Bryce Holdaway and Ben Kingsley have written a book called Make Money Simple Again. They join us to talk about just how simple it can be with their 7 step formula.
Listen to the interview now:
Kevin: A few weeks ago I had as guests in this show, Bryce Holdaway and Ben Kingsley, who have written a book called Make Money Simple Again. They join me to talk about just how simple it can be. Good day gentlemen, how you doing?
Ben: G’day Kevin, how are you?
Kevin: Well, thank you. Good to be talking to you again, both. Inside the book, you talk about how easy it can be, and you actually make it easy by giving seven steps. Can we quickly walk through what they are?
Ben: Yeah, sure Kevin. What we’re talking about here is making it really easy by breaking it down into those steps. So the first step is gather, which means if we’re going to understand our money movements, we need to understand where it all is. So that’s sort of grabbing the bank statements, the credit card statements, and then step two is sorting it out, right? So categorising it and making sure we’ve got it all in easy to understand buckets, or jars as we call them. Then calculating what those numbers come up to is number three. Then we set up our banking, to support our money management system, so we like to have an offset account with these virtual jars sitting inside.
Ben: Step five is a monthly check-up, where you’re analysing how you’re progressing to your annual target. Step six is if there’s a little tweaking that you need, you simply just look at those tweaks to get the balance right, and step seven is rolling over that annual number so you plan out the following year.
Kevin: Okay, well let’s go back to sorting, where we’re talking about putting it into lots, or into barrels. Can you give me an example of how many you’re talking about here? What sort of barrels?
Ben: Yeah, so it’s really simple. We want to go back to the olden days where our parents used to put their money into the money jars or the money tins. That’s back in the generation of our grandparents. And so we’ve got these jars, and we talk about having firstly, the living and lifestyle jar, then we’ve got our credit card jar, then we’ve got direct payments, and then we’ve got loan payments, and then a provisioning jar. So there’s effectively five virtual jars that live inside the primary account, which is the main offset account if you’ve got a mortgage, or if it’s not an offset account if you’ve got a mortgage, it’s a high-interest savings account. Kevin?
Kevin: So Bryce, we might come to you. In the calculate section where you’ve got these five jars, is there a benchmark for each one as to how high it should be?
Bryce: No, it’s more about, the approach is a top-down rather than a bottom-up., meaning once you have calculated what you put in each of those virtual jars that Ben talked about, and we wanted to make it so you could still use your grandparent’s era principals, but in the 21st century where it’s digital. Once you’ve actually determined what the number is, then you use that each week. So we have what’s called a seven day float, as part of that calculate.
Bryce: Which means if you live your discretionary spend on a week-to-week basis, throw a number, say it’s 500 bucks a week, you pay yourself once a week, into your seven day float, and instead of micro-managing everything you spend that on, all you need to do is just make sure that you’ve got enough to last you for the seven days, and it’s really empowering, ’cause it means that I don’t have to have an app, I don’t have to calculate receipts, I don’t have to worry where the money’s going. Once I’ve done the hard yards in the calculate section, I then just go about spending my money in a discretionary nature, any way I see fit as long as I swim between the flags, and that flag is the calculate that you’ve done.
Kevin: Yeah, it’s fascinating. Hey Ben, with that monthly check-up, or that monthly check that you talk about, I imagine that would work hand in hand with the tweak, because if you’re looking at it monthly, you can sort of estimate where you may be overspending, or where you can cut back a little bit, so does tweaking always mean cutting back?
Ben: Not necessarily, it just means that because it’s an annualised system, and the idea that the end game here is about tracking surplus cash, right? Ultimately what’s happening is, there’s a lot of slippage in the household, because they’re not monitoring their money, but everyone hates to have to track every dollar that they spend, right? It’s just time consuming, it’s very difficult. So with this system, you don’t have to track every dollar you’re spending, you wanna aim towards that monthly surplus, and then the annual surplus. What we’re talking about from the tweaking point of view is, let’s say your son’s got drumming lessons, and the price has gone up from $20 a lesson to $25 a lesson. So you would then have to, that’s a bill, we just need to tweak that number for the drumming lesson, and then that will automatically adjust the system, and then effectively off you go to remainder of that year. So it’s about tweaking those types of things, but you could also get a pay raise, so that could also mean a tweak to the system.
Ben: Now, again, it’s about controlling your money over the course of a 12 month period. But just having that monthly check-in, so we always talk about checking up on it. It only is effectively 10 minutes a month, is all you need to do your monthly check-up. Effectively, we only need three numbers, right? We need the balance of your primary account, we need the balance of the credit card account, and finally we just need to know what you’ve spent in the provisonary account. Now, how easy’s that? In terms of being about to look after your money?
Kevin: In the book you detail, obviously you give a lot more detail about the seven steps, but you’ve put it under the heading of money smarts. I notice there that you also talk about it being a whole of life solution. Can I just ask you then in an environment where there’s a young family, with kids, are you advocating that the kids get involved in this as well, so they learn these skills at a very young age?
Ben: Yeah, absolutely Kevin it’s an evergreen system, it works at every stage of your life. If you’ve got a part-time job, and you’re at university on casual wages, or you’re a CEO of a Fortune 500 company, it doesn’t discriminate, it works at every stage. And it’s a system that allows you to adopt it from where you’re at. That’s what makes it so universal, and that’s what makes it so powerful, and the fact that you don’t have to be on big bucks to do it. You can be on wherever you’re at, you can start wherever you are, you don’t have to wait to the beginning of the financial year, you get it done straight away.
Kevin: Yeah, wonderful stuff guys. Thank you very much for your time, my guests have been Bryce Holdaway and Ben Kingsley, and the book is called Make Money Simple Again, so check it out for yourself. Gentlemen, thank you very much for your time.
Bryce: Terrific, thanks Kevin.
Ben: Thanks again Kevin.
Kevin Tuner worked in radio as General Manager of various east coast radio stations. He started in real estate in 1988 and was ranked in the Top 10 Salespeople in the state until he was appointed as State CEO 1992. He also operated a number of real estate offices as business owner and was General Manager of several real estate offices in Christchurch.
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Disclaimer: while due care is taken, the viewpoints expressed by interviewees and/or contributors do not necessarily reflect the opinions of Your Investment Property.