{"id":7602,"date":"2016-04-13T01:00:13","date_gmt":"2016-04-12T15:00:13","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=7602"},"modified":"2016-04-13T01:00:13","modified_gmt":"2016-04-12T15:00:13","slug":"there-are-countless-budgeting-mistakes-made-by-investors","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/","title":{"rendered":"The countless budgeting mistakes made by investors"},"content":{"rendered":"

There are countless budgeting mistakes made by investors all over the world but they can be summarized as underestimating expenses, overestimating income and failing to plan for unexpected costs.\u00a0 But there are long-term errors investors can make in their existing financial plan and Helen Collier-Kogtevs<\/strong> reveals what they are.
\nTranscript –\u00a0<\/strong>
\nKevin:<\/b>\u00a0 My guest this time is Helen Collier-Kogtevs from RealWealthaAstralia.com.au.
\nYou wrote an interesting article that I wanted to talk to you about, Helen, and that was about the budgeting errors that investors should avoid or quite commonly make. What are those errors?
\nHelen:<\/b>\u00a0 There are quite a few, Kevin. Firstly to start off with, it\u2019s preparing a budget without any real goals in mind. There\u2019s a lot of conversation around \u201cWe must be doing some budgeting, we must look after our pennies, we must save for the future,\u201d but there is no real structure or framework in place for people to actually implement.
\nWith that, sure, you can go online and you can download an app and do all that kind of thing, but people are like, \u201cYeah, yeah, I\u2019m doing a budget because I feel like I need to and I should be managing my pennies better,\u201d but they\u2019re not factoring in goals. What Is the purpose of it? What are you trying to achieve? What is the outcome? What is the desire you\u2019re wanting?
\nKevin<\/b>:\u00a0 Yes. You make a very good point there, and that is what I call the \u201cwhy\u201d \u2013 \u201cWhy am I doing this? What is the outcome that I want?\u201d That\u2019s going to help you make that plan, Helen, isn\u2019t it?
\nHelen<\/b>:\u00a0 Exactly right, Kevin.
\nKevin<\/b>:\u00a0 You mentioned there about budgeting, but probably budgeting without enough understanding about what the real costs are.
\nHelen<\/b>:\u00a0 Yes. It\u2019s one of the areas people don\u2019t realize, and what I want to share from personal experience is that the very first property we ever bought\u2026 And I know this is a nincompoop thing to do, but you know what, Kevin, back in the days I had no idea what stamp duty was. So when calculating out a deposit, I thought, \u201cYes, we\u2019re going to engage a solicitor so we\u2019re going to need some money for that,\u201d but when it came to it, oh my gosh, we got this $15,000 bill for stamp duty, and I didn\u2019t realize that or I didn\u2019t anticipate that.
\nFor the newbie investors, understanding every cost is important. For those investors who have been in the market for a while and understand the basics, some of the costs they underestimate or don\u2019t even consider are things like trips to go and view the property \u2013 if you\u2019re going to jump on the plane if the property happens to be interstate, whether you get in the car and drive to view it \u2013 or what about the data reports that you might be buying? Some of those aren\u2019t cheap. It\u2019s those sorts of costs that people need to factor in and take into account
\nKevin<\/b>:\u00a0 When it comes to budgeting, too, especially for some new investors, I guess, they don\u2019t know what they don\u2019t know \u2013 all the more reason to cast that net wide and get some experts involved, isn\u2019t it?
\nHelen<\/b>:\u00a0 Exactly right, Kevin. I never buy anything really without consulting my accountant and my finance broker first \u2013 even with something like buying a car. I\u2019m in the process of looking at buying a car; the first call I made was to the accountant to say, \u201cHow do I structure this? What\u2019s the best way as far as asset protection goes? What\u2019s the best structure for buying it? Do I put it under finance, or do I buy it with cash, etc?\u201d Then I went straight to my broker and said, \u201cLook, I want to buy this car. This is roughly how much I want to spend. What\u2019s the impact on my borrowing power for when I want to buy my next investment property?\u201d
\nConsulting the experts in all areas of your life when it comes to money really does make the difference between being able to get into that next deal and potentially not.
\nKevin<\/b>:\u00a0 The final point that you made, and it follows on from what you\u2019ve just been talking about there, Helen, is how we tend not to take some insurance, I guess, by way of a buffer. Explain to me about the buffer and how big should it be?
