market and focus on what you have to work with:

1. Your income
2. Reducing expenses
3. And earning interest in savings accounts

Lets say you want to take a well deserved holiday in the next 12 months, it’s a good idea to park your money in a decent bonus savers account.

The rates being offered aren’t high, between 2.5%-3.4%, as published on finder.com.au but the bonus interest for regular monthly deposits can make a difference if it adds an extra 1% or 2%.

So if you need $2000, but are starting with your $500, and deposit $100 a month for the next 12 months, you’ll earn a small but at least an extra $20-$45, depending on which lender you go with.

So as that money grows through deposits and compound interest (try this calculator), you should now have about $1740 in 12 months time.

That said, we are still short about $260 or $22 a month over a year. So what are your other options?

Investing short-term in the share market is risky and not recommended because it is very volatile.

“You might contribute $100 a week but if the market bottoms out, that money may not be available when you needed,” says Barber.

Investing in the share market is better suited to those long-term money goals which are three years or more and that’s when you can get a bit more savvy with your investment choices.

So short of getting a pay rise, or asking friends and family to give you a little cash for a birthday present this year, Lisa recommends looking for those savings in your income and this involves dividing it up into three parts through the 50/30/20 rule. This means:

• 50% of your income goes to pay committed expenses, such as accomodation and essential services and items.
• 30% goes towards discretionary spending and the things you do not want to negotiation on it.
• 20% goes towards saving for that money goal.

From this point, you need to look for any savings that can be made in the committed expenses and the discretionary spending.

This will often come down to your lifestyle choices.

And remember to achieve the $2000 money goal, you need to find $22 a month in savings.

“The discretionary spending might include somehings which are non-negotiable like getting your nails done or dieting costs.

“So don’t deny yourself of those things because your saving plan may not be sustainable if you do.

“The power of the 50/30/20 rule is that you are more conscious of when you spend on discretionary things, for instance every six weeks, versus every fortnight,” said Ms Barber.

Lisa Barber says the kindness of strangers never ceases to amaze her.

Hillross wealth adviser Lisa Barber can’t help herself – she just keeps returning to Paris, even dropping in on her “way home” from China. She answers our Traveller Q&A.

First, business or economy I won’t allow myself to dream of flying first class until the day I can afford to do it for each and every flight. With young boys, that’s not going to happen for a very long time.

Most frequented destination The one place I simply cannot get enough of is Paris. I lived in London for a few years and would head to Paris whenever I could. Now I’m back in Australia, but even when I flew to China, I had to head to Paris on “my way home”. I must have been there over a dozen times.

If I ran my own airline I would … advertise the final price you will pay for the ticket.

The worst place you’ve been lost It’s certainly far from the worst place but a compounding set of circumstances led me to be lost in Japan with no phone reception and a non-English-speaking local driver at midnight in the middle of winter. With all options exhausted, I knocked on the door of strangers. They happened to have lived in Australia for a couple of years and decided to drive me to my destination, even though it was 1am. The kindness of strangers never ceases to amaze me – as well as how blessed I am that things always seem to work out.

Most memorable overseas dining By no means was it high-end dining, but late one night I came across this little Mexican place on Frenchmen Street, New Orleans. The taste, the smell and the flavours of the soft-shell tacos with homemade local sauce, oozing with cheese, guacamole and beans were so mouth-watering I kept going back for more.

In the suitcase You could say that I am a bit of a minimalist in that I typically wear black, white and grey, so one of the advantages when it comes to travel is that you require only a few basic items. Add a little black dress, a pair of favourite heels and I’m ready for everything.

How do you make the most of a spare afternoon in a strange city? I chuck on a pair of running shoes and cover as much ground as possible exploring the city, stopping to admire the architecture, the shops and the aromas of the local cuisine.

Travel tips When you’re in a foreign country and you don’t speak the language, always take the address of your accommodation with you, written down and in a safe place.

What technology do you use? The trusted iPad and iPhone are essential for touching base with my family and my assistant (who is usually running my business while I’m away) and, of course, taking that must-have photo.

Best overseas purchase The best are those about which people say, on my return: “I love that, where did you get it?” And I have to respond: “When I was in … ”

Best travel tale Drinking multiple magnums of Dom Perignon in a VIP lounge in Paris and not having to pay the bill.

