Money management tips from four normal Australian families

By Stephen Pincock

If you were to ask a financial advisor how best to manage your money, the chances are he or she would mention a few universal principles of good money management, such as not living beyond your means, planning for the future and setting up a budget.

Beyond those fundamentals, however, it’s worth keeping in mind that personal finance really is personal. Staying on top of your money isn’t simply a matter of following rules. To achieve long-term success, you need to find a system that works for you.

The four ordinary Australian families whose stories we tell below show how different those systems can be. Each one has taken a different approach to budgeting, saving and avoiding debt. Their advice shows just how many ways there are to make your hard-earned cash work better for you.

A few years ago, soon after NSW couple Kim and Pete came home from the hospital with their first child, Kim had a moment of panic.

It wasn’t anything to do with their happy new son; it was about money. “I started to freak out about the future,” remembers Kim, a full-time mum in her early 40s. “We were living from pay to pay and had no savings. That had to stop.”

Although she and Pete, a firefighter, had been together for years, when it came to money, “we’d been living like single people,” she says. So Kim sat down with the household bills and wrote out a budget.

Next, she went into the credit union and arranged for Pete’s fortnightly wages to be automatically divided into three accounts — one for bill paying, one for savings and another that Pete uses for his own personal spending. “I’m pretty much on top of it,” Kim says. “The budget just changed my attitude. Now I’m really strict with what I spend.”

The budget has also brought a much-needed sense of financial security, Kim says. “It was really reassuring. We’ve gone from having no savings to having savings, which has made me more secure.”

The system also works from Pete’s perspective, Kim says. “He doesn’t really want to know about the bills, so he’s happy, too.”

Dan and Lori spend most of their time living in temporary accommodation out in the bush, but that hasn’t stopped them buying three houses.

Dan, 28, and Lori, 32, are part of Australia’s flourishing construction industry. He’s a rigger and she operates cranes, and together they have travelled to some of the country’s most remote regions, where they spend months on end, living in camp accommodation, and saving their pennies.

Camp work of this kind can be lucrative, but for some people in the industry there’s a temptation to spend that cash as soon as they hit the big smoke, Dan says. “A lot of people will get a month off and go overseas and blow everything they earned in the past year,” he says.

He and Lori have taken a more level-headed approach. They’ve used their savings to invest in two houses they now rent out, and a third, an hour outside of Brisbane, which they plan to use as a home base. Any extra cash they earn goes straight into the properties, so they can attract higher rents.

Running three properties from out in the bush can be tricky, but the couple does all their banking online, via a laptop and modem. Beyond that, the secret to their success, when many of their colleagues end up broke, is simple, Dan says. “It’s easy, just make sure you play with what you’ve got.

Just over six months ago, 54-year-old travel writer Jim and his wife Ann, a consultant doctor, took money they had invested and used it to pay off the mortgage on their lakefront house on Queensland’s Gold Coast.

It was a strategic move, and one the couple only made after looking carefully at the state of the economy. “There were signs interest rates were going up so our mortgage payments were going to be increasing,” Jim says. “It also allowed us to do other things with the money we would have been paying off the mortgage with.”

Being careful with his money is something that comes as second nature to Jim, although he and Ann are comfortable enough now that they don’t need to count pennies. “We’re basically tight!” he laughs. Simple strategies like keeping an eye out for sales and avoiding expensive brand names items if cheaper alternatives are just as good have paid dividends, he says.

“I even used to cut out coupons on weekends. You might laugh at the 50 cent savings, but there were times I was getting $30 back on a $50 shop.” With retirement roughly 10 years away, the priorities now for Jim and Ann are planning for a future that involves travel to Europe, Asia and beyond. “I just want to be able to see the world,” he says.

Although they no longer have to watch the pennies, Jim’s advice is to automate bill paying, and check bank balances once a week online. “For us, everything’s automated,” he says. “We’re almost 95% electronic. It’s easier to manage.”

Early in their relationship, Trish and Darryl established a way of dividing up their bills that has helped them negotiate three decades of marriage, and the same number of kids, without falling into any financial traps.

“We don’t really have a joint account, not one that we use, anyway,” says Trish, who’s 66 and a physiotherapist. “Darryl pays for the household bills, and paid for the mortgage while we had one. I pay for the housekeeping.”

It’s not a common situation, but it has worked for them, she says. “Most people I know seem to have joint accounts, but it just sort of evolved for us. If I need to pay for a big bill or something, I go to him.”

The crucial thing about having separate accounts is that it has allowed the couple to keep close tabs on their bank balances, Trish says. “I always knew what I had available to do what I had to do.”

Darryl, a retired architect, kept a diary so he knew when the big bills were likely to be due, Trish remembers. “For me, it was more or less payday to payday. I just knew that if we kept things fairly simple, we’d survive.”

Trish says she wishes they’d planned more for their financial future, but in the end, being careful has proved to be enough. These days, they have gone beyond survival - she’s a fan of camping holidays in the Aussie bush, and he spends his cash on cameras and computers.