Throw away your shoes off to take a look at what we've dubbed the 'gateway drug' to becoming a personal finance addict. We are of course referring to "The Barefoot Investor" style of budgeting. We also explore the gift economy and the idea of helping your neighbours to not spend money as Natasha joins us to share her experience as part of the Buy Nothing Project.
The following is a transcript taken from episode 9 of the We Talk Cents podcast. The transcript is created by AI software so it might not be perfect - please forgive any imperfections or grammatical errors.
Dan Jovevski, Blaize Pengilly, Natasha
Blaize Pengilly 00:09
Personal finance, budgeting, cash flow, and investing don't have to be scary words. The We Talk Cents podcast is here to help you learn more about money and take control of your personal finances. The We Talk Cents podcast is not a financial advisor. This podcast is made for entertainment and educational purposes only. All information shared is of a general nature and does not take into account your personal situation. You should consider whether the information is appropriate for your needs and where appropriate seek professional advice from a financial advisor.
Dan Jovevski 00:45
For more information, please check out wemoney.com.au slash disclaimer. Today, welcome to another installment of We Talk Cents. I'm Daniel, your WeMoney finance expert,
Blaize Pengilly 00:57
and I'm Blaize your resident spendaholic. Today on the We Talk Cents, we learned about a project that was started by two friends in the United States and is now a worldwide phenomenon, with Facebook groups everywhere saving people money and also saving stuff from landfill.
Dan Jovevski 01:12
Also round out a budget breakdown series with a book the Barefoot Investor Budget.
Blaize Pengilly 01:18
But before we get into that, Dan, it is officially Cyber Monday. Do you crank out the card and do some online shopping for the Black Friday and Cyber Monday sales over the weekend?
Dan Jovevski 01:29
I don't think I could avoid applies. There's just so many things, every single text messages I've got from companies that I bought things like three years ago now we're jumping into the crazy. I cannot avoid it. How about you?
Blaize Pengilly 01:41
I did I did a little bit of online shopping. I'm trying not to buy too many Christmas gifts this year. But I thought it was very good opportunity to get some really discounted gifts. And as a little bit cheeky and bought some birthday presents for my friends in Jan and fab next year. But I'd be interested to see what what do you think will happen? Do you think the sales will be big enough to give the economy a bit of a boost? Or do you think people are still hesitant with their spending? How do you think it will play out for Australians?
Dan Jovevski 02:07
Blaize, I think Australia's dairy accommodating we've we've been influenced so much by the American system we celebrate Halloween, we you know, we're probably you know, wouldn't surprise me the next 10 years if we end up celebrating things like the Fourth of July or Thanksgiving at the rate that we're sort of going. And I think what it's done is it's basically accelerated all that Christmas spending that we would ordinarily have spent the week before Christmas, waiting up in those shopping queues Christmas with our turkeys and hams underneath our arms along with the latest iPads and electronics that are being brought forward to you know, a few weeks earlier than Christmas, which I think is probably going to take away that Christmas spending where people can get rid of their shopping, and focus more on the events that happened in Christmas, but also as well, but we have to remember during COVID is that the government stimulus right now has extended a long way for a lot of all these people back to work for the most part and the economy is picking up again. So because Shema sentiment is an all time high. And a topic that we've discussed before is you know how many people are going to consume throughout the Cyber Monday Black Friday, Christmas period on platforms live, buy now pay later after pay and then potentially wake up in January, which is a topic though we'll cover off. But people fleeing pretty boring up it buys I'm not sure about you or your friends. But certainly my mates are certainly feeling quite cheery as they come into December. How about you?
Blaize Pengilly 03:36
Yeah, that's right. Definitely feeling a little bit Sherry definitely better than the sentiment that we're all kind of experiencing in March, going back to what you said about COVID? Like, yes, we received a lot of benefits from the government during this period, which is awesome. But also, I I'd be interested to see if Black Friday is increased this year, or if the sales made through this weekend or increased this year, because of also the fear of COVID. So you don't want to be going around the couple days before Christmas in a cram shopping centre when it's absolute mayhem. Like I think perhaps maybe online shopping will increase this year. And maybe this boost the sales we'll really see numbers go crazy out of the ballpark because of the fear as well of not wanting to be out in public where risk of transmission of infection is higher.
Dan Jovevski 04:27
Hospital could agree more that is that that's probably 100% what what's happening. And there's also online shopping options. You know, more and more Australians are getting used to online shopping now as their first port of call and sort of going retailers. So yeah, let's let's wait and see from next week on the official stats, but I'm going to be a betting man and so they're going to be a lot higher than they were last year. All right, let's
Blaize Pengilly 04:49
find out next week and check back in okay Dan, questions time. I'm What are the most iconic lyrics? Like? What's the first thing that comes to your mind? When I say hip hop? Do I outcast?
Dan Jovevski 05:08
Sorry, Miss Jackson.
Blaize Pengilly 05:12
That's a good answer. But what I was really hoping you would say is lend me some sugar, I'm your neighbour.
