Kochie’s 16 signs of financial maturity

How many times are we told to “act like an adult”, “grow-up” or “get a bit of maturity”… whatever that means.

Whether it’s behaviour, humour, manners or lifestyle there’s a level of expectation which governs the opinions of others. To make grown-up decisions.

It’s the same with money. Financial adulthood means taking ownership of your money rather than just letting it happen. Using your money to match your values and to finance your dreams.

Just like adulthood, there’s no really strict definition of financial maturity to benchmark ourselves against. So here’s our checklist to what we think you need to tick off  to reach monetary adulthood.

1. Have a credit and a debit card. Be able to pay your monthly credit card balance on time and in full… without going into overdraft on your transaction account.

2. Know your credit score and check your credit report at least annually. It’s pretty easy by going to www.getcreditscore.com.au. Knowing your score gives you power to negotiate better deals and checking it ensures there are no costly mistakes.

3. Consolidate your superannuation into one fund, which you understand and check regularly. Ideally, you’d be making extra annual contributions up to your age limit. Remember superannuation is the second biggest asset of most Australians. It accounts for 26 per cent of our net worth.

4. Have an emergency fund. As a general rule, the ideal is to have 6 months worth of salary in a separate savings account to use in case of a financial or medical emergency.

5. You have adequate insurance protection. For you (life, income protection), health, car and household insurance. The amount of cover depends on your age, commitments and circumstances. Often it’s best to get expert advice and recommendations.

6. Have some form of a financial budget… in writing. There are so many budget templates out there and a huge number of good smartphone apps. There is absolutely no excuse not to have one but also make sure it’s constantly updated.

Kochie explains how to ask for a pay rise… and get it!

7. Know your take-home pay every month…after tax. We know this can sound a bit simple, but you’d be amazed at how many people don’t know the amount they earn. Add in any regular overtime or part-time jobs. This is the cornerstone of your budget.

8. Know your net worth. It is simply the value of your assets (house, investments, superannuation balance, car etc) less the debts you owe (home loan, credit card balance, personal loans etc). Do this calculation annually as it provides a concise barometer on whether your personal wealth is improving or not.

9. Spend less than you earn. Living within your means is the absolute foundation of financial maturity. It’s not complicated. Don’t spend what you don’t have.

10. Have a system for remembering and paying your bills on time. Whether that’s setting up a direct debit for regular costs or a calendar alert in your smartphone, you shouldn’t be forgetting about bills, or leaving them unpaid. If you automate payments, regularly check the statements are correct.

11. Know when you’re going to be debt-free. Credit card debt (and to a lesser extent personal loans) has extremely high interest rates. A rule of thumb is that if you have consumer debt you should have no savings… it should be used to pay off debt.

12. Know your financial goals and how you’ll achieve them. Looking after your money better can be pretty boring if there are no goals you want to achieve. Could be buying a house, going on a big holiday, paying off the car, putting the kids through school… the goals are endless. Having a goal provides an automatic map of how your finances will be used to make your life better and more enjoyable. It also gives you an incentive to stick to your plan.

13. Plan your tax better. Everyone has to pay tax to do our bit for keeping Australian society and services the way they should be. The aim is to pay the right amount of tax and not more than necessary. Start by improving your record keeping, use good tax software or meet with an accountant or tax agent.

14. Organise your important documents. We have what we quaintly call our “death file”. One spot where all the important documents are kept in case one of us (or both) die. The deeds to the house, wills, bank details, investment records etc. In other words, records of your financial life should be kept in the death file. Many people digitally scan the documents into a folder and email them to their loved ones for safekeeping.

15. Be able to confidently negotiate a better deal or challenge a payment. But be polite while doing it. If you don’t speak up for your money, no one will. For example, never automatically pay an insurance premium without asking for a better deal or question an unknown expense on your credit card statement.

16. Be able to say no to expenses you can’t afford or don’t want. On the other hand, know when it’s most important for you to be able to say yes, and figure out how to afford the things that mean the most to you. Being a savvy spender is crucial to financial security. Determining which is an important expense and which is frivolous can save you a fortune.

Kochie’s challenge for couples: 15 minutes a month

Here’s a challenge. This year we want you to set aside 15 minutes every month to talk about your money with your partner.

Doesn’t sound much, but think about it, when was the last time you sat down with your partner to talk about your finances?

Financial worries are a leading cause of relationship breakdown, and so often relationships are put under strain for the simple reason that partners do not talk about what they each want from their money or understand where it goes.

So what happens in your 15 minutes a month?

We’re not talking about paying bills, checking the credit card statement or doing the banking. That’s managing your money and not the objective of these sessions.

Instead, we want you to start thinking about the big picture… together.

Start the first month’s 15 minute session by just getting organised and making sure you both know where all your financial documents are kept and whether they’re actually up-to-date.

Collect all the insurance policies (life, disability, health, home and contents etc), check the cover is still right for you (if not shop around for alternatives) and put them in the one place where both of you can easily access them.

The same with mortgage documents, superannuation accounts and reports, bank documents, investment records as well as tax returns and receipts.

