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Empower Wealth Blog post by Empower Wealth

MyWealth Portal Tutorials : Money STRETCH

Did you know?

The average Australian household has just four and a half months of savings before their money runs out! That’s right, the average household has only $28,602 in savings, yet spends on average $74,301 a year (source: finder.com.au and ABS 2016 census data)

Introducing MoneySTRETCH

A self assessment tool that helps you work out just how long money will last if your income were to change.

How it Works?
Step 1 : Log in to MyWealth Portal and establish your baseline scenario. Import your live MyWealth Portal income, expenses and lending data from your MyWealth Portal using the IMPORT LIVE DATA button below. This will give you your MoneySTRETCH baseline reading.

Step 2 : You can now play around with your figures. Each time you adjust either an income, expense or lending figure, you will see the changes it makes to how long your money will last.

TIP: To get the most out of this money insights feature on our platform – do your best to separate essential from discretionary expenses, as this will show you how far your money can stretch, if you needed it to. This hopefully gives you peace of mind and highlights just how important it is to be across your money as well as having a money management system that you put in control.

So what are you waiting for? Log in to your MyWealth Portal and try out MoneySTRETCH today! Click here to log in.

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Transcript:

Hello, everybody. Ben Kingsley here. Really excited to be showcasing this tutorial around MoneySTRETCH. So, many people have come up to us over the journey and all of the advisory work that we do, and there’s one big observation that I’ve had around that story and that is, people don’t necessarily know how long their money will last them if something was to happen to their income, and that is a critical thing. Ultimately, if there is a change in income, it’s really important to know just how long your money will last. Well, that’s why we are thrilled to introduce you to the MoneySTRETCH application, the tool inside the MyWealth Portal that is going to showcase to you very simply and easily in terms of how you can build awareness and confidence in how long your money is going to last. So, without further ado, let’s get a look at this now. Here we are on the main dashboard and we can see here, there’s a couple of ways in which you can get there. So, there’s obviously the MoneySTRETCH.

So, this is taking us into the application, and you can also see, we have navigation across the top here where you can move between what we call our Money Insights areas of the MyWealth Portal, such as our famous Money SMARTS. Now, if you want to learn more about Money SMARTS, there are further tutorials all about our MyWealth Portal on this page. So, feel free to move around and have a look at those things. We’ve got MoneyFIT, which is a money comparison, and ultimately the MoneySTRETCH. Now we’re going to introduce you to this couple. So, it’s Financial Piece One and Financial Piece Two, and what we’re going to do, it’s very, very simple in terms of how this works.

So let’s start. Here is our navigation bar, and we have what we refer to in here as all of our LIVE data. So, if I was to click on here, I could move into bills and spending and borrowings. If I was clicking in here, I’d be moving into property and other assets. And then if I clicked on here, I’d be taken into the income. Now that’s the genuine LIVE data area. Now, as you can see here, two simple steps. What we’re doing is we want to move that LIVE data by clicking on this button. It says over here, by using this import LIVE data. Once I click on this button, I get a nice little notification on here to say that all my data has been bought across, and now effectively I’m playing in a sandpit. It’s not affecting my LIVE data over here. This data is now, for me, free to play with in terms of learning just how long my money will last me in the event that I have a change of income.

So, what we’re going to do first is have a look at some of the graphical presentations, and also, some of the input fields. We’ll start firstly with the graph. Now, what we can see here is three different areas. We can see what’s known as “Current Spending”, what’s known as “Baseline” and what’s known as “Essential Spending.” Now, for those of you observing, are you wondering, “where’s the third line?” Well, it’s actually sitting behind the baseline, because we haven’t changed any of the data yet. So, I’ll show you that in a minute. And then I’ll talk you further through the changes that are going on here. Now, we all know we’re talking about money into the household, and then we’re talking about money leaving the household when it comes to the expenses. So, money-in and money-out. This information has come across this couple, so Financial Piece One and Financial Piece Two, are both earning $60,000 gross, and the tool is smart enough to take out the tax because obviously we can’t spend the tax man’s money. And so we have those figures here.

So, we can see the monthly money-in. Our net is $8,167.50. Now what we’ve also got here is a little interactive awareness tool that sort of shows us just how long our money is going to last us. We haven’t finished in terms of showing you the money available. Remember that how long your money will last you is a combination of money coming in, and what buffers and cash reserves you have in place. Now for this particular couple, they have $5,000 in cash reserves at the moment, and no other funds available to them. You can see also here that the loan repayments, they have a credit card and a personal loan is $940 in monthly commitments at the moment, and then we can see their bill payments, which are essential and discretionary, and we can also see their monthly spending, which is also broken down in a central and discretionary, and we’ve got some navigation bars here that I’m going to talk to you about shortly.

