Professional Post from Michal Bodi – This is his ‘Ultimate Financial Planning Checklist’

We always hear about people wanting financial freedom.  I want to ‘get on top of my finances’,’take control of my financial future’ – We have all said it and this usually happens after the realisation that there is a need to change the way we have been running our finances. If we don’t, the future will not be bright.

This is a significant point in our lives – a transformation from being a victim and waiting for the life to happen to us, to actually grabbing the steering wheel and driving to the destination of our choice.

Maybe you’re at that point right now.

But where do we start? What are the very first steps we need to consider?

Well, aren’t you lucky! I have assembled a list, which is more less a thought process you need to go through, should you wish to live your life on your terms.

1. Start talking about it ☑

Even though we need to make everyday decisions with it, money is not something we feel comfortable talking about. Most of us feel it’s a private topic (but then again we don’t talk about it at home!) and it’s not uncommon we feel money isn’t an ‘elegant’ topic to bring up at the dinner table.

The inevitable consequences are that the money decisions often become too hard and end up being swept under the carpet.

If you want to start getting ahead, you need to start addressing your money issues.

It often involves acknowledging that you struggle initiating these conversations and you are better off hiring a professional. That’s one of the main reasons why they exist –to create a platform for you (and your partner) to put the all cards on the table and start addressing the elephant in the room.

2. Decide whether you actually really want it ☑

You have to be ready for this. This goes hand in hand with the point number one. You have to accept you need to change something and it usually comes with a sacrifice. And we only make sacrifices if we really want something.

You need to want it badly. And I mean, really want it. Lots of people say they ‘want’ to start getting ahead, but after a while it’s obvious that what they want more is going out with their friends.

Once you feel that you have done enough of talking and you gave yourself enough of excuses, you might be ready to take a plunge. You may also find that publically declaring your determination (e.g. by telling your friends) will help you cross the invisible line of procrastination. Remember, if it doesn’t challenge you, it will never change you.

3. Be optimistic ☑

We’re being absolutely blasted with ‘the news’ every day and every minute but the emphasis is traditionally on the negative. The bad news is good copy. And this stuff is really sticky! It sticks to our brain and it clouds our vision when it comes to looking ahead.

It’s going to be extra difficult for you to get organised and start planning your life if you’re constantly worry. 99% of the stuff you hear about has typically zero impact on your personal life and you have zero control over it.

Remember, every time you hear about a crisis du jour – it’s not your crisis!

Instead, if you start thinking about your own life and the things you can actually control and manage you will find it much more optimistic and easier to plan. Also, if you believe in the future and that its potential, you are in a much better position to evolve.

4. Think about your values ☑

This is a good one… we generally differentiate between money (and the money producing machine called work) and our life (where we live and follow our feelings).

How many times have you heard about the work-life balance? Have you realised how much time you spend at work?

I believe the first thing to do, in order to reach the work-life balance, is to stop separating the two.

Even if you don’t have your dream job (yet), start thinking about bringing your life to work with you. Start writing down things that make you happy, your values and things that you truly believe in – things that mean a lot to you. Surround yourself with these constant reminders and stick them somewhere you look every day.

Once you think you’ve got it all down, think about answers to the following questions and write them down too:

  • What do you think is the most important to you in life?
  • What would you do with your life if you didn’t have to go work tomorrow and your income would continue?
  • Close your eyes, and think of the word ‘MONEY’ – What do you see?
  • What is it about money that matters to you? Why?
  • How do you want to spend your time?
  • Who do you want to spend your time with?
  • What concerns you the most about your current position?

By doing this, you’re allowing yourself to think about spending money based on what’s really important to you (rather than based on what everyone else is doing). This will form the basis for your financial decisions later on.

5. Eliminate wastage ☑

The popular saying ‘It’s not about how much we earn, it’s about how much we spend’ goes a long way. During my own professional career I have witnessed it so many times. Once we take control of our spending, we’re in the pole position to win the race!

Watching your expenses and knowing (pretty much exactly) where your income is spent is totally crucial.

Yes, I’m talking about good old budgeting! Here, more important than anything else is to have the right attitude.

Don’t think of budgeting as deprivation and rather see it as elimination of wastage. It’s a positive change that will improve your life.

You’ve already decided you want to change something, this is where you start making changes – go through your expenses! (Here is an example of a budget)

Just in case it’s not obvious, the purpose of this step is to free up your cash, which can be painful. It often involves changing your lifestyle, living arrangements, etc.

But that doesn’t matter anymore; we’ve passed the point of procrastination and are now ready to make sacrifices – in order to achieve something that is more important to us than spending money on other stuff.

