How To Create An Automated Household Budget

I’ve created an automated household budget template where you can use this to track your BSB and account number and know exactly how much a week goes into each of those accounts.

On the template you can see that I’ve set up the first four accounts as transaction accounts, the rest are savings; they don’t attract any fee or anything like that.

Now in this spreadsheet you only need to touch the green cells. So in the detail page, you just need to go and pop in whatever your expenses are (remember, this is personal expenses only, don’t include anything paid from the business. If your business pays for fuel, the phone, the home internet, that sort of thing, don’t include it in this personal budget spreadsheet)

If you’ve got an annual body corporate fee of $4,500, you just pop that in the “Annual” column, and it will work out how much a week that body corporate is. Or $6000 for private health insurance works out to be $115 per week. This spreadsheet works out for you how much a week goes into each one of these accounts.

The accounts I recommend you have set up are:

🏡 Living Expenses: this all depends on you and your families needs, which might include groceries, public transport, fuel etc.
🥂Entertainment: this includes date night, meals out, family day trips, etc.
😀Your Slush fund: this includes things such as personal gym memberships, entertainment, boys trips/girls trips, whatever.
👤Spouses Slush fund: I recommend allowing the same amount for you and your spouse, so that there’s no inequality there.
🚘 Irregular bills: anything more than weekly goes in here, for example car rego, council rates, child care etc.
🚙 Travel: $200 a week is our number, however yours might be different.

So what this spreadsheet does is once you fill in the detail side, this works out what your weekly allocation is. This doesn’t include your mortgage or any rent by the way. So that needs to be paid before these accounts get topped up.

>>> Download a FREE copy of the Budget Template at https://insp.red/budgettemplate

Need To Change Accountants? Why Now Is The Best Time

It’s the first few days of January and I really want to encourage you – when you’re setting New Year’s resolutions – to reflect on the last 12 months that you’ve had.

What I’m specifically asking is: how have the last 12 months gone with your accountant?

For many business owners in Australia, it’s been one of the biggest 12 months that we’ve had to rely on the accounting help, and I think for most businesses, it’s actually been a positive experience.

In the accounting world, we’ve seen people step up to a huge degree. In fact, we’ve had to support each other as accountants to make sure we keep our mental health fair and our support there so that we can be there for our clients, but also our teams and our own families as well.

It’s been a really intense 12 months, but for a handful of Australian businesses, I don’t think you’ve had that support there.

This is where I want to challenge you: if you do need something, like a change of accountants, then this is the time to do it – at the start of January. Most people think that the time to change accountants is in the new financial year, which for us is about six months away at the moment.

Now, in the video I’m going to suggest a couple of reasons why that might not be a great idea and could cost you tens of thousands of dollars…

Book a zero cost Strategy Call with an inspire accountant.

JobKeeper December Claim

Quick reminder about JobKeeper for the month of December – we actually get three fortnights for the month of December, and the third one actually finishes on the 4th of January. So if you are eligible for the first extension of JobKeeper 2.0, our last month is to claim for this December – you can do so from the 4th January.

We’ve also got an extension this month – instead of normally being the 14th of each month (because of Christmas, and maybe your accountant or yourself are on holidays and you’re not in that quick reporting rhythm) the ATO have given you until the 28th of January to report on your December JobKeeper turnover threshold on your next month.

Also, just a reminder, because we are finishing the first extension of JobKeeper 2.0, we do start the next extension. So it’s a separate turnover test to claim for January, February and March, and we do need to look at your December quarter in 2020 versus your December quarter 2019. That’s on a first pass, but you may have to look at alternative tests depending on your business.

Being the first few days of January, now is a good time to work out whether you can expect to receive the JobKeeper 2.0 extension for the second round in January, February and March.

I hope you’re having a good holiday.

Get your JobKeeper sorted pretty early on and everything should be good to go.

If you need to have a chat with an Accountant about your business – book in a free Strategy Chat with an Inspire Life Changing Accountant today.

4 Steps To An Effective Business Budget

You actually get to know a few insights from having a business budget, but my recommendation is that your budget is inside your accounting software. Xero makes this quite easy for us to do – It also allows you to know what your sales target needs to be to make sure you pay all your bills, and you earn a profit for your efforts as a business owner.

In terms of what you need to do, it’s not something you just set up and let sit in the background. I’d recommend reviewing the actual budget versus actual at least every month, so that you can see what your budgeted expenses were, what did it turn out to be, and if there’s any variance that you need to take in mind going forward.

You can also make decisions on whether you need to cut back expenses or increase others – for example you might need to increase more marketing, or sales-related expenses to grow the business.

In terms of monitoring your numbers, having your budget done means you know your sales target. As a sales team, you should review that sales target at least every week (that could be just you if you’re your only sales person), but make sure your sales target is front and center at least every week – if not a bit of a daily wrap up, or a daily tally. But it’s super important to keep monitoring the sales in your business.