Dan Jovevski 05:19
Blaize Pengilly 05:21
The reason that I asked that question is because today we are talking about communities, and neighbours and really how people can get things from their community and really benefit each other. So today's guest is a member of the Sydney community. She's a stay at home mom, and she's also a decluttering consultant. She's got a family and runs a pretty incredible localised Facebook group that's part of a worldwide movement known as the buy nothing project. Here to tell us all about it is erskineville. Local, Natasha, thank you for joining us Natasha.
Thanks, Blaize. Thanks, Dan. Thanks for having me on the show today. I've been in erskineville for probably about 10 years now, and was looking for ways to help shed some of the extra items while I was going through my hectic decluttering phase and came across this amazing group called the Buy Nothing Project. This is on my Facebook feed at 1.5 years ago and came across a video that talked about this thing called a gift economy. I thought what's that because I've been donating to charity shops. I've been doing the buy sell swapping and I was looking for new ways to I guess offload things that I didn't need anymore. But items that still have value and still have use. And this particular project really hit an heartstring with me because it was hyperlocal it meant sharing and gifting between neighbours that actually live around the corner. For me, when I had a look, I was a little bit sad to find out that there wasn't a group in my area. So I took the leap, and I kicked one off. And I've been stewarding it ever since. We currently have 600 members and a still growing. And the amount of things that get posted that are getting shared as just really inspiring. Meeting people to is pretty cool, especially during COVID times that could be a way to kind of get out and about go for a walk. But of course contactless pickups and drop offs. And most welcome.
Blaize Pengilly 07:22
Natasha, this is really interesting! And I'm really interested to learn more about the gifts economy. But what is the Buy Nothing project? And how did it all start?
Well, according to the website, two ladies from the States liezl Clark and Rebecca Rockefeller started the project globally. What inspired them was a trip to the Himalayas. And they saw our community there, that this social fabric was around things like gifting, sharing and daily gratitude. They saw these communities take turn of caring for fragile and infirm members of the community. They would also communally care for animals, each household had equal social capital to share with the community both giving and receiving. So the idea of trade or using money as a unit of trade, really didn't play a role. And I think it was Liezel, she came home and she thought, I wonder if we could do something like this an egalitarian gift economy back home, in our towns in the States. So they decided to launch it on Facebook as a platform. And they started locally. And over time, it just grew. It grew to the point that that video popped up on my social feed, and I got hooked.
Blaize Pengilly 08:41
So from Himalaya to the States, and now erskineville, Australia and all over the world?
Correct. It's pretty big in Perth. So if you're listening from Perth, check it out, you've probably got a group already humming in your background.
Dan Jovevski 08:54
We don't measure and my wife's a massive fan of the buy nothing project. So yeah, it's thriving globally. And I think it's just amazing that concepts of like community, they can start off where two people come up with an idea, put it out into the world. And is it taking steam? That's absolutely fascinating approach. And I just think about all the countries that have tried to do this before and probably spent, you know, countless billions of dollars trying to create and foster this community. But right now, I think the the awakening of helping out other people that are close to you, especially times the COVID has really come to pass. So that's that's an amazing and amazing insight. And did it start for you, Natasha, how did you first get involved was the first thing that you did and how did it grow from there?
Well, I'm looking for group in my area was K and they're very strict on it being hyperlocal. So So joining something a few suburbs over is probably not going to work in this model. Because one group did not exist and I live very close to a large suburb called Newtown here in Sydney, which is known to be quite progressive forward thinking, super surprised there wasn't one even just next door, I had a look, there was an option to start a group yourself. And I thought this is a big step. But I was keen to give it a go, I was trying a whole bunch of new things at the time going through all the different decluttering ups and downs. I thought, why not, I'll kick it off, maybe someone can take it over at one point. So I put a request in, I followed the steps, the development team built the page for me, they put all the banners up for me. And they sent me all the documentation guidelines and rules around running a group. They also supported me by offering training once training was developed. And also having group discussion pages for admins, regionally, which is awesome. Once I did start the group, it was a little bit slow in terms of memberships only because I didn't really go out there and spend it too much. I didn't want to yell it from the chops, I just wanted to see how organically it will grow through word of mouth. I did add quite a few mutual friends on Facebook that lived locally. And I think through that, and just the discussion down at the pub or the community garden, down at the local bolo, people started to join. And slowly Facebook algorithms jump onto that. And they see that I'm part of similar community groups he they will offer other people on Facebook, hey, do you want to join this group? Do you want to join this trip? And I think that's what's been driving a sense is just that web of interconnectivity on Facebook.
Blaize Pengilly 11:36
Natasha, you mentioned other groups. And also so I've actually lived in Newtown for for for a number of years, and they are a member of a different a bunch of the different Facebook communities there as well. They've got like the street bounty. So if you see something on the verge, and it's free, people post in there so other people can get the bounty and there's the Pay it forward group, and then the general Newtown community group, you have the buy nothing project, defer to these groups? What's the benefit for from being part of by nothing? What's the and what's the difference?
