The Finance Bible

OD #3 - You’re Probably Doing Money WRONG! Here’s How to Fix It Before It’s Too Late!💥

• Oscar Don

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Most people are stuck in a financial trap—and don’t even know it. Is that YOU? In this episode, we’re exposing:
🚨 The budgeting hack that could save you THOUSANDS (hint: it’s the 50-30-20 rule).
💳 The shocking truth about “good debt” vs. “bad debt” (yes, some debt makes you RICH).
⏳ Why delaying your retirement planning could cost you BIG.
🔥 How to escape the paycheck-to-paycheck cycle once and for all.

Unlock the secrets of mastering personal finance management and fundamentally change your financial future. Discover practical strategies to track expenses, set achievable goals, and manage your money wisely. By adopting tools like the 50-30-20 rule, you'll learn to allocate your income effectively into needs, wants, and savings. We also address the common misconceptions about budgeting, making it less tedious and more engaging with the help of digital tools. Prioritising debt repayment is crucial, and we provide insights into building a robust financial foundation that will support your goals for years to come.

Explore the fine line between good and bad debt, understanding how some borrowing can pave the way to wealth while others can trap you in a cycle of high-interest payments. From student loans to investment properties, learn how certain debts can actually enhance your financial health. This episode places a special emphasis on the power of compound interest, the importance of starting your retirement planning early, and seeking professional advice to secure a comfortable future. We uncover common financial pitfalls, like living paycheck to paycheck, and stress the need for better financial literacy and habits, empowering you to navigate the financial world with confidence and clarity.

 For any enquiries or to connect with Oscar, Zeke, or their company, Asset Road, listeners can visit the following links:

The advice shared on The Finance Bible is general in nature and does not consider your individual circumstances. The Finance Bible exists purely for educational / entertainment purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.

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Oscar Don:

When I first started managing my finances, I made every mistake in the book maxing out credit cards, skipping budgets and feeling overwhelmed. But one day I stumbled upon the power of tracking expenses and setting small savings goals. That simple shift changed everything, and it can for you, too. In this episode, you'll learn the essentials of budgeting, discover how to build an emergency fund, get tips on managing debt and uncover common financial pitfalls to avoid Stick around, because these strategies could be the game changer you've been waiting for.

Oscar Don:

Welcome back to another episode of the Finance Bible Podcast. Zeke here and your co-host, oscar. But before we get into it, please note that nothing in this podcast should ever be considered as personal financial advice. Of course, if that is what you are seeking, reach out. We'll get you in touch with the correct professionals and get the job done properly. Sit back, relax and enjoy the show. Let's get into it. Welcome back to the Finance Bible Podcast.

Oscar Don:

Today we're diving into personal finance, a topic that can transform your life. Let me ask you this to start it off have you ever wondered where your money really goes each month? Well, by the end of this episode, you will have a roadmap to take control of your finances and build the future you dream of. Personal finance is essential for everyone, regardless of your income level or financial goals. In my eyes, how you set up your personal finances and how you manage ongoing debt, et cetera, and your income really sets you up for not only tomorrow but next year, in five years, 10 years, 20, 30, 40, 50 years, until you retire. It sets you up for life, literally how you act now and what you spend your money on if it may be investments, or it might be things which bring you value, or it might just be things that you splurge on, like coffees and going out shopping or going out clubbing but what you spend your money on today and for the next five years is going to have a direct impact on your life. So, before you spend money, think that is this going to impact and make future me better and put myself in a better position to understand the basics in personal finance.

Oscar Don:

I have said it many times in previous episodes the budgeting. Budgeting is the cornerstone of financial health. The purpose of a budget and to really, you know, figure out why budgeting is vital is it helps you understand and control your money, where your money goes, what happens when it comes in, and really actually figure out what you're doing and, if you need to be on track, put yourself back on track. A budget is vital, especially if you, like many people I know, and especially in today's day and age, with the cost of livings increased. You get paid and then all of a sudden you've run out of money before your next payslip and then you dig into your savings. Where did your money go? Did 60% go to dining out? Did 30% go to buying clothes or whatever it may be, and did 10% go to bills? Like, where's your money gone? And the issue is so many Australians and people all around the world don't budget because they think it's so boring, takes forever and it's just an old school mentality way of doing it. But the thing is, yes, it can be boring, but the impacts this will have on your life if you've got goals that you want to achieve financially, this will literally catapult you into those goals if you follow it accordingly.