Then there’s the will. No-one likes talking about the possibility of death but the prospect of leaving your family in the financial lurch is just plain stupid. Read each other’s wills and make sure they’re current and relevant.

Just knowing where your financial safety nets are stored and what’s in them is a great start.

One of the most common questions we receive is ‘what can I do with my money?’ Our immediate reply is ‘what do you want your money to do for you?’ In other words you have to decide first.

So for your second session use the time to think about the future, what you each want from it and how to afford it.

Write down your needs and wants. Do this individually first, and then share them with each other.

Surprised? Shock horror? Or were you both on the same track? Sharing the ‘want’ lists is usually the eye-opener. It’s highly likely there will be some surprises there.

These lists will form part of your regular budgeting and, like all good budgets, they are not written in stone. Budgets should be reviewed at very regular intervals and change as your wants and needs change.

Another session should look at your investments and super. Have you accumulated too many super funds? Are you in the right superannuation investment option which matches your risk profile and stage of life? Is it time for both of you to visit a financial planner to talk about a long-term plan?

These are just examples, everyone is different and you can use the sessions to discuss whatever is most important for you. So here’s another challenge. Start tonight. 15 minutes a month is not a lot to ask to think about your financial future.

These staggering figures show how much Aussies will spend this Christmas [infographic]

Have you finished your Christmas shopping?

New figures from the Commonwealth Bank show that as a nation we’ll spend a staggering $11 billion on presents alone this year. And what’s even more worrying is that 43% of us will not set a Christmas budget.

As we head into what truly is the most expensive time of the year, we hope this infographic can remind you to be smart with your spending this Christmas. If in doubt, here are four tried and tested rules to ensure you don’t overspend:

  • DO set a budget for presents, travel and festivities
  • DO track your spending across the whole holiday period
  • DON’T feel pressured by friends, family and the media to spend more than you can afford
  • DON’T wait until next year to start practising good money habits. Today is just as good as January 1!

Enjoy the infographic, and we hope you have an amazing holiday season with your family.

Kochie’s guide to good vs bad debt… and how to manage yours

Debt…  it can lead to ruin, or riches. It’s all a matter of degree and how it’s used.

Used appropriately, debt can build wealth. Used inappropriately, debt can destroy wealth.

With so much talk among politicians and in the media about Australia’s national debt levels and our ongoing budget deficit, it got us thinking … how do you assess your own household debt and know when you’re in the danger zone?

As the Treasurer of your family budget, you are responsible for taking control of your debts. So here’s our guide on how to go about it.


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1. Understand the difference between good and bad debt

‘Good’ debt is money borrowed to buy something that will rise in value, bring in an income and create financial discipline. A good example is borrowing to buy a house.

Bad debt is money borrowed to fund everyday expenses like a holiday, or to buy an asset that will fall in value like a car.

But regardless of what the debt is, as Claire Mackay from Quantam Financial says, “a manageable level of debt is what doesn’t give you stress. If repayments and the end goal of having the loan repaid is overwhelming, that is not a good level of debt.”

2. The warning signs

When it comes to “bad” consumer debt, the warning signs are not being able to pay off credit card balances on time or the interest payments on a personal loan. They are tell tale indications your debt is getting out of control and you are in a debt spiral where the chances are that you won’t get out of it.

When it comes to “good” investment debt, you know you’re getting in over your head when you can’t meet the interest payments out of cash flow or the value of the asset falls below the value of the loan.

3. Borrow within your means at the start

The key figure is not how much you owe or how much you can borrow, but how much you can afford to repay.

If you haven’t done your budget, you don’t know how much you can afford to repay.

So start by putting together an accurate budget listing all income and expenses. As a general rule of thumb, Claire Mackay recommends 40 per cent of your money should be going towards housing costs (if you own your own home), 30 per cent to living and 30 per cent to saving for the future.

4. Take control of your spending

Australia has run a consistent budget deficit since the global financial crisis of 2008, which means as a nation we’re spending more than we’re earning (and using debt to keep the lights on).

So take a lesson from all those pollies in Canberra: don’t be like them.

Armed with your new budget, work out whether you’re in deficit or surplus. If you are in a deficit, look at what to cut to get back to the black.

The pie is what the pie is. What you can control is what you think of as essential living expenses and what you consider as nice to have.

5. Make extra repayments

Funnelling extra money into paying debts off early will save you big on interest and free up money to put towards building your wealth.

Start with the highest interest rate debts fist, because they are costing you the most.

For example, the average Australian credit card debt is $4,315. At an average interest rate of between 15—20 per cent that’s a guaranteed return of around $700 a year in saved interest … just by paying off your card.

Once your credit card is paid off in full, you can focus efforts into the next highest interest rate loan, for example a car loan.

6. Minimise the interest you pay

In a low interest rate environment, there are always opportunities to minimise the interest you pay, and that money is always better off in your pocket than the bank’s.

Compare the market for the best rate. Don’t be afraid to negotiate with your bank or switch to a better provider if the terms stack up.

And look for product features that can help you save on interest, like mortgage-offset accounts or credit card balance transfers.

