She's On The Money - If you like piña coladas (and being fiscally conservative)

Episode Date: August 27, 2019

How does travel fit into your big, grand, money-saving plans? If you're not quite sure, then this is the episode for you. How much can we really afford to travel in our twenties? How can we see the world without breaking the bank? Victoria's got the answers. Do you love the podcast SICK and want more SOTM? Of course you do! Join our Facebook page to share your money wins and money confessions, follow us on Insta for daily inspo to keep you on track and DEFINITELY subscribe to our newsletter, the written recap of the pod's key takeaways, including some bonus bits you won't want to miss... In a money mess and need help untangling the muddle? We've got you sorted - simply record your qualm and send it through to us at [e-mail] and you may end up on the podcast! The advice shared on She's on The Money is general in nature and does not consider your individual circumstances. She's on The Money exists purely for educational purposes only and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Consultum Financial Advisers Proprietary Limited ABN 65 006 373 995 I AFSL 230323.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the Money, the podcast for millennials who want financial freedom. I'm Annabelle Lee, one of your co-hosts. If you've tuned in before, you might already know that I'm a law student and a millennial and I so desperately want to lift my money game. To do that every week I pick the brains of my friend and money expert Victoria Devine. Welcome Victoria. Hello. It has been a

great week for so many of our Shoes in the Money community members. I've seen so many money wins and I am continuously impressed and proud and motivated. So as always let's share our favourites from the week. What have you got for me? I love that I get to go first in here because I get first choice. So this week I've got Holly and Holly says I'm officially debt free. And you know why I love this? Because she says that she just sold her car for the amount she owned to her personal loan, which was $14,000. And she was going to buy another car for about $6,000 so she could pay off her loan in half the time as her partner and her were saving for her first house. But she thought about it a lot, had a chat with her dad and decided to buy his car, which was her first

car ever from him. So he agreed and she paid it off in full and she doesn't have any loan money now and she's completely debt free and she attributes that to this podcast and the group of women in She's On The Money. So I could not be prouder of her and I love that story. There's nothing we love more than debt free. 100%. Music to my ears. I've got one from Belle this week who says, this week I achieved a number of money wins. She says, I'm 34, a single mum to a teenager in private school and this is the first week of my life i feel like i've got control of this money thing she's hit the a hundred thousand dollar mark on her super and she's paid off her credit card in full which was three thousand dollars she ended up by saying a year ago this all felt

impossible so tonight i will celebrate my achievements and we are celebrating with her that's amazing from one bell to the other she's smashing it yay victoria today on the show we're talking about travel how does fomo contribute to tens of thousands of millennials accumulating bad debt. How do you see the world without landing yourself in a terrible money situation for years to come? But before we get there, as always, it's time to share a money win or a money confession from the week. How'd you go this week, Victoria? I have a money win. This one's been a long time coming though. And I think that it's probably one of my proudest moments. So I love my wardrobe. I try really hard to keep a capsule wardrobe, but I think it's often really hard to really pick the

pieces that you don't wear, but still love and then give them away. Right. So at Christmas time, which as I said long time coming at Christmas time I actually turned all of the coat hangers in my wardrobe around to face backwards that's so smart yeah and this past weekend I decided that all of those clothes either needed to be donated to charity sold online or you know maybe be given up completely because they're a bit sad but what happened was I pulled them all out and even though there are a few things that I absolutely loved on the hanger I realized I hadn't worn at all and so I popped them on eBay and I am $300 better off now and I think my wardrobe is far cleaner and easier because I'm not filling it full of stuff that I don't wear.

That's something I really need to do and I find it so hard giving out items that I even though I don't wear I still love them they're like my children. I know and I felt really bad giving up some of them but when I realized the coat hanger hadn't been turned around in literally eight months I think that was when I was like look if I haven't worn it in eight months when am I gonna to wear it there are a couple of things i did keep because i couldn't part with them but there are a number of things i was like this dress is really great but i don't wear it no that's a great way that's a great way to force yeah so what did you do i have a money confession this week no come on annabelle you've been so good so it kind of aligns with last week i talked about uh my eyebrow

tint before i got the new ones in the mail i went on groupon and i i think i have a bit of a groupon addiction I feel like they need to sponsor us because you use them so often I do and like the idea the concept of Groupon is good you know it's great things for cheaper but I'm definitely overusing it I bought like a voucher for my eyebrows yeah no wonder they look so good thank you thank you like massages nails it's no it's an issue so this week you've gone and what bought how many vouchers I don't even know the number Annabelle you need to help me that is so naughty but also I hope you really enjoy them. Oh, I will. So Victoria, we want to see the world, but according to a 2019 survey in Travel Pulse, 56% of millennials go into debt for travel.

