Okay, let's talk about how to save money to pay for your
flight training, coming up.
Hello, how is it going?
My name is Jane, I am a flying instructor, charter pilot and jump pilot in Australia,
actually I am also an accountant as well, I have a master degree in accounting.
Before we start, if want to know more about flight training and other aviation
related topics, consider subscribing.
So, when we talk about saving money, most people thought that
they need to earn more money to save more, that's actually not true.
It is about how much you spend.
For example, both person A and B earn $800 per week, person A spends $700 per
week and person B spends $400 per week, of course person B will save more money.
Interestingly, people who earn more will tend to spend more, so a person
who earn $3000 a week might only able to save the same amount of money compared
to a person who earn $1000 a week.
It all depends on how you control your spending.
Step 1.
Set a weekly or monthly budget.
When you set up a budget, you can start understanding your spending
habit, then you can set a threshold for each spending category.
There are 4 primary needs for expenses - food, housing, transport and health.
All other categories will be considered to be optional that you can cut
down, such as clothing, mobile plan, Netflix, Spotify, gym membership, etc.
I am not saying you cut down all these item completely, some people consider
some of these things are important, you just need to plan a budget for it.
First, food.
You can divide it more precisely into groceries and dinning.
In general, you will spend less if you cook every single meals that you
eat compared to dine out or take out.
For me, I cook most of the time for all my meals but I do occasionally
treat myself my take out because I just don't know how to kebab, Thai
food, sushi, etc, so I put different budgets for groceries and dinning.
Second, rent or house mortgage.
You can try to minimise the cost by having house mates.
If you don't want to share, see if you can spend less on bills like
power and water, internet or cable.
Third, transport.
This can divide into more specific categories - car fuel,
car service, car insurance, car registration and other transport.
You put an actual cost or approximate cost for your budget.
Fourth, health.
For Australia, there is public health system, so that actually
doesn't cost anything, but other countries, you may want to put
a budget for a health insurance.
As for other spending items that you can think of, if you personally think
that is important, plan a budget for it.
After putting numbers for each spending items, you will know what
you think you should be spending.
Then I want you to download a bank statement for the past 3 months and
compare your spendings and your budget.
If it is over the budget, you want to find out why, are
those over spending essential?
Step 2.
Compare your income and budget expenses.
Once you compare these two numbers, you will find the extra and know
how much money is left to save.
I wouldn't suggest you to save everything towards flight training, you should save
part of money towards an emergency fund and the rest can be for flight training.
An emergency fund should be at least 3 months of your expenses, personally
I think one year is more appropriate, considering what is happening in 2020.
Let's say your weekly expenses is $350, so your one year
emergency fund will be $18200.
You might want to factor 20% to 30% of the extra money to build the emergency fund.
Step 3.
Set multiple short goals.
When you start saving, don't aim for the ultimate final cost of the
whole flight training, that will take a long time for you to save.
In the meantime, you might give up.
Instead, you should aim for milestones, such as first solo, area solo, RPL
theory exam, RPL test, first navigation solo, PPL theory exam, PPL test, etc.
Or you can aim for block hours, such as 15, 30, 45 hours.
Once you save up 15 hours, and start spending it on flight training, you
are still saving for the next 15 hours.
This will also motivate you to keep the saving habit and keep track with
your budget to not go overboard.
Let's look at an example.
So in the screen here now, I have a budget template that you can download
you can find in the description below.
It will help you to have an overview of your income and expenses, then
you can figure out how much you can actually save for your flight training.
In this spreadsheet here, you will see income and expenses, so you
will have food housing, transport, health insurance and others.
Then come down here, you will see the savings go towards the emergency fund
that I mentioned and flight training.
Then also you can factor in how much you want to save for your goal.
Then come down here, it will automatically show up the 3-month, 6-month and 12-month
emergency fund based on your expenses.
Before we started, I want to show you for Australia minimum wages is
$19.84 per hour so if you earn 19 dollars, so let me put in $19.84.
As a full time, we do 38 hours per week and 52 weeks per year.
After tax you will get $663.92.
Let's use that to see if we actually can save anything by
earning minimum wages in Australia.
Here the first line is for your main job, so I earn $663.92, let's say
I don't earn any passive income.
For you, if you earn any passive income like youtube, online courses,
investment, you can factor in as well.
All this is already automatically have formula for you so you just
put in value in yellow boxes.
So let's say I don't have any passive income at all, so my
total income weekly is $663.92.
Then you will have fortnightly, monthly, quarterly and yearly.
Then come down here, let's say I want to save absolutely everything, so I
will cook every single meal I'm going to eat, I want to plan for maybe $60.
Per fortnightly I will have $120, monthly $260.
For myself personally, I'm actually able to spend less than $250 per
month, so it's actually doable.
I don't want to dine out, I want to save absolutely every single
penny, then I put zero here.
For your rent, again if you want to save more money try to rent a room, like in a
share house or share apartment, that'll be great so it can vary from $100 to
up to $250 for a share house in a room.
For example, let's say I put $150 for the rent.
I don't have mortgage, so I don't put anything.
For power and water, again it really depends on your renting situation.
If you are lucky, sometimes the bills already included into your rent.
Let's say you do need to pay the share bills with your housemate.
Normally in Australia, it costs around $300 quarterly after the sharing thing, I
will put $300 in the quarterly expenses.
Then the next one internet, again if you're in a share house, you can
share the cost for the internet, also if you're lucky, it could
be already included in the rent.
Let's say we share for that, so normally for internet is around $60 per month.
If you have one housemate, you will spend $30 per month.
For transport, let's say you own a car, you do need to maintain your car, you
need to pay for a car service twice a year, you need to pay for registration,
car insurance, all kind of stuff.
So car fuel, let's say spend around $30 per week.
Then a car service you normally do it every six months or every
year, so I will put into yearly.
Let's say you do $500 for the year in total.
Then car insurance, if you're actually able to pay the car insurance annually,
it will turn out to be cheaper, so let's say you can't afford a $1000
insurance in one go, you pay monthly, you probably end up to be maybe $1200
something like that, it's not a big deal, but it's something to think about.
So let's say you are paying a $100 per month for your car insurance.
Then your car registration.
Based on where you are located in Australia or even in the world, it
will be different, so I would guess yearly maybe you're paying $100.
Then other transport, you choose to actually take public transport, that's
actually great to save all the money by not owning a car, but let's say you
drive the whole time to work all that, you don't take any public transport
at all, so I put zero dollars for weekly expenses for other transport.
Then come down to health insurance, so let's say we are located
in Australia so we put zero dollars for the health insurance.
For a mobile plan, obviously you have the choice of having more
data, the more data you get, the more expensive the plan will be.
For me I actually spend $20 per month for a 5GB data plan,
let's put $20 for monthly.
Then next one, myself I wear the same shirt every day, if I do go out nowadays,
basically I don't buy clothing at all, so I don't actually factor in into my
budget, so I put zero dollars here.
Next one is Netflix, for me is essential, so that's why I will put a budget
for Netflix, so here I will put $15.
Then the next one, Spotify or any other music streaming services membership,
if you think that is essential, put in a budget for it, for me, I don't have
any membership with any music streaming services, so I'll put zero here.
Then the next one is gym membership, I don't work out so zero dollar for it.
Next one is a haircut, if you're a guy, you probably will have haircut
more often compared to a girl, but normally a girl haircut will cost a
lot more compared to guys, for me it's around $30, so I put $30 per month.
Then for shopping, I will always put a yearly budget for me to be a little
bit more flexible with the spending.
Probably I want to just buy something close to $1000 in the beginning of
the year and that I won't be spending anything for the rest of the year,
that's fine, so that's why you have a yearly budget to be a little bit
more flexible with that, so normally for me I will put about $1000 yearly.
You can see our total income is $663.92 and when we come down here, we are
actually spending weekly $319.62, end up you're able to have an extra
$344.30, so you're actually able to save almost half of your income, even
though you're earning minimum wages, if you are able to stick with the budget,
that we are just talking about here.
Let's say I build $50 for the emergency fund weekly, so I put $50 here, so
yearly I actually able to save up to $2600 yearly for the emergency fund.
Then it comes down to, I'm able to save $294.30 into flight training weekly.
Let's say I want to save up a block hour, maybe 10 hours, I put in 10 hours
here, then I'll put a rate for the whole flight training cost, so for example
let's say it will cost you $250 per hour, then I will put $250 per hour.
Every 10 hour it will cost me $2500, you can have a look here, it may
take me about three months or around two and a half months, or even two
months to able to save for 10 hours.
So every two months you can go flying for 10 hours.
So basically if you think about it.
Every week, you can go flying.
Actually it's quite doable, isn't it?
Even though if you're earning minimum wages in Australia.
And come down to here, we can see 3-months emergency fund is $4,200, 6-months
is $8,300 and 12-months is $16,600.
If you earn actually more than minimum wages, everything will be much better.
Let's say you are earning $30 instead of the minimum wages in Australia, so if
you come back here, if I earn $30 hourly, still doing 38 hours per week, 52 weeks
per year, then you will have a taxable income of $1140 and also $929 after tax.
Now come back here, $929 weekly income.
Let's say all your expenses, no change at all, you still try
to save up as much as you want.
Your saving becomes $600.
Let's say you still want to save even more for your emergency fund, so which
is $100 per week, you are able to save $509 per week for your flight training.
Every month you can go flying for 10 hours and also you are able to save for
emergency fund as well, in case you lose your job, like what happened in 2020.
Yeah so that's basically it.
Overall, learning your spending habit is the first step of saving,
then setting up a budget and stick with it are the key to success.
That's it for this video.
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I will see you in the next video. Bye