Mar 15

The Power of a Zero-Sum Budget

Posted by Peter Marmara-Stewart at Friday, March 15, 2019

In our last article, we discussed the power of budgeting. In this article, we explore my favourite way to formulate your budget. It is called a Zero-Sum Budget.

The Power of a Zero-Sum Budget

In the midst of the many articles on budgeting systems and strategies, a less publicised (but equally important technique) is the Zero-Sum Budget. This strategy involves "spending" every dollar that you make. However, you are not 'spending' your money in the usual sense of the word. In this situation, it refers to allocating your entire earnings into appropriate categories. The following steps demonstrate how you can apply this kind of budgeting:

Step 1: Determine your Single or Combined Total Salary

For most salaried workers who are paid on a monthly or fortnightly basis, this step is simple. Others may have to put in a little more effort if pay is based on an hourly rate, or particularly irregular. Try to work out your income as a monthly amount - you can then use the strategy of paying for next month's bills using this month's income. By always being "one month ahead", you will find your budget much easier to plan and keep track of.

Step 2: Itemise Your Bills

Once you know the total amount of money coming in, your next step is to work out how much you need to spend next month for bills, groceries, everyday expenditures, etc. Be aware that some things may be yearly or quarterly expenses. Try and include everything you can think of, as the more accurate it is, the better your budgeting will be. Please find below an example list for your reference:

- Mortgage: $1,426
- Fuel/Miscellaneous: $200
- Electricity: $200 (estimate)
- Mobile Phone: $55
- Gas: $25 (estimate)
- Internet: $35
- Groceries: $500
- Life insurance: $77.31 (paid quarterly)
- Daycare: $500
- Rubbish: $56.25 (paid quarterly)
- Health Insurance: $377

Total: $3451.56

Step 3: Compare and Contrast

Once you have listed your income and expenses, you will notice how much is left over. How is this money currently being used? You may realise that you are wasting it on things you do not really need, or you may be gradually saving it. Regardless of what you decide to do with this money, the point is, you now have the knowledge of how much is left and can therefore make an informed decision on what to do with it.

For example: If a couple had a net income of $7000 for the month, a zero-sum budget may look like this:

- Mortgage: $1426
- Mobile Phone: $55
- Electricity: $200 (estimate)
- Health Insurance: $377
- Gas: $25 (estimate)
- Life insurance: $77.31 (paid quarterly)
- Groceries: $500
- Rubbish: $56.25 (paid quarterly)
- Daycare: $500
- Short-term savings: $1500
- Internet: $35
- Long-term savings: $1500
- Fuel/Miscellaneous: $200
- Holiday Fund: $548.44

Total: $7000.00

This strategy may also bring to your attention that you are actually spending every cent you earn. In this case, you might need to start considering the things you could live without. Some possible items you could cut back on are your pay TV, eating out, or excessive entertainment spending. Remember, everyone's lifestyles and priorities are different and it is up to you how you allocate your money.

Step 4: Make a choice and stick to it

Once you know your excess cash flow, you can decide what you would like to do with the extra money. You might decide to pay off some debts, save, invest or put it towards a financial goal. The only trick is - if you decide to allocate a certain amount of money somewhere, stick to your decision and put it there straight away to avoid spending it on something else.

Step 5: Keep on top of your spending

It is important to check in every now and then throughout the month to make sure you are not spending over your self-allocated limit. Try to stick to the motto, "when it's gone, it's gone". It may be painful in the first few months, but it can be one of the best ways to create good habits.

Step 6: Make Adjustments

It can take a few months before your Zero-Sum Budget is working efficiently. Do not be concerned if you have to make adjustments, as it is all part of the budgeting process. As with anything, you will become more aware of where you may need to allocate more funds to, or where you can easily shave a few dollars off here and there.

Don't Forget

One last (but very important) part of your Zero-Sum Budget is an emergency fund. This is crucial in circumstances such as an unplanned medical emergency or car issue, and will allow a bit of leeway so that your whole month's plan will not have to be abandoned. Just remember that when you have tapped into these funds, try to replace them again as soon as possible.


The power of using Zero-Sum Budget is that it allocates all of your money, so the opportunity to spend it on things that you don’t really need is no longer there. It helps you focus and prioritise. If you need help with your budgeting, call our office to make an appointment with one of our Team on 03 5134 1778.