Watch the full webinar at https://insp.red/christmascashflowwebinar and plan your Christmas cash flow.

The First Step In Creating Wealth for Life

I truly believe you need to take time and plan out what you want in life. Anything about goals, creating wealth, or that sort of thing needs to be contextual into what you want out of life.

Some of our clients want a couple million dollar lifestyle property in the Gold or Sunshine Coast hinterland, and that’s their goal. We need to work that out first before we go and work out how that’s going to happen.

Spend some time on mapping out your bucket list. I recommend you actually take some time to do individually, and then meet up with your partner to discuss it.

We have four goal sections mapped out:

🏙️ Personal/Lifestyle
👨‍👩‍👦 Family / Relationship
👥Community/ Contribution
📈 Business/ Wealth

The idea of them is, there is some sort of reference to time in good goals. For example: 12 month goals (short term), three to five year goals (mid term), and then 10 to 25 year goals (long term).

As a personal example, our goal was to buy a house within 12 months. Another goal might be to travel as a family. For community contribution goals, you could tie some sort of giving goal in there. For business and wealth, this is where you might put financial dollars behind, or you might want to make $500,000 per year from the business.

Lastly, we need to determine our 90 day action. This is good to check in on every 90 days, or every quarter. I’d even recommend using it as an excuse to go away with your spouse and spend a night or two at some sort of retreat. Discuss with your spouse what new rituals you have to start to hit these goals up here? What new things (or assets) you need to work on, and what do you need to stop doing?

Download a FREE copy of the Bucket List here >> https://insp.red/bucketlisttemplate

How To Review Your Profitability In Xero

I’m going to give you a demo on how to review your profitability using Xero.

In your Xero dashboard, what we want to do to have a look at profitability in your profit and loss statement (which can be found in the “reports” field). I’ll be using the old report style as you can see more columns on it.

The thing we want to have a look at is your net profit, which is the number found along the bottom of the report. Now, if this demo company was your company, we’ve got some problems here because we are making losses and that is not fun to do.

The idea is to have a look at three months at a time, and compare it against the three previous quarters. As we’re currently at the end of November, your bookkeeping is probably not going to be completed for that month of November anyway, so let’s go back to September. If things have been steady for you since September, go to September, otherwise you might want to have a look at October as your starting month more recently and then have a look at the three months. So if we’re looking at the September quarter, we’re comparing that with the June quarter – which is the first quarter that COVID hit – and then March and December the prior year.

Some key things I want you to have a look at is, how’s your profitability going in the September quarter versus the last few? Hopefully it’s picked up for most businesses – especially after the June quarter which could have been a bit of a question mark, given that most of the country was locked down in parts of the June quarter – but just see how you’re tracking along there.

What I want you to do is even look at December last year. And you can also add more quarters to compare – I believe you could even go up to seven comparable periods. So you’ve got September 2020 versus September 2019, and you can see how you’re tracking versus last year pretty clearly, so have a look at how it’s been trending pre COVID, versus during COVID.

As a business owner, you’ve probably got a rough idea of how your sales might be tracking going into December. Now, the great thing is that most businesses are actually doing the same or better now, than they were before COVID, which is so relieving, and hopefully that’s you.

Enrol for free and watch the full webinar at https://insp.red/christmascashflowwebinar

Our Daily Content Planning System Revealed

I was recently on a webinar with Roze Ferrer – Head of Marketing at Inspire – Life Changing Accountants and she revealed our daily content planning system.

Here’s what she said –

We keep track of our daily content schedule in an Excel spreadsheet.

Using the spreadsheet like a calendar, we map out the topics we’re posting every single day. Next to the topic, we include hyper-links to Google folders so you can easily access the different video formats as well as transcript files and copy – it’s all reconciled in the one spreadsheet.

I’ve also attached the blog links so you could go directly to the blog post as well as the publish YouTube video.

In terms of the process with how we post; I generally email Ben and say, “hey, today we’re going to be posting this topic – JobKeeper Update” So Ben then jumps into the Google drive folder and grabs the copy and the appropriate video format to post on his personal facebook page. Once he’s posted, that gives me a cue to post across all social pages for our business accounts.

For the month of November, we’ve smashed out content every single day because we were organised and we were able to plan ahead.

That’s how we schedule our marketing posts – everything’s all in the one place, and it’s easy for everyone to know what topic we’re posting every single day.

Want to learn Inspire 2021 Marketing Strategy? Enroll for FREE on my e-learning page and watch the full webinar at http://insp.red/2021MarketingStrategy

Why Estate Planning Is Not 'Set and Forget'

If you get married, any previous wills you had are automatically void – that’s pretty huge.