So, overall with the money coming in, which was the $8,000 and the money going out, we have $1,810 of monthly surplus. When you read here, it says, “How long will your money last you?” Well, there’s ample reserves of 36 months or greater. That’s because we’re not going into negative. We’re basically obviously bringing more money in than we’re actually spending, and this leads us to having a conversation around what happens if one of us was to experience, say, a job loss, or moving to, say, four days a week given these certain economic times. So, we can now start playing around with just how much money you’ve got coming in, and you can see the graphs are starting to adjust in terms of what that actually means in regards to savings and essential versus where our money’s going to last us. So, I’ll reset this back and start to explain what’s actually happening. Let’s just pick a moment in time. So, let’s go here in terms of month 10.

Now month 10, what we’re looking at is if we only spent our essential spending, meaning that we cut back on current spending and only used the essential amount, which is the $5,100, as opposed to the $1,166 that we’ve got as discretionary spending. Of course, what’s going to happen is, our money is going to last us longer. So, we go back to the example. You can see that if we did cut back, because our situation had changed, we would have $34,000 in terms of available money at that time as opposed, to obviously, if we were to continue to run our baseline with those changes, and the current spending we were doing, that would be impacted by that particular story. So, the more that our income gets affected, and let’s say, both couples have a situation where they lose 20% of their income, we can basically see what’s going on here. Now this line here was originally our baseline, so if nothing was to happen to us, that money would still be moving through. So, we want to measure against baseline. And then this is our current situation.

So, all of a sudden, our money is you’re starting to dwindle, but we’re still building up those reserves. So, if we both lost one day a week of work, we would still be able to still meet our current commitments, but if we took that, say, to 60% for one of us, we can start to see what’s happening in terms of those reserves. Now, if we kept that current spending up, then technically we would only have around seven months of reserve and you can see that coming down here. So, as we move these numbers around, we start to get an indication of just how long our money was going to last us. Now, you can see that with current spending. If we were to remove that discretionary spending, then ultimately we would be still making money based on that household income that’s coming in.

So, you can just see how successful you can be as a household. If you really do start to focus in on essential and discretionary spending, which is a nice little segue to now open up the sandpit into a bigger format. Over here, we can start to see how we can play around with these numbers. So, you can see here, I’ve opened up the bill section. And so, if I wanted to review each expense item, I can adjust those into essential and discretionary, and by adjusting the frequency, the tool will automatically calculate those adjustments and the same applies for my spending. If I wanted to reduce my bills down, or maybe focusing on a lot of my discretionary spending, which might be in holidays, dining, recreation, those types of things, you can see that I can take all of that information and I can move it around. The more I move that around that will effectively adjust the overall outcome in terms of what’s happening here.

So, it should give you some confidence and awareness around how you can look at those particular numbers and then see for yourself exactly how long my money will last. Now we’ve had record numbers of people taking money out of superannuation, because they’re trying to build these buffers up. The best way in which you can build or make your money last longer is to look at those spending items that you’re doing down here. So, remember, you’re in a sandpit here. This means, whatever you’re changing in here, isn’t actually affecting your LIVE data numbers. Now that said, one of the other great little features that we’ve put inside the tool that if you did want to push that data and make those changes, you would be able to publish that into the LIVE data section if you’re saying, “Okay, I want this to be our new budget, or our new target numbers.” You can simply save this data, and as you say, those changes, you would then be able to publish that into your LIVE data, set.

A tip here, if I can, I wouldn’t publish straight away because you may have your Money SMARTS running, and that would obviously impact your Money SMARTS. Play in the sandpit until you feel really comfortable in terms of what you’re going to be using that money for. And then once you feel really comfortable, you can play around with your data sets by moving that income, and then start working with your expenditure so you can get a good feel in terms of how long your money will last you. So, that wraps up our tutorial in regards to our brand new feature, which is MoneySTRETCH. If you want to learn more about the power of the MyWealth Portal, including our very popular Money SMARTS money management system or how MoneyFIT are you in terms of comparing yourself against your peers, all of those are in the tutorial videos on this page as well, below this video. So, check them out, get familiar with it.

The MyWealth Portal is free to use. We want to educate people so they can become aware of their cash flows and build confidence so they can take action, because remember knowledge is empowering, but only if you act on it.

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