Smart Spending in a Consumer World

Jason · 00:00Welcome to episode 146 of The Numbers Game. I'm Jase. I'm here with Nick and Marty. How are we going today, fellas?

Marty · 00:07Going well, thanks, Jase. Leading into the festive season, parties are beginning.

Jason · 00:13Yeah.

Marty · 00:14So feeling very up and about, my friend. How are you, Nick? Looking sharp.

Nick · 00:18Oh yeah. You know, just doing my best trying to keep up with you, to be honest. But no, going well after Big interview with Ryan from Dashboard. Just, yeah, looking at all the things that we can do inside of our business. I noticed Jase hasn't washed his shirt yet.

Jason · 00:35He's— I've been sleeping in this shirt. I'm obsessed.

Nick · 00:38Right on the wrong train. So it's quite sickening actually. But what a good interview. But looking forward to getting back to our main man, Marty Vidakovic, and sharing some Marty gold today. How are you, Jase? That shirt starting to smell or all good?

Jason · 00:53Nah, nah, all good. I got sent like a 10-pack of them. So I've just been, It's 10 days straight now just repping the Dashboard Insights t-shirt. You know, we've got to make sure.

Nick · 01:01Did you get sent those or the Numbers Game team? It's not just Marty and I haven't got one.

Jason · 01:06No comment. No comment. I might have forgot to distribute them to the whole team. I've got one that's— yeah, I wear to bed and then one that I wear to work. So it's working out quite well for me. But no, Marty, you're talking about silly season, the amount of things going on. Greg and I were at the Old Melbourne Gaol for an event the other week, and I just thought, you know, the different ways businesses are, you know, putting on their Christmas parties or end-of-year events and getting real creative.

Jason · 01:32But, uh, Worrells were, were the business. They do insolvency, and God, they put on one hell of a party. Like, open bar, cocktails. You roll into the old Melbourne jail, which is like quite an interesting place to go to, to have a function. You've got all the old jail cells and the memorabilia— or call it memorabilia, like, whatever you'd call it.

Jason · 01:51There's a string quartet playing Eleanor Rigby, Beatles. So it felt like real. There's a bit of a charm to it. And then a live band kicked in, and there was a guy doing caricature drawings, the cartoon dude. Man, it was, it was fun. Of course, Greg and I were the last two people there being asked to look nicely to leave.

Nick · 02:09Isn't it funny that, you know, we're talking about cost saving and, you know, businesses winding back, and the insolvency business is absolutely flying and throwing big parties?

Jason · 02:18Yeah, well, there's a— yeah. Yeah, well, I think that given the 2019, 2020, 2021, 2022 was record low insolvency numbers off the back of the ATO putting a bit of a freeze on everything with COVID Let's just say now that that freeze is unlocked, I think the insolvency land is booming.

Marty · 02:41Will continue to. And it's great to see that a place where, you know, murderers were hanging out is now such a place of joy with Eleanor Rigby playing. And I know since Dashboard Insights, I've been wondering why Jase has been smiling smiling so much, but Ryan in the previous episode was talking about efficiencies creating 10x profitability.

Marty · 03:00So mate, I'm looking forward to the future advisory Christmas party. I don't care where it is, but Nick and I are just wanting to just drink some of that gravy, my friend.

Jason · 03:12Well, Caitlin, if you are listening, make sure you get those invites in the mail as soon as possible. We're yet to send them out yet, but yeah, we're looking forward to it. Speaking of Dashboard Insights, this episode is brought to you by the great team at Dashboard Insights. Insights have gotten behind the numbers game.

Jason · 03:27They'll connect your data into custom stunning dashboards so you can make data-driven decisions, attract and retain high-performing employees that love access to their data, improve your productivity, your profits, and your cash flow. Check out dashboardinsights.com. Marty V, what do we have on today's episode?

Marty · 03:47Well, I wanted to talk about Black Friday. And I was just thinking in regards to inflation being high and we're trying to control inflation. Could Black Friday lead to a dark start to 2024? Obviously, we've got Christmas sales coming up as well, leading into Christmas, naturally.

Marty · 04:06And but there was 10 million people that were reaching for their credit cards to shop on Black Friday, which is 14% up from last year. So quite phenomenal numbers and retail sales volumes that have dropped over the last three quarters, which is the first time since the GFC.

Marty · 04:27Actually are really exciting. But what I'm starting to see is Black Friday is starting to turn into Black November. You're starting to see all these discounts with sometimes 25% off, 50% off, not only running just for one day.

Marty · 04:43And you see it in the retail stores out there as well as online that this has become not just a one-day event. This is now expanding for two weeks. And I think Retailers obviously need to be able to cash in and look, it's good for the consumer too, getting discounts during these times.

Marty · 05:01So in 2022 they had $7 billion in sales and what the expectation is that they'll be around about $9.5 to $9.8 billion in revenue for 2023. So again, inflation, inflation, inflation.

Marty · 05:20Oh my goodness. The average spend per person was $440 this year, which is up from $380 per person in 2022. So some really interesting numbers there to start off with.

Marty · 05:36And it's the Black Friday sales at 20% larger now than the Boxing Day sales. So it is really taken off. Have, have you got the credit card out at all over November and shopped up, boys?

Nick · 05:51Yeah, I did. Yeah, I did. I, um, I bought a new golf bag, surprise surprise, on the weekend, uh, online, but only because it was, well, what I thought very cheap. It was 30% off. Um, I've needed a new one, but I've been putting it off because there's only, you know, I just didn't really, really need one.

Nick · 06:11But, um, it popped up because obviously I've been looking at it and trying to choose which bag I wanted. It popped up on the weekend and it was 30% off at this particular place, and was too good to say no, so I, um, I bought it. So yeah, I'm a, uh, I'm a victim, Marty.

Nick · 06:26I'm a victim of, um, Black November.

Marty · 06:29You've been persuaded by the Black Friday dealings. I got my wife a birthday present. Um, did I just say that out loud?

Jason · 06:38So is her birthday next June? Is that why it's funny?

Marty · 06:42No, no, it's coming up. And, uh, yeah, but it's, it's amazing. They're saying that 44% of people make decisions on the day to buy, like the actual Black Friday day, and then another 37% plan to get a good deal for Christmas, which is interesting how that's become, you know, the Christmas shopping period is in now Black Friday.

Marty · 07:04Jason, have you picked up any deals?

Jason · 07:07Not yet, but I feel like I'm missing out. I think Casey's had a delivery arrive every day for the last 2 weeks, so I dare say she's heavily partaking in the Black Friday, Black November, half of October was black. Apparently I saw sales starting mid-October for some companies.

Nick · 07:25Black 2023 at our house.

Jason · 07:27So I think if that's the case, I think, yeah, the amount of deliveries coming through. I don't know if you've seen or heard of the thing Girl Math, but Kay sent me through a screenshot of a dress and she's like, what do you think of this dress? I said, yeah, it's nice. Why? She goes, well, I need to spend another $42. I'm buying a present for a birthday coming up, but if I spend another $42, I'll get free shipping.

Jason · 07:47And I'm like, oh man, this— if this isn't girl math, I don't know what is. But yes, I think, yeah, Kase is heavily partaking. I'm so far not. But you mentioned golf stuff. I did just get a set of clubs off a mate, so I need to get, I know, 56-degree or some kind of wedgie thing that I haven't learned what it is yet.

Nick · 08:05So yeah, uh, 56 and 60.

Jason · 08:07Bang, that's what I need.

Nick · 08:08That's boy math.

Jason · 08:09Yeah, boy math. This is great. And because, um, because Mike— shout out to Mike at Animal Carpentry— has been sending me links, now all the advertising algorithms know that I'm in the market for some golf stuff. So I've got nothing but golf ads all over my Instagram and other pages. So it's a really— having clients that are in e-com and retail as well, I mean, it's one of those things is like focusing on margin and are they actually profitable by the time they run their ads and discount their products?

Jason · 08:37You know, did they actually come away from October, November with profit in the tank? And when you are, I guess ripping into your margin for the sake of keeping up with every other business doing your Black Friday deals, then you risk not getting your Christmas sales because everyone's loaded up for Christmas, taking advantage of a sale.

Jason · 08:57I do really worry about what happens in December and then leading into January 2024 and beyond. So I'm, I'm intrigued, that's for sure, as to what the outlook looks like.

Marty · 09:10Yeah, well, I think if, if we do have an interest rate rise in February, Black Friday is to blame and the people on The Numbers Game here. Well, Casey as well has contributed to that interest rate rise. So you know who to call and who to hook up with on Instagram.

Marty · 09:27Two-thirds of sales are made online, which is interesting in itself. So it's amazing how many people buy online. I think from even 10 years ago, people would always say, I'd never buy online. It's too risky. But just how far that economy has come is incredible.

Marty · 09:45And two-thirds of all Black Friday spending will be in three categories: clothing, shoes, and beauty, 30%; electronics, tech, and entertainment, 21%; and furniture and home lifestyle, 17%, which are the three major categories.

Marty · 10:02And yeah, I just, I come back to, even though I'm talking about Black Friday tongue-in-cheek here. I'm coming back to spending habits and behaviors of the general consumer. Because as we've talked about in the podcast, you know, savings have diminished over the course of what's happened with interest rate rises and cost of living.

Marty · 10:24But everyone is up and about for spending when there's a sale. And to me, again, I just want to put it out there. It's never about what you're saving. It's about what you are spending. And it's like you talk about boy math, girl math and all that, but it's like, and every other math that's out there before I get into trouble on something.

Nick · 10:47There's about 200. Can you start from the top and go through?

Marty · 10:52I'm not going to go through the list. I'll send it to the website if we need to. But I just go, you know, there's, to me, there's always like, you've got to have your own discipline. Sometimes you talk about a budget discipline. And we've talked about that in the past and how you need to know your numbers and your expenditure.

Marty · 11:08But what about your savings discipline? And something I want to share with, and this is, you know, me before 35 years of age and after 35 years of age that made a huge difference for me. I was always really, really good in business in creating good profit margins.

Marty · 11:27So I knew expenses, I knew upside, I knew to create strategy and logistics to make sure I maintained a certain margin. But before the age of 35, that never applied into my personal life. That was basically, you know, what I was earning was going out the door because, you know, I wanted the next best thing.

Marty · 11:47I wanted to keep up with Joneses and everyone else in the street. And you just find that if you haven't got a buffer of savings, you are just going sideways, even when you've got assets working for you, you're still not optimizing your position.

Marty · 12:04And one of the big fundamentals I learned after 30, 35 years of age was how do I ensure that I keep 30% of what I earn, like the net earnings I make personally, that I earn, that I keep to either put into a mortgage or to invest in something else and just orchestrate my life to create that same discipline.

Marty · 12:26That I was very good in, in business, but I wasn't so good in personally. And that was a huge game changer. So it meant if I was making a personal investment decision, that if I couldn't maintain that 30% savings buffer, then I had to question as to what changes did I need to make in order to be able to want to do that and to do that or not, not do that.

Marty · 12:50Because otherwise it would always be, yeah, I'll just do it, it'll sort itself out. I'll do it, it'll sort itself out. Just go for it. You know, I was very aggressive by nature, very competitive, driven, but that's a good thing in one way, but you need to have boundaries around that drive as well. So I would encourage people to adjust their expenses accordingly and also just work out what are they going to do to maintain all their hard work, all their hard work for it just to go month to month.

Marty · 13:20And not have any upside on that. You know, just, just really hone in and create an upside for yourself and make the adjustments personally. So you've got it there to put it in your mortgage, create equity, to put it into investment, to grow wealth, make life easier for you as you get older.

Marty · 13:36I wish I could talk to every 20, 25-year-old to be doing that at an early stage. And as you then earn more money, that benefit actually expands for you. And that's the beauty of it. It's all about the right disciplines and that discipline will expand as you go.

Marty · 13:53We all tend to want to have high leverage, which is risk in itself. You know, we all want to leverage in order to get assets and everything. But, and sometimes when you're younger, you do need to do that to get into the market. So I get that. But you, at least if you are doing that early days, you still want to have a buffer that you've got money to put towards something, you know, towards that investment or that home or even pumping it into your super, you know, whatever the case may be.

Marty · 14:21I want you to get ahead. So, and if you don't know where you're going, you won't get anywhere. And I think that's the thing, how often life gets busy and we don't pay attention to these things. But I find what's really helped me is just having some really simple basic ratios that I stick to.

Marty · 14:40And when I'm going outside of that, you want it to be a hell of a good reason and you might be able to orchestrate yourself back to those good ratios within a 3-month period of making a decision. So yeah, I thought I'd just share that because that made a big difference in my life and just gave myself some self-disciplines to know that the hard work that I was doing was actually going to something that was going to help me personally down the track, which if

Marty · 15:10I didn't change it, it would have never happened because I would have kept leveraging up. I could have, would have gone to the next opportunity. I would have been very diverse in my interests, which is my natural personality. So I had to create just some simple techniques to make sure I had set boundaries so I could still do that within the boundaries.

Marty · 15:28And that made a big difference for me. So does that resonate, lads? It's a very personal, um, type of way of operating. But yeah, thoughts?

Nick · 15:40It's personal, but it also makes a lot of sense. And this is— we've spoken about this before on the podcast, and it's something we talk about to all of our clients— is just reverse engineering your budget and understanding the things that are important to get you ahead, which is, you know, debt reductions and savings and investments.

Nick · 15:59And then just ensuring that that money comes out first. And that's what I mean by reverse engineering. Instead of getting to the end of the week and going, oh, I've got $100 left, so I'm going to save that. Do your budget, work out what you should be saving each week, which also means you're working out what you should be spending.