As treasurer, if you can borrow within your means, control your spending and minimise bad debts and interest, you are managing debt effectively … certainly better than the mob in Canberra!

7 smart strategies to revolutionise your family budget

A solid budget is crucial to keep your financial life on track, especially if you have a family to look after.

We know you’re busy and keeping your budget up to date can get tough to manage, but that’s never an excuse to neglect it.

Something we’ve always done, and highly recommend to others, is to set aside time every month to work through our budget as a couple and make sure our money is under control.

It doesn’t have to take very long. Fifteen minutes is about right for us… although you can always add a bottle of wine if you want to make things interesting.

The beauty is, once you’ve done the heavy lifting, a good budget will practically run itself. You’ll be on track to achieve your financial goals, and you can focus on enjoying life.

Here are seven ways to revolutionise your budget at your next family finance meeting.


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1. Negotiate everything

Whether it’s your bank accounts, insurance policies or even whitegoods, it pays to ask for a better deal.

Most retailers will have a good amount of wiggle room when it comes to pricing, so speak up before you get to the register. You never know if you never ask.

2. Cut your energy bills

Sometimes it’s the little things that can lead to the biggest savings, so get your family to start forming good habits when it comes to your household energy.

Make sure lights and heaters are switched off when you leave the house, cut down on using the dryer and opt for warmer clothes instead of running the heater could massively
cut your power bills this winter.

3. Don’t automatically renew your insurance

It’s so easy to set these things to autopilot and get on with your life, but you could be saving yourself a small fortune if you play it smart.

Use online comparison tools to make sure you’re getting the very best deal for your circumstances.

If you pay your premium annually (which is always cheaper) that’s only one review a year for each policy you hold. Time well spent if you ask us.

Of course… a disclaimer. If you do find a cheaper deal, make sure it still provides adequate cover for you and family, because if it doesn’t, it could leave you worse off in the long run.

4.Weigh up the car

If you own a car, tally up the costs and consider whether you really need it. If you have more than one, could you get by on less?

Most cars spent the majority of their lives parked in a driveway somewhere, and if you can get rid of it you will save thousands on registration and insurance premiums each year.

5. Salary sacrifice

Take advantage of salary sacrificing and pay less tax. You can sacrifice for superannuation contributions, your car or even your phone.

Paying less tax while still paying for the things you need – or boosting those retirement savings – is a great way to save money.

6. Bring in more money

A second source of income is probably the most effective way to get ahead when it comes to your budget.

Everyone has a skill. If you’re a keen writer, can do odd jobs or even have a good voice for voiceovers, tapping into the freelance marketplace can earn you some extra cash in your spare time. Even 2 or 3 hours of extra work a week can make a big difference.

7. Automate everything

We all make mistakes from time to time. It’s part of being human. So when it comes to the process-driven side of your finances, let a robot worry about them.

Set up automated withdrawals for things like savings or bills that you know won’t change. While you should check regularly to make sure everything is as it should, it’s much quicker than paying the bill manually.

The next Money Makeover starts on the 8th of August. Want to get an idea of what it’s all about? Join our newsletter for your free lesson on how to supercharge your savings!

How to Handle an Irregular Income

One of the most common questions Lib and I get asked on the Money Makeover is from people earning an irregular income.

We’ve had self-employed tradies, small business owners, contractors and even a sheep shearer complete the course, and they all want to know the same thing; how on earth can I budget if I don’t know how much money I’ve got coming in each month?


“How on earth can I budget if I don’t know how much money I’ve got coming in?”


Firstly, having been small business owners ourselves for the best part of thirty years we know exactly how you feel.

It’s tough worrying about whether you’ll be able to earn enough this month to cover expenses, especially compared to the safety net a salary provides.

But our answer to this question is always the same… budgeting and financial discipline is more important than ever when you have an irregular income.

We sat down with financial planner Claire Mackay, a Money Makeover expert and Principal of Quantum Financial, to ask her what she tells her clients in the same situation.

According to Claire, “when there are ups and downs in your income, the key is to have a good understanding of what your essential costs are over the course of the year. And when you have a good month, you need to be putting money aside to cover them”.

Makes sense. For example, you know your car rego and insurance all come in one hit, so regularly putting aside money throughout the year to cover them when they eventually fall due will take the stress off.

Claire says planning for both lean months on income and expensive months you know are coming will help you manage cashflow much more effectively.

One option Lib and I have always advocated is to build up an emergency fund (or as my somewhat crude former colleague used to call it… “f-off money”).

The key with an emergency fund, as Lib has always reminded me, is when you put money from your budget into separate compartments you have to be very self-disciplined to actually keep it there.

Opening a separate high interest savings account or term deposit which isn’t linked to a debit card is a good way to help your emergency fund stay on track.

So to sum up, an irregular income doesn’t mean you can’t budget. It means you have to.

  • Work out your expenses a year in advance, including known big ticket items like holidays.
  • Set aside money in the good months to cover known expenses.
  • Start an emergency fund to cover you against the unexpected.

Good luck!