MONEY

SMARTS
System
(Which Account do you use?)

BEN KINGSLEY AND BRYCE HOLDAWAY

© Empower Wealth Advisory 2015
 Money SMARTS System
(Which Account do you use?)

This cheat sheet is an extension of the money SMARTS system which was
discussed about in page 58 of The Armchair Guide to Property Investing and in
Episode 53 of The Property Couch Podcast. If you have yet to read the book or
listened to that episode, we strongly recommend you to do that prior to reading
this document.

WHAT IS MONEY SMARTS?

This money management system is basically comprised of Surplus, Mindset,
Application, Resources, Timelines and Strategy. From the book, you would have
learned about the three ways to spend money, the Primary Account, the Payments
Account and the Living and Lifestyle Account. It is vital to the success of the Money
SMARTS system that the right Account is used for each item of spending. To help
decide which account to use for what purpose, some of the more common items of
spending are listed below:

To pay for : Pay from : By :

Household Bills Payments Account Direct Debit

- Council Rates
- Water
- Gas
- Electricity
- House and Contents Insurance
- Home Phone
- Mobile Phone
- Internet
- Pay Television

Other Household Expenses

- Major Appliances and Tools Payments Account Eftpos
- Small Appliances Living and Lifestyle Account Eftpos
- Furniture Payments Account Eftpos
- Soft Furnishings Living and Lifestyle Account Eftpos
- House and Garden Maintenance Living and Lifestyle Account Eftpos
- Medical and health expenses Payments Account Eftpos

Other Regular Bills

- Health Insurance Payments Account Direct Debit
- Life Insurance Direct Debit
- Income Protection Insurance Direct Debit
- Education Fees BPay / Eftpos
- Child Care Fees Direct Debit
- Regular Bills for Pets and Animals Eftpos
- Accountant / Tax Agent BPay / Eftpos

© Empower Wealth Advisory 2015

 Money SMARTS System
(Which Account do you use?)

To pay for : Pay from : By :

Vehicle and Transport Costs
- Car Registration
- Car Insurance Payments Account BPay
- Motoring Organisations ( RACV, Direct Debit
etc.) Direct Debit
- Fuel Eftpos
- Maintenance Eftpos
- Parking Eftpos
- Tolls Eftpos
- Regular Fares ( Train, Bus, etc. ) Eftpos

Holidays Payments Account BPay / Eftpos

Investment Property Expenses

- Council Rates Payments Account Direct Debit
- Insurance Direct Debit
- Body Corporate Fees Direct Debit
- Maintenance BPay / Eftpos

Regular Payments
- Living and Lifestyle Money Primary Account Automated Transfer
- Credit Card Balance Direct Debit
- Loan Repayments Direct Debit
- Rent Direct Debit / BPay

Living and Lifestyle Living and Lifestyle Account Eftpos / ATM

- Food and Groceries withdrawal
- Dining out / Takeaway food
- Entertainment
- Alcohol and Tobacco
- Clothing and Footwear
- Personal Care
- Education expenses
- Child Care expenses
- Sport, recreation, hobbies
- Expenses for Pets and Animals
- Books, magazines, newspapers
- Video / DVD purchase or hire
- Gambling, lotto
- Presents and gifts
- Donations
- Occasional Fares

© Empower Wealth Advisory 2015

 Money SMARTS System
(Which Account do you use?)

Setting up Regular Payments

To reduce the amount of time it takes to manage your money, we suggest that you
set up your regular payments to be made automatically, as shown above. The
preferred approach for payment of all regular Bills is to set up a Direct Debit with
the service provider from your Payments Account ( Credit Card ). Most service
providers have either an online form or a printed form available from their website
which will allow you to set up an automatic payment of the Account Balance on the
Due Date, and once this is done your Bills should be paid automatically without any
further action from you.

Some service providers won’t accept payment from a Credit Card, or will treat the
payment as a Cash Advance ( in which case there will be additional fees and
charges ), so these Bills should be set up as a Direct Debit from the Primary
Account.

When setting up Direct Debits for the first time, it is a good idea to submit the form
a few weeks prior to the next Due Date to give the service provider plenty of time to
process the form, and then make sure you check the next bill to ensure it has been
paid successfully.

Should you find a service provider that does not offer a direct debit arrangement,
the next best alternative is to use BPay from your Internet Banking. Again, the first
choice would be to use the Payments Account ( Credit Card ), but if the service
provider will not accept BPay from a Credit Card, the Primary Account should be
used instead. Most Financial Institutions will allow you to set up regular recurring
BPay payments in advance.

OPERATING YOUR MONEY SMARTS SYSTEM

The Living and Lifestyle Account

Each week / fortnight / month, your regular amount of “spending money” will be
deposited, and all you need to do is make it last until the end of the period.

However, you must remember that there will be times when you wish to spend
more ( such as Christmas, Birthdays, etc. ), or you may have the occasional large
expense ( e.g. a new suit ), and once your Living and Lifestyle allowance is spent,
you will need to wait until your next deposit for it to be topped up. For this reason,
some people prefer to build up a buffer in their Living and Lifestyle Account for
these situations.

An alternative approach is to hold back some of this money in the Primary Account
for known future Living and Lifestyle spending. For example, reducing the regular

© Empower Wealth Advisory 2015

 Money SMARTS System
(Which Account do you use?)

transfer to your Living and Lifestyle Account by $20 a week would mean that there
would be $1,000 of spending money in the Primary Account saved up in time for
Christmas.

The Payments Account

As indicated above, Credit Cards have their risks, so we strongly suggest that you
carefully review your Credit Card statement every month, looking for unauthorised
transactions, unexpected Bill Payments, unexpected charges from the Credit Card
provider, and, most importantly, unplanned Living and Lifestyle spending.

If you have used the Credit Card by mistake for Living and Lifestyle spending,
simply transfer the amount from your Living and Lifestyle Account to the Payments
Account at the earliest opportunity.

You should also check that the amounts of all Bill Payments are within
expectations, otherwise it may mean that some of your estimates in your Expenses
Table are incorrect, or that prices have increased, or that your usage patterns have
changed.

The Primary Account

As the central account in your Money SMARTS system, it is important to monitor

your Primary Account at least once a month, or more often if you prefer. You
should find it easy to identify the major cash flows - Incomes, Loan Repayments,
payments of the Credit Card balance, and transfers to your Living and Lifestyle
Account - and see if there are any unexpected transactions. If you have used your
Payments Account and Living and Lifestyle Account as suggested above, it should
now be very easy to see how much you are spending in each of the major
categories.

By looking at your statements for this account, and your Payments Account, each
month, you will be able to keep track of your spending in each of the major
categories on a regular basis. In looking at your statements on a monthly basis, it
is important to remember that there will sometimes be five weekly or three
fortnightly Living and Lifestyle Account transfers within a month, so you should
expect this to vary. Bill Payments will also vary from month to month, but by
having a record of your monthly spending, you will be able to compare this
category with the expected amount each month and soon get an idea of whether
your spending in this area is on target.

© Empower Wealth Advisory 2015

 Money SMARTS System
(Which Account do you use?)

ADDITIONAL RESOURCES
If you need more information regarding the implementation of the Money SMARTS
System or if you would like to learn more about cash flow management, here are
some additional resources for you:

• Episode 03 | Four Pillars of Mastery (Cash Flow Management) – Start listening

• Episode 41 | The Moving Parts of Cash Flow Management (Money & Wealth
Accumulation Model) – Start listening

• Episode 53 | The Money SMARTS System – Start listening

• Episode 72 | Dumb things people do with their Money! – Start listening

• Page 58 of The Armchair Guide to Property Investing (For a discount, use this
coupon code: TPC) – Get a Copy

DISCLAIMER:
This publication is general information only and is intended to assist you in understanding Empower Wealth’s
money SMARTS system. This publication forms part of Empower Wealth’s proprietary Property Portfolio Plan.
The information contained in this publication is for Australian residents only. The information does not take into
account the particular investment objectives or financial situation of any potential reader. It does not constitute,
and should not be relied on as, financial or investment advice or recommendations (expressed or implied) and
it should not be used as an invitation to take up any investments or investment services. No investment decision
or activity should be undertaken on the basis of this information without first seeking qualified and professional
advice. The Property Couch, its employees or contractors do not represent or guarantee that the information is
accurate or free from errors or omissions and therefore provide no warrantees or guarantees. The Property
Couch is a podcast and blog managed by Empower Wealth Group of Advisory Companies: Empower Wealth is
the trading name of Integrated Pathways Pty Ltd ATF Integrated Pathways Unit Trust ABN: 13 653 728 295.

© Empower Wealth Advisory 2015