Nick · 16:17Because the one thing that we need to cover off is the ratio doesn't have to be 30% as it was with you, Marty. Everyone's situation is different, correct? There's, you know, there's, there's kids, there's school fees, there's all these things, there's mortgages. Your ratio might be 5%, and if that makes sense, then that's actually okay.

Nick · 16:34It's the discipline in sticking to it. But you also have to have in that budget, you also have to have in there your spending, you know. If you, if you're allowing yourself $200 or $300 a week to spend on yourself, that's okay as long as there's some, some element of saving in there as well.

Nick · 16:52And when you get paid, The money comes out, goes to the saving account. The money comes out, goes to the wealth creation or debt reduction account, and that's not negotiable. The money comes out and goes to the spending account, and that's what you've got to spend. And once that runs out, you stop and you wait till next week or next month, whatever you're running your budget, whatever time period you're running your budget over, and then you spend that money again.

Nick · 17:15So it's— the ratios are not— well, they are important. Yeah, don't spend 99% and save 1%. But what I'm saying is 30% can sound daunting to some people, so the ratios can be what works for you. It's just finding the discipline to stick to them.

Jason · 17:33And if during October, November, and December you're in a negative ratio because of Black Friday and Christmas, just make sure that for the other 9 months of the year you're in a bigger positive ratio to make up for that. Looking at you, Casey, if you're listening. I like the way you've shared and spoke about it, Marty.

Jason · 17:48I think I had some little flashbacks to like, it must have been one of our first 10 episodes we did. I think I almost cried talking about, you know, being in my late teens, early 20s. I had credit card debt. I was hopeless with money. I was just spending to try and keep up with, you know, yeah, studying at uni, but just I wanted to live, live a good life like that, you know, ahead of, beyond my means and ahead of my time.

Jason · 18:09And, you know, I financed the, the better car because I didn't want to drive the not so nice car. And I just made some, some bad decisions. So You know, it's all about creating that budget, creating good habits, as you talked about, Marty, and starting with something that's manageable and to build those good habits.

Jason · 18:26So, you know, now actually having, you know, a method to the madness of, you know, X amount of the salary goes away. And, and as you said, Nick, it's the first thing that needs to move out of the way because if it's in your account and you can see it, you can spend it and touch it. It's too easy to buy the extra coffee or to have the targeted ad pop up on Instagram and go, actually, I wanted that and buy it.

Jason · 18:47And you see the money in your account. But if you're moving your savings out of the way first, every time you get paid and it goes into that high-interest saver or your offset account to lower your mortgage interest rate or your mortgage repayments or into some other kind of investment, shares, whatever your poison is.

Jason · 19:02But it's, it's, that's the thing that has to go first. If you leave it sit there, you find a way to spend it. It's the psychology of the way we're wired when it comes to money. So great tips from you boys. Smart, smart guys.

Marty · 19:13Yeah, and I like the fact, like, like when we talk about budgets, yes, we want to save money. Given, you know, high cost of living. But a lot of people don't think about that 30% even as an emergency fund. Like if something goes wrong, that you've got that as a, you know, as a backup.

Marty · 19:30Like you said, Jason, even if you put it in a high interest account, you put it in shares. But also no one understands the compounding effect of that discipline and what that does for your life. And that's why financial planning's important. So you get an understanding of what that upside is for you.

Marty · 19:47And like I said, you can, you can choose that number regardless of how challenging it might seem. And a lot of the times it's challenging because of the ego. And I know a few people who want to have discretionary money left over to invest even during these times have taken some pretty, what people would think are drastic measures, like sold a car that is a high expense car.

Marty · 20:10That they want something that's cheaper and, you know, more economical because they want to have money to set aside for their future. They're thinking about themselves in 5 years, in 10 years' time. And that's a courageous decision. That's not an easy decision when you want, you know, when you want that next car, you know, to show you're doing well.

Marty · 20:30So that's the thing. Just it's, it's, it's a courageous decision, but they're great decisions if it's getting you to where you want to get to. And you're adapting to the current economic climate as well. So again, just like business owners, personally, we need to think about these things in the same way.

Marty · 20:46What adjustments need to be made? How can we generate some additional money into the household as well? You know, not to stress people more by having to work more, but sometimes there's some clever ways. Might be eBay, it might be, you know, lots of different ways you can generate income that you can put away something for yourself with your family.

Marty · 21:04So just want people to get thinking on that, you know, budgeting, but also putting money aside so you can still continue to build wealth in any market. So yeah, hope that's helpful.

Jason · 21:15Thank you, Marty, for sharing and thank you to Dashboard Insights for their sponsorship. The right information to the right people at the right time. Thanks for listening and until next time.

Marty · 21:25Well, the way we're going, we might have Grey December. Game over.