PocketPals: James Davis

How James is using PocketSmith to track his progress to making $10.5M

A little about you, James

I’m a General Manager of an IT company and live in Australia with my dog, Hugo. Historically, I have been quite sh*t with my personal finances and got into bad habits early running my own sole trader gardening business. I got used to earning handfuls of cash each day and I would buy what I wanted because I knew I would be able to get more money from doing more work. I also didn’t put away for superannuation; a situation which was compounded by jumping from job to job and creating another business that ultimately didn’t succeed.

It wasn’t until I attended an industry peer-group meeting with a focus on retirement that I realised I needed to change my ways. There were all these older business owners there who were very clever people with huge, unrealistic expectations. Something clicked in my head: I knew that I didn’t want to be in that position come retirement. The more I heard in the news about the future of work and how pensions are changing, the more I understood that I had to make some dramatic changes.

So, I set myself a massive financial goal: to have $10.5M by the time I’m 65. Whether I get there or not is a different story, but I now have a focus and will at least be in a better position than if I hadn’t changed anything.

What do you primarily use PocketSmith for?

To get a very up-to-date, consolidated view of all my finances and keeping me accountable to my long-term goals.

How has PocketSmith changed the way you do money?

With my new extremely large long-term goal of $10.5M, I created a shiny Google spreadsheet to break down what I needed to save each year to get from $0 to hitting my final goal. This gave me some practical targets to hit.

I tried other budgeting apps but after a month I would get bored sh*tless and just stop: they all seemed too short-term for me. My spreadsheet had given me a long-term purpose; now I needed a needed a tool that would help me to achieve that one day at a time.

Around this time I stumbled across PocketSmith. It did everything I thought I needed (and much more). The first, simplest thing I did in PocketSmith was to create a budget from actual transactions, letting me see where my money was going with little effort. This prompted my mindset to change dramatically; I started researching personal finance techniques on Google, started following finance and economic pages on Facebook, and listening to podcasts — constantly building my knowledge.

After building a base of financial understanding as well as data in PocketSmith, I was able to start reviewing things like: getting rid of my credit card (one of the best things I have ever done financially); changing banks to get better interest rates and no fees; and assessing my car loan to see if it was worth paying off in one go, or letting it go over the term. I was able to calculate that I was actually financially better off with the fixed term instead of my gut feeling of paying it off in one go!

After lots of research I’ve put my new found savings to work. There are much better options than sitting savings in a bank account getting just 2.8% each year. Investing in things like shares, managed funds, ETFs (Exchange Traded Funds), index funds and property is much more rewarding.

What pages/ features in PocketSmith do you use most?

I seriously use it all and look at how to use new features and improve the way I am doing things all the time, it’s how I keep interested.

If I had to pick one feature though, it is the Net Worth section. Being able to see where I’m at and then track that against my goals is what keeps me motivated.

How often do you log in?

For me, it’s a daily routine to jump in, reconcile my transactions, check my budget, my trending and my Net Worth.

Any tips?

Start by actually stopping and thinking about retirement. The sooner you start planning the easier it is, while the longer you leave it the bigger the problems your future self will face, so don’t be that guy!

It can be daunting to set a long-term goal. From my research, the average Net Worth for a household in Australia is $809,000; estimates that I have seen for a comfortable retirement ($40k to $50k annual spending) is between around $1.5M to $2M.

If you have never done anything like this before, I would highly recommend just setting yourself the personal target of the Australian Average. Work out where you are now, then work backwards from that. If you find you are smashing it, then review what you are doing and reset your goal to $1.5M. Track your progress and keep moving the goalposts forward.

If you don’t know anything about personal finance, there are heaps of resources that you can google and there are lots of Facebook pages to follow. Just get in there and think about it!

If you don’t know anything, reach out to others (but be careful with financial advisors — you should have some knowledge under your belt before you speak with them).

Finally, find what works for you: do some research into techniques, and use trial and error to find what works for you. There is no one-size fits all solution, so be cautious and don’t fall for the bullsh*t peddlers.

What’s the smartest money decision you made in 2017?

The smartest thing I did — apart from using PocketSmith properly — was to separate out my fortnightly budget, expenses cash, capital for investments and making money. This means I can make short- and long-term decisions separately, such as finding a better savings account where I can move my capital money to which will make me $7 more a month without any extra effort. I would have never previously looked at things like this because I was treating all my finances as one thing.

Another smart move was taking the time to learn new financial techniques and investment mechanisms. I am 30 now and not even close to my $10.5M goal, but I am already in a much better position because I am thinking about things differently and actually making behavioural changes. It isn’t entirely about achieving my $10.5M goal — but it would be great to hit it! — and I still have 35 years to continue improving.

Since I have starting helping myself, I have been helping my friends too! We have our own Facebook group to post any questions and achievements. We help keep each other accountable and provide info and resources more frequently. It’s great!

Curious to see how others use PocketSmith? Read more from our PocketPals series ❤ Are you looking to nail down some financial goals? Get started with with PocketSmith for a consolidated view of your finances and long-term goals!

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