Oscar Don:

One budgeting tool which I've mentioned before and I did use I still use from time to time is the 50-30-20 rule. So, depending on your rent, if you are paying rent, if you're at home, even better, you don't have to pay rent, but basically what it means is 50% of your pay. So this is when you get paid and your money comes in. So 50% goes to needs. So we're talking your rent, we're talking your groceries if you need to go, get your own groceries and also utilities so rent, electricity, wi-fi, just bills, things that need to be paid 30% goes for once.

Oscar Don:

What do you want to do? So you may want to go out and have dinner with your friends. Well, a portion of that comes from the 30%. You may want to go to the movies, or go on a date or go let's just say, for example, go shopping on a Saturday afternoon or go to the footy. That's where that comes out of that 30% and the last 20%. That goes towards your savings. And if you have any debt, that will go towards your debt and in my opinion, it will go towards your debt before it goes towards your savings. So you want to make sure you get rid of your debt before you start saving, because what's the point of saving when you've got debt makes no sense. You may as well extinguish it and then start your saving. Start fresh. 50, 30, 20.

Oscar Don:

People may sometimes flip the 30 and the 20 around if you want to save more money. I personally used to do that because I used to love saving. It was quite exciting when you get your pay and then you see your savings go up and then there's a new number in your bank account and blah, blah, blah. Everyone's different, but change it. It is flexible. That's the basics of personal finance and budgeting 101 and so many tools online as well which makes you not have to actually physically set up your own budget, because if you've got to go physically set up your own budget could take a while. You probably get bored and then you'll stop doing it and then all of a sudden, you'll never get back to it. It's the good old act of procrastination. So there's heaps of different spreadsheets online. All you got to do is just Google it budget template on Excel and you can download it. There's also different apps like YNAB and Mint you can download and they're literally budgets on your phone. So in today's day and age, with everyone on their phone, very easy and probably a smart thing to do. Actually, if you're wanting to get into it Now.

Oscar Don:

The first step to gaining financial awareness is simple, but it's tracking your expenses. Knowing your spending habits is crucial. For example, if you love spending all your money on shopping and buying clothes. You need to figure that out sooner rather than later, because if you figure that out you can then put a stop to it or restrict it. It's literally the same as addicts. So let's say gambling addiction, for example. If you're putting all your money to gambling, you don't realize. And then you do your budget and then you say, oh damn, I'm putting 20 bucks a week, or 20 bucks a day actually, into gambling on Sportsbet. I need to pull back because this is a bad spending habit. This is where all my money's going.

Oscar Don:

So you need to start tracking your expenses and you may want to start small, such as just tracking one category at a time. You might want to do one category per week for the month, so it may just be dining out. You want to track how much you're dining out for the month and then the next month you may want to track how much money you're spending on clothes. So really figure out, based on yourself, what you feel you're spending the most money on, and definitely track it, because you're going to surprise yourself. But start small and then gradually add another one to the month, add another and then all of a sudden you're tracking every single expense for the month in every single category, and then you can figure out all right, let's push the spending on going out down 200 bucks for the month, let's put that money into savings and blah, blah, blah. So there's options to do it and it's so simple, but it just takes time and it's a must if you do want to grow your personal finances and achieve the goals that you want to set, especially being in January. I'm sure everyone's got their own new year's resolutions, so this is a vital if this is one of your New Year's resolutions of increasing your finances.

Oscar Don:

The next segment of your personal finances is you must build your financial foundations. So when I think about financial foundations, I think directly to emergency fund, your financial safety net. An emergency fund, in simple terms, is just a different bank account or a little savings account which covers unexpected expenses such as car repairs. You may have medical bills that come up out of nowhere. Something might've happened to your phone and it's fully broke. You need to get another one because you need to communicate to people. So that's an emergency, whatever emergency you feel for yourself, but it's just covering the unexpected expenses as simple as that.

Oscar Don:

When you Google emergency fund. There's so many different levels of what people recommend having in your fund, but for you, just have a realistic goal. You may want to have one month of living expenses in your emergency fund or have two months. I personally think having at least three months is a good place to be in terms of emergency funds. So, for example, especially in COVID, how a lot of people lost their jobs and became redundant. Having emergency funds at least for three months would have helped a lot of those individuals get back on their feet, pay their rent if they had to, pay their mortgage bills if they had to, and search for jobs. So you know, you may start with five hundred dollars in there or even one hundred dollars and add to it every week for 12 months, for example, depending on what goal you want to have. But a tip to to building an emergency fund is you can just automate a small percentage of each of your paycheck into a high yield savings account, which will give you a bit of a boost at the end of every month as well due to the interest for that. So that's a tip for you if you haven't built an emergency fund.

