Eps 13: The Barefoot Investor method to financial freedom

August 2, 2023

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How does financial abundance every single month sound like to you? Too good to be true or right up your alley?

If you’re looking to take control of your finances, build wealth, and achieve true financial freedom, then it’s high time you looked at the Barefoot Investor method to make this a reality.

If you’re not familiar with the term, “The Barefoot Investor” is a popular finance book written by  one of my favourite people, Scott Pape, an Australian author and financial advisor, who’s down to earth and funny to boot.

His guide to financial freedom has resonated with millions worldwide, and today I’m going to break down two of the nine key principles he recommends to help you gain a better understanding of how to manage your money wisely, and take one step closer to all you desire, no matter where you’re at right now.

I think this episode is all the more powerful at a time when many people are enduring a recession, insane mortgage rates, and increasing costs of living. It can be hard to not dip into a scarcity mindset, so the practical guidance Scott offers and I cover in this episode will leave you feeling like you can reclaim your finances and go on a journey to more abundance in your life.

Read the full transcript below or listen to the podcast on YouTube.

In this episode you’ll learn:

  • The 9 step Barefoot Investor Method to financial freedom
  • The two steps I think are most crucial and powerful to get started
  • Why date nights could become your new best financial friend
  • How to avoid budgeting and instead love buckets

Experience the art of setting wealth goals with LifePilot

Transcript

So how does financial abundance every single month sound like to you? A month where you know that your income is going to cover all your living expenses and more, where your mortgage is going to be paid off and some, where you’ll have an emergency fund that just makes you feel rock solid about being able to handle anything that comes up in life, and where you have a wealth plan that is kicking ass.

Basically where you feel in control of your finances and you’re heading towards financial freedom. Well, that is what this episode of the life pilot podcast is going to cover off on. And more specifically, we’re going to talk about one of my favorite people in the world and his barefoot investor approach to financial freedom.

Before we dive in, you are listening to the life pilot podcast and I’m Natalie Sisson, one of the co founders of life pilot. Which is a tool and methodology that is powerful yet simple and letting you create goals and intentions that actually get you one step closer to your dream life.

That’s right. It’s all about getting really crystal clear on all your desires in life, what you need to prioritize next week, next month, next quarter, and then making that happen. Check out lifepilot.co for more details.

So each episode of the life pilot podcast is going to focus on one area of what we like to call the life pilot categories, which are all the things that encompass your beautiful whole of life self.

And for us, these are wellbeing, growth, wealth, lifestyle, work and relationships. I’m really excited to dive into this, because personally, on my front, the last quarter has been really, Challenging financially for my husband and I, and I know we’re not alone in this.

I know this year in particular, it’s kind of the hangover from the pandemic it’s recessions. It’s massively high interest rates and mortgage rates. It’s huge costs of living increases. It’s just all around shite. To be really honest, a lot of people are struggling.

A lot of people are in over their heads and the thought of being able to afford all your beautiful desires in the world is probably something that slipped your mind recently because you’re just busy trying to get by.

And if I’m totally off on that and you’re absolutely thriving and making a ton of money, then awesome. You probably don’t need to listen to this episode.

But if you are right now just in the space of, okay, how do I get back control of my finances so I can work towards my own abundance that feels so far off right now or doable, but we’re just not making any progress.

This episode is for you. And as I said, I am particularly excited to introduce to you. The Barefoot Investor method from my favorite, favorite Australian in the space who I have followed for a long, long time, who I think has an incredible level of integrity, who is not only a financial advisor and former stockbroker.

He also is just passionate about getting people out of debt and in control of their finances. He does a ton of volunteering for financial health lines and crisis and debt lines.

And he is constantly lobbying the politicians, the banks, the financial institutions, the big organizations to quit making all these ridiculous profits or making it so hard for people to get by and to start giving them the financial vehicles, the tools and the leg up that they need to be able to get their first house or get out of debt.

And so for all of those things. I really appreciate the work that he does. On top of that, he has a really awesome email that comes out probably every three to four weeks and it’s almost like a Dear Scott email where people write in with either incredible stories about how they have gotten themselves out of debt.

I’m talking retirees who got scammed for their entire retirement fund. People who’ve lost all their hard earned savings, people who got duped out of a new house build, single mums with abusive ex partners who have gotten themselves back on top, and it’s just incredible to read these messages to Scott.

I also love that he includes his critics who are like you’re you got it wrong or you told me to just invest in this and I think crypto is better and it’s just awesome. Because he will always include his critics and he will give them his honest feedback and answer and he just stays tried and true and steady with his advice all the time.

He has helped millions of people around the world and it all started really when he wrote his book the barefoot investor in 2016. And the whole premise behind it is simple steps to essentially reclaim your financial freedom.

