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From Fixed Costs To Freedom: A Beginner’s Guide To Budgeting · That Home Loan Hub

• 0:10
  SPEAKER_01: If you want to learn about budgeting or what does this word even mean, well, tune up.
• 0:16
  SPEAKER_01: I've got James with me in the house and we're going to talk about budgeting.
• 0:18
  SPEAKER_01: Hello, James.
• 0:19
  SPEAKER_01: Yay.
• 0:21
  SPEAKER_01: Budgeting, your favorite.
• 0:23
  SPEAKER_01: I can see the excitement in your eyes.
• 0:25
  SPEAKER_00: Yeah.
• 0:26
  SPEAKER_00: And she's not being sarcastic.
• 0:27
  SPEAKER_00: I mean, I was just doing my budget again yesterday or the over the weekend, I think.
• 0:32
  SPEAKER_00: Because my situation's as your situation changes, your budget needs to reflect the situation.
• 0:39
  SPEAKER_00: So it's good that we're talking about budgets today.
• 0:42
  SPEAKER_01: Okay.
• 0:42
  SPEAKER_01: So budgets.
• 0:44
  SPEAKER_01: What's the number one thing people need to know when they sit down to do their budget?
• 0:48
  SPEAKER_01: Because for someone that's never done it before, it can be so overwhelming.
• 0:52
  SPEAKER_01: It can be a point of, oh my God, what am I doing with this?
• 0:56
  SPEAKER_01: Where do I even start?
• 0:57
  SPEAKER_01: Too hard, walking away.
• 0:59
  SPEAKER_00: Well, I think the first thing is just at the start, keep it nice, keep it really simple.
• 1:03
  SPEAKER_00: So I it's probably a bit tricky to just start off straight away with a budget.
• 1:08
  SPEAKER_00: I think you've probably got to have a look at what you've been spent, you know, look at your accounts and what you've been spending your money on over the last, say, three months and get a bit of an idea for what all your what your costs are.
• 1:21
  SPEAKER_00: I don't know if that sounds like fun to people, but so it would be looking at your your bank statements over the last two or three months and get sort of get an average for the month on say what you're spending on food.
• 1:34
  SPEAKER_01: Can I intervene?
• 1:35
  SPEAKER_00: Of course.
• 1:36
  SPEAKER_01: If I was an absolute beginner in budgeting, what I would start with is your absolute fixed cost.
• 1:44
  SPEAKER_00: Yeah.
• 1:44
  SPEAKER_01: So what can you not change?
• 1:47
  SPEAKER_00: Yeah.
• 1:47
  SPEAKER_01: And I would say things like rent.
• 1:49
  SPEAKER_01: Yeah.
• 1:50
  SPEAKER_01: That's fixed, right?
• 1:51
  SPEAKER_01: You know, every week you have to pay$550 a week on rent.
• 1:55
  SPEAKER_01: Or if you've got a mortgage, you know exactly how much is going out on your mortgage or payments.
• 1:59
  SPEAKER_01: And that's something you can't easily change yourself unless you're moving a house, or unless you're selling and buying a cheaper house.
• 2:06
  SPEAKER_01: But right now, this is your fixed cost.
• 2:08
  SPEAKER_01: This is what you'd start with.
• 2:10
  SPEAKER_01: And then same as income.
• 2:11
  SPEAKER_01: I would say if you're on salary, for instance, you know exactly how much you're earning each month, and that would go in into your columns for the budgeting.
• 2:21
  SPEAKER_01: So fixed cost and fixed income that you know for sure that's coming in.
• 2:25
  SPEAKER_00: So that would include things like power and uh your rates and insurance.
• 2:31
  SPEAKER_00: Yeah.
• 2:31
  SPEAKER_00: Because those are all things that you know you're gonna have to pay every month anyway.
• 2:35
  SPEAKER_00: Yeah.
• 2:36
  SPEAKER_00: You know, it's ongoing, eh?
• 2:37
  SPEAKER_00: So that that would include those things.
