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ADF Financial Services Consumer Council
Army October 1, 2009
WHETHER the economy
is booming or in decline,
whether you have lots of
money or just a little,
everyone can benefit from having a
A spending plan
Managing your money can be bor-
ing. The word budget suggests you
need to cut back and limit your life-
style. But don't think of it as being a
budget -- think of it as a spending plan.
Budgets or spending plans allow you to
free up your money so you can spend it
on something really worthwhile.
It doesn't matter whether you're
saving for the short term (for a pair
of sun glasses, say) or the long term
(you might want to start investing, for
instance), the way to find extra money
is by having a plan.
What's in a plan?
When you're setting up your spend-
ing plan, look at the things you need
-- the essentials, such as housing and
food -- and those you simply like to
have, or want. And think about your
plan as something flexible.
Make sure you don't cut out all the
wants. If your plan's too hard to stick
to it's not going to work.
A good place to start is the online
budget planner at www.ADFconsumer.
gov.au. This is a comprehensive tool
that you can save to your home com-
puter as an Excel spreadsheet. Or you
can simply make a start by tracking
your spending for a week or two.
Start writing down where every dollar
goes and then have a think about what
expenses you can remove and turn into
A member's plan
LS Irvine had always wanted
to take his family on a trip to the
Whitsundays but he's never had the
extra money to do it. When his salary
increased recently he decided to put
the extra portion into a special savings
account. He set up a direct debit so he
wasn't tempted to spend it.
In just under a year he had more
the account and took his
emorable holiday. And he
t-card debt hanging over
manage your investments
nt part of how you man-
able to implement your
spending plan or if you already have
some money set aside, you should
think about how you can invest that
What you invest in depends on how
long you can invest the money for and
how comfortable you feel about differ-
Investments are usually divided into
two main types: income and growth.
Income investments, like cash man-
agement trusts and government bonds,
give you an income from earning inter-
est. However, your original investment
does not usually increase in value.
Growth investments like shares or
property may give you capital growth
over the long-term, so that, as well as
earning income, your original invest-
ment may increase in value.
Before you invest, you should
always consider what your goals are.
Having goals helps you to pick the
right investments for your timeframe
and work out what investment risk you
are prepared to take on.
For more information on investing
and how to get professional advice,
go to the ADF Financial Services
Consumer Council website, www.
Worried about debts?
Before you start thinking about sav-
ing for a new car or starting to invest,
look at your debts.
A spending plan can help you
reduce your debts by putting a system
in place for you to follow.
For example, imagine someone
with $5000 in credit-card debt who
only pays the minimum repayment
each month and who spends $200
on going out with friends on the
If this person reduced his spend-
ing to around $50 per weekend and
put the rest towards paying off his
debt, he could pay it off in just over
a year and save around $15,000 in
interest (this assumes a minimum
repayment of $10 or 2 per cent per
month, interest rate of 18.5 per cent,
repayments of $450 per month and no
longer using the card).
Genuine help with budgeting is
often available free of charge through
independent financial counsellors.
There's no high-pressure selling,
and a financial counsellor will help
you put a plan in place. The FIDO
website, www.fido.gov.au, has a list of
financial counselling organisations.
For further information, visit ASIC's con-
sumer and investor website, FIDO at www.
fido.gov.au or call 1300 300 630. You can
email ASIC with topics that interest you via
Photo by LS Paul McCallum
This little piggy went to market
Australian Securities and Investments
Commission chairman Tony D'Aloisio
looks at how a spending plan can help you
start investing or clearing debts.
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