Well, I really love that question. Because I love all the other groups, I think they all serve a purpose. There's certain things about buying nothing that we try and refrain from why because we can't service everyone in every particular channel that they need. So we try not to be a notice board. We try not to actually buy or sell or swap anything, which those groups like pay it forward. Or Piff groups might still have monetary unit attached to the item that's moving. The other thing we look for is really hyper local. So it's really important that people are leaving a few blocks, if not a nice stroll away from each other, when we are gifting. The other thing is the bounty the street bounty, which is amazing and it's it's rife in this area, I walk down my street plenty of times, and I see things on the corner, either ready for council pickup or for the street bounty credit come through. And I have enjoyed that myself. However, with by nothing the ethos is, is that you're gifting from yourself in from your own abundance by posting shots of what's going on on the street corner, you're not 100% taking ownership of those items and passing them directly to someone who's, you know, had a thought about when actually yes, I do need that I'll have that thanks. The street bounty is also questionable in terms of safety sometimes, and whether it is up for grabs or whether it is waiting for council to come pick up. The other thing is you don't have any backstory to the items. So we gift with a little bit of a blurb to say hey, my kids grown out of these thongs they didn't even wear them last summer, they are practically brand new. Anyone out there that will fit a size x y Zed, they're yours. So this way you kind of know where they've come from, you can build a relationship and a connection with the person gifting. And the giver can actually feel like they're giving that item a new lease of life without just kind of dumping and running, I guess or, you know, just dropping off at the charity shop and going okay, I'm done with that. So there's there's a little bit of extra going on there. And again, when I speak to like no money, so the the ups that you get in gifting is all internal. It's not tangible. It's it's, I guess it's from the heart. Yeah, it's spiritual. The wallet is definitely not involved in this with that postage not involved. And also tire kickers hopefully not involved. Which one of the reasons that got me going with this group is because I was feeling like buying and selling online or swapping online was getting very transactional. And that was frustrating me. I would like to just give from the heart see a smile at that person. face and not require anything more than that.
Dan Jovevski 15:03
That's amazing, Natasha. And as the people are tuning in to hearing about the final project for the very first time, as a work, if we were just walk through, you know your situation or where you first put something on that Facebook group headed or what have you, and what's the process like for people as they go through participating in the buy, while he project?
Well, once you're part of the group will vet you very quickly, we just make sure you're a very teen, we'll make sure you're local, and that you're not part of any other buy nothing group. So it's really important that you're only part of one, okay. You need to give locally, if you're moving no problems. If you're just on the boundary of a group, no problems, talk to your local admin, I'm sure there's a few grey areas there. Once you are in the group, if there's something you would like to give, take a photo of it, post it with a little story, maybe even pre emptive with the word gifting or offering and see what you get in the comments. Everything is very transparent, open, keep to the comments until it's time to pick someone, and then you've chosen that person. And then you can move on to DMS or personal messaging for pickup details, we try and keep a transparent just so people can see that the community is actually in touch with each other. It's not a first come first serve. However, if you need to flash give, you can put flash give, and people will know that this has to go really quickly. We try and let things marinate longer than some of the other groups. Because not everyone is sitting on Facebook 24 seven, some people only check it once at night. Some people check it, you know, every other day. So we do encourage some of our posters to let the post marinate. And gifting is not the only way that you can be part of this community, you can actually ask, and that's something that's really hard for people to do sometimes is put their hand up and ask ask the community for something.
Blaize Pengilly 16:53
Natasha, you pretty much answered my next question, which I was gonna ask if there's any freeloaders. But I really like the way that you structure it so that if people aren't about that, it's not first come first serve. So people aren't just like waiting, waiting, waiting to click quickly can take take take that I like that the structure of letting the posts marinate so that people really can get the opportunity to connect with someone via story or where they live. And it's not just first come first served.
I can add to that, because we don't mind if you're someone that wants to collect a lot of things. As long as you find a need in it, we're happy to share it. If someone is getting a lot of traction, admin might reach out and say, Hey, I really love the enthusiasm. Maybe you need to be an admin with me because you're on this, such as I am. So we're very open to people being on there. And being present. However, it is totally up to the gift as to who gets it. And sometimes they might ask for something like, if you're interested in this item, share a story with me of how you might utilise it. And it's not a competition, it's just a little bit more to connect. And if an item is super, super popular, to take some of the stress over who should I give it to, you can actually run a draw. You can say I'm going to draw this item at the end of the week if there's a lot of attention. And basically they'll randomly pick someone say this person is getting the item and then both those people move to DMS to organise pick up or drop off. Or sometimes what I like to ask people to do if they're a little bit cagey about giving out addresses is made at the local park, or have a coffee at the cafe. Go check out the new tree plantings at council or wherever. Even car parks are great for things like that. This is awesome. You're getting free stuff or you're getting rid of free stuff. You're making a new friend you could be going out for coffee or a pint. I I love the concept. Natasha, what are the kind of items that people are putting up because I'm having to scroll through the photos on the asking bill feed now someone's offering massages, someone is offering kids toys. There's makeup bags, or gift bags? Is so exciting, there're such a variety of things. What kind of things can you expect on the page? And is there anything that's not allowed? Another great question. So most of the things you'll see on the page will reflect other things like bias or swap. So kitchen appliance gardening tools, furniture, books, kids scooters, even food plants, landscaping materials, but the extra thing that we allow is services, like you've mentioned massage. So if you want to give the gift of knowledge or the gift of your skill set that is encouraged also, because it's not just all about the tangible items. It's also about what we can share of ourselves. That massage store is actually really great one we've had two people jump on who are trying to get their qualifications and they require clients to massage for free as part of that. Their assessment. So that's actually a really hot topic on the group, which is fantastic.
Blaize Pengilly 19:29
Pretty intense neck just thinking about it. People sign up, and fly.
We've also had a lady who came through tried to join the group, but was out of area. But when she spoke to me as I was fitting her membership, and she said, I've actually got a free nail salon session that I've bought, but I can't attend. And I'd like to give it to someone in that area because the nail salon was in this area. And so we're able to post on her behalf as admins, and give that gift back to the community. So there's been really some interesting combinations. But if you talk to the local admins, I'm sure there'll be help help to bridge any kind of gaps. When you also talk about things that are not allowed, we have a three layer system. So number one, keep it legal. That's not determined by us, determined by the law of the country living. Second level, keep it Facebook legal. That's term by Facebook, there's sometimes chatter about pets, tobacco, alcohol, things like that. Thirdly, we have some guidelines around it. And the top ones give from your own abundance. So we've talked about street bounty before, also give with no strings attached. And this could mean things like I've got a voucher for a service, which I can pass on for free to a friend. However, to access that free item voucher you need to sign up with the company. If you need to give away your credit card details like on the App Store. Because it's a free demo, then we try not to do that. If there's anything involving coming back and someone ringing you because you've left your details for this demo, or this, this free service this one off, we try to reduce those kinds of shares. If there's anything you're wondering either how to Word Up, or how to share just private message your admin and they can help you with the wording and the posting. We also try not to post any external links. So someone might be gifting a coffee table they had from IKEA, and they're posting the link to IKEA. As to this is what it looks like we'd actually like the actual photo would be great. And also name dropping of organisations and things like that. Let's just say you were needing something to help do a fundraiser for the community. Speaking the fundraiser not allowed. But asking for things for help during a fundraiser is allowed.
Dan Jovevski 22:34
So incredible Natasha, who would have thought that people coming together to help one another would be taking off in in this period of time? That's really heartwarming to hear. With the holiday and Christmas period big around the corner. How can people be utilising a little local group ahead of the festive season and what are you seeing right now? Are you already seeing the preparation of that happening in erskineville and beyond?
Well, I know Christmas is coming in erskineville when they've put up the Christmas tree in the local park. That is a very big visual reminder to me when I'm walking around. Also, they will start to do the Christmas decorations down the main street on all the light lampposts with getting ready for the Christmas season. If you find yourself caught out, and you might need an extra hand, you could use this as an amazing resource to ask a neighbour for some skills, just someone to come around and help you set up that backyard Marquis. You might also be asking for things like platters. Not everyone has platters at home, not everyone wants to go forking out platters. There could also be some really interesting gifts like hey, I've been holding on to the family China set for years and I never host but if a neighbour does and wants to borrow it, come and grab it because I'd love someone to get a little bit of life out of this. So I think with Christmas, we are going to see a bit of gatherings at home a lot more and with just needing those extra little things to make Christmas a bit smoother, even when it comes to sharing food and things like that. I know that we do drives here in the community for gathering of groceries and things like that or our toys. So even if you're working in one of those organisations and you want to call out you can say I'm collecting on behalf of an organisation you need to be upfront about that. And you can say hey, if you have any toys or food but can't make it to the drop off, I'm willing to come pick them up from you. So could also be using that during this time to communicate with your neighbours. A lot of us probably don't go for walks and chit chat to each other like I would However, having a digital first step through Facebook is a great way to kind of just get your idea out there and see if it grabs anyone and then you can move to private message and then you can move to meeting face to face and Then once you've got what you need, you don't really need to continue, unless there's something else that you can help each other with. But it's just a great little way to meet people in your community help out where you can and share what you've got, because running to the shops, or I'll just Google that, because I don't know how to do it. Maybe I'll ask a neighbour, or I'm just going to jump online and hit Amazon up. I'll just ask a neighbour, or Hey, I'm going to go on to air Tasker. And Hi, someone, hey, I might just ask a neighbour, see what I get. Try us first. And then if you need to visit all the other resources available.
Blaize Pengilly 25:36
Natasha, I'm really curious. So obviously, we're a money podcast. So I'd like to talk about the money side of things. Obviously, the gifting aspect is awesome. And you get all those internal amazing feelings when you're gifting. And then this group helps with things like sustainability, because we're not buying so much. We're not having so much waste, etc, etc. But when it comes to money, are you saving money using using this method of gifting? Or how does money? How does this group or being part of this project impacted you financially?
I love the way you posed saving money, because I would say that I'm not spending money. It's not large chunks, it's a trickle effect. If you are bent on saving some money, and you want to know how utilising this resource may assist you, especially in the season coming, I would say anything that you might receive, think about what would have been the value of that item or that service that gift and take that and put it aside in a savings account, because then you're actually saving people go on, I didn't have to buy that bluetec. So I save two $4. I haven't saved any money unless I've taken that money and put it aside, what I've done is not spent two or $4. So I'm not exactly sure how much bluetec is. So I've done that previously where that beer I didn't have at lunch or that cupcake I didn't have at that coffee run or that lemon, lemon bitters I didn't buy, I would take the value of that in item. And I would then put it aside to a separate savings account. And over time, those little things I went without during the week. And the great thing was is I'd actually name a cupcake, I'd name it lemonade, or I'd name it, you know, a magazine that I didn't buy over time, all of that built up as savings. But I could always go through my transactions and see what it was that I sacrificed in order to save the value of that item. So I would say the first step is you're not spending even if it's trickle but to save, you do need to still do the second step and put the money aside somewhere else.
