I’m blowing off budget day and so should you
FORGET THE FEDERAL BUDGET – SPEND TUESDAY FOCUSING ON YOUR FINANCES AND GOALS
Today, for the first time in more than 20 years … I’m breaking with tradition. I’ve decided I’m not going to next Tuesday’s budget lockup in Canberra. (My editor is not amused.) Tuesday is Daddy day with my three-year-old and we have a very busy day planned on the tractor, digging random holes around the farm that I will invariably forget about and end up driving my ute into.
Besides, the budget has always been poor man’s prime-time political theatre.
The government’s spin doctors spend months in focus groups conjuring up a catchy name for their signature splurge – which they hope will get them re-elected.
(This year it’s “Made in Australia”, apparently.)
Then they get turfed out, and the next mob dismantles it.
Plus, all the rosy economic forecasts they make in the budget can’t hide the fact that many people feel like they’re living in a recession right now.
Bottom line?
Don’t look to Canberra for help – they’ve got enough problems of their own.
Instead, focus on what you can directly control, and I guarantee you’ll move mountains.
That’s why this year I want to start a brand new budget tradition. On Tuesday night I want you to dust off an old copy of my book and have a Barefoot Budget Date Night.
Yes, I know it’s probably been a while since you’ve looked at Betty the sheepdog and me, but there’s a special type of compound interest that comes from getting together to plot, plan and dream … as a team (and if you’re single, bring along a friend).
Specifically, on Tuesday night I want you to write down which Barefoot Step you’re on, and then pick just one thing you can do in 30 minutes or less that will help you move to the next step.
It could be sacking your scheissenhausen super fund, dominoing your debts, getting a cheaper deal on your insurance (they can do better, trust me) or, most importantly, rebalancing your bucket percentages after all the rate rises and rental increases.
Best of all, you can do it with a nice bottle of wine or a fancy meal (or both), with no Elbow or Mr Potato Head in sight. Now I haven’t passed this by a focus group, but I’m calling it … the Barefoot anti-budget.
Tread Your Own Path!
P.S. Send a Barefoot Budget Date Night selfie to me at scott@barefootinvestor.com!
Q My Mother Lives in a Chicken Coop
Hi Scott,
I’m in the US but feel like your column and book apply to us over here too, and it’s my favourite tool!
The problem is my mum is a serial multi-level marketer. She has lost a lot of money over the last couple decades but keeps truckin’ on, mainly due to social security cheques that come from her having been married to my dad for 20 years (they have now been divorced for almost 30).
She’s in her 70s and we live in the mountains. She literally lives in a converted chicken coop – she has no running water but does have a
composting toilet (and at least the coop has electricity). It’s cold and snowy here. She’s broke and freezing most of the time, kept warm by whisky and pickleball.
Do I give up or build her a house and risk my family’s money? When do you stop trying to help your mum?
Rachel
A Hi Rachel Happy Mom’s Day!
Thank you for being so American. (The average chicken coop in Sydney rents out for $1800 a week.)
Seriously, though, your mum is now 70 years old and is unlikely to change. That chicken has flown the coop. Just make sure she doesn’t get any of your eggs.
Q Look Me in the Eye
Hi Scott,
We’ve just returned from a
meeting with our financial adviser. It was the first time I’d met him face to face. He never really acknowledged my presence and spoke directly to my husband throughout the meeting, which made me feel uncomfortable – because it’s my money too! The statement of advice (SOA) has us in 16 different products. When I asked him why we needed 16 different products, he turned to my husband (not me!) and explained that this was normal and that each fund had been specifically selected to maximise our returns.
My husband (a landscape gardener!) dismissed me and said, “you just don’t understand investing”. I read you every week, so I thought this might be a good question to get your thoughts on.
Dina
A Hey Dina, Your experience reminds me of a meeting my wife and I had with an accountant many years ago. He turned to her and quipped, “Liz, I think there is plenty of money for shoes!” That meeting ended then and there, and we never saw him again. You asked a very intelligent question, which unfortunately your husband clearly didn’t know the answer to … but I do. The reason the adviser has selected 16 different funds is that he wants to make your portfolio so complex that you’ll be forced to stick around and pay his fees each year. (There’s an old saying in the finance world: “Complexity is job security”). You do not need 16 different funds to maximise your returns. I have four diversified index funds.
Your husband is incredibly lucky
C“Don’t look to anberra for help – they’ve got enough problems of their own
to have such an insightful person by his side.
Q I’m All Alone
Scott, I am a 22-year-old single mother with a six-year-old child. I recently escaped domestic sexual abuse and violence. My abuser is on trial for attempted murder. In order to keep myself and my son safe, I had to leave behind my support network. I received some compensation for the abuse and I have saved most of this money. However, I am unsure what to do with it. I am considering investing it for my son’s future or maybe a home eventually, as I am afraid of having nothing to pass on or fall back on. I would appreciate any advice on how to invest this money, as I do not have parents to guide me. Thank you for reading this. I admire your work, it is truly inspiring.
Belinda
A Hi Belinda, I’m so sorry for what you’ve been through. You’re not like other 22-year-olds. You’ve seen life. You’ve been through a lot. And that makes you stronger than the average woman your age.
My advice? Don’t stress about giving your son money in 20 years – instead, focus on the here and now.
The best return you’ll get on your money is not having to worry about it. So I’d suggest you open up an online savings account and deposit three months of living expenses (we Barefooters call it Mojo).
After that? Spend money on getting a secure and safe rental in a good neighbourhood.
I’d also open another online saver, nickname it ‘House Deposit’, and put some money in it. I don’t know how much you’ll be able to put in there, but it doesn’t really matter.
What does matter is that you’ll see it each time you open your banking app and know you’ll eventually buy a home for you and your son with that money. It’s begun. You’re going places. It’s only a matter of time.
And after that? I’d spend money on making positive memories with your son. Holidays with the two of you in a caravan park. Cricket pads. Scout camps.
Finally, spend $5 on a notepad from Officeworks. Write your story down as it unfolds. Then give that to him at age 22 and it’ll inspire him to go out and make his mark, just like his mum did.
Happy Mother’s Day!
DISCLAIMER: Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions.