I’m a terrible budgeter (although I do manage to save for the things I make a priority). I’m not so good week to week. I thought it was time to get sensible about money. After hearing some recommendations online, I’ve recently devoured “The Barefoot Investor” by Scott Pape and I am super keen to start. If you’re not all over your money and it freaks you out, then I highly recommend you read it. This post isn’t sponsored by the way, just a public service announcement. Pape knows about money. He’s an independent financial advisor and knows first hand what it is like to lose everything. He watched his farm and everything he owned burn down in the Victorian bushfires. But was able to turn to his wife at the time and say “I got this”, and he had. This is the essence of the Barefoot Investor Budget. Pape wants you to be prepared for all possible events, but wants you to have fun too. He asks that you schedule dates to see how you are tracking, and five consecutive ones to get things going. Here are the principles of a Barefoot Budget and how you should allocate your money. Let’s do it.
Expenses = 60% of your income
No more than 60% of your income should be allocated to living expenses (food, accommodation bills). If you’re pushing further than this quota then its going to be hard to do anything. Pape recommends to see a financial advisor if you’re in this situation.
Splurge = 10% of your income
This is fun money. For things like pedicures, drinks at the pub or meals out. I’m pretty good at allocating this. (Too good in fact.) Continue Reading…