He grew up barefoot on a rural lifestyle property and even though he went on to become a stockbroker in Melbourne, he’s always come back to his roots and he now lives on a farm with, I think he has four children.

Recently he took a holiday in an RV with his entire family for a couple of months when a project that he was working on that he really wanted to come out in schools wasn’t given the green light by the government, even though it had had an amazing pilot. And he was just pretty bummed by it.

So he went off and had an amazing, you know, holiday in the countryside and all around across Australia with his family. And it was just so, such a beautiful way to kind of like collect his thoughts and come back recharged with energy. A

Then he put out the Barefoot Kids book, which I ended up buying several copies of and giving away to my nieces and nephews. And it’s really aimed at kids who are sort of like six up, but you know, it can be even younger where he just profiles all these incredible kids who are already entrepreneurs at heart and using their savings and money to do really cool things.

So amazing book. I’ll link to it in the show notes, which you’ll be able to find at lifepilot.co forward slash 13. That’s one three, because this is episode 13. So what I wanted to do today was really just look at two of the nine steps that are part of the barefoot investor strategy, because I think they might really enlighten you.

They might inspire you to take action, especially if you’re in this place where you just kind of feel like you’re treading water and not getting anywhere.

The nine steps of the Barefoot Investor Method

With the first being my absolute favorite, which is monthly date nights. And I think that’s just because Josh and I have almost always had date nights right up until our gorgeous son came along and then things went a little bit awry.

But in general, before that, we were having date nights every two weeks and we would always discuss life pilot and our big goals and dreams. And we would reflect on weeks. We reflect on our relationship. We would talk about, you know, what mattered.

And so I’m just a huge fan of date nights to give yourself that time and I really like how Scott has made a date night out of discussing your financial dreams and hopes and practical realities.

The second one is to set up your barefoot buckets and that’s the other one that I’m going to discuss on this podcast.

The third is domino your debts.

Number four is buy your home.

Number five is supercharge your wealth.

Number six is boost your mojo to three months.

Seven is get the banker off your back.

Eight is nail your retirement number and nine is leave a legacy.

Now I will just say straight off that Scott is Australian. A lot of the advice in his books, in his newsletters, in his articles is aimed at Australia and I would say also New Zealand.

But you can apply this wherever you are in the world because you’ve just take your own banking system, the accounts that they allow you to set up, all those numbers, your own tax system, et cetera. Plug it in, really. So don’t be put off if you’re not in Australia.

Okay, so monthly date nights. It ticks two things for me in our LifePilot categories. It ticks relationships because you’re going out on a monthly date night and it ticks wealth because that’s what you’re doing.

So what Scott recommends is that you book them in with your partner or yourself if you don’t have a partner. So this is another thing. There’s quite a few people who’ve written in to him saying I’ve been having monthly date nights with myself for four years and here are all the amazing things that have come out of it.

And they are essentially the perfect way to show up with, you know, a glass of wine, some delicious food and track your financial goals and see if you’re sticking to the steps and make it really enjoyable by making an event of it.

Going to your favorite restaurant, or you might want to go to a new place each month, keep it fun, make it something you look forward to, rather than those crappy after hours, after work time convos that are often just not in a place where you feel you can be really honest or take that real time to reflect.

And essentially at the date night, you just look at things like what are the fees that we’re paying on our everyday accounts and our super fund, which by the way you should be paying zero bank account fees.

And if you are being charged and you need to switch to a new bank ASAP, according to Scott. And reviewing your super fund, which hopefully you do have and also just looking at your insurances and even your cost of living expenses, like what’s going on there and really just being fully transparent with each other and talking it through.

A problem shared is a problem halved and being fully transparent about your financials if you’re in a relationship or even just with yourself is empowering.

You know, at times it might be a little bit crappy to look at it if you’re not in the best place, but it is empowering because it gives you a start on what you need to handle and what you can fix.

Cool. So I’m a big fan of date nights and I just think it’s such a cool idea to do. And obviously in his book, which I’ll link to in the show notes, he talks you through how you can do this and what you can keep track of.

So the next step is to set up your buckets and buckets are accounts. Scott’s not a big fan of budgeting, which I really like about him because I always feel like if you’re having to budget and pull back on everything, life gets pretty miserable, whereas an entrepreneur, sure, you can cut costs.

But if you’re having to budget heaps, you actually turn it around and go, okay, how can I make more money so that I can afford these things?

I appreciate that’s not the case for everybody, if you’re in a job, you can’t necessarily just suddenly make more money unless you have a side hustle or you’ve got other forms of income coming in.

So the three buckets that he talks about are:

1. The blow bucket, which is everyday expenses.

It’s for your rent or your home loan repayments. It’s for food, phone bills, internet bill, insurances, and utilities. So 60% goes to your blow bucket.

