SERIES: The cost of living in… Brisbane

Welcome to the next instalment of our ‘cost of living’ series, where we explore the cost of living in different cities and towns all around Australia.  In this post, we will explore the cost of living in Brisbane

Who: Pete, Asset Finance Associate, in the NAB Business Bank
Where: Milton (an inner-city suburb of Brisbane), QLD

Tell us about your town.

I am lucky enough to live in the sunny suburb of Milton, smack bang in between two Queensland Icons, Suncorp Stadium, and the XXXX Brewery.  As rowdy as this sounds, its astonishingly quiet, with our neighbourhood populated by young families, plus a few oldies to keep us sensible.

I am currently renting a house with a few mates from University and school, amazing the connections you make!  We are all young professionals, at the very beginnings of our careers.  At this stage, we are all saving and investing (after a good amount of my nagging) for our respective futures.

 

Talk us through your cost of living.

My biggest expense (of which there aren’t many) is rent, closely followed by feeding myself.  I borrowed to buy my car and paid that off as fast as I could, owing money on a depreciating asset really bothered me!  I live a very low-cost lifestyle; I even walk to work!  This saves me money and burns fat, as opposed to driving or taking the train, which would cost me money and make me fat!

My budget is super simple, as I find simple behaviour is the easiest to maintain.  Money comes in from my salary, and it’s automatically distributed to various different accounts for different purposes.

I keep it simple by dividing my income into a few different accounts, and letting them take care of themselves.

  • Spending – rent, food, indulgences.
  • Oh Crap – non-regular expenses, car servicing, medical costs.
  • Grow – self managed investments in shares.
  • Even Bigger Oh Crap – this is the best account I have!  It holds at least three months of living expenses, in case of a situation which causes me to say, “Oh crap”.  This is held at a different bank, so I can’t see it, and so it’s harder to access. This account makes me feel wonderful!

I give myself enough to get through the week for expenses and little indulgences (who doesn’t love a double shot cappuccino, or a beer after work on Friday?) For young people (my housemates will attest to this) sticking to a regimented budget is both difficult and demoralising (when you inevitably stumble outside of its confines).  I have found giving yourself spending money and actually spending it with glee works really well!

I see investing as extraordinarily important, and while most kids in my year at school turned up their nose at compound interest as too simple, it turns out to be the most important thing you will ever learn.  EVER.  I invest my own money in Australian shares that I very carefully and deliberately select, and hold for a VERY long time.  In financial planning terms, that would be very “risky” and “aggressive”, but if you peak under the curtains of how I invest, it’s very structured, sensible, and my favourite, boringly predictable.

Category Cost (per year)
Groceries & Food  $7,800
Rent  $10,140
Investing & Saving (less of an expense, more of a necessity)  $10,400 (generally more)
Utilities  $1,000

How do you manage your finances / cost of living?

I live in the middle of a capital city, which means I must constantly be on guard to keep myself from indulging in the various treats which are constantly around me.  A small amount of discipline can go a very long way in this area.

I don’t own a house, I’m quite happy renting right now, as I am in the most important part of my investing life, the building phase.  I would much rather have the compounding be in my favour at this point, and aim to buy a house further down the track.

Working for a financial institution, I have my super with Plum Financial in their growth option.  The only reason I’m with them is because I get half-price fees, but I’m always on the hunt for to see if I can get a better deal elsewhere.  Over a lifetime, you can pay out an extraordinary amount of your nest egg in fees, so every basis point counts!

 

Who influences your financial decisions?

I was extraordinarily lucky to have parents who were not only financially literate, but took the time to build good habits and ideals in my sister and me.  They ran their own business, and told us everything they could about investing and managing their own money. This early financial education and exposure has been priceless.

I’m also extremely lucky that I am a voracious reader, and have absorbed almost every book on investing I can find.  The most obvious influences are Warren Buffett & Charlie Munger, but I have also taken heed from various other investors such as Bill Miller, Ben Graham, Phil Fisher & Joel Greenblatt.

Closer to home, two authors have really stuck with me for their simplicity and objectivity in managing money.  They are Peter Thornhill (Motivated Money), and the Jamie Oliver of finance himself, Scott Pape, the Barefoot Investor.

The combination of these influences has taught me how to buy shares in great companies, at great prices, and wait.  Over the share market’s life, it has outperformed every other asset class by a country mile, and is a great machine for transferring wealth from the impatient, to the patient.

I firmly believe that knowledge compounds in the same way as compound interest, so the more financial education you can have, the better off you will be.  Above all, I have learned, that to manage your money, you don’t have to be a wiz at math or accounting, you just have to be really good at managing your own behaviour.

 

Written by Pete Buchanan

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