• 2:39
  SPEAKER_01: Yeah.
• 2:41
  SPEAKER_00: Anything else in a fixed cost?
• 2:43
  SPEAKER_01: Yeah, I would say, you know, if you've got schooling, like childcare cost, school cost, I would say that would go in there.
• 2:50
  SPEAKER_01: But again, if you don't know, if you're not sure, then as you say, go back three months.
• 2:54
  SPEAKER_01: And to be honest, with the power of AI these days, yeah, AI can actually do the budget for you.
• 3:00
  SPEAKER_01: So you just need to drop it into the Chat GPT the last three months.
• 3:04
  SPEAKER_01: Yeah, your bank statements, and you could just say, Hey, I'm doing my budget.
• 3:08
  SPEAKER_01: Can you help me to understand my costs?
• 3:10
  SPEAKER_01: You know, and it will give you amazing breakdowns straight away.
• 3:14
  SPEAKER_01: So you don't actually have to sit there with a calculator in hand calculating every single point.
• 3:19
  SPEAKER_00: Okay, I'm gonna do that as a case study.
• 3:22
  SPEAKER_00: I would love for you to do that.
• 3:24
  SPEAKER_00: And then we talk, next time we talk, I'll I'll I'll share the results.
• 3:29
  SPEAKER_01: Yeah, you could actually drop your last 12 months if you wanted to, and you could say, hey, break it down month by month.
• 3:34
  SPEAKER_01: Now do remember AI is not as intelligent as some humans can be.
• 3:39
  SPEAKER_00: So I shouldn't worry about it then, because I'm gonna do a much better job, right?
• 3:42
  SPEAKER_01: You would still do a better job, but make sure, you know, because you can't catch them out making mistakes.
• 3:46
  SPEAKER_01: But you just have to have really good prompts for AI to do what you want it to do.
• 3:51
  SPEAKER_01: Okay, but that could be a really good starting point as well.
• 3:54
  SPEAKER_00: Yeah, I might get your assistance on that.
• 3:55
  SPEAKER_01: If you're worried about, you know, oh my god, I don't know where to start.
• 3:58
  SPEAKER_01: You know, ask AI for budgeting tips or come to us and we'll be able to help you.
• 4:02
  SPEAKER_01: But yeah, definitely start with your fixed costs, fixed income, and then the rest can be averaged out.
• 4:09
  SPEAKER_01: And then from there you can see, are you in the red?
• 4:11
  SPEAKER_01: Are you in the green?
• 4:12
  SPEAKER_01: How much surplus do you have there?
• 4:14
  SPEAKER_01: You know, yeah, do you have money for play money to have fun with?
• 4:18
  SPEAKER_01: Do you have money to invest, like shares these or uh building your wealth or you know, topping up your kiwi saber?
• 4:25
  SPEAKER_01: So all those things that you've got to sort of think about in the future because you want to live in the now, you want to have fun now, and you want to enjoy the time with your family, especially now at school holidays.
• 4:34
  SPEAKER_01: You want to go out and have fun with your kids.
• 4:36
  SPEAKER_01: But at the same time, you've got to think about when you retire, are you gonna have fun when you retire?
• 4:41
  SPEAKER_00: You've got to get the balance right, eh?
• 4:42
  SPEAKER_00: You just gotta get the somehow you've got to get it, get the balance right.
• 4:46
  SPEAKER_00: I was talking to somebody yesterday about Kiwi Saver, and and they've saved a a lot of money, you know, hundreds of thousands of dollars.
• 4:52
  SPEAKER_00: But then when we worked out, they're the same age as me, that they are gonna be still renting when they retired, the amount that they needed to put away is a lot more.
• 5:02
  SPEAKER_00: Wow than um it was like it was like five hundred thousand dollars more.
• 5:07
  SPEAKER_01: Wow.
• 5:07
  SPEAKER_00: If you if you consider your this these are just random numbers, yeah.
• 5:11
  SPEAKER_00: Um but it blew my mind if you're gonna be renting over when you're retired, you need a lot more money.