Oscar Don:

Another good reason for it is mentally. It helps you in the back of the mind. So if you're getting stressed out about things coming up and you might have to pay a bit more for your car because it's broken down, well, the good news is you don't have to dig into your savings. You've already built up a fund. So that's what it's there for. It's there for emergencies, unexpected things, and to ease the stress for yourself.

Oscar Don:

The next topic is debt management, taking control of your financial obligations. So when I think about debt management, I think about two methods which people have spoken about before in the industry. So there's two ones. There's one called the snowball or the debt snowball method, and the other one's a debt avalanche method. So we'll start with this debt snowball. So the debt snowball method focuses on building momentum by eliminating your smaller debts quickly. So this will give you psychological wins and give you a bit of a sense of accomplishment. So, for example, if you have a debt of 200 bucks or a thousand and five thousand, you'd start with the $200 debt first, even if it has a lower interest rate, and then you'd make your way to the $1,000 and then the $5,000. So the smallest first and then make your way up. On the other hand, the debt avalanche method. This targets debts with the highest interest rates first, the reason being it minimizes the overall cost of borrowing. So, for example, if you have a $5,000 debt at 20% interest and then the $1,000 debt at 5% interest, you tackle the $5,000 debt first. But both methods are effective. Choose the one that aligns with your financial situation and, most importantly, like what motivates you more. So is like for my girlfriend. She likes smashing the big debts first if she has to pay, as opposed to the small ones. So, depending on what you're wanting to do, figure out which method you have, and that's only if you've got debt. You may not have any debt and may not need this, so that's also fine.

Oscar Don:

Now, when we talk about debt, there's two different types of debt. There's good debt and there's bad debt. So good debt, for example, student loans, investment property mortgages and bad debt, high interest credit cards and, pending where you sit on the fence, maybe an owner-occupier mortgage. We'll start with good debt. I'll dive into it a little bit more. So good debt is really any borrowing that contributes to your long-term financial health or helps you build your wealth. So, for example, student loans some people may see them as bad debt, some as good, but let's just say, for example, it's good debt because it may help you with your financial health down the track. We're getting a good job, but they often come with lower interest rates and help increase your potential through education. And, at the same time, if we're using mortgages, for example ideally an investment property mortgage these enable your home ownership as well as building your equity over time and be able to buy other properties and continue building that legacy for yourself.

Oscar Don:

In contrast, bad debt is borrowing that does not provide any lasting value and often comes with a high interest rate. So credit card debt is the number one. Payday loans and other forms of high interest borrowing fall into this category, reason being they can quickly spiral out of control and drain your financial resources. The key is to approach borrowing with caution. So take on good debt only when it aligns with your financial goals and avoid bad debt by living within your means and paying off balances in full whenever you can, because that is the most important, especially with credit cards. If you start paying minimum repayments and use a credit card for everything, it creeps up on you and then all of a sudden you've got a big bill which you may not be able to afford. Try and avoid minimum payments when you can and really tackle the debt aggressively if possible, because that's how you're going to get out of it.

Oscar Don:

So segment three what I've got written here is growing wealth over time. Saving and investing Make your money work for you. The main thing when I think about saving and investing is compound growth, compound interest and how starting early can significantly impact your long-term wealth. First things first. What is compound interest? Definition, or one of the definitions, is the process of earning interest on both the initial principle and the accumulated interest from previous periods. For example, if you invest $1,000 at a 5% annual interest rate, you'll earn $50 in the first year. In the second year, you'll earn interest on the $1,050, and so on. So this creates growth over time. However, at the same time, in the other side of the fence, compound interest can also work against you, especially with credit card debt. So, for example, if you had $1,000 on your credit card with a 20% annual interest rate, this can balloon rapidly if only minimum payments are made. So this highlights why it's crucial to harness compound interest through saving and investing and avoid it as a liability in high interest debt.