Steps to organise your expenses:

  •  Assign the necessary part of your income needed to fund your existence (your fixed cost) – money you need to spend in order to live half-decent life – tax, housing cost, communication bills, transport, food, family and household. As a guide, you want to limit these expenses to about 50% of your income
  • Now go through your ‘keep me sane’ expenses – clothing, eating out, cinema, hobbies etc. Again, you don’t want to spend more than 30% of your income on these
  • What you’re left with is your surplus cash or approximately 20% of your income. What you do with it depends on your answers in the point 4 – using your values and thinking about what’s important in your life. There’s more about this in the latter section of this blog. 

Note, if after going through your fixed cost, you’re not left with any cash or you’re only left with a small change, you will have to re-think your lifestyle. You have two choices – decrease your expenses (change your living arrangements etc.) or increase your income (consider taking another job, perhaps your spouse can work full time instead part time etc.).

6. Debt talk ☑

Most of us have debt. Some of it can be good, some of it, bad. The trick is to distinguish between the two and only pay down the bad one.

Typically, a good debt is the one that reduces your tax or what we ‘the experts’ call it an investment debt. Example would be an investment property loan. This is not the debt you want to reduce. Keep it steady and use the income from the investment you bought with it to either service it or pay off your ‘other’ debt – the bad debt.

The bad debt is the one you definitely want to focus on and pay off as soon as possible. Example is your home loan, a personal loan or an outstanding credit card debt. Find out how much interest you pay on each, line them up from the highest to lowest and start shooting.

I want you to remember two things here:

  1. It’s nice to consolidate your bad debt to one low interest repayment. But let’s get this right – Debt consolidation gives people false hope. It creates a feeling that you’re doing something about your debt. In fact, you haven’t started yet  – It’s the successful debt repayment strategy that will pay off your debt, not the low interest rate
  2. Don’t waste your time investing or saving if you have lots of personal debt. Unless you’re paying considerably less interest on your debt than you can consistently earn (after fees and taxes) you need to focus on getting rid of your debt first. 

Correct structuring of your debt and planning ahead can also determine whether you have options once your circumstances change. It’s vital to obtain right debt advice and get it right from the start.

☑ Pick your buckets

If you got this far and you now have a certain amount of your income paying for your existence in the society (the fixed cost) and part of your income going towards activities that keep you human.

This is where you start allocating the rest of your money (the last 20%) to different buckets/jars, whatever you want to call them, based on your values and things that make you happy.

Caution!!! Do not start implementing this step unless you’ve done the waste eliminating exercise!!!

So, by this stage, you already know how much surplus income you have.

Now, unless you’re older than my 87 year old grandma, you don’t physically have to go and buy yourself a set of buckets. Instead, simply name your accounts and direct debits in online banking after the life milestones you wish to achieve (Holiday in Maldives, Christmas, Mum’s 65th birthday party).

Everyone’s buckets will be different but the three main buckets you have to end up with are:


Smart people realise that protecting the money making beast (you) means protecting your ability to earn income.

We’re talking about planning, being in control and not leaving anything to chances. This naturally involves being smart and transferring the risk of losing the income to an insurance company


Start building your emergency cash for any ad-hod, unplanned expenses. You want to end up with at least 3 months’ worth of net income as your cash buffer.

There are risks that we can’t control and/or transfer and life always gives us something to spend the money on – leak in the roof, pool pump replacement etc.

Being smart here means NOT using what banks sneakily call ‘high interest saving accounts’ if you have a mortgage. No savings account will offer you higher interest than the interest you pay on your mortgage.

Using offset account/s linked to your mortgage means you can effectively earn a tax free ‘true high interest’ on your money.

It’s also important to note that the emergency money is there for emergency. Not for a holiday, not for that awesome kitchen cabinet that would look so good in our kitchen. It’s ONLY for emergency. Get it?!


Whether it’s investing in companies (equities) or property, the idea is to earn a much higher rate of return than the actual rate of constantly increasing cost of living. This is the only bucket that will keep increasing your asset position, even after inflation and taxes.

The chances you’re probably already investing – in your super. This will be no different, except you invest outside super where you will be to access your money before you retire. Again, be smart and get professional opinion.

☑ The final tick

Hope these general tips will help you with prioritising in your money decisions.

The last thing to mention is that I have two lots of news for you. One’s bad news but the other one’s good news:

The bad news is – you will not be able to do this on your own.

The good news is – there are lots of awesome financial coaches / planners out there.

Look around, find the one who you can fully trust and have an open conversation with, who can guide you, educate you and continuously review your position.

Good luck and start today. Not tomorrow, today! – 

Click To Contact Michal Bodi


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