2. Then you have your grow bucket

Which is essentially your emergency fund. It is the simplest of all the buckets. It’s money you have tucked away just in case. It’s your rainy day fund. It’s your stress free fund. It’s your backup plan. And this is definitely the most important barefoot bucket for financial freedom. For this one, you want to get started with at least $2,000 in your mojo bucket.

So maybe you can’t put that in straight away. Maybe you can. And eventually you want to grow it to three to six months worth of your living expenses.

So yes for this whole episode to make sense to you. You need to know what your living expenses are every month. So let’s try and put it really simply here let’s say you earn ten grand after tax each month and let’s say Your living expense costs are $6,000..

So straight away $6,000 is going to go into your blow bucket, and then that actually gets separated out into four buckets, which I’ll talk about soon. And then in your mojo bucket, you might just be able to put in a grand, right? Maybe you can put in two grand every month. Great! Okay, let’s say you can put in two grand every month.

That means in three months time, you will have saved one month’s worth of living expenses. And if you keep doing it in nine months time, you will have saved three months worth of living expenses, just in case you lose your job, you lose your income, there’s some sort of crisis and you literally can’t work or pay for anything for the next three months.

So that’s how that works.

3. The final bucket is the grow bucket.

And the grow bucket is all about your wealth plan. This is about how to grow your net worth and includes things like your superannuation,

investment properties investing in shares. Probably not investing in crypto because scott doesn’t actually condone that at all. But hey, i’ve got crypto and i’m super happy with it But this is where you’re making your money compound and becoming wealthier over time.

So it’s growing your net worth it’s passive income and it’s compounding interest and so you want to put in Let’s say for that, two grand a month.

So maybe some of that goes into your super fund. Some goes into a property investment or some goes into shares, or maybe it all goes into one thing. Right? So now your 10 grand is essentially gone, but you have your living expenses paid for.

You have an emergency fund that is growing, your grow bucket, and you have a wealth fund that is going to continue to compound every single month and you’re just going to sit on it.

Now, if we go back to the blow bucket, what’s pretty cool is that he then breaks this down into four areas again. So, of that six grand that you’ve got in this example, 60% of that is going to go into the blow bucket to cover those things that I talked about, rent or mortgage, food, bills, utilities, insurance, like the day to day costs of living.

So in this case, that is going to be $3,600. Then 10%, so that’s 600, is going to go into your splurge bucket. And your splurge bucket is for fun things that you just want to spend cash on.

That could be going out with your friends. That could be facials or massages, clothes, appliances, whatever sparks joy for you. It’s the little things you want to splurge on.

10% is going to go into your smile bucket. So again, another 600 per month is going to go into a smile bucket. What is that? That’s things like saving up for a holiday or a honeymoon or a retreat that you want to go on.

And then 20% is going to go into your fire extinguisher and the fire extinguisher can be regarded as a savings plan for you, or it could be put towards paying off a chunk of cash on your mortgage to reduce that debt down, to reduce the amount of interest you’re paying, and to save you money in the long run.

So yes, it can be for savings, or it could be paying off debts, or big things that are going to make a big difference in your life. Cool?

So there you go, you’ve got the Blow Bucket, the Grow Bucket, and the Mojo Bucket. And the Blow Bucket is the one that is split down into what you’re going to blow this month, your daily expenses I should say, the splurge, the smile and the fire extinguisher.

And so, I hope you don’t feel overwhelmed right now. I hope you feel kind of like, oh my gosh, this is actually really smart. I can see how by the minute my income, whether it’s through my business, my side hustles, rental properties, whatever it is.

The minute all that income lands in my account, I then send it off to a whole lot of different accounts on automatic payments with set amounts that I have determined up front that will go.

So I can’t touch it. I don’t touch it. I know my living costs are covered and then I’ve got these accounts where I can dip in for splurging and smiling and I know I’ve got my savings going on. I’ve got my growth plan and I’ve got a freaking emergency fund that if everything hit the fan I could live without earning anything for three to six months.

And you know, for some of you, you might be like, holy crap, this is going to take ages. But the point is you put in what you feel you can into those buckets. And ultimately there should be no money left over. Like all of your money should be working for you, either reducing debt, making you money or covering your day to day costs of living.

That’s it. And I do believe that Scott mentions that if you’re paying any fees on bank accounts you shouldn’t be, switch banks.

He also suggests having many banks that you have your accounts in and for your savings accounts it can go in a high interest saving account, one that you can still access very easily but some of the wealth money that you put in might go into a long term deposit which you can’t get out straight away that has a much better interest rate.

He actually suggests investing in, like, low risk diversified funds. They’re very safe and steady. They have specific measurable growth. I tend to have a bunch of shares in high growth funds that are more risky and generally has a better return.

But right now, if you look at my portfolio, I’ve invested in a number of businesses and funds and usually, environmentally sustainable and ethical funds because I’m not going to invest in mining or anything that’s going to harm the planet so I’ve been quite specific about my funds that I invest in.

