I'm Dreaming Of A...Budget

It's beginning to look a lot like Christmas.


Where has the time gone.  It feels like yesterday was my daughter's 3rd birthday (July) and here I am again perusing the influx of catalogues and emails for little girls toys.


So how did you fare after last year's Silly Season? 


It is alarming just how many temptations are out there to totally derail us;  An incredible amount of retail sales and online bargains plus the usual timely pre-approved credit card limit increases.


What is your strategy for not breaking the bank over Christmas?  Or do you even have one?


Over the years talking to clients about cashflow and budgets the biggest gripe is that it's too hard and too boring.  The key here is to make your budget FUN.  I know, words only to be uttered by accountant, but actually it's true;  a budget can be fun and thus more chance of being successful.  Let me explain.


There is a tendency for people to cut back on all luxuries when they need to save or make their money go further.  What makes a budget like this fail is that the cutbacks are completely unachievable or unrealistic in the realms of real life.  Let's face it, life is here to be enjoyed and unfortunately in a material world, part of that enjoyment does come at a monetary cost.  It's how you manage that with your happiness and enjoyment that makes a budget a success.  


What you need to do is find a balance between saving and fun and also in part, change your thinking about what constitutes fun, ie something that is free compared with something that costs money.


How does one go about creating a fun budget then?


The first time you prepare a budget you should write down everything you spend your money on each month/week/fortnight (if you are new to a budget and really need some guidance choose a shorter period like weekly or fortnightly).


Then critically look at what you are spending each period.  


There are certain items that  are "fixed" like mortgage/rent, insurances, rate  and taxes etc.   Whilst some of these you can't change, there are always deals to be had on insurance to internet and mobile telephone plans to electricity providers.  Something as simple as changing a provider could save you a few hundred a year.


Then there are the "variables" (the fun items) like entertainment, clothes and to a lesser extent groceries.  


Once you've critically looked at the fixed and the variables, critically look at yourself - who you are and what you need.    


If you are a social person cutting out entertainment altogether will mean your budget is doomed before it's even implemented.  The amount and type of entertainment is what needs tweaking.  Are there things you could do that are free?   If part of your social enjoyment is sharing time with friends or family then why not do that at a park or over a board game.  


If you are a person that won't give up personal grooming then think about ways you can save money on these types of expenses.  Buying deals on the internet, buying a cheaper brand, buying vintage or barely worn clothes off EBay.


Revisit your budget on a regular basis.  What is working and what isn't.  Where are you struggling to keep within the limits and why.


Need more help?  Contact me at sarah@willoughbys.com.au

To Be or Not To Be - Working or Stay Home Mum?

I have a pregnant friend living in New York who in February is attending a course on, well, on not what one would expect.  She isn't attending a course on how to give birth, or how to breast feed or how to administer first aid, she's attending a course on how to hire a nanny.

In America, labour is relatively cheap compared with Australia, read a great story here, so hiring a nanny in Manhattan is pretty much the norm.  Walking Central Park last year the number (literally hundreds) of late teen, early twenty female nannies pushing bugaboos was astounding "These are all the Nannies.  Everyone has a Nanny here".

For the average Aussie working mother, childcare/hiring nanny versus being a stay at home mum is quite the conundrum.

Whilst childcare workers are paid relatively poorly in Australia (putting it into perspective of what they are doing ie looking after our precious babies), the cost to parents isn't necessarily inexpensive.  Yes we do have a Child Care Rebate (not means tested) and Child Care Benefit ( means tested) but for a mother of two or three children, the cost of a childcare centre can out way the cost benefit of returning to work even if you qualify for one or both of the above. 

Child Care Benefit

 - to qualify for the Child Care Benefit, you must satisfy the following:

• you use approved or registered child care, and
• your child is immunised (or on an immunisation catch up schedule), or is exempt from the immunisation requirements, and
• you are responsible for paying the child care fees for your child.
• passed the work, training, study test

You must meet an income test effective from 1 January 2011:-

Maximum rate is payable for actual annual family income under $38,763 or families on income support.

Zero rate is payable over the following thresholds:

• 1child  $134,443
• 2 children $139,333  
• 3 or more children $157,329 plus $29,721 for each child after the 3rd

Child Care Rebate

 - to qualify for the Child Care Rebate, you must satisfy the following:-

•  used approved child care during the year;
• been eligible for Child Care Benefit (entitled at a rate of zero or more);
• passed the Child Care Benefit work, training, study test

 The Child Care Rebate is a refund of 50 per cent of your out-of-pocket expenses for approved care up to the annual cap. From July 2010, the Child Care Rebate annual cap will be $7,500 per child per year

So what about nannies?  Three months after my daughter was born I needed to be able to see clients without my daughter in tow.  We embarked on the nanny journey and it was pretty interesting.  We ended up with a wonderful girl by sheer luck but if you choose to use a nanny then be prepared to pay.

We negotiated $23/hour for our nanny 2 days a week without paid holidays (initially she wanted 4 paid annual leave days per annum).  To put it in perspective, a full day at childcare (7am-6pm) is roughly $66 before the Child Care Rebate/Child Care Benefit.  For a nanny for the same length of time, it's $253.