Blaize Pengilly 27:55
And I suppose it's all in the name, isn't it? Buy nothing, now that I think about it. Of course, it's really right there and it kinda means Buy nothing. Yeah, yes, that's right!
Dan Jovevski 28:03
Natasha, how does somebody get involved in a love group? Where's the best place to start? And how can they go about doing that?
So with the buy nothing group, it does run on the Facebook platform, you will need a Facebook account and you will need to have your messages open. So you can't have private like closed off, you can't have that. Because we need to be able to communicate with you through that to join the group. If you head to the website, buy nothing project.org that is your first port. Once you're there, you'll see a link to joining a group. It'll list all the current groups globally. Being in Australia, we're lucky because we normally at the top of the list. So go ahead, drill down from there and see if there's something local. If there isn't anything local, follow the links to starting a group. And if I can sincerely ask anyone out there who feels like this could be something definitely for them. And if there is no group in your area, please have a good think about starting a group. Because admins like members need to be local. A group cannot start unless someone locally kicks it off. Going back to being a member. If there is a group, click the link, hit join. It'll go to your local admin team that run the group. And now quickly, make sure those three things you're writing you're definitely in the local area and you're not part of any other buy nothing group, you can still be part of your street bounty groups, you can still have you pay it forward groups, and any other local notice. Notice board type groups, but only one buy nothing group per Facebook profile. Also try and join as yourself if you're joining as a business profile on Facebook, that might not be let through. Once you're in the group, just have a quick read of the guidelines. They're pretty straightforward and have a look also at what's been going on. We're also one of the groups that don't delete any posts. So when an item has Being gifted, the person who posted will change and say gifted or taken. We also try not to use words that are like sold or acronyms like loot or abbreviations like next in line. And I'll, we try and make sure that the language is pretty clear. And it's not like some clandestine, secret society. And it's not this kind of quick, rough transactional environment. Like I said, we do like things to sit in marinate for a bit, we do like to start a few little conversations back and forth about the item and how the item has served one person and how it can serve the next person. But your admin will guide you through that. So yeah, come and have a look at your local page, see what's going on and take a dive, post something and ask a gift. And if you've had a really great transaction, we also like gratitude posts, it's really great to see people moving on with items showing pictures of how they're being used. I recently received some plants from someone who was moving out of the area, and I was able to post up a new arrangement of those plants in my back garden. And that was nice for that if to to see that their plants have found a new home while they were still moving and dealing with lots of cardboard boxes, but their plants had found the new home.
Dan Jovevski 31:23
Natasha, that's absolutely amazing. As you were talking, I just completed my registration. So I'm gonna be part of my hopefully, Work Project here in Perth. So that's amazing. And I was just using the podcast right now, it took me literally 30 seconds to check in those details and be involved. So that's awesome, Natasha.
Blaize Pengilly 31:42
Natasha, thank you so much for joining us on the way talk sense podcast. That was really, really fascinating. I'm excited by the project. It's at on behalf of We Talk Cents. We thank you for joining us and talking and sharing with us today, your knowledge about the project. And also on behalf of your local community. I'm sure they would be thankful as well. And as someone who was a part of it did live in Newtown, I'd like to thank you as well for running the group and dedicating your time so that the community can access this awesome resource and and share with it with one another. Natasha, if our listeners want to find out more about you, where would they go?
They can contact me through my website, curate your life. So the word is cure. Then the number eight, your life.com. And you can send me a message through there if you're interested to just reach out and chat about Buy Nothing or if you might need a little bit of help navigating the whole decluttering scene.
Blaize Pengilly 32:20
Awesome! Thank you so much for joining us, Natasha, you have a lovely Christmas and happy gifting.
Thank you guys!
Blaize Pengilly 32:49
So the buy nothing project, what are your thoughts?
Dan Jovevski 32:52
Blaize, I cannot believe that this such a well organised community not only just in Australia, but globally, that adheres to some pretty good principles on making sharing items, a community affair. And I think what Tasha shared with us today is absolutely incredible. Because how many times do you get stuck in to pick all your wish, you could get something in your life, you nearly get something down, you need to buy something and it just becomes all too hard. And something as small as a blue tack, like a piece of blue tag. If people are getting together and share this stuff, I think the world could be your oyster with the violin project. So I'm actually very keen to get involved. I'm waiting for the admin as we speak to let me into my local group so I'm excited to get started How about you?