Oscar Don:

The next thing I want to talk about is retirement planning. So when it comes to retirement planning, the earlier the better. A lot of people we meet in our roles are nearing retirement and 70 to 80% of them haven't really planned for anything. They have gone through their life which used to be okay, you know, going to school, getting a good job, buying a house, paying off the mortgage and then relying on their superannuation to help them with their retirement, and think the government's going to, you know, fund their retirement, when back in the day that was okay, you could live a comfortable life. But now it's virtually impossible to live solely on the government, especially on the pension. You cannot live comfortably on the pension. So the main thing is you need to plan your retirement in your 30s, 40s or even earlier.

Oscar Don:

And when I say plan your retirement, speak to a financial advisor. Let them know what you want to do. Speak to a property investment consultant to help you build wealth through property, because in my eyes, that is the most important and the most effective way to build wealth. Over time, compound interest, compound growth, getting equity reinvesting, building an absolute empire. That's what gets me excited, that's what gets our clients excited who come to us, and the good news is, generally speaking, mortgages are 30 years, so if you start in your 20s or your 30s, well good news is, you can build an absolute empire and by the time you want to retire, all your property may be paid off and you're literally living off the rental income. Start planning, because everything has changed in terms of government spending, the pension, what's going to happen in the future? You don't want to rely on that because you're not going to live a comfortable life and you may be stuck working forever.

Oscar Don:

If you do so, set your retirement goals. How much do you need? How will you get there? So, if you are in your 50s or nearing retirement and you have kids and a family, how much are you making per week now? Are you comfortable with the overall income? Are you just getting by? So this will help you figure out do you want to replicate your own income right now for retirement and replace that income from rental income from an investment property, for example, that income from rental income from an investment property, for example? And if you do, if it is, you know $100,000, you may need $2.5 million worth of an asset base to pay you 4% of that annually, which is the average dividend and rent as well. So that's what you may need, not financial advice nothing to do with that, but just example. So figure out how much you want, how much you need, and then speak to a professional to help you get there. Can't emphasize that enough.

Oscar Don:

Point four, or segment four mindset and habits. Cultivating good financial habits is literally your key to long-term success. Yes, some weeks there may be times when we splurge a little bit more than we thought we would or could afford to, but it's all about over time. You know, if you look at the stock market, for example, if you zoom in for the 12-month timeline, you can see a lot of up and downs, but if you zoom out over a 50-year period, mostly you'll see an upward trend. So this is all about the same with good financial habits. If you do it over time, you're going to increase. But even if you look in on the week and you may have some bad days, that's all right. Just continue to try and fix that and build it over time.

Oscar Don:

So one of the points I want to talk about are automating your savings and bill payments to make financial discipline easier, which makes it so you don't have to think about it, it's automated, you've got money going to your savings money going to your spending money going to your bills, that's easy. Got money going to your savings money going to your spending money going to your bills that's easy. Also, one of the problems I see is when people increase their income, they may get a pay rise or something exciting or a new job. A lot of individuals then actually start looking at upgrading their lifestyle, too, to match their new pay. So if you're in a position, try and keep what you're doing the same. If you're renting, you may want to get a new place which is based on your income In some cases. Sometimes that's fine, but don't really overextend, because use your extra income to help you build more wealth, because this will really give that extra oomph to push you up the ladder.

Oscar Don:

Main one is educate yourselves. You've got everything in front of you. We've got podcasts on our phones, we've got eBooks. We've got real books in paper form. We've got TED Talks. We've got online courses. We've got people doing reels about investing on TikTok and everything. We've got people doing reels about investing on TikTok and everything. So educate yourself continuously. Read 10 pages a day at least. Listen to one podcast a day, take courses and build your mindset around this.

Oscar Don:

Now look, the last segment I'm going to talk about are really probably the most important one, and it's ones that I've put together from four years of meeting clients face-to-face and figuring out what is the most common mistakes which they have brought up. Simple as that. What mistakes have they shown us consistently? And a lot of these people have it. So it's the common mistakes to avoid. So these are frequent financial pitfalls which many people fall into it. So these are frequent financial pitfalls which many people fall into, but I'm sharing with you how to actually avoid them.

Oscar Don:

Number one most common, and a lot of people do this is living paycheck to paycheck. You may get paid and then at the end of your pay cycle, you've literally got no money and you're waiting for the next pay to come in. You're struggling, you're counting down the days you can't go out. You tell your friends no, I can't do it because I've spent all my money. The reason people do this is because they're not saving any portion of their paycheck. Spend it on things they want to do, just short-term things like going out for dinner or going clubbing or buying drinks. It's not helping them down the track. If you do wanna go out all the time with your friends, that's also fine, but put a small portion of every paycheck into a savings account. I'm actually shocked by how many people in their 30s have less than $5,000 in their savings because in their 20s and their 30s they have not been putting any money in their savings. And it's just. You need to do it, even if it's $50 a week or $10 a week. Just start somewhere, because, same with the emergency fund, it's going to help you mentally as well when you look back and you're stressed about something. But you know you've got a bit of a backup, because that will put you a long way and reduce a lot of stress. So it doesn't matter how small, but start putting some money into your savings.