Mar 08

3 Reasons Why Personal Budgeting Is Brilliant, Not Boring!

Posted by Peter Marmara-Stewart at Friday, March 08, 2019

If a business owner said to you that they run their business without a budget, what would you think? You would think they were incompetent! Or perhaps lazy, or even both?

What do most families do?

When you think about it, a family is actually like a mini business. There is income, expenses, and hopefully, something left over to invest and to enjoy.

So why don't most families operate to a budget?

After all, a personal budget helps you to see your financial direction, and helps you stay (or get back!) on track. It is a great comfort.

One reason some people do not put together a budget is because, it makes them feel overwhelmed, or too busy, and leaves them feeling like life is too complex to keep track of all that.

Well the good news is, we can hold your hand through the process, which in turn, makes it easier for you.

Before we look at the 'how' aspects, let's consider 3 more reasons why a personal budget is such an important tool in helping you achieve your financial goals and dreams.

1. Most of your money is already spoken for long before you get it

The money you earn has already been promised to keep the electricity on, make the loan repayments, and pay for the insurance. What most people don’t realise about budgeting is that, it is really honouring the commitments you already have.

Now since we are all honest people and plan to pay these bills, the first step is to track these bills, and see what is left over for your day-to-day living.

2. Your day-to-day living money is spread all over the place

Some of your day-to-day living money is in the bank, and some is in your purse or wallet. Some may even be with your partner or children, if you have them.

You need a simple system that allows you to track day-to-day expenses, such as fuel for your car, shopping, and discretionary spending expenses.

We do not suggest you try to keep track of every cent of your day-to-day living money, as this would provide little benefit for the amount of effort that would be required to obtain that level of detail.

Instead, you need to identify your main day-to-day expenses, and make allowance for all other minor day-to-day expenses.

Here's a key: You need a system that is so easy to use, that you keep using it. You can track the day-to-day expenses by entering them into a spreadsheet, or better yet, use a tool like MyProsperity. MyProsperity can automatically pull in bank feeds, which can save you a lot of data entry.

3. The Number 1 reason people give up on their budgets is that they don't have the right attitude

It is ALL in the attitude!

Have you ever attempted to budget and given up in frustration? What is the reason your budgeting attempt failed? What will make you stick to it?

Think about this…

One of the reasons, if not the top reason so many people give up at budgeting, is attitude. If you think of it as a penny-pinching sacrifice instead of a means for achieving your financial goals and dreams, how long are you likely to stick with it?

Think about the difference between going on a diet, and eating healthy. One is negative and restrictive; the other is positive, and allows you to indulge every now and then while still achieving your goals.

To increase your chances of success, work on your attitude first.

Many people refuse to budget because of budgeting's negative connotation. If you are one of those people, try thinking of it as a 'spending plan' instead of a 'budget'. Once you have attempted to budget and failed, the bad feelings associated with any type of failure can keep you from trying again. Don't give up!

The cold hard reality

Let's face it. Money is a tool that enables you to reach your goals in life. But the cold hard reality is that, until you know where your money goes, you cannot make conscious decisions about how to use this tool effectively.

A budget (or spending plan!) shows you exactly where your money goes and provides a clear plan. It also lets you save for the things that are important to you, like a new house, a new car, a comfortable retirement, a tertiary education, high quality health care, travel, or whatever your particular goals and dreams happen to be.

Now that is exciting!

Whatever YOU decide you want to achieve and save for, you can. All you need is the right attitude, a goal to aim for, and a (spending!) plan.

Avoid This Pitfall

There are several universal budgeting concepts that every successful budget will include. But one of the most important features of a successful budget is, for it to be easy to use and suitable for your needs.

Trying to use a generic, complex, one-size-fits-all budget won’t work. A simpler approach makes it easier to stay committed. If you stick to a realistic and effective budget long enough, the rewards will keep you motivated. In the meantime, do whatever it takes to keep yourself going.

To summarise, the 3 steps for effective personal budgeting (spending planning!) are: Build a Budget, Track Income and Spending, and Compare Budget to Actual. Once you start budgeting with a positive attitude, you will see the difference a budget (or spending plan) can make in your life. Your next step is to call us on 03 5134 1778 and organise a time to have a chat. We would love to discuss this with you further, and help you to get on track towards achieving your financial goals.

Feb 26

Accountability - key to achieving your cash flow goal

Posted by Peter Marmara-Stewart at Tuesday, February 26, 2019

A key to creating a budget is to have a goal that you want to achieve; but how hard is it to achieve your goals?

