Budgets Are B.$.

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I've spent the last five years learning from those brilliant minds in money, wealth, and investing. And now I'm part of a group of driven women who are changing the game and taking control. Don't know where to start. I get it. So join me and follow along. As I learn, apply and share the secrets towards more money, more investing and more freedom. My name is Simone, Martha Huggins, and welcome to ms. Wealthy's kiss my money podcast.

Last night, I was lying awake for, I think, about five hours in the end. So a couple of days ago I arrived in Austin. So it's the third time I've come to the U S in the space of six months. It feels like I'm a little bit proud of the furniture now. Um, but I ride an Austin and I'm here for a kind of a business event. And last night was the third night. But for some reason, my body clock decided that it was going to revert back to my home time zone, which is Sydney Australia. So even though I'd done pretty well, the two nights before all of a sudden it, it was done, I was done my body time clock just thought it was morning. So I lay awake from 1:00 AM to 6:00 AM. And by that point I got so fed up. I got up, but I've been dealing this morning with the very real reality of sleep deprivation.

And when I was lying awake in the night, I was thinking about sleep deprivation and being in that really frustrated state of wanting to sleep, but not being able to. And yes, I did all the things meditated. I took myself out of the bed. I went and got a sleepy time tea. Um, you know, just all of the things that usually work, but I guess with jet lag and time zone changes, sometimes there's just nothing you can do. But when I was thinking about deprivation, I really got thinking about how similar it is to budgeting and also how similar VAT is to dieting. And I was just thinking about deprivation in general, and this, this is kind of how I think about budgeting. It is all the focus is on deprivation. So cutting back, being frugal and being really, really, really what's the word skinned.

I think it is on not spending money and trying to miss and minimize all costs. Right. And yes, look, I think in general, most people have a lot of debt, consumer debt, my main like credit card debt that isn't helping and not getting us anywhere. And yes, you do need to manage money properly and pay that off. That is damn important, but when it comes to just everyday life and long term budgeting, it gets me sort of frustrated when I see so much of the budgeting focus from other people that teach it or even apps. And the focus is on being super, super, super frugal. There's even like frugal months and like few frugal February. And like, I just, I mean, I mean, I get it. Yes. Save money, but the focus isn't on the joy, for example, that you're saving for and what you're actually trying to achieve.

It's the focus is on that deprivation and just like dieting, when you deprive your body of something, what happens? We just wanted more, right? I've been on a bunch of diets purely. And mainly out of curiosity, I have tried going gluten free because I thought it had an allergy. Cause my mom is celiac. I've tried different diets and just out of, kind of an interest in how my body reacts and what it's like to try different things. Right. But what happens all ways is the mind goes into that instant, Oh my God, now that I can't have it, I just wanted more and understanding how our brain works way. I still hardwired to be pretty primal in that way. So when we think about deprivation, we go into sudden scarcity mode and fear and worry about getting that thing again. Right. And we're not that much different to a young toddler that when you take their toy off them, all of a sudden they were fine if it was just in a proximity, but as soon as you take it off them, they lose their bananas.

Right. But it's just because they think they're deprived and then therefore they want it more. And we're not that far removed. We're pretty much the same. And so diets are this that way, but budgets are that way too bright because the focus is all on that scarcity and cutting back. And the focus is on basically what you can't have an cutting back, all of the things that you like having your life. And so in the middle of the night, when I was sitting in my sleep deprived state, it just got me thinking that it does funny things to our mind and our psyche and our behavior. We kind of react in really irrational ways I find and gets the point where we're almost just not human because it's, it's just this thing. That's not sustainable living in this guess frugal, deprivation, state. It's not sustainable.

So probably thinking, okay, well, what is the solution? And for a long time, actually I was pretty fortunate. I was never exposed to the hardcore super meticulous data entry into a journal or Excel spreadsheet about every single thing that I bought budgeting that I was, I was never exposed to that. And thank goodness because I think it would've sent me insane. And actually they've done studies on it that style of budgeting, this constant tracking about your $3 50 coffee. And I don't know the newspaper you bought. And like every single thing that actually doesn't work for over 95% of the population now. So what does work? What does work and has been proven by not just me, but financial gurus all around the world and laid financial figureheads is the kind of 80 20 rule. And yes, it's a little bit will be a little bit more in depth than that, but essentially it's cutting your money up in slices.

So you have a slice for savings to invest. Do you have a slice for paying off debt? You have a slice for, you know, the things that you want, like your wants and your desires, and you have a slice for your needs, like the roof of your head and bills and whatever else. And you can even slice them up even more so you can splice them into even smaller pieces. In fact, this is what I do. So I slice things even more into transport. And actually my dog even has an account. And that might, that might sound crazy, but it actually freaking works. So basically every time you get paid, whether you're in business or you have a job and it's your salary, every time you get paid, you have the opportunity to give every single dollar purpose because money loves clarity and it needs purpose.

