Kristina Plimer Budgeting Myths Busted Interview

Kristina Plimer Budgeting Myths Busted Interview

Budgeting can seem completely overwhelming, particularly when people succumb to myths about saving and believe they have to sacrifice their lifestyle. The Wealth Tutor, founded by Kristina Plimer, is a coaching and mentoring service that assists people in managing their wealth. Kristina describes herself as a 'wealth psychologist' because of her emphasis on the psychology of spending and how every client differs when it comes to the challenges they face in saving. She has compiled the top ten common myths about budgeting and has busted each one:

Myth 1) I'll have to give up everything that makes life worth living.
Kristina says: This couldn't be further from the truth. I divide all expenses into 'essentials' which we need to survive, 'desirables' which are things we'd like to have but do not need and 'sanity savers' which are those non-negotiables. When I was struggling with debt at university, my sanity savers were one beer and one DVD a week. They differ for every person but they can range from a coffee each morning to a holiday once a year. The worst possible thing you can do is deprive yourself of what makes you happy.

Myth 2) I have to be good with numbers and I barely passed tenth grade maths.
Kristina says: This is a fallacy and it's a concern I hear time and time again. That's what people like me are there for. Even setting up one consultation with a budgeting expert will help you see the numbers for the trees and set you on the right track.

Myth 3) Budgeting creates tension between couples because you end up arguing about what each other spends.
Kristina says: Unfortunately this can happen, and usually happens without a budget anyway, but it can certainly be avoided. Many couples find that budgeting is actually a relief and can ease tension in the relationship, because both parties feel in control and they know they have an allotted amount each week/month/year for 'desirables' and 'sanity savers'.

Myth 4) I already know what I'm doing with my money.
Kristina says: If this is really the case, fantastic! However, I meet a lot of people who think they know what they're doing with their money and still aren't in the financial position they want to be in. One common complaint I get is that people can't see any other ways they could be minimising their spending. The only way to get around this is to physically record everything you spend money on for a fortnight or a month and to go through it with a fine tooth comb. If you don't face the monster, you will never see how small he really is.

Myth 5) Budgeting is just for people who are struggling to get by.
Kristina says: Every single person who is earning money should be budgeting in order to reach their financial goals. There is no two ways about it. My clients' incomes range from 30k to 300k+. The approach differs but the concept is the same. It's the only way to ensure you gain maximum enjoy of your life both now and in the future!

Myth 6) Money Mentors are so expensive and I can't afford it – that's why I'm in this situation to begin with!
Kristina says: This is valid but not all advisors are created equal and costs vary considerably. If I meet with a client who I can see is clearly in an extremely difficult financial situation and cannot afford my services, I would never take them on. That being said, some clients benefit from only one consult and my long-term clients have made the money back that they've spent on my services ten-fold because of the skills and knowledge they've developed.

Myth 7) I know that I'll need to cut out those little luxuries like a coffee in the morning and I'm just not prepared to do that.
Kristina says: I've coined them 'sanity savers' for a reason. If something brings you enough happiness, it is well worth the money. However, if you find yourself buying a designer dress every time you're down in the dumps we need to look at the psychological reasoning behind that and work out a cheaper (or free) way to perk yourself up when life gets tough.

Myth 8) A budget will stress me out because I'll constantly be watching myself.

Kristina says: Actually, the opposite is true. It's a proven fact that a budget gives people peace of mind because they feel in control of their finances and on track to achieving their goals. Instead, every time you hand over money, you will know that it is planned and will not impact the greater goal.

Myth 9) A budget is pointless because life is unpredictable and an unexpected medical bill is going to throw the entire thing off.
Kristina says: Bumps in the road are inevitable and at some stage, there will be an unforeseen expense, but even the unexpected can be planned for to a certain extent so that you can still meet your goal, but does binging on a family sized pizza mean you should throw in the towel and give up on eating healthy foods? No! The most important thing is to get back on track as soon as you can and not to beat yourself up about things that are out of your control.

Myth 10) Budgets are redundant because you are just plucking numbers out of the sky and as a result saving becomes unrealistic.
Kristina says: People do tend to come up with random numbers when deciding how much to save. If you are consistently trying to save $500 every fortnight and constantly pulling money out of your high-interest savings account, it will only make you feel like you are failing. You need to record your expenses and work out a realistic amount to stick to. This may take some trial and error and a little bit of homework but it'll be worth it when you're sunning yourself in Bali rather than looking at an empty bank balance!

For more information visit www.thewealthtutor.com.au

Interview with Kristina Plimer

Question: What inspired the creation of The Wealth Tutor?

