45 - Financial Exercise

BN-IH953_bankro_G_20150508035010There’s very little I can share with you about physical exercise—other than the fact that I avoid it and any “workout” of mine is entirely coincidental… think mowing the lawn and carrying the kids around. I know exercise is good for me but I prefer to flex my financial management and discipline muscles instead.

Of course since we can’t easily practice buying real investments without making costly mistakes, what follows is an overview (from simple to hard(er)) of what I do regularly to keep my mind on the money, so to speak.

Check your accounts regularly

I regularly log in to the web sites for our bank and credit card accounts to review the list of recent transactions. I quickly scan for high dollar value debit transactions: anything more than $100. I ask myself whether I recognise the transaction (i.e. did I buy something?) and check the transaction description and date. I also check for credits like refunds and payments to make sure everything is as I think it should be.

It’s also worthwhile keeping an eye for really small transactions ($1.00) as this may be a fraudster probing the account.

I also check our monthly statements when they arrive—especially for any interest charges.

Review and revise your financial goals

I set our financial goals annually. I list the goals for the year ahead and then short, medium, and long-term objectives. In our case, short-term is defined as 0-2 years, medium-term is 2-10 years, long-term is 10-30 years+. I review our goals every so often as a reminder to keep my train of thought on track.

Have you written down your financial goals? If not, do this now:

  1. Spend five minutes thinking about your future. Brainstorm—think small or large but just think. Think about next year and think about how you’re going to retire and then die.
  2. Write down at least one or two financial goals that will help you to achieve your future reality.
  3. Edit later.

Drafting your financial goals is vitally important to shape and inform everything else you do in life. Your goals and objectives form the foundation of your financial existence and ultimately shape your personal existence.

Start small and build, reviewing what you wrote down and editing periodically to cull things that no longer make sense and add things that do.

Save your receipts and keep a log book of costs

The office supply store sells a basic accordion-style folder for about $5 containing a pocket for every month of the year and a few to spare.  I buy a new one each year.

I always ask for a receipt when I purchase something and file it by month. For online transactions, I print to PDF and save the PDF in a similar manner.

At month end, I pull out the receipts for the current month and record, at a minimum, the date, supplier, amount, and any relevant notes. I use an Excel spreadsheet for this purpose and add a new row for each receipt.

On my log I categorise each transaction by type (e.g. grocery, petrol, utility, clothing, children, communications, vehicle, entertainment, etc) and sub-type for each of those types (e.g. utility includes gas, water, and electricity). I also include a Yes/No field to indicate if the expense should be flagged to the accountant to be tax deducted, and note how the payment was made (cash, card, PayPal, etc).

Because I’m a geek and an ex-manager, I have an Excel pivot table sitting over that data, which allows me to dynamically filter this information by time/type/tax deductible/etc in order to consolidate and analyse our expenditure. For example, let’s say I want to know if we’re spending a little bit more or a lot more on gas or electricity… since last year or last season or since we had the kids. The pivot table tells me this. It also gives me a nice overview of how our annual expenditure breaks down into the categories I’ve specified.

Now when you apply for a loan and you’re asked how much your family spends each month, you can amaze and impress by providing an exact dollar figure to two decimal places!

In separate logs, I also track things like income (salary), credit cards, and specific things I want to manage closely throughout the year. For a very macro-level view of our situation, I can now see how much we earn to how much we spend (I express this as a ratio) and how much we’re saving.

Do you know how much you’re spending? If so, how and how precise is your understanding?


Using the information I have from our receipts helps me to budget more accurately.

with our combined income (earned income—i.e. salaries, government payments, superannuation, investment returns, etc), I divide that number by all the big ticket things that make life expensive.

An annual budget is a good starting point but life tends to work in monthly, fortnightly, or weekly intervals and a budget will likely be more meaningful if you if think short-term. If you’re working electronically, I find it easiest to plan at the week or fortnightly level and then aggregate those figures as monthly or annual figures.

Starting with some of the aggregate numbers from my log and our financial goals and objectives for the year, I can decide where we need to cut costs and where we want to spend (or save) more. If you’re working with a calendar, you can then plot how to achieve that by ramping up or down on specific costs over time (but I feed this information back to our financial goals and objectives).

Some areas of a budget will be easy. If you’re saving for a home deposit or something else like a trip, put a dollar figure against that item and adjust later if you need to. For things like savings and paying off debt, I’m aggressive and stretch ourselves to prioritise these items.

Some areas seemingly won’t provide much wiggle room. We all need food, shelter, clothing, petrol, and things like utilities, phone, and maybe internet. I’ll occasionally look at those areas in detail to see you if I can find a better deal on our energy or mobile phone plans, for example.

The online ASIC Budget Planner at https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/budget-planner is a great place to start if you’ve never laid out a budget for yourself.

Once you have a budget in place, your receipt log allows you to determine how you’re tracking to budget and where any variances sit.


I regularly review the official interest rate and the interest rates applicable to our various loans. The cash rate is pretty boring these days (for now) but the interest rates at the lender end are constantly jittering around and there’s always the question of whether it’s time to refinance for a better deal.

realestate.com.au allows you to subscribe to a feed of new real estate listings for a specific criteria and I receive regular updates from that channel for the suburb where our family home is located and the Brisbane suburb where IP#1 sits. I don’t use this information other than to keep tabs on the market and, as buy and hold investors, we have no intentions of selling. I am interested, however, in house prices both from an equity point of view and to understand our return on investment position. Of course the advertised price for a property rarely tracks it’s sale price.

You can also do the same thing with the rental market and properties sold.

The more I’ve learnt about property investing, the more interested I’ve become in the things that impact it and to that end I at least try to read about some of these demographic and economic indicators (for example, the free Monthly Housing and Economic Chart Packs produced by CoreLogic). I supplement some of this summary-level information with detail from the ABS, such as population growth and and unemployment.

I suppose a disclaimer is also worth posting: I'm just a guy, I'm not an accountant, lawyer, solicitor, tax agent, mortgage broker, banker, financial adviser, insurance agent, land developer, builder, government agent, or anything else so I disclaim your application of anything I write here is to be applied at your own risk. What I write may be incorrect and you are best to seek your own professional advice (tax, legal, financial, and otherwise) before entering into contracts or spending your money. Your situation is unique to you and what I write here reflects my experience only. This content is not professional advice and is not tailored to your situation. I’m not selling anything and I do not receive any form of commission or incentive payments for any companies or individuals I endorse. I'm learning too and expect to make many, many mistakes along the way.