Best thing about travelling The sense of adventure, absorbing myself in the local community and culture, tasting the produce, drinking the coffee and wine, attempting to speak other languages and finding special places I can believe no one has found before. What’s not to love?

Top gripe Australians who go overseas only to hang out with a newly found fellow Australian.

Author and wealth adviser Lisa Barber in her office in Sydney. Picture: Tim Hunter

LISA Barber’s life changed when her father died suddenly in a workplace accident when she was just 13.

He was just 49. Her family suffered untold devastation.

Barber was one of four kids and her mother, who had a “big heart”, also looked after foster children.

Lisa Barber had women like her mother in mind when she wrote her book. Picture: istock

“You grow up really quickly after something like that and I wanted to help out mum as much as possible,” she says of her childhood in Toowoomba.

The family’s grief was only made worse by immense financial strain. Her dad hadn’t organised a will and they were put at risk of being homeless.

It had a “profound” impact on Barber and set her on a path as a financial adviser.

When she was in year 10 she really wanted to do work experience at a nursery or a childcare centre.

Instead she walked up to the board at school and saw she had been placed with a financial services firm.

“I went in to work there and absolutely loved it and ended up staying for seven years,” she says.

Barber now has 20 years experience in the industry and works as a “wealth coach”.

She is the director of Hillross-Aspire Wealth in Sydney and the co-founder of Females Inspiring Females Inc, where women support each other’s ideas.

Wealth adviser Lisa Barber ended up with a career in finance by chance. Picture: Tim Hunter.

On Tuesday, she will launch her first book — A Woman’s Guide To Wealth: What My Mother Needed To Know. The tome is about helping people make the most of their plan A life, while empowering them to choose a plan B that will go a long way to financial security.

It’s designed to help women gain control and confidence when dealing with finances, and using money as an enabler to live the life they want.

“The sooner you understand your finances and make your money work hard for you, the sooner you’ll get to live the life you want,’’ Barber says.

“It may seem fantastical and possibly out of reach compared to where you are in you life right now, but I’m living proof and a witness 100 times over that it works.

“Through education and discipline, we can begin (to) realise that financial independence isn’t confined to the realm of experts, men or rich people.

“It’s available to anyone who is prepared to spend a little effort now to receive greater returns down the track.”

Barber becomes incredibly passionate while talking about why women, specifically, need financial advice tailored to them.

Lisa Barber is passionate about financial equality between men and women.

She points to the statistics, including that women have a whopping 46.6 per cent less superannuation than men.

“Because we do earn less than our male counterparts, we live longer, we are under pressure to look good and overspend, and when a woman is the main income earner in a family, she still does more housework,” she says.

With so much juggling going on, sorting out the finances gets lost.

The vast majority of her clients, Barber says, are single women.

“There’s usually a catalyst for them coming forward to seek advice, they turn 40, or get a pay rise, or separate from their partner,” she says.

“Financial security is something women seek. They live by themselves, more and more women are choosing not to marry, or they’re waiting for that knight in shining armour but realise he’s not coming any more.”

A significant step to getting “financial freedom” is to figure out what it actually means to the individual person, Barber says. Money is only the enabler to living the life you want.

“Before I do any work with clients I need to understand what’s really important to them,” she says.

It’s important for women to do their sums.

For instance Barber’s own definition of the term is to provide “better options” for her children’s education, explore the world and drink champagne at sunset in Paris at least once a year.

Then it’s about understanding cash flow — how much you earn each month and how much you spend.

“One of the first questions I ask my client is ‘what is your cost of living?’ Nine out of 10 can’t answer,” she says.

Barber says working out how much tax is being paid and organising superannuation are also important first steps.

It’s about managing the cashflow and working out the timeline on when you want to reach your goals, like buy a house, she says. She doesn’t like the term budget because it’s like dieting: unsustainable.

“Once you identify how much surplus you have there’s a regular pattern on how much you’ll be able to save each month. Also remember to have a little safety buffer in case you lose your job or something happens,” she says, adding it can also be important to work out ownership of assets.

“Then start investing, the higher the risk the greater the potential, but you need to calculate your appetite for risk.”

It’s important for women to do their sums.