Well according to research, without outside assistance, it is very difficult to achieve your goals. There is nothing wrong with asking for help. The people who are the best in the world at what they do ask for help - by hiring Coaches and Trainers. So, why should you be any different for needing help?

The American Society of Training and Development (ASTD) conducted a study on Accountability, and have provided the following statistics:

The probability of completing a goal if:
• You have an idea or a goal: 10%
• You consciously decide you will do it: 25%
• You decide when you will do it: 40%
• You plan how you will do it: 50%
• You commit to someone you will do it: 65%
• You have a specific accountability appointment with a person you have committed to: 95%

So, here you can see that just having a goal is not enough. If you want to achieve a goal that you need to budget for, it is important that you plan how you intend to do it, and have some accountability in place to help you achieve it. So, if you are serious about achieving your goals, what is stopping you from getting the assistance you need?

As part of our Cashflow Budgeting Service, we can help you create goals and keep you accountable to them. No matter what you decide to do, make sure that you create some accountability to achieve your goals.

Feb 06

Cashflow Management

Posted by Peter Marmara-Stewart at Wednesday, February 06, 2019

Everyone knows that they should be budgeting and managing their cash, but how many of us actually do it?

There is a lot of power to be gained over your financial future, by preparing and taking control of your budget. Better yet, if you start comparing your budget to your actual expenditure, you will get to know yourself better, and be able to make more educated and beneficial changes for your future.

A lot of us may have had some goals for 2019 that have already fallen by the way side, but all of us should have some financial goals. Did you know that just by having a goal, the probability of achieving that goal is only 10%? However, if you commit to someone that you will achieve your goal, you can increase that probability to 65%. Even better, if you have a specific Accountability appointment with a person you have committed to, you can increase it to 95%.

We want to help You, our Clients, succeed and achieve financial freedom. The first step is to ensure that you fully understand your budget. That is why we are doing this series to help you take control of your budget.

Sep 14

Fake Tax Agent Scam

Posted by Peter Marmara-Stewart at Friday, September 14, 2018

We would like to share with you an update from CPA Australia regarding ATO impersonation scams reported by the community in September 2018.

The ATO is reporting a variation of the ATO impersonation scam where people are contacted by someone claiming to be from the ATO and demanding payment of a ‘debt’.

In the example provided by the ATO, the person pretending to be from the ATO dialed the victim’s tax agent into a three-way teleconference; however, it wasn’t the victim’s tax agent, it was someone pretending to be from the agent’s practice. The person then instructed the victim to pay the ‘debt’ on that day, and via Bitcoin.

The ATO reports that during July and August, it received more than 7000 scam reports to its dedicated phone line, with close to $190,000 being paid to scammers, and more than 1600 people handing over their personal or financial information.

- Fake Tax Agent Scam, CPA Tax News Issue 34

Know the status of your tax affairs. If you are aware of the details of debts owed, refunds due and lodgements outstanding, you are less likely to fall victim to a scam. You can regularly check your details via myGov or by contacting your registered tax agent.

If you receive a call like the example above, you can hang up and call your tax agent independently.

It's OK to hang up and phone the Australian Taxation Office on 1800 008 540 to check if the call was legitimate, or report a scam.

Sep 12

Xero Pricing Adjustment

Posted by Peter Marmara-Stewart at Wednesday, September 12, 2018

Xero has recently announced its pricing adjustment starting 28 September 2018.

The price adjustment will only affect those who are on Premium Plans.

Good news for the smaller employers, as the Standard Plan now covers payroll for two employees instead of one, at no extra cost.

For those who are on Premium Plans, here are the adjusted prices below:

For more information on the Xero pricing adjustment, check out the Xero Blog.

The price changes take effect for existing and new plans from 28 September 2018, and will show on invoices from this date onwards.

If you have any questions, don't hesitate to call our office.

Jun 08

End of Financial Year Checklist 2018

Posted by Peter Marmara-Stewart at Friday, June 08, 2018

To prepare for the end of this financial year, we would like to share with you the End of Financial Year Checklist - a great tool that covers five key topics:

•     Superannuation
•     Self-Managed Super Funds
•     Insurance
•     Centrelink and Aged Care
•     Taxation
We have prepared this eBook, providing summaries of these five topics, and areas you should be thinking about regarding your own financial affairs.

We encourage you to call our office to discuss any of the key topics above, and/or to discuss future opportunities for us to work with you on your financial wealth.