Blaize Pengilly 33:43
Do you know what I signed up when it when I knew we were chatting to Natasha I signed up to my local group here in Perth and last week I needed some coat hangers because I've decided to you know it's springtime beside to Marie Kondo my life while springs on my server so I'm had to jump on the train pretty quickly. And I got a whole bag of coat hangers and this might seem like a small thing. But they were all exactly the same. And I was like a luxury who has completely a set of matching anyway, current news with a small thing. It was it was just setting sitting there collecting dust in his lady's household. And then for me, it's something that I don't have to buy and eight minutes It was an eight minute round trip from my house to her house. Pick up. Thank you Goodbye. And now my room is halfway there to being in a liveable state.
Dan Jovevski 34:35
Incredible, incredible Blaize.
Blaize Pengilly 34:38
Yeah, I love the gifting aspect. I love the sustainability. I love the community aspect and that it's keeping stuff probably out of landfill. Yeh, I love it all buy nothing way to go. Now, Dan, I know you a big radar or I guess I should say listener because I know you're big audible fan. Dan, if you were to take a guess, at what the best selling books have been in Australia, or the best selling book in Australia has been over the past decade, what would you guess?
Dan Jovevski 35:13
Blaize, I think we've got a little bit of insider knowledge on this one, because that's a topic that we love. But who would have thought that a book about managing your money would capture the imagination? I don't know what the letters numbers are. Maybe Blaize you can let us know. I'm guessing it's about was at 1.21 point 3 million copies of that's sold so far.
Blaize Pengilly 35:36
Mate, Dan. Okay, first of all, the actual Just so you know, the highest selling book in Australia in the last decade is actually 50 Shades of Grey.
Dan Jovevski 35:47
Blaize Pengilly 35:47
But! The second highest selling book in Australia in the last decade is of course, the Barefoot investor budget. And it's almost sold nearly 2 million copies. so..
Dan Jovevski 35:59
Blaize Pengilly 35:59
cheeky 800 sell off, off your off your estimate. And the Guardian even says that they they think there's one book in every 20 Australian households, which is just, that's mayhem. That's a lot. That's a lot of books. We've mentioned the Barefoot investor many times before on the show. And it's really popular book recommendation with the guests that we get in as well, which is awesome. So we thought we'd round out the mini budget breakdown series we've been doing over the last couple of episodes with what we have dubbed the gateway drug for personal finance, enthusiasm. So it's of course, the Barefoot investor written by Scott Pape. And what I love about the book is that it's easy to read. Scott is just your regular as he dude, he's not some stuffy finance guy. Like he does know about finance, but he's relatable. He's it's not stuffy and full of jargon and fun, the love, you know, it's it's easy to read, easy to digest, and which makes it really accessible for everyone, which I guess is a testament to why it's been so popular and such a such a good seller. The book has a lot of information in it. It's got useful tips about your super your bank account, loads of different things insurance included, but today we're gonna focus purely on how the budget works. Dan, have you read the Barefoot investor?
Dan Jovevski 37:16
Blaize, I've listened to the soothing tones of this is Scott pipe on Audible. And the second edition, and I did that only this year, for the very first time I did skim read the book, I do have a copy at home. But I feel like the audio version really brought it to life. And I really wanted to remark on for those who haven't read the book, and your nerves, probably the dwindling few number of Australians that haven't. But the story that Scott shares at the start of the book, I think really sets the scene around the importance of money management and to your point plays, he has really captured the imagination of a lot of young Australians in his pursuit of being hyper authentic, getting straight to the point, and really just having real talk about the conversation about money. And I think a lot of people have related to that he does present his way as being independent. He's not afraid to even go after the banks as well, which is awesome to see. And just the simplicity of the approach. And just the common sense, I think is part of the successes that Scott has had with the with the Barefoot investor, he has always just become, you know, part of the Australian furniture right now, in terms of all the people that we have in our lives. So yeah, I'd love the book. And I would highly recommend it to anybody that is looking to take their first step into understanding a little bit more about money.
Blaize Pengilly 38:38
Yeah, awesome. So for anyone who's listening and hasn't read the book, let's take a look at how the budget works and hit like how the book works and how the process works. So this is a little bit different to the other budgets that we've covered. So the first step of the Barefoot investor is to set a date night and create new bank accounts, which is a little bit unusual. With all the other budgets we've looked at. It's been like look at your The first step is usually look at your income, look at your expenses, Scott has a really different way to approach this. And I think that's a part of a testament to the success of why this budget is so popular, because he really takes finance and makes it less boring and more relatable and easier to access for other other people. So step one is set a date that he goes through how it's likely that you've already got one or multiple bank bank accounts that you pay fees on. So his suggestion is take yourself out to dinner. And the first step is to set up five bank accounts that you will never get charged for fees on ever. So he provides a couple of recommendations in the book. And with the five accounts to that you're creating it every day transaction accounts to an online savings account and one is an online savings account with eight different bank.
