Have fun and keep the T-Bird

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6 December 2018
‘…...And she'll have fun, fun, fun till her daddy takes the T-Bird away’ lyrics from the iconic song by the popular sixties band The Beach Boys called Fun, Fun, Fun, that so aptly encapsulates the human race.  

Having fun is truly the best part of living. No worries, wind in your hair and driving your T-Bird (Ford Thunder Bird), or car of choice, to new uncharted destinations with the sole purpose of having fun and living for the moment, sounds fantastic!

Sadly, when it comes to our finances though, most stories of living for the moment and having fun tends to end with daddy (the bank) taking the T-Bird away, as payments are behind and debt levels are spiralling – a real fun killer!

If only we could have fun without the financial cost that somehow tends to accompany it. If only we could have fun and keep the T-Bird. There is a way, and it’s simpler than you might think. It’s a fool-proof technique that I like to call ‘Four Stage Boundary Budgeting’ and it works as follows:

Stage 1 – The good stuff (chase ’em)

List what you earn (income) from every source.

Stage 2 – The real stuff (control’ em)

List all the real stuff you need to survive like rent, food, transport, bills and accounts, etc. Now, deduct these from the good stuff (stage 1).

Stage 3 –The right stuff (grow ’em)

Put away something for long-term investing after you have deducted the real stuff from the good stuff (stage 1 - stage 2). How much should you put away? That’s entirely up to you. Think about what you want to leave your future self and how much you think you are worth, after all it’s only you that has the power to look after you! 

Stage 4 – The fun stuff (live ’em)

List the fun stuff you want to do – and then go and have fun with what’s left after putting aside the right stuff (investment money).

Expected Result – A solid financial future, low to zero debt levels, a lifetime of fun and keeping the T- Bird.

The order is extremely important when it comes to ‘Four Stage Boundary Budgeting’, you can’t move to the next stage without completing the current one. Unfortunately, a large majority of people tend to follow the ‘Broken Budget’ approach below with the following result:

  1. The fun stuff
  2. The real stuff
  3. The good stuff
  4. The right stuff

Expected Result – Borrowing, taking on debt to survive, lending from Peter to pay Paul, an unstable financial future, insufficient future funds (money) for your later years, short-lived fun, and bye-bye T-Birdie. 

But what if there is not “enough” money left for the fun stuff? Then you need to invest and save until you can afford the T-Bird. Besides, there are plenty ways to still have fun without hurting your financial future, it might mean enjoying those dinner and show outings just that much longer before being able to fire-up your new T-Bird.

Investing something (the right stuff) is always going to give you a better result than investing nothing - you can even have fun in the process and still keep the T-Bird.

Speak to one of our financial advisors and start your investment journey.

 

Gareth van Deventer CFP®
OUTvest: Head of Advice
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