Kylie and Casmir Bratkowski are husband and wife. They’re also both solo business owners. Kylie is a freelance editor and writer and Casmir runs his own building company. In a recent chat with Flying Solo they explained how creating a savings buffer (end goal: $20K) is one of the best decisions they’ve made. Below Kylie – helpfully – shares the process how they’re doing it.
When did you start saving?
I’ve always been a saver. When I was growing up, my dad lived by the teachings of the famous book, The Richest Man in Babylon and encouraged my brothers to save a minimum of 10% of our income, so that’s what I’ve always done. When I was in primary school, I won a creative writing prize worth a bit of money, and my dad helped me invest it in a high interest savings account. At that time (it was the late 1980s), interest rates were sky high and I remember the thrill of watching my investment grow exponentially!!
These days, my husband and I are both self-employed and there have been times when saving hasn’t been possible and just keeping our heads above water has been our number one priority. At those times, we’ve fallen into credit card debt but we’ve since paid that off and are now debt free (except for our mortgage).
This occurred, along with a tightening up of our budget and increase in our savings, about three years ago after we read The Barefoot Investor by Scott Pape. By applying his technique to our situation, we’re now 100% better off financially. Scott determines we should all have three months income in a high interest savings account as an emergency fund, which he calls MOJO.
We’re now well on our way towards meeting that goal. There have been times when those savings have been depleted for whatever reason – a new car, a holiday, a renovation or another major expense – and we’ve had to start our savings plan all over again. But just knowing that money is happily accumulating each week without us really even needing to think about it gives my husband and I confidence and a financial security we’ve never had before.
What account do you use? As in, does it sit in an account outside of your normal transactions?
We use a UBank USaver + Ultra account, which currently has a 2.41% p.a. variable interest rate. We use a different bank for our everyday expenses so it is entirely separate.
Do you transfer weekly/monthly/whenever you have extra, or all of the above?
We transfer 20% of my husband’s weekly income into this MOJO account and if we get any extra money, this goes in there as well. Usually I’d be transferring ALL of my earnings into it, too, but at the moment we’re using my income to complete our home renovation in anticipation of its sale next year. Once that’s complete, we’ll go back to depositing all of my earnings into savings and other investments.
Is there a “reason” for this money?
This money is our ’security blanket’. As we’re self employed, we feel much safer having ready access to our own cash. We’ve cut up our credit cards and have vowed never to fall into that debt spiral again – having a MOJO account ensures we can stick to that vow.
What have you had to give up/change/alter in order to do it?
No more credit cards. We’ve had to become smarter with our spending and, in the process, forced to make some tough yet valuable decisions on what we can and can’t afford. We’re better planners and budgeters now and have become more patient and realistic about what we need and when we need it.
That said, my husband is less interested in all this than me! He’s more focused on managing the finances and the huge amount of paperwork his own business demands. My business is more simplistic in that way, so I have more time and resources to invest into coordinating our personal finances.
What have you noticed about the way you think about money as you’ve done it? Are you saving in other ways too? Do you think twice about how/what you spend on generally?
We work so hard for our money and knowing that we’re making considered choices about how we use it to protect and benefit our family – now and in the future – is a great motivator to continue putting in those hard yards. In the process, we hope to inspire our two primary school aged kids and teach them financial literacy so they’ll learn how to manage their own money one day.
Yes, we’re also saving in other ways, too – I regularly do an audit on our everyday expenses and try hard to reduce that cost wherever possible. For example, with the forthcoming changes in private health insurance, our existing family cover will lose a lot of benefits and be even less cost effective than it already was! Having a savings buffer means we can do away with extras cover (we rarely use it anyway and can now use our savings to cover those costs instead) and increase our hospital cover to SILVER – and for less than we were paying previously.
We have an additional high interest savings account for our two children, which we regularly and generously contribute to as well. We expect this will cover their future private school fees and other unexpected child-related expenses that may come up. We also have a holiday savings account into which we transfer 10% of my husband’s income each week. This is happily accumulating in anticipation of a family holiday to Thailand over Easter next year!!
I’ve also recently started learning about – and dabbling in – investing in shares and bonds to diversify our investments.
And, as mentioned previously, all my earnings go into paying to complete our extensive home renovation. This is an investment in itself as we plan to put our home on the market next year and downsize to achieve one of our biggest financial ambitions – to be 100% mortgage free before we both turn 45.
What’s the end goal?
Our end goal is long term financial security for our family; to educate ourselves and our kids on how to manage money effectively; to continue to run our businesses efficiently and profitably; to have the means to continue to travel as often as possible; and, finally, to enjoy our lives and share any benefits of accumulated wealth with our wider family and friends.
Right now our society is enjoying much prosperity – certainly more than there has been in previous generations! For this reason, I feel a responsibility to ensure my family, both now and in the future, continue to benefit from our prosperity. To do this we need to think about the long term. Leaving a financial legacy for our children is an important consideration for Cas and I.
While money is important, it’s certainly not the be all for us – far from it! It’s more important to be doing what we love for a living (in my case, writing, and my husband’s case, building). The money is a secondary benefit to that – a means to an end in creating a life for us to enjoy.