It needs direction, right? Human beings by default, we need direction. And a purpose and money is exactly the same. So without it, if we don't give our money, purpose and direction and clear intent, then it's no wonder that so many people struggle with confusion around finances, state saying staying in a state of worrying and concern and living in a state of paycheck to paycheck, never being able to save, because what is likely to be happening is that all of your money is say, for example, in one account, or even like just two main accounts, and you're just taking money out of that shoveling money into whatever you're spending it on, but because nothing, no area in your life actually has distinct purpose given to it. Then you don't clear on how much is the right amount to spend based on your salary and you know, where you live and the other things that you want and how much is the right amount to spend so that you can still sustain that without having to pull out your credit card or what's the right amount to spend without kind of going, you know, what, if I do this and I completely blow whatever it is and amount, then that means that for the next week, it's going to be really tight.

And then you can make an informed decision and an empowered decision. But because most of us have just lumps of cash sitting in a main bank account, or even just two bank accounts. It's not broken down into smaller bite size pieces. And I'm not talking literally minute to dollar amounts. I'm talking, maybe it's like, you know, a hundred dollars a week that you spend on dinners out or something. And for example, my dog account, he has close or it's about $250 a month, right. But it's a separate account that nothing else comes in or out of like, it's purely just for my dog. And every month an automated, direct debit goes into that account. And then whatever needs to be paid for, for my dog and that's insurance, that's medical, you know, vaccinations, that's, um, forming and flicks and T tree treatments and that's treats and kibble.

And if I need a dog Walker, then everything comes out of that account. So I'm really clear about how it's going if way overblown on traits or if he can have a dog Walker awake, because his account is really flush, like all areas about life need as much clarity as my dog has on the amount of money he's allocated. And you mind me like thinking, this is, this is strange, but it truly works. Once you have a proper system and you set yourself up and you set your money up so that every single area of your life is clear, because then you're never in this state of going well, I just ate out way too much for dinner. And now I can't afford groceries or maybe it's the opposite. You're trying to be really, really frugal and deprive yourself of even the things that make you happy.

And don't even cost that much. Like maybe you love getting a pedicure every two months or something. I don't know. And that's like 50 bucks. So if you're depriving yourself of even those smaller things, because you're trying to be super frugal on every single area, but not actually ever focusing on one single area, then it's going to end in disaster because that's just means that it's too much to consider you. Can't at every point in time, every point you have a purchase and you both go to buy a coffee, or you go to buy lunch. That every point in time, you can't calculate based on the amount of money in your account, how much do I have to live for the next two weeks? I need to pay rent and bills and groceries. And like, is that enough to cover every single area in five of those categories?

Like you can't compute that you're, you're not a walking calculator. Like, and even if you were, you wouldn't want to be making those decisions at every point. So that's why having allocated amounts in different accounts that have purpose for each area of our life gives us the clarity, because we know exactly how much we can spend in that area. Right? So you can let say, for example, the fun splurge blow account, build up a bit and you can let that build up and grow every time you get paid and you can save up for something bigger or you can just spend as you go, and then you're never ever having to sacrifice or deprive yourself of those things that make managing your money long term realistic because frugal, ism and deprivation is a really short term game. It's not sustainable, just like bad diets. They're called fed diets for a reason, the not sustainable.

And so you need to have something that grows with you that you can hold onto and manage your money. You can pay off debt whilst still getting a pedicure and not feel guilty about it. Like money is there for us to enjoy. It's a tool. It gives us options, but it's game over. When we let money, make us feel certain things like shame or guilt. Sorry, correction. What I should have said is we allow ourselves to feel certain ways about money because money doesn't actually have the power to make us feel anything, but that's why it's so important to have different allocated amounts and accounts for each area of your life. I hope that makes sense. I know that I've just covered a really topline view of how it works, but essentially it's the 80 20 rule or it's the 50, 30, 20, so 20% investments, 30% on kind of those, you know, once and then 50% on needs.

And you can, there's like different ways that you can split it. I actually teach a different way. I teach it in five split out amounts and it massively works. It's what enabled me to get out of debt really quickly without killing myself over it. And it is what has allowed me to save consistently 20% of every single dollar that I earn, whether it was in my career or now in my business, and still maintain a lifestyle of holidays and going out and, but also taking care of my financial future and creating longterm financial freedom. Right? So I still have amounts to invest and I never have to question or think about, or be concerned about how I'm not saving money because it's just all automated. It's done. So that's what I teach. And actually I'm probably giving away a massive secret, but I actually have that, you know, full program.

I teach it in a program with workbooks and actual videos to show you because it does take a little bit of setting up, but once you have it set up, everything's automated and you never have to think about it again. You don't have to labor over Excel spreadsheets ever again. Right? But that is essentially a major bonus that I include in my stock market and invest investing bootcamp, which by the way, if you are tuning in now as this podcast episode goes up, uh, next week is actually when I am doing a live master class free training that you can come and join in. So you can go to go.ms. wealthy.com/invest and register your seat to come and join me. And I'm going to be answering all the questions that I get about how to invest in the stock market without losing money and risking everything anyway. So massive secret that I probably shouldn't have shared, but I do give away the huge bonus of managing your money and the actual full program on how to do it properly, essentially so that you don't have to live in this scarcity deprivation mindset because that self perpetuates and keeps you stuck. And what you're really meant for is massive abundance, a promise you that, or at gorgeous, that's it for today. I need to go and catch up on some sleep. I will see you next week.