Sunday, 4 September 2011

where does all my money go?

The most asked question in my humble accounting firm is "what's my tax refund going to be?" closely followed by "where does all my money go?".  A large proportion of my clients have no idea what they actually spend their money on. They have vague recollections of trips to designer shoe stores or online binges on power tools.  Primarily, however, I think they are starting to wonder if there is a reverse tooth fairy stealing from under their metaphorical pillow.

Sometimes, just for fun, I like to shock them by asking what their monthly mortgage repayment is and then I multiply it by 12 and tell them what their house is costing them a year. It's usually followed by silence.....and crickets chirping.  The ultimate thrill arrives when I ask them what they spend at the pub each week and extrapolate that into a year's worth of drinking.  I think I'm spreading the good word of sobriety when I do that.  Do as I say, not as I do clients.

Now here's the part where I get all boring - do a budget people! Even a really simple one so you have a rough idea where your money is disappearing to.  Figure out your household income, take away all the expenses and then decided what to do with the remainder.  Some for fun and some for saving or investing.  Even if you don't have much left over for saving (or the pub) at least you'll be able to locate where all your money has gone.

If you are considering going into negatively geared rental property or shares the budget becomes a really handy tool.  Knowing your cash flow position is very important because no matter how 'tax effective' these investments might be you still gotta eat.

Include a bottle of wine on the budget every few months, settle in for a bit of dull 'budget' time and tackle the mystery of where all your money has gone and where you want it to go.  I promise you it feels better buying those sky high heels or that hammer drill knowing where it fits into the puzzle.

Monday, 15 August 2011

advice with a side of onions and sauce

Professionally as an accountant (and otherwise) I have lots to say - most of it helpful advice given to my clients from the bottom of my generous heart.  Meant to help them succeed in their financial endeavours and hopefully building them a bright future.  Some of them listen, the good ones listen. However, the vast majority would rather take their tax advice from a stranger at a BBQ. 

Thankfully it's winter now in Adelaide but the blossom trees have burst forth and with these beautiful buds comes the dark spectre of spring and the BBQ......the advice that will be exchanged at these gatherings is only weeks away.  It will be dished out with a couple of beers and some tepid salad.  Rental property purchases will be decided upon between mouth fulls. Capital gains tax calculations will be made with the exacting mind of someone who has red wine stained teeth.  

Then there is the most heinous of BBQ crimes......the share trading discussion.  This one has a special place in my consciousness as it is not dissimilar to digging a big pit and tipping your inheritance in, covering it with the debris of the charred meat that has just been consumed.  Now, you may feel that I'm exaggerating but I'm truly not.  When a client rings me and the first sentence I hear is "I was at a BBQ on the weekend and......" I feel slightly nauseous and very nervous - which coincidentally is how I feel about potato salad with bacon in it.

So please, I implore you, do yourself and your accountant a favour and just enjoy the beautiful weather that is about to be upon us when you next attend a BBQ.  Have a few cold beers, talk about your week and have fun.  Then if the mood strikes you and tax is on your mind on Monday morning give someone a call who (hopefully) has clean teeth and a clear mind!