Kristina Plimer: I found myself at the brink of declaring bankruptcy in 2001 after having accumulated up to $30,000 worth of debt while studying at university. After moving to Wales, I realised that I was not eligible for the equivalent of HECS and found myself working full time while studying throughout her degree. I had to borrow from the bank at 19% interest and ended up couch hopping during her exam period because I couldn't meet my rent payments.

This difficult period was a wake-up call and I took it upon myself to learn more about money and finance. During that time, I developed strategies that I now share with my clients, on everything from getting out of debt and developing a budget to learning to invest and build your savings. By using these strategies, I paid off my debts in two years, travelled around Africa for a full year and built up $1.5 million dollars' worth of investments. It made sense to take this know-how, along with my psychology background, to become The Wealth Tutor! After all, if I could do it, I could certainly help others to.


Question: What is The Wealth Tutor?

Kristina Plimer: The Wealth Tutor is a coaching and mentoring service that assists people in managing their wealth, budgeting and ultimately, becoming a money master. I describe myself as a 'wealth psychologist' because of my emphasis on the psychology of spending and how every client differs when it comes to the challenges they face in saving.

Question: What is a budget?

Kristina Plimer: A budget is, simply put, a realistic estimate of income and expenses. Regardless of income or situation, everyone needs a budget or you'll never save a dime. To stick to a budget, it is necessary to work out how much you can spend on a weekly/monthly/yearly basis. People associate the word 'budget' with being tight and having to sacrifice life's pleasures but this is completely the wrong way to look at it. A budget gives you the freedom to plan your next holiday guilt-free, save for your dream home and to not stress when you just want that designer pair of heels!


Question: Can you talk us through a typical consultation with The Wealth Tutor?

Kristina Plimer: I offer an initial free consultation and suggest that 6-12 one-on-one sessions is ideal. In the first consultation, I'll delve deep into your background and the psychology behind the way you spend and the way you save. I ask my clients to record their spending over a short period of time (from about two weeks to one month). I then go through this with them and work out what are essentials, what are desirables, what are their sanity savers and what's just not necessary. From there, we can put together a realistic budget.


Question: What is your top piece of advice to a female who needs to live by a budget?

Kristina Plimer: Do not bury your head in the sand! I meet so many clients who have avoided budgeting for so many years because they felt they were no good with numbers or they were scared to sacrifice lifestyle. It's like avoiding a medical appointment - it's only going to get worse the longer you leave it. The fact is that all women should be budgeting and saving a portion of their income to go towards achieving their dreams, however big or small they are. Women need to see a budget as empowering, rather than something that holds them back. A man should not be your financial plan!


Question: Can we create a budget without sacrificing our lifestyle?

Kristina Plimer: Yes! I divide all expenses into 'essentials' which we need to survive, 'desirables' which are things we'd like to have but do not need and 'sanity savers' which are those non-negotiables. When I was struggling with debt at university, my sanity savers were one beer and one DVD a week. They differ for every person but they can range from a coffee each morning to a holiday once a year. The worst possible thing you can do is deprive yourself of what makes you happy.


Question: How can we create a family budget without causing a fight with our partner?
Kristina Plimer: Unfortunately this can happen, and usually happens without a budget anyway, but it can certainly be avoided. Many couples find that budgeting is actually a relief and can ease tension in the relationship, because both parties feel in control and they know they have an allotted amount each week/month/year for 'desirables' and 'sanity savers'.


Question: Are budgets just for people who are struggling with money?

Kristina Plimer: Every single person who is earning money should be budgeting in order to reach their financial goals. There is no two ways about it. My clients' incomes range from 30k to 300k+. The approach differs but the concept is the same. It's the only way to ensure you gain maximum enjoy of your life both now and in the future! The way I describe it is, living without a budget is like going for a drive without your destination in mind. You have no idea where you are going to end up. A budget is your plan for fun!


Question: Why should we all create a budget?

Kristina Plimer: It's a proven fact that a budget gives people peace of mind because they feel in control of their finances and on track to achieving their goals. Instead, every time you hand over money, you will know that it is planned and will not impact the greater goal.


Question: How can we budget for the unpredictable?

Kristina Plimer: Bumps in the road are inevitable and at some stage, there will be an unforeseen expense, but even the unexpected can be planned for to a certain extent so that you can still meet your goal. Budgeting is essential because of those unpredictable experiences. You need a nest-egg to fall back on when life throws you a curveball. The most important thing is to get back on track as soon as you can and not to beat yourself up about things that are out of your control.


Interview by Brooke Hunter