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Money management 101

Posted by Sean O'Kane on 16 August 2018
Money management 101

When it comes to keeping on top of your personal finances, it can be easy to overthink your approach and get overwhelmed. But although there are lots of things that you could worry about, it doesn't mean you should.

Easier said than done, we know.

Beware information overload

With our 24-hour news cycle, it can be hard to avoid the seemingly unending stream of things to add to our list of financial woes.

What's going to happen with property prices?

Are we on the brink of the next global finance crisis?

What's Trump going to do next?

But while these are all legitimate things to be thinking about, the key to managing your money effectively is to spend more time and energy concentrating on the things you can control about your finances.

And the best way to get in control (and stay there) is to keep it simple and, if in doubt, focus on two things:

  1. concentrate on your day job, be that working in your own practice or in the public system, to create the cash flow to build your personal wealth; and
  2. get a handle on your spending so you know what's going where (and why).

Systems are your friend

I've written previously about using an effective cash management system and how this can help you run your personal finances like you would your practice finances. To date, we've implemented this system for over 50 clients with excellent results.
For most, this is the first time they have a true picture of what is happening with their income, expenditure and thus their surplus cash flow. We're so excited about this as a business, as it allows the forward planning we do to help clients with their financial decision making to be far more accurate.
The other piece of the puzzle

Tracking your finances and understanding what you're spending your money on is all well and good, but the next step is making sure you do something with that information. And that means being in control of what you spend.

I've found that for a lot of clients, once we start tracking their expenditure, this automatically results in them thinking a bit more about how they spend their money. But I firmly believe that to be fully in control you need to go one step further.

Here's what you need to do:

  • work out a budget for your discretionary expenditure;
  • divide this by 52 to get to your weekly amount;
  • set up a discretionary expenditure account and have EFTPOS cards for this account;
  • transfer the weekly amount into this account;
  • use the account for all discretionary expenditure; and
  • stop using a credit card (seriously, we mean it!).

This is a system that I have been running for some time, and have also helped many clients implement, and I can honestly say it works!

If you need support getting in control of your money, we're here to help. Like most people need a personal trainer to get fit and stay fit, the same can be said about finance, so it's worth investing in professionals to help you get on track and stay there.

Get in touch today!

Author: Sean O'Kane Connect via: LinkedIn
Tags: Budget Financial planning Planning

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The information on this site is of a general nature. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.

The financial planning services are provided by Medical Financial Pty Ltd trading as Medical Financial Planning (AFSL 506557)