\nHelen<\/b>:\u00a0 Great question, Kevin. With a buffer, it\u2019s that bucket of money that you keep aside that you don\u2019t touch. Now that bucket of money can be cash in a savings account, it could be equity in your home or in an offset or redraw account, but it\u2019s money you have access to that you keep aside for a rainy day.
\nA buffer is not the, \u201cHey, I\u2019ve been saving for a couple of months. I have $5000 in the bank and \u2013 oh, upsy-daisy \u2013 I want to go on a holiday, and I think I\u2019ll just take it out of that account.\u201d That\u2019s not a buffer. The buffer is something you just keep aside purely for your investing and to protect you should and if life gets in the way.
\nAn example of how much a buffer should be? Some investors say to me, \u201cHelen, $10,000 is plenty.\u201d That\u2019s okay if that\u2019s where their peace of mind is at and if $10,000 set aside gives them that sleep factor, great. But then there are other investors I\u2019ve spoken to who say to me, \u201cHelen, $10,000 doesn\u2019t cut it. It needs to be more. I want to take a more conservative approach.\u201d
\nI have got a rough calculation that I share with people and it goes like this. Annual expenses: you look at your total annual expenses for that property minus the rent, and whatever the balance is, you multiply it by 12 months.
\nFor example, if your expenses are $25,000 and the rent is $20,000, therefore you have a balance of $5000 and you multiply that out by 12 months and that gives you $60,000 as a buffer.
\nThen some investors will keep that $60,000 aside because that gives them the sleep factor.
\nKevin<\/b>:\u00a0 Gee, that\u2019s a really good formula there. I guess the other two points, too, that you make in your article are that a budget is flexible \u2013 you need to be adaptive \u2013 and also to redo your budget when you reach your goals.
\nHelen<\/b>:\u00a0 Absolutely, Kevin. We call it \u201crinse and repeat.\u201d When you\u2019ve actually achieved the goal of, maybe you\u2019re purchasing that property a set time, then you have to redo your budget. You have to see what the impact that property is having on your disposable income and on your day-to-day cash flow or month-to-month cash flow.
\nIf it\u2019s drawing more money out of your budget, then you need to reassess so that you still have your buffer maintained and you still have your lifestyle, you\u2019re not living off baked beans while you\u2019re going through this journey of creating wealth through property.
\nYou\u2019re just taking stock. It\u2019s doing that constant stock-take once you\u2019ve achieved your goal and then resetting yourself, where you go, \u201cOkay, great. I\u2019ve bought that property. It\u2019s only costing me $50 a week. The budget can handle it. The buffer is in place. I still have $150 a week in savings. So I\u2019m ready to go now and do another deal.\u201d
\nTat way, when you\u2019re looking at purchasing the next property you are crunching the numbers, and you already have a really good idea as to what it\u2019s going to cost you and that your budget can sustain it.
\nThere are investors who sometimes go and buy that second property without reviewing the budget, and then they realize, \u201cOh, my gosh,\u201d after they\u2019ve done the deal that their budget is really tight and they\u2019re scrambling to find more cash flow.
\nKevin<\/b>:\u00a0 Helen Collier-Kogtevs, my guest from RealWealthAustralia.com.au.
\nHelen, it\u2019s always great talking to you. You make so much sense. Thank you very much for your time.