And also my super fund is through Booster and they again are an ethical superannuation fund so they don’t invest in anything that is harmful to people or the planet.

So I feel good about that. And I use Sharesies, which is such an awesome New Zealand company that has made investing in shares and stocks so easy from just five dollars. Even if you only have five dollars, you can buy some shares. And I love it. It’s the coolest dashboard. It’s visually super appealing.

And they’ve just made it for everyday people like you and me. And they’ve cut out all the brokers who charge, you know, extraordinary fees sometimes for not doing much work. Don’t get me wrong. There are financial advisors and brokers out there who charge and do a lot of really good work. And then there are some who just like take your money and then lock you in.

And so I’ve been trying to get my mom on to Sharesies for ages because she’ll be able to control her own investments. They’ve also just introduced a amazing high interest savings account, which I love and they’re also just introducing their own KiwiSaver fund Which applies if you’re in New Zealand, which is great as well and you can buy shares On the US stock market, the Australian stock market, all the stock markets.

It’s awesome. So yeah, big fan of Sharesies. Then I also invest in crypto, which again, as I said, Scott is just not a fan of. It’s just way too high risk, way too unknown. But like any of my investments, I’m not expecting necessarily to get my money back. I am sitting, I am holding, and I’m continuing to invest each a little bit in both portfolios.

And I’m happy with that. I’ve got a plan. That’s where it’s at. And I also have invested in properties. So I’m kind of across the buckets there, I guess, across the wealth plan spectrum and it works. So, I can talk more on that in a later podcast, but the biggest thing up front about any of this is you just need to know where the heck you’re at financially.

And Josh and I have this geeky spreadsheet, which I love, and he set it up with these cool toggle reports. But essentially we know exactly what our monthly spend is, our cost of living, across everything. Childcare, rents, insurances, food, eating out, cars, electric, internet. everything and we don’t really spend money on clothes and we don’t spend a heap of money on like entertainment we will go out for dinner quite a lot but typically we’re not splurging a lot. Probably spend most of our money on travel if we’re really honest and experiences and it’s just great to know it and it has also gone up a ton like our mortgage just went up two and a half grand a couple of months ago.

These things are scary and they’re big, but just knowing that cost of living expense is huge to understand, when we make a financial decision, how it can impact.

That also gives us really good targets to know what we want to earn every month to feel abundant or to be covering our needs.

Um, so just that, that financial transparency with yourself and knowing where you’re at, even if you want to stick your head in the hole. Or it feels so far off from your dreams. This is what I really love about the barefoot investor method is it makes it doable. If you’re on, you know, a really small income, you’re still putting 10% aside into that splurge fund.

That might be 80 a month, but 80 over the space of 10 months is 800. You can splurge a lot with 800, right? You may not think so. You really, really can. Anyway, the best things in life are free most of the time. Nature, outdoors, experiences, fun things like that. So I just, I really love that the buckets is a really cool way to look at your money.

And as I said in this email that I get from him every couple of weeks, I’m just inspired by what people have accomplished when they have been in massive amounts of debt, with very little income and even in these challenging times, it’s Amazing. So, I highly recommend you check out his book. If you’ve done the Barefoot Investor Method or some version of it, if it’s worked for you, I would love to hear about it.

Please direct message me on Instagram at Natalie Sisson or tag me in a post. @nataliesisson or hash life pilot, I will find you. And if you’ve enjoyed this episode, if it’s sparked some hope for you, if it’s sparked a curiosity to get really clear about your financials and take back control of them, then fantastic.

Please share it with somebody that you think might really benefit from it. And you know, I will be covering off on different methods that you can use, but I’m a big, big fan of the barefoot investor method and how many people, how many millions of people it’s helped and how it’s just easy to start with, just get control and then start to build up on all those other things like paying off your mortgage and getting amazing savings and a wealth plan in place, and your retirement plan.

Anyway, you have been listening to the life pilot podcast. I’m Natalie Sisson. I sure hope that you’re on a path to financial freedom that excites you and allows you to live your dream life, not 10 years from now, but today. And if you’d like to know how to do that and the steps that we break down in life pilot to do that, head across to lifepilot. co you’ll find this episode at lifepilot. co forward slash 13.

Thank you so much for listening. If you’re enjoying it, do me a small favour and take two minutes to leave a review on your favourite tool that you use to listen to this podcast.

I would so appreciate it. Also check out Life Pilot on YouTube. It’s just the podcast there and it’s going really, really well. And, of the episodes have just been taking off recently, which is really exciting when it’s a super new channel.

So thank you so much again. Here’s to your abundance.

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About the Author

Natalie Sisson

I'm a serial entrepreneur, besotted Mum, best-selling author, speaker, podcaster and lifestyle design enthusiast. I'm all about showing you how to live life to the full, on your own terms and by design.

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