Oscar Don:

Another one is ignoring your credit scores. So when you go for a loan, eventually if you do wanna buy a house or if you're in the process of buying a house, you need a good credit score because that's what the bank will look at. These scores will impact your loan or impact your interest rates and also your job applications. Ways to improve your credit score because it's very important Main one is paying your bills on time. You need to pay your bills on time, because if you don't, it gets lodged and then it comes up on the system that you're not very trusting with bills and you can't really afford the repayment. So if you're going for a loan, they may decline it because of that. Another one is keeping your credit utilization low. So how many credit cards are you applying for? How many credit cards do you have that you pay off? How many loans are you going for? Online, like? Make your inquiries low, because the more inquiries you have, most of the time they're actually lodged on the side. So there's so many different sites that you can actually check your credit score. If you did want to have a look like, for example, just typed in there, then you've got Credit Savvy, you've got ClearScore, you've got GetCreditScore. Equifax is like one of the official ones which banks use, but there's so many there which you can look at.

Oscar Don:

And lastly, is failing to plan for taxes and insurance. So, especially if you're self-employed, you must set aside money for your taxes, because it's a common thing a lot of people forget about. This is probably a direct correlation to how around 80% of small businesses fail within the first 12 months because they don't really take into account the tax and then all of a sudden, the tax comes around and they got a big bill. They got to front up. Yeah, make sure you put money aside for taxes if you're self-employed. And then, even if you do know you're paying money back in taxes if you're not self-employed if you spoke to your accountant put that money aside as well.

Oscar Don:

So important Also insurance. So ensure that you've got adequate insurance cover. So this really is literally just to protect against any unexpected losses. It's simple you want to make sure you're covered for anything happening. You might want health insurance, you may want life insurance or your income protection, depending how old you are in your job, and if you've got kids or a family, you may want to protect them. But, yeah, you need to make sure that you've got all that going and protecting yourself and your future, because if it's, for example, if you've got a family and you're the main provider, if you lose your job, everything's stuffed up. You want to make sure that you've got insurance, you've got your income protection. So if anything does happen or you can't work because of an injury or something, things are sorted.

Oscar Don:

So they're the main three mistakes which a lot of individuals have spoken to us about, but I just wanted to share them to you because they're not really talked about much in the media. As we all know, the media don't really talk any personal finances. It's quite hard. I'm still surprised, like you've got the schools, no one's talking about them either. You're learning about algebra and then Shakespeare and English. It's like what's the point? You want to learn about these things because these are what's important in life. You eventually get to a stage when you have to learn about this, so why not learn about it in school? It's yeah, hopefully they change it down the track, but this is, yeah, basically the basics and the most important things about personal finances and mastering your money. So I hope you guys have learned something.

Oscar Don:

A bit of a longer episode than normal, but there's a few points I wanted to talk about. So, if you're new to this podcast, welcome. We hope you enjoy our episodes. But, yeah, if you have any friends or family who you think will benefit from this, share it to them. Send them a text, send it through them on TikTok, whatever you do or how you listen to the podcast, share it through.

Oscar Don:

But just remember that as long as you get 1% better every day, you may start budgeting with one category, for example. But as long as you're saving even $5 a week, you're improving. Keep going. You're going to get there one day and even if you're close to it perfect. Or if you're there already awesome Help others around you. But these tips are vital and even if you need to come back to this episode a few times and remember some parts, please do. But, yeah, make sure that you take on the advice, take on the action. It's not personal advice, it's just general advice about life and personal finances, but take it on. Improve your life, get your finances on track and share it with your friends. Speak next time. We hope you enjoyed the episode. As always, we know exactly what to do. Hit that follow button, subscribe whatever platform you listen to this podcast on. Also, share it to your friends, family, co-workers, wherever you think may benefit from it. But unfortunately, that's the end. We'll see you next week.

People on this episode

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Oscar Don

Co-host
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Zeke Guenthroth

Co-host