Jun 04

Another financial year is about to finish

Posted by Peter Marmara-Stewart at Monday, June 04, 2018

As a business owner, there are many obligations that you need to consider and action over the next few weeks. Some of these will help to minimise your tax. We have outlined these action points below to assist you.

Key Changes from 1 July 2018

Please urgently check these key things:

1. Has your payroll software automatically updated for these changes? Or do you need to load these changes into your payroll software? (Xero does this automatically.)
2. Check your first pay run from 1 July 2018 to ensure the changes are correct.
3. Review any salary packaging and calculations and make any adjustments to employee FBT contributions or other items where needed.

Accelerated Depreciation

All small businesses with an aggregated annual turnover of less than $2 million will get an immediate tax deduction for any individual assets costing less than $20,000. This $20,000 limit applies to each individual item. Small businesses can apply this $20,000 rule to as many individual items as they wish. These arrangements have been extended until the end of June 2018.

Trust Distributions - Timing of Resolutions

Trustees (or directors of a Trustee Company) need to consider and decide on the distributions they plan to make by 30 June 2018 at the latest (the Trust Deed may actually require this to be done earlier). Decisions made by the Trustees should be documented in writing by 30 June 2018.

If valid resolutions are not in place by 30 June 2018, the risk is that the taxable income of the Trust will be assessed in the hands of a default beneficiary (if the Trust Deed provides for this) or the Trustee (in which case the highest marginal rate of tax would normally apply).

You might not need to do a Stocktake

Small Business Entities (operational businesses with an aggregated turnover below $2 million) have access to a range of tax concessions. One of these concessions is the simplified trading stock rules. Under these rules, you can choose not to conduct a stocktake for tax purposes, if there is a difference of less than $5,000 between the opening value of your trading stock and a reasonable estimate of the closing value of trading stock at the end of the income year. You will need to record how you determined the value of trading stock on hand.

If you would like to take advantage of the simplified trading stock rules, call us today to make sure you are eligible to use the simplified rules and to discuss how to use them properly.

Deadline for 2018 PAYG Payment Summaries
You need to provide your 2018 PAYG Payment Summaries to your employees and other workers by 14 July 2018.

Action Step: If you have any doubt about how to correctly complete your 2018 PAYG Payment Summaries, please contact us for assistance BEFORE you prepare them.

Building and Construction Industry Reporting

Since the 1 July 2012, tax reporting rules apply for businesses in the building and construction industry. Businesses have to lodge an annual report with the ATO setting out details of payments made to contractors. This will assist the ATO to reduce the "cash economy" by ensuring tax is paid on all income including "cash" payments.

You will need to record the following details of all payments made to contractors for building and construction services:

• The ABN of the contractor
• The name and address of the contractor
• The gross amount paid for the financial year, including GST
• The total GST included in the gross amount paid

If you use computerised accounting software, your system should be able to track this information for you and prepare the required Taxable Payments Annual Report.

Action Step: Ensure that you lodge your Taxable Payments Annual Report with the ATO no later than 21 July 2018.

Payroll Tax

Payroll Tax applies to all entities that have an Australian payroll that exceeds state-based limits.

You should note that in addition to normal salaries and wages, the following items are generally also included in payroll expenses, if payroll tax applies:

• fringe benefits based on the grossed-up taxable value of fringe benefits;
• all employer contributions to Superannuation on behalf of employees; and
• some contractor or sub-contractor fees.

For more detailed information about whether payroll tax applies to your business, please contact our office.

Action Step: The Annual Return/Reconciliation for Payroll Tax must be lodged by 21 July 2018 with your State Revenue Office.


Your WorkCover/WorkSafe insurer sends an annual reconciliation to all registered employers at the end of the financial year.

In completing your annual reconciliation, you will need to include the following items in addition to normal salaries and wages:

• fringe benefits based on the taxable value of fringe benefits (do not gross-up);
• all employer contributions to Superannuation on behalf of employees; and
• some contractor or sub-contractor fees.

For more detailed information about what items to include in the reconciliation statement, please contact our office.

Once the reconciliation is received and processed by your WorkCover/WorkSafe insurer, you will be issued with a final assessment or a refund depending on the instalments you have paid during the year.

Action Step: Complete and lodge the Annual Reconciliation with your WorkCover/WorkSafe insurer by the due date.