Dan Jovevski 39:53
Blaize, isn't it hilarious? Everyone's probably been in the situation you're going is a Coles or Woolies and you are waiting in line. And somebody pulls out their wallet or the purse and open up that flashy orange ID card with a piece of masking tape on top of it. And you know, they're one of the one of the in crew of Scott papes disciples that have read the book and really living the mantra of the investor. Every time I say that I always always find is having a conversation with somebody. And I realise it's probably going to be a bit creepy at the checkout
Blaize Pengilly 40:29
Well, you know, it's the Barefoot it the Barefoot bag Giovanna having that yellow, orange iMj card? Yeah, have seen them this pledge cards and smile cards come out. And I will say I am guilty of having two of his cards myself. However, I haven't labeled them yet. But yeah, the IMG account is Scott's recommendation in the book. So yeah, that's step one. You set up the accounts with a bank that pays charges, no fees on your accounts, then what Scott's next step is, is to on your next date night is to and by the way, the purpose of the date night is that and I completely agree with this I wholeheartedly had on heart 100% agree with this is that finances are better with garlic bread and wine. And that's Scott's opinion and I, I could not agree more. So that's the premise of the dates. So step two on date number two is to divide your income into buckets. bucket number one is your blow bucket. bucket. Number two is your mojo bucket. Number three is your grow bucket. When it comes to understanding the buckets, it's dividing your income. So this isn't dissimilar to what we've looked at in the past with the 50 2030 model and the 60% solution. However, with Scotts method, the blue bucket is 60% of your income. So this is your daily expenses like your housing, utilities, you transport food, insurance, cetera. And then it has your mojo bucket. So your mojo bucket is the equivalent of your emergency fund. It's just got away cool in name, Scott's just starting with $2,000 in this account, and watching it grow over time. So this isn't a high interest savings account. We've discussed on the podcast before different ways to come up with that kind of money. And you can side hustle, sell things on eBay work over time, pick up a second job, whatever it is, he's really enthusiastic about getting two grand to start off into your major account. So then you have that safety net. Like we discussed in their emergency fund episode, you have that safety net so you can relax and not be so stressed about your personal finances. If something does happen to go wrong. You'll be prepared. The third bucket is your grow bucket. Dan, can you take a guess at what the grow bucket is for?
Dan Jovevski 42:43
Blaize, my mind is getting a little bit fuzzy now as we're approaching December. But the term grow I'm thinking trees and thinking sprouts and investments and things like that. Am I right?
Blaize Pengilly 42:53
You are correct. It's to start your own garden centre. So Scott's method No, of course not your growth. Your growth bucket is exactly about that it's about growing wealth. The citizen Goody super fund is a savings. This is investments. This is money you putting aside to grow and really prepare for your financial future. Now, step three, step three of the Barefoot method is to put it into action. So this would be leaving 60% of your take home pays, that's your pay after tax in your daily expenses account. So this is this is where you combine this, the steps and the buckets with the bank accounts that you set up on your first date. So 10% of your pay will go to your splurge account. And this is for all my favorite things is concert tickets brunch, however you'd like to spend it, you've got 10% towards your smile account. And I love the name of the smile account because this is your short term savings account. So it could be for overseas holidays for an upcoming wedding for an upcoming event. It's the account where you put your money into and you sort of give it makes you feel happy smile because it's something to look forward to. So that's where 10% of your income will go. So that's 80% of income covered. The last 20% goes to your fire extinguisher, which is your online savings account. Now fire extinguisher is to extinguish debt fires in your life. So this may be paying off debt or paying off a mortgage or it might be for something bigger like saving up a house deposit. The final step is dominating your debts. So we'll leave it here because the like I said earlier, the Barefoot investor style budget has a lot of steps and so many tips out of the book and it really is a valuable read. However, we're focusing purely on the budgeting and the breakdown of the finances in this in this episode. So we might look further at his different techniques in a later episode. But Dan, I'd love to know you're the finance expert here with the setting up of The accounts and the division of wealth and how you're spending your income and the way that he divides it with 60% in daily expenses, 10% to splurge, 10% to small, and 20% to fire extinguisher, as well as having that safety net of the Mojo. What are the pros of this budget? What are your thoughts about it?
Dan Jovevski 45:18
Blaize, I might be a little bit contradictory because this almost sounds very similar to what we had before with the 60% budget. And it's very similar approach here where we are splitting expenses to certain categories. I think skon has made it a lot more simpler. And he's also created a bit of fun to go with budgeting. And it's not a chore, it's actually you putting labels on certain accounts, and then having discrete percentages that go to certain areas. And so I think what Scott has done here is really taking the most simple approach to organising a budget, putting into percentages, and then making sure that you achieve your goals for splurging, having fun, setting up your short term savings and then saving up for a rainy day. And that is really the some of the biggest ingredients of financial success. If you can manage your money and allocate dollars to the right areas. And I Yep, I absolutely love it. I think a lot of Australians do like it as well, by virtue of the fact that people are actually using it and more importantly Blaize, sticking to a budget and then making that a habit. So I think he's an awesome job.
Blaize Pengilly 46:29
Do you know what I like about it? It's, it's kind of Scott makes budgets sexy. Like, if you pair it with garlic bread and wine, like come on, like I'm totally there. So what I like about this style, is that it's really comprehensive. Yes, I agree with you. It's very similar to the 60% solution that we discussed, however, because it's so comprehensive, and he literally tells you the bank accounts to create how to split your money. The step by step strategy of it makes it so easy. And so like its simplicity is everything. It's simple to follow, then you do it and like you say, you'll stick to it. And what's a budget unless you're gonna stick to it. If you create a budget and you look at it for one week, one day, one month, it's not really that useful. If it's something that you can easily adapt to your life. I think that's really, he's on to something really, really good. Yeah. And like, every other budget that we've discussed, my one of my favourite things is that it gives you permission to spend money on fun things. So I think having that splurge account and naming it splurge, having the permission to do that and spend your money on something is Yep, brilliant, it that that ticks all my boxes. Dan, are there any cons you can think of, for this budget or for the Barefoot investor style?