\nHelen<\/b>:\u00a0 Thanks, Kevin.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

There are countless budgeting mistakes made by investors all over the world but they can be summarized as underestimating expenses, overestimating income and failing to plan for unexpected costs.\u00a0 But there are long-term errors investors can make in their existing financial plan and Helen Collier-Kogtevs…<\/p>\n","protected":false},"author":176692471,"featured_media":7605,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[34,10,11,13],"tags":[101],"class_list":["post-7602","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","tag-podcast"],"yoast_head":"\nThe countless budgeting mistakes made by investors - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The countless budgeting mistakes made by investors - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"There are countless budgeting mistakes made by investors all over the world but they can be summarized as underestimating expenses, overestimating income and failing to plan for unexpected costs.\u00a0 But there are long-term errors investors can make in their existing financial plan and Helen Collier-Kogtevs...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/\" \/>\n<meta property=\"og:site_name\" content=\"Realty Talk\" \/>\n<meta property=\"article:published_time\" content=\"2016-04-12T15:00:13+00:00\" \/>\n<meta name=\"author\" content=\"rolanrush\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rolanrush\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"7 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/\"},\"author\":{\"name\":\"rolanrush\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#\\\/schema\\\/person\\\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"headline\":\"The countless budgeting mistakes made by investors\",\"datePublished\":\"2016-04-12T15:00:13+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/\"},\"wordCount\":1395,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/#primaryimage\"},\"thumbnailUrl\":\"\",\"keywords\":[\"podcast\"],\"articleSection\":[\"Finance\",\"Kevin Turner\",\"Kevin's Update\",\"Latest Stories\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/\",\"url\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/\",\"name\":\"The countless budgeting mistakes made by investors - Realty Talk\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/#primaryimage\"},\"thumbnailUrl\":\"\",\"datePublished\":\"2016-04-12T15:00:13+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#\\\/schema\\\/person\\\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/#primaryimage\",\"url\":\"\",\"contentUrl\":\"\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/there-are-countless-budgeting-mistakes-made-by-investors\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"The countless budgeting mistakes made by investors\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#website\",\"url\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/\",\"name\":\"Realty Talk\",\"description\":\"Your Trusted Voice For Property Investing. Anywhere, Anytime.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#\\\/schema\\\/person\\\/384a57ac9e52cb9bf19896cb15eaa52d\",\"name\":\"rolanrush\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g\",\"caption\":\"rolanrush\"},\"url\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/author\\\/rolanrush\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"The countless budgeting mistakes made by investors - Realty Talk","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/","og_locale":"en_US","og_type":"article","og_title":"The countless budgeting mistakes made by investors - Realty Talk","og_description":"There are countless budgeting mistakes made by investors all over the world but they can be summarized as underestimating expenses, overestimating income and failing to plan for unexpected costs.\u00a0 But there are long-term errors investors can make in their existing financial plan and Helen Collier-Kogtevs...","og_url":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/","og_site_name":"Realty Talk","article_published_time":"2016-04-12T15:00:13+00:00","author":"rolanrush","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rolanrush","Est. reading time":"7 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/#article","isPartOf":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/"},"author":{"name":"rolanrush","@id":"https:\/\/channels.realty.com.au\/realtytalk\/#\/schema\/person\/384a57ac9e52cb9bf19896cb15eaa52d"},"headline":"The countless budgeting mistakes made by investors","datePublished":"2016-04-12T15:00:13+00:00","mainEntityOfPage":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/"},"wordCount":1395,"commentCount":0,"image":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/#primaryimage"},"thumbnailUrl":"","keywords":["podcast"],"articleSection":["Finance","Kevin Turner","Kevin's Update","Latest Stories"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/","url":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/","name":"The countless budgeting mistakes made by investors - Realty Talk","isPartOf":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/#website"},"primaryImageOfPage":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/#primaryimage"},"image":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/#primaryimage"},"thumbnailUrl":"","datePublished":"2016-04-12T15:00:13+00:00","author":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/#\/schema\/person\/384a57ac9e52cb9bf19896cb15eaa52d"},"breadcrumb":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/#primaryimage","url":"","contentUrl":""},{"@type":"BreadcrumbList","@id":"https:\/\/channels.realty.com.au\/realtytalk\/there-are-countless-budgeting-mistakes-made-by-investors\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/channels.realty.com.au\/realtytalk\/"},{"@type":"ListItem","position":2,"name":"The countless budgeting mistakes made by investors"}]},{"@type":"WebSite","@id":"https:\/\/channels.realty.com.au\/realtytalk\/#website","url":"https:\/\/channels.realty.com.au\/realtytalk\/","name":"Realty Talk","description":"Your Trusted Voice For Property Investing. Anywhere, Anytime.","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/channels.realty.com.au\/realtytalk\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/channels.realty.com.au\/realtytalk\/#\/schema\/person\/384a57ac9e52cb9bf19896cb15eaa52d","name":"rolanrush","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g","caption":"rolanrush"},"url":"https:\/\/channels.realty.com.au\/realtytalk\/author\/rolanrush\/"}]}},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/posts\/7602","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/users\/176692471"}],"replies":[{"embeddable":true,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/comments?post=7602"}],"version-history":[{"count":0,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/posts\/7602\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/media?parent=7602"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/categories?post=7602"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/tags?post=7602"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}