Tammy May

Business is booming at MyBudget, the personal finance business that takes control of clients’ income, pays their bills, talks to creditors and develops long-term budgeting plans.

The business, which was founded by director Tammy May in 1999, turned over $11.1 million last financial year and has aggressive expansion plans. Two new Sydney offices are planned for this year, as well as a 75% jump in clients to 15,000 and a doubling of staff numbers to 230.

May says MyBudget is a recession-proof business: people spend too much when the times are good, and have less money to play with during the glum years.

There’s also plenty of room for improving Australia’s financial literacy, she says, with the bulk of personal finance problems driven by people spending more than they are earning.

SmartCompany interviewed you a few years ago and since then your revenue has soared. To what extent has this been driven by the fragility in the economy?

The economy has played a part in our growth, but to what extent it’s hard to say. It’s been very much a planned exercise, a strategic move to grow like this. Looking at all our budgets and targets, it’s been very strategic. We had always planned to grow this aggressively.

The economy, it’s hard to say whether it has had an impact, but I would say just more awareness around what we do and people thinking about their finances has definitely helped.

How do you think the economy’s going at the moment? Do you think people are struggling or is it just a media beat-up?

We’ve definitely seen growth in the markets that we were in 12 months ago; we’ve had about 35% growth this January alone, without extra advertising.

What it says to me is there are definitely more people aware of their financial position and wanting to improve it. 

And is that driven by large mortgages? 

The majority of it is spending more than they are earning. It sounds pretty basic, but that’s what it is. It’s a combination of things: it’s using credit cards rather than cash, it’s taking on higher mortgages than they can possibly afford, and rents are more expensive than they’ve been in the past. The main thing is committing themselves to more than they can afford, and also spending more than they can afford.

Can you explain your average client? 

Average clients are mums and dads; they are not the bottom 20% of the market, or the top 20% but they’re anything in between. They’re aged between 25 and 55, a high percentage have children, but then we’ve got single mums, single dads and couples with kids, couples without kids, and single men and women as well. So we have a variety of clients, and they’re 50/50 men and women.

So it doesn’t sound like the older demographic is in there at all.  

No, not really. We do have clients under the 25 and over the 55 but it’s a smaller percentage of the market.

And what are the backgrounds of your staff members? 

Their background varies depending on the role they’re in. A lot of them have had customer service experience as well as banking and finance, and accounting. A high percentage have customer services background, because we can teach our staff everything they need to know about personal budgeting – it’s not like you can go and study it or you can get experience somewhere else – so we have quite intense training. We have two big training rooms and three full-time trainers who spend their time training our staff and also retraining in our system and just generally understanding the finance industry.

So are you cutting into financial planning? 

No, we don’t do any financial planning; we have had some ex-financial planners work for us, but not doing any financial planning work. We refer all that business out.

So the idea is people come to you in a distressed position, you stabilise them. Is there a point when they have their affairs in order that you encourage them to go out on their own? 

We help our clients with whatever goals they want to achieve, so if they want to save money for something in particular, or pay down their debt, we help them do that.

And then if they get to a point where they want to create wealth, we refer that business out. But we also still help them manage their day-to-day financials, with their personal budgeting, because that really is the foundation of financial success –  getting our personal finances right. That’s what we aim to do.

And one person’s financial stress is different to another’s. One person might be stressed having one credit card; another person might not be as stressed having 10 credit cards. So it really just depends on the person and how they feel.

And the business works by charging a one-off fee and then a weekly management fee. How is that set? Is there an average charge? 

It’s not a percentage, it’s based on how much work we have to do on client’s behalf.

The set-up fee, it’s based on how many bills does this client have? Do we have to make any new arrangements with creditors? Are they in arrears? Do we have to contact the collections department and make a new arrangement?

It really depends on the situation, and the fee gets factored into budget and paid off as the client can afford it.

And there’s a weekly management fee, which again is based on how many payments we make on the client’s accounts, how many different incomes streams they have coming in, as well as the complexity of the budget and the client’s income.

And how did you get into the industry? You were working for a debt collection agency? 

I was working for a solicitor’s firm that ran a small debt collection arm, which is where I saw the impact that debt was having on people’s lives. And I noticed that it wasn’t how much people were earning, but how people were managing their money.

That’s when the idea came to me, that we could set up a personal budget and then the clients would be able to keep track of everything and work out what they can afford to pay and how much they can save.

How would you describe financial literacy in Australia at the moment?  

There could be some improvements in financial literacy.

We don’t learn about it in school, it’s not a subject we learn about, but it’s something we should all know. We should all know how a credit card works, how to pay bills online and how to put a budget together. There’s definitely room for improvement.

And where would that come from?

Ideally it would come from the Government to be introduced into schools, because the earlier we could start with the program, the better.

And I know a lot of the banks are putting effort into building websites that teach people to understand money, which is really good, but a lot of people don’t have access to the internet and don’t see that information. It really needs to start from our schooling system.