Question: How is MoneySMARTS different from the Smile, Grow and Splurge system?
MoneySMARTs does work slightly differently with respect to the account set-up structure. Below is a simple but helpful diagram of how things should generally be set up. Once critical amounts have been determined (I.e. how much you need for your living and lifestyle account and what you want to be set for your provisioning expenses), and you have direct debits set up with your credit card account, the remaining surplus can be utilised for additional investments.
So, the way you might be able to convert these barefoot accounts across to the moneySMARTs system is as follows:
- Smile → Provisioning. This appears to be a ‘guilt-free spending money’ account, so it makes sense to track it as provision items, such as holidays.
- Splurge → Living & Lifestyle Account. The way this works is you essentially have an account that caters for all of your groceries, entertainment, eating out etc. This balance gets transferred automatically from your primary account to say, a debit transaction account, on a weekly basis. Then, you use this balance to spend on all of those personal spending items listed (including groceries, movies, clothing etc.).
- Grow → There is no specific account designated for this specifically as the moneySMARTs system is designed to help you build up your surplus – any surplus from that point onwards can be used towards investments or remain within the offset account. You can of course create an ‘Investment Asset’ under the ‘Other Assets’ page and attribute a set amount of post-tax contributions to your investment fund through this manner if you would like to apportion a dedicated amount of surplus funds to this investment activity.