Dan Jovevski 47:46
Blaize, the Barefoot investor budget is a great way to start your budgeting journey, because it's so simple to follow, as you've just said. But for those who are looking to maybe progress to a more aggressive style budget, where they're looking to really start honing down on the allocation of all of those dollars, it probably isn't right for you, if you're chasing, say financial independence, this budget is probably for an individual or a family or a couple that is looking to live a very normal life, but become financially secure, right now and into the future and really sort out their their finances. If you're a person that is chasing the financial independent, retire early, or if you're a fiery, as it's called, then this budget may not really scratch that age, because you may want to become more aggressive in say, your investments, as opposed to really living off the scent of an oily rag, as opposed to you know, allocating say, 60% of your dollars towards normal living expenses. So that would be one of the potential cons, the only other one that I can potentially think of plays. But now the more I think about it myself, I actually think it's a pro. Where, because he got so many different accounts to manage, you know, sometimes that complexity can get really sort of high. And you often have to remind yourself of transferring money on certain days. But as I was thinking it through, it's actually a pro because that additional friction, and that step can help you become more discipline, instead of taking money of say, out of your fire extinguisher account and putting into your splurge account. That additional step requires a confirmation in your internet banking, and adds that guilt factor that you may be actually allocating the money for the wrong reasons. So I might just circle back with a pro there Blaize because I think that's actually something thats really good. How about you?
Blaize Pengilly 49:34
I can't! To be honest, I can't really think of any cons for if you're if you if you want to adopt the method, and you pick up the book, when I did it. I took up the Barefoot investor style budget at the start of 2018. And then I sort of let it go by the wayside. So one con would be it's not really a con it's more the person, your approach to it. If you're going to do it, do it. Pick up the book, do the easy steps and follow through. I had several things going on in my life at the time that I tried to start it. So I couldn't dedicate enough time, even the weekly date nights, or after the first four I couldn't commit. And then having re looked at it again, it's definitely something it's great. Like, I think it's a really good budget. And yeah, the only con would be, you do have to set aside the time. But that's the same with anything. If you want to get something good out of something you've got to put the time you've got to put effort in, then this is the final stuff on our journey of the mini budget breakdown series. So I'd love to know, taking a look back at all the different styles of budgets that we've looked at. What are your thoughts as a whole? Do you do you have any final thoughts on on everything that we've looked at? And all the different budgets? We've discussed everything from the 60% solution to the cash only the envelope, zero based budget? What are your final parting thoughts?
Dan Jovevski 50:59
Blaize, my final parting thoughts would be is that we've covered a pretty wide range of different budgets, the principles are more or less the same. It's about getting to the point of developing a habit so you can help achieve your long term financial goals and also your short term goals. And I think there's gonna be something there for everybody, in terms of what approach might work for them. If also say what is my personal favorite, I think the topic that I'm really getting really interested about is zero based budgeting approach with every dollar as a job. I think there's just something that captured my attention and imagination, where if you think about each every single dollar as being a little worker, to help you achieve your goals in life, that to me just has a lot of residents. And I think some some of the most dividers we've discussed in this miniseries have had that very similar approach, but that that particular style of budget for me, has been really resonant. How about you Blaize?
Blaize Pengilly 51:54
My final thoughts would be overall, I think most of the budgets we've been have looked at a pretty positive and do have really good, they're good takeaways you can take from it. Unlike you, I didn't really like the Zero Based budget, because it doesn't suit my style of managing things. And it doesn't suit my personality. So I guess from taking a look at all these different variations. The biggest, the biggest takeaway I have is not just having one giant account where you have all your money coming coming in and out of it. Taking a look at where you're spending your money, tracking your spending, if that's that's what you require for your budget, and really dividing it and giving maybe not every dollar a job, but giving portions of your income jobs, whether it be for your emergency fund, or whether it be for investments, or whether it be for your daily expenses. I think the division of funds is really important. And yeah, focusing on that and not having one giant pool to take from would definitely be my biggest takeaway. And just in regards to Scott's book, you know, if it's a best seller, he must be doing something right. So the Barefoot investor budget is something that takes you fancy, and you really want someone to hold your hand through becoming better with your personal finances. I think he's Scott's relatable steps that are super simple is definitely a great way to go.
Dan Jovevski 53:17
Thanks to Scott. If you're out there listening to our podcasts, we would love to have you on the show to hear from you firsthand.
Blaize Pengilly 53:24
Yeah, Come join us Scott, Mr. Pape, come on down.
Dan Jovevski 53:32
Thank you for tuning into We Talk Cents! If you like the show, please head to Apple podcasts and leave us a review and rating.
Blaize Pengilly 53:39
If you've got any questions you'd like us to answer or any feedback about the show, feel free to get in touch through the Instagram @getwemoney. We'll be back next week for more money chat. Adios!
Dan Jovevski 53:50
The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.