I follow an estate planning lawyer on social media, and she (basically at the same table) signed her wedding certificate, and signed her updated will; she had it already prepared and signed it straight away. That’s pretty nuts.

Also, if you get into a de-facto relationship, your wills and estate planning need to be updated. If you get divorced, or if you go through a relationship breakdown, you also need to reconsider your estate planning because it’s probably not going to be appropriate.

If you get sick, or if you get COVID, you do need to get that stuff sorted. The same goes for If you have a baby. All these things might not mean you need to do the process again, but you need to check it’s still appropriate. So if you know you’re going to have kids in the future, we can set up the wills so that it accounts for that. We don’t need to mention their exact names, but if you have a child, make sure it still makes sense.

It’s also beneficial to review your wills and estate planning before you travel. We’ve had clients who have planned a pretty extensive trip, or they might be going to some questionable countries, and so they might sort that stuff out before they leave.

If you inherit money, or you increase your wealth a fair bit; let’s say when you do your wills initially, your balance sheet might look like $500,00, then a few years later, it might be $1,000,000, you do need to make sure that your estate planning keeps up with your wealth, and your structures as well.

And lastly, if time passes, you still need to check this stuff. I recommend you review this every three years or so to ensure it’s still relevant.

Learn more in our next Wealth for Life workshop (next year) at https://info.inspire.business/wealthforlife

3 Key Tips To Start Your Rainy Day Fund

I strongly encourage you to set up a rainy day fund, or a “profit war chest”.

We had a client in May of this year who sent us a Thank You note, saying that a couple of years ago, we recommended that they start a separate bank account called the profit war chest, and they said, “We didn’t really need to use it since then, but this year has been a bit of an interesting one, and there’s been a few rainy days. Thank you so much for your recommendation – it’s saved our business and meant that we didn’t have to make anyone redundant.”

As an accountant, that’s pretty fulfilling. So if you don’t already have a rainy day fund, then I strongly suggest you set one up.

The key here is to ideally have a separate bank account in your business name, at a separate bank, so that you’re not looking at this account every time you log into your transactional banking accounts. Now that keeps it out of your mind, so you ignore it and you don’t feel like you’ve got 20, 30, 50 or $100,000 sitting aside just for that rainy day. Hopefully it’s out of sight out of mind, but you do know at the end of the day, you can access it if you need it.

A lot of business owners I’ve seen are actually quite cashed up as a result of the stimulus measures. So if you don’t have something like this in place, then start with any excess cash that’s lying around in the business accounts. So let’s say you’ve received $80,000 of cashflow boost, and you haven’t needed a cent of that, then there’s your rainy day fund – or at least the start of it.

Even clients with JobKeeper; if you’re eligible in any of the first few months, you’re eligible for the full six month initial period. So what that means is, if we had a client who took a little bit of a revenue hit in March or in April this year, and then they’ve picked up to the same sales or more, then they’ve probably got a lot of JobKeeper lying around that the business didn’t really need to survive – which is a great thing. So please set aside that excess cash for the purpose that it was given to you for, which was actually to look after the business in a downturn – that’s essentially the definition of a rainy day fund.

I also recommend you contribute regularly to your rainy day fund. For you, it could be a couple of hundred dollars a week, or it could be $1,000 a week. Whatever that number is for you, it needs to continually build that rainy day fund up. You’ll get to the point where you won’t notice the cashflow drain in your working accounts, and then all of a sudden months later, you log into your rainy day fund and go, “Wow, that is an impressive balance there.”

The recommendation is to aim for three months worth of your business operating expenses, and also three months of profit that you want to take out as a business owner for your efforts, so that you’ve got three months of complete cash flow, in case anything hit the fan again.

Watch the full webinar at https://insp.red/christmascashflowwebinar

Are You Making An Operating Profit
Without The Stimulus Measures

When you’re preparing your profit and loss statement, I want you to look to really make sure that you’re actually making an operating profit.

In terms of your layout of your profit and loss statement; every business will look different. But what you want to look at is, if you’ve got cash flow boost or JobKeeper income in any of these past months, you want to make sure that you work out how your profit and loss is doing without those incentives.

I’ll give you a demo on how to see these figures in Xero. If you are currently receiving government grants, we want to mark that in Xero as “non operating income”. So then what happens is, any JobKeeper or cash flow boost (or anything you bring down to the “non operating income” section) will come out of your operating profit up the top. By doing this, it will show you a true reflection of how your business is tracking without any government incentives.

So I do want every business owner to do that so that you know: are you still profitable, and is your profit enough to put food on the table for your family? Especially if you take drawings and don’t pay yourself a salary, so I think it’s important to know that. But that’s also a question on the financial viability of the business at the end of when JobKeeper runs out.

If you’re showing a loss every month without JobKeeper, you’ve got to make some decisions soon because you will run out of JobKeeper, which is scheduled to end at the end of March 2021. This is important for you to know.