money CLARITY Explained

Money Management & Debt Reduction

Debt can buy you great things but being debt free buys your freedom. money CLARITY is a market leading financial software designed to provide debt reduction strategy. We help our clients with their cash flow, budgeting, and goal setting so they can optimise their money better and plan for improved savings into their retirement.

We help rid the debt of Everyday People and the massive interest cost and stress that debt imposes upon them by managing their money better and by connecting with their Future-self.

I know very few people who know exactly what they earn, how much they spend and exactly what they spend it on. Knowing this is essential in forming and committing to a personal budget. Why are we out of touch with our money??

A staggering 86% of the Australian population doesn't know how much money they are spending every month. Some 82% don't know what their mortgage rate is either.

Research, conducted by UBank found 59% of Australians admit their current financial situation causes them stress or loss of sleep and nearly half of millennials (44%) constantly worry about their financial future.

In real-time, money CLARITY models various cash flow management strategies, then calculates and simulates one’s financial ‘Future-self’.

Future-self Concept?

The concept of one's future-self is an aspect of planning out future opportunities or occurrences that might affect one's future.

Behavioural Science has identified that people think about their future-selves similarly to how they think about other people. Whilst cognitively they recognise their future-self as themselves, they discount this ‘person’ and contextually relate as if they were somebody else - a stranger!

The extent to which people feel psychologically and emotionally connected (i.e. similarity, closeness) to their future-self influences how well they treat and make decisions today for their future-self. Studies in connectedness to one’s future-self have shown that when people feel a closeness to their future-self, they are more likely to save for retirement, make healthy decisions, and avoid ethical transgressions. Interventions that increase feelings of connectedness with future-selves can improve future-oriented decision making across these domains.

In terms of personal finance, money CLARITY provides that intervention and allows for those in the areas of financial advice to present this to their clients.

money CLARITY succeeds because;

of the simple and incontestable logic built into the modelling of money CLARITY;
the significant improvement in financial outcomes that can result;
the low-barriers to Client behavioural modification and implementing the advice recommendations;
and most relevant, it offers solutions to the financial concerns most ‘present-self’ Clients want answered by financial services providers: Those questions being;

Question 1? - “I wish to manage my money better. We don’t seem to be getting ahead.”

Question 2? - “How do I reduce my Debt and pay my Home Loan off ASAP.”

Question 3? - “I wish to have a comfortable Retirement.”

The “money CLARITY” principles and priorities are:

Clients learn more about their cash flow movements and spending behaviours – without this knowledge it will be difficult for them to establish and maintain their Cash flow budget and understand their “consumer behaviours”.

Set simple, practical and realistic budgets on expenditure with the absolute intent to ensure they have greater income than expenditure.
Within their budget, ensure that they retain a cash flow buffer, recognising that cash flow (inflow and outflow) will have its up’s & downs and that it is wise to have available “cash at hand”; enough to insure you against life’s misfortunes, breakages and inflation.
Use simple and cost efficient banking and loan structures.
Next, rid yourself of high interest debt.
Strategy to save for a ‘Big Hairy Audacious Goal’ (BHAG) – your priorities before paying down your home loan. Things like, planning for a single household income whilst you are caring for a new Baby or planning that “once-in-a-lifetime holiday”.
Pay your Home Loan off as soon as possible
Invest in your retirement, over and above your Superannuation Guaranteed Contributions, as soon as you are able and can afford to.

money CLARITY simultaneously analyses up to 5 residential loans across 7 strategies and compares the outcomes to their Client’s current loans, predicting the term reduction, interest cost and repayment savings that could be made on their own Home Loan.

money CLARITY can simulate a range of methods of how our Clients should approach the paying off of their high interest debts (Credit Cards, Motor Vehicle Loans and Personal Loans). money CLARITY automatically calculates the shortest term where each debt can be repaid, the interest cost saving and total repayments that are also saved.

As goals are achieved and debts are paid off, the savings are cascaded to the next goal, in ‘best outcome’ order.

When high interest debts are paid off, money CLARITY points any surplus income towards saving for a ‘Big Hairy Audacious Goal’. It projects the date at which this savings goal will be achieved.

Once high interest non-deductible debts are paid off and important savings goals have been achieved the software looks to pay off the Clients home loan in the shortest possible time and sets the target date for achievement of this.

When our Clients Home Loan is paid off, savings are pointed towards investment into your Retirement Planning.

The example tables below shows an overview of the money CLARITY results of how our Clients Goals and Objectives project the potential outcomes by implementing the advice strategies.