Goods and Services Tax (GST)

A reconciliation of GST should be performed as at 30 June 2018 to determine if there has been an under or over-payment of GST in the 2018 tax year. If a discrepancy has arisen, then it is possible to amend a subsequent Business Activity Statement (BAS) to rectify the error, however there are limits imposed on adjustments that can be made in this way.

Income declared on your BAS should be reconciled to income declared on your income tax returns.

Also, please note that you are required by law to substantiate all Input Tax Credit claims with a complying Tax Invoice, and you need to retain these documents for a minimum of 5 years.

Action Step: Complete the annual GST reconciliations, and check that you have all required tax invoices and other supporting documents.

ATO Audit Activity

Please note that the ATO and State Revenue Office are constantly increasing their audit activities. In particular, there has been an increase in audit activity for PAYG Withholding, Payroll Tax, WorkCover, GST, Division 7A loan accounts from companies, and Trust distributions from Discretionary Trusts.

We are able to offer a review of your records and record-keeping procedures if you are concerned about your ability to satisfy an audit.

Action Step: Please contact our office if you would like to request this service.

Last Minute Tax Minimisation Tips

Here's a few final reminders about ways to reduce your tax for 2018:

1. Write-off Bad Debts.
2. Write-off any trading stock that is damaged or obsolete.
3. Review your Asset Register and scrap any obsolete Plant and Equipment.
4. Pay for repairs, consumables, office stationery, and donations before 30 June 2018.
5. Realise any capital losses you have before 30 June 2018 to offset against any capital gains you may have made.

Feel free to call our office any time on 03 5134 1778 or email us at

May 28

Some Key Items that mean $ in your pocket

Posted by Peter Marmara-Stewart at Monday, May 28, 2018

You can reduce your tax by hundreds of dollars, if not thousands with some of these strategies.

Here's how to do it:

The Strategy behind Tax Planning

The tax you pay depends on your taxable income, and the tax rates that apply to that income.

Therefore, your tax is reduced if you:

1. Reduce your income, or

2. Increase your tax deductions.

Seeing we all want to earn more, reducing your income isn't an option! But increasing your tax deductions definitely is. We have shared below links to two Tax Planning Flyers which both list a number of items that could be claimed as tax deductions. You can use them as a guide, but you should contact us if you are not sure of anything.

To illustrate: If you need something in July that is classified as a tax deduction, it makes sense to bring this purchase forward and buy it in June. You then get the tax deduction this year, and not next year.

Warning: Don't fall into the trap of buying something simply to get the tax deduction for it. If your tax rate (including Medicare Levy) is for example 34.5%, you would only get 34.5% of the purchase price back as a tax refund (or reduced tax payable) from a tax deductible item. You DON'T get 100% of the amount that you spend back as a tax refund (or reduced tax payable).

But if you do need an item for your business or your work and it is tax deductible, we recommend buying it BEFORE 30 June so that you get the tax deduction this year.

Your Tax Planning Strategy Checklists

Business Owners: Click Here for our Tax Planning Flyer for Business Owners.

Individuals: Click Here for our Tax Planning Flyer for Individuals.

If you are a business owner, we will look at both for you.

If you want to minimise your tax burden, then you need to help us help you and get in contact with us today!

By spending a little bit of time with us reviewing your situation, we might be able to help you save thousands!!

Now is the time to do it - please contact our office TODAY to get started.

May 21

Pay off your home loan sooner and maximise your tax deductions

Posted by Peter Marmara-Stewart at Monday, May 21, 2018

This is one of my personal favourites. Debt optimisation (sometimes referred to as "Debt Recycling"), is a financial strategy which creates wealth over time, and improves an individual's debt structure. Achieved in the majority of cases by:

- Using all surplus income to reduce the home loan (non-tax deductible "bad debt");

- Creating or increasing investment debt (tax deductible "good debt"), by drawing against equity in the home; and

- Using this borrowed money to build an investment portfolio.

It is a great strategy that can be adapted to suit your goals and time horizons; though it is important to note that borrowing money to invest and budget are key components.

Here is an example of how the assets and cash flow involved in a debt optimisation strategy can be used in a "split loan":

Where suitable, it is possible to extend on the strategy above by using the newly created investments as security for a margin loan, with the proceeds used to further invest. In this type of strategy, the interest costs are still generally met from the home loan, with investment income also used to reduce the home loan balance.

Using a strategy like this allows you to decrease your bad debt over time, and replace it with debt that can be used tax effectively, whilst building an investment portfolio that can be used to help fund your goals.
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