Video: Scott Pape's start your working life money challenge

Starting work money challenge

Video transcript 

Welcome to the Barefoot Investor's 60, 60, 6 challenges.

Helping you get more money smart by the minute.

60 second challenge

Part of becoming a wage-earner is taking control of your money. Do it now and you'll have this ritual for life and you'll be able to use it to build real wealth.

This challenge takes one call. Phone your pay office and ask them to give you all your employment details. You need to know how much you're pulling in each payday, how much is going to super and whether you've started to pay any higher education debt that you might have.

Now, you might also find some of this info on your payslip. Now, you don't need to start paying back your higher education debt until you earn just over 50- grand per year, but you do need to declare to the tax office that you have a HECS-HELP debt. This is usually done on your tax file number declaration when you start a new job.

60 minute challenge

You can't really understand your finances unless you devote a bit of time each week to keeping them in order. But who said it had to be hard?

Just do what I do: First, I want you to find an empty shoebox. Next, buy a packet of bickies or whatever treat takes your fancy. Then, put all your bills for the week in the shoebox. Okay now I want you to put the kettle on, and make yourself a cuppa and go through your bills. Pay the bills if possible, or work out exactly when you'll need to pay each one and put the payment date in your diary.

If you do this little 60-minute ritual once a week, at the same time each week, I guarantee you'll not only get on top of doing your weekly finances, you'll even look forward to it.

60 day challenge

Now this may sound strange but for the first part of the 6-day challenge I'd like you to go out to a restaurant with your partner or a mate. While you're there, get a serviette and a pen and draw a tap with three buckets under it. Label them 'Blow', 'Mojo' and 'Grow'.

That's exactly what I did with my wife before we were married and it's become famously known as my Serviette Strategy. And now I'm going to share it with you.

Okay, so how much you devote to each bucket will vary depending on your situation but what's important is setting all three up and giving something to each one each payday.

Now, for most people, their Blow bucket is their one and only money bucket - wages come in, money goes out and hopefully there is something left over to put towards saving and long-term wealth. But there's nothing systematic about it.

Your Blow bucket is an everyday transaction account I want you to use to pay expenses like bills, food and your mortgage or rent. But the problem is, it has a hole in it - every dollar that you pour in ends up leaking out the bottom.

That's why you need the other two buckets.

Now, your Mojo bucket is simply a high-interest online savings account. Work towards keeping your Mojo bucket stocked with at least 3 months of living expenses or a quarter of your annual pay.

The final one is the Grow bucket. Now the aim with every dollar you pour into this bucket is to compound your money, hopefully doubling your dough every seven to ten years. Now, there are actually three parts to the Grow bucket - superannuation, shares, and property investments. And if you can devote money to each of those three things your wealth will grow safely and surely over your career.

You can use MoneySmart's Budget Planner to help you work out your goals and how much to allocate to each bucket. 


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Last updated: 09 Aug 2016