A trained nanny with experience will cost at least $20 per hour in Australia and be warned, nannies do not do any chores apart from those relating to the child - if you are looking for a cooked dinner and clean house when you get home, you'll be bitterly disappointed.  As our nanny pointed out, she was there to give all her attention to our daughter - did we really want her focusing on cleaning and cooking rather than our child?  Good point, although given my daughter had 2 sleeps during the day of 2 hours each I was curious as to how she would be spending that time.  Still, I was willing to pay (and fortunate to afford it) as I personally couldn't bare the thought of my 3 month old going to childcare.  But at six months, we did succumb to the childcare system and whilst we did have a number of absent weeks due to a series of hideous infections, our daughter has enjoyed it very much and as parents we have been extremely pleased with the centre we use.

If you are thinking of hiring a nanny, to qualify for the rebate make sure your nanny is a registered carer with the Australian Government.

So back to my Mum To Be and her :"How To Hire A Nanny" course - an altogether excellent idea - have you seen that Trial and Retribution episode about the nanny - chilling. 

Oh, and if you are thinking of bringing a nanny back from another country, you will need to organise appropriate visas and obviously you won't qualify for the government rebate...just be careful the nanny doesn't do a runner, I know of at least 2 girls who disappeared, visa in hand, after just a few days...

This Week's Term Deposit Rates

%pa (paid at maturity)

5.50 - 90 Days

6.10 - 180 Days

6.05 - 1 Year

6.50 - 3 Years*

7.00 - 5 Years*

* interest paid annually

Today's Money & Markets News

AUD trading lower this morning but still above parity.  At Bank rate at approximately 98.49 US cents.

In The News
A win for the consumer: Loan exit fees to go
Qantas shares down over 3% as A380s remain grounded
US Stock market back to April's highs means good news for our local market

Term Deposit Rates

Term Deposit Rates avaiable through Willoughbys, week commencing 1st November

%pa (paid at maturity)


5.50 - 90 Days

6.10 - 180 Days

6.05 - 1 Year

6.50 - 3 Years

7.00 - 5 Years

Are You Paying Too Much for Telephone Calls & Broadband?

there was a good story on A Current Affair last night.

Click here for broadband comparisons



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Excel in Budgeting

A friend of mine recently told a job interviewer she loves excel.

What isn’t to love about excel.

Excel (or similar spread sheet style programs) are simple and effective tools for budgeting.

For some, budgeting can be a scary term. However, with the assistance of an accountant who knows your financial situation, budgeting is very straight forward and effective in helping you determine your financial parameters and reach your financial goals.

I am a fan of a monthly budget. If you are paid fortnightly, a fortnightly budget may be more appropriate.

When preparing a budget it is important firstly to list all of the possible outgoings for each period. Secondly, it is important to be realistic about the dollar amount of the outgoings. When I have helped clients prepare budgets, there is a tendency for a client to say something along the lines of “I currently spend $1,000 per month on clothes but I am going to cut it down to $500 from now on”. If $1,000 is currently what you spend, this is what should be in the budget. Whether you can afford the $1,000 or not will become quite obvious once the budget is completed. It is at this point (when the budget is finalised) that spend on individual items will be adjusted.

As with most things in life, sticking to a budget needs discipline. But using a budget (in Excel or similar) as a spending guide each fortnight or month will have a positive outcome.

A budget allows you to gain control of your spending habits and an understanding of where your money is going. It enables you to change where your money is spent.

A budget will also allow you to implement an affective savings plan. Knowing what you can realistically save each period and sticking to it, no matter how small, is more achievable than a sporadic approach. This works particularly well for example if you are saving into some sort of investment which experiences market peaks and troughs. A regular contribution will even out the market bumps over the longer term, what we call Dollar Cost Averaging.

If you would like assistance with preparing a personal budget please contact me at sarah.willoughby@willoughbys.com.au

Don't Pay Now; Pay Later

Whilst spending a gazillion dollars on vintage designer clothes, Rachel Zoe infamously said on The Rachel Zoe Project “you don’t pay now, you pay later…the beauty of credit cards it that you can pay later” (*cringe* yes, I did watch and love this crazy freak of a woman).

Whist I am not against having a credit card I certainly don’t subscribe to Rachel’s way of thinking.

As constantly plugged on Today Tonight type shows and finance websites, credit card debt is very bad debt. Generally interest rates are massive and frankly it is all too easy to spend that extra bit of credit whilst promising ourselves we will pay it back. And of course - we never can.

However, in every girl’s (or guy’s) life there comes a time when the most amazing must have shoes come on sale for a ridiculous price and with the bank bare the credit card is the only possible option. Guilty as charged.

The point I am trying to make is that with a credit card comes discipline. Whilst the upside is thousands of dollars of credit the downside is a very nasty credit rating if you default in making the minimum repayments.

So how to manage credit cards.

In my opinion:-

• yes have a credit card.

• Only use it if you can repay the total spend each month (ie never incurring interest)

• Use it for emergency situations (eg the once in a lifetime sale) but be sensible and make a plan to pay it back over the shortest time possible

• Don’t take up the increase limit options.

• Maxed out? Then DO shop around. There are lots of deals to transfer balances with 0% interest for a set period of time. Budget what you can afford to pay each month and plan to do this so that the debt is repaid as soon as possible.

Click here for credit card comparisons

Click here for credit card transfer offers


Please note – that this is not advice but my opinion only as each individual’s case is different. Should you wish to seek help or advice please contact me privately at sarah.willoughby@willoughbys.com.au or alternatively seek advice from a qualified accountant and/or financial adviser.