• 5:18
  SPEAKER_01: Yeah, and you're not really building towards your net worth if you're renting, right?
• 5:22
  SPEAKER_01: No.
• 5:22
  SPEAKER_01: If you guys missed our episode on net worth, go back and listen to one because this is where we dive in into how having assets increases your net worth.
• 5:32
  SPEAKER_01: So if you're renting, then you've got no asset to show for, and it's just money that's going out to someone else's mortgage.
• 5:38
  SPEAKER_00: And the rent's about the same as what the mortgage is at the moment for most for a lot of people.
• 5:42
  SPEAKER_00: The other thing is I'm glad you brought up surplus.
• 5:45
  SPEAKER_00: If you do see that you've got a surplus, then you might start thinking, oh, how do I use that surplus?
• 5:50
  SPEAKER_00: Now, most people spend more than they earn.
• 5:53
  SPEAKER_00: Yeah.
• 5:54
  SPEAKER_00: No matter how much money you make, most people will spend more than they earn.
• 5:58
  SPEAKER_00: It it's it's crazy that we're like this, but this is what pretty much what happens.
• 6:02
  SPEAKER_00: So, but if you do have a surplus, you can you can then use that surplus, you can put some aside for yourself, but generally speaking, you could put the others the other third of it into Kiwi Saver, the other third could go on your mortgage.
• 6:16
  SPEAKER_00: So if you you're making sure that any extra money you've you've got coming in in terms of your budget surplus, that is actually being used effectively rather than just upping your spending on nice to haves.
• 6:30
  SPEAKER_00: You know, so that would really pay pay off for you over the long term, long term.
• 6:34
  SPEAKER_01: Yeah, exactly.
• 6:36
  SPEAKER_01: Exactly.
• 6:36
  SPEAKER_01: So I think step number one, see if you can do it yourself.
• 6:40
  SPEAKER_01: If you can't, reach out to us.
• 6:41
  SPEAKER_01: Yep, use ChatGPT.
• 6:43
  SPEAKER_01: But again, remember ChadGPT is probably not going to do it as easily.
• 6:47
  SPEAKER_01: It does give you some easiness in it, but at the same time, it does make some errors.
• 6:52
  SPEAKER_01: Reach out to us, we'd love to help you.
• 6:54
  SPEAKER_01: And then as you said, the third step would be is to find out if you do have that surplus, what do you do with that surplus?
• 7:00
  SPEAKER_01: But if you have a big shortfall, what do you need to do there as well?
• 7:03
  SPEAKER_00: Yeah, yeah, exactly.
• 7:05
  SPEAKER_01: Yeah, and there are lots of different budgeting sheets out there that you can just download online and play with it.
• 7:11
  SPEAKER_01: But keep it simple first.
• 7:12
  SPEAKER_01: Yeah, I would say start very, very simple, very basic, and then build yourself from there.
• 7:17
  SPEAKER_00: Yeah, and if you don't don't put too much discipline on yourself when you do the budget, don't make it too hard.
• 7:22
  SPEAKER_00: Like, don't say, Oh, I'm only gonna spend a thousand dollars on groceries this month when you're a five-person family.
• 7:29
  SPEAKER_00: Like, that's really hard to achieve.
• 7:32
  SPEAKER_00: Be realistic.
• 7:32
  SPEAKER_00: So be realistic about what what the targets are that you're setting for yourself.
• 7:37
  SPEAKER_00: Make sure they're achievable.
• 7:38
  SPEAKER_01: Awesome.
• 7:39
  SPEAKER_01: Cool, cool bananas.
• 7:40
  SPEAKER_01: Thank you, James, so much.
• 7:41
  SPEAKER_01: And for those that are listening in, and if you've got any topics for us to cover, please let us know.
• 7:47
  SPEAKER_01: We'd love to help you to achieve your financial goals in 2026.
• 7:51
  SPEAKER_00: Cool.
• 7:51
  SPEAKER_01: Bye.
• 7:52
  SPEAKER_01: Bye.