That's more than half, 6%, more than half of us. So let's start there. Is this something you've seen anecdotally amongst your own friends? Because I have quite a lot of friends who go overseas without any sort of money plan, which stresses me out a little, but that means that they end up spending all that they have far too quickly they either resort to getting personal loans in the end or they spend the rest of their trip overly stressed about money or they call their mom and their mom transfers them more cash no that happens so often so I think this is a really interesting topic to bring up actually because I think that we justify travel so easily because we say it's for the experience like I don't want to miss out and you know you've got FOMO a little

bit but also I can completely understand people saying well I don't want to miss out like two of my girlfriends are going to Europe and I don't want to miss out like that's the experience of a lifetime like fair call right so I think that this is something we really need to take a step back and really think about like why are we traveling is it because it's really easy to access like we now have all of these travel websites offering after pay and offering you know loan schemes that you're able to you know pay off the trip once you return and I think that that is actually putting us in a position where we think that debt for travel is an okay debt to have when in reality it is absolutely not debt is debt absolutely you come home with nothing except

something that you need to pay off and you need to pay it off in a way that incurs a lot more interest than a home loan a lot more interest than any kind of loan because it's an unsecured personal loan so you're looking at either having it on a credit card and credit cards are between you know 16 and 22 percent more if you're a little bit unlucky and have a really high interest credit card or a personal loan which is 14 to like 19 interest that's a lot of money to be paying for an experience you already had do you think it's maybe a generational thing because our generation seems to be borderline obsessed with travel 55 of millennials are looking to increase their financial plans the next year compared to 31 of gen x and 20 of baby boomers is this a

generational thing or are there cultural factors at play here that make us extravagant travelers Can we just talk about Instagram culture right here, right now? Yes. I think that we see so many people living their best lives overseas and we get a little bit jealous. Yeah. So I see it all the time. Like it is what?

It's August now, which is prime Europe season. They're all living it up in summer. They are. So I think that we're in a position where we feel as though we deserve something that we haven't worked for. If we've had a really big year at work or we've had, you know, something significant can't happen often we go look I really need a holiday and the easiest way to access that is to put it on credit card. Why do you think people automatically want to put it on their credit card

or a personal loan instead of saving? Ease of access you can choose to do it and you know make the most of those travel deals or make the most of the cheap flights so often you see people you know get their emails in the morning and it's from Webjet and Webjet says oh Hawaii's got $500 return flights and you go well I can't afford that now but you know I'll pop it on my credit card and we'll do it later and I don't think they think about the real cost of that so cheap flights are great but how much interest are you paying on that how much are you then going to have to spend on accommodation and all of the expenses that are associated with traveling so those $500 flights that you thought were fantastic are now going to cost you three or four thousand dollars

in a trip that maybe you couldn't afford because you already put the $500 on your credit card and so many people justify this and go oh but the flights were so cheap I got them to Bali and a little while ago we had someone on the podcast who said look I just wrote off the flights completely because it would have cost me more to go than what I would have lost by giving the flights up and I think we really need to have a good look at ourselves and go why are we choosing to do this if you want to go on a holiday save for it yeah it's that whole like you only live once attitude and it seems to pop up a lot in these surveys do you think that's a fair enough reason to put yourself into debt for a holiday for example what would you say to a client who

explained she's in five thousand dollars worth of debt because you only live once yolo i just think it's unacceptable to be honest and i think i'm quite harsh on this because it's putting you in a financial position where you're not able to achieve your goals you're not able to work towards wealth you're not able to do things that you need to do a holiday to me should be a reward for doing something really good and that's something really good should be the savings yeah it shouldn't be you going overseas and spending your rainy day fund it shouldn't be you going overseas and going into debt it should be you going overseas and feeling incredible because you've already paid fruitful and then coming home and feeling like fresh and rejuvenated instead of having to like

pay back all those debts exactly and like I'm the first to admit that I'm probably a lot more organized than a lot of my friends but the first thing I do when I want to go on a holiday is create a spreadsheet and that spreadsheet outlines how much my flights are going to cost how much my accommodation is going to cost you know what I think I'll be spending each day and I'm pretty generous with that budget but working out exactly what that holiday is going to cost me and then how much I'm going to have to set aside in addition to my savings and investment goals to achieve that holiday and sometimes that means me looking at it and going wow I'd really like to go because at the moment I'm thinking of going to Europe in the next two years ish which will be

fantastic but I look at that and I go wow that's you know a five thousand dollar holiday at least I don't have the surplus you know cash at the moment because I don't want to be impacting my investing or my savings plans to go on this I don't want to be putting myself backwards but it's literally going to take me another two years to save up another five thousand dollars by putting money aside each month instead of taking it from what I already have yeah the fact that you're thinking about it now is what maybe more people should be doing thinking about it a bit more in advance so that you can enjoy that holiday absolutely and one thing that they always say about travel is the anticipation is half of it. So like how often do we talk about the travel that

we're going to go on and how often do we have conversations with friends about you know what we're going to do when we travel. So I think that travel is fantastic to go on but it's also something that's really gratifying to look forward to because having things that we are looking forward to makes us get through the hard days a little bit easier. 100%. So according to Travel Pulse on average it takes a year for the average millennial to pay off $3,000 of travel debt. are you at all surprised by that do you think we're maybe too flippant with how we spend money on holidays so it actually all comes back to how much you earn versus how much you spend I never say to someone that they can't actually travel or that they shouldn't be spending their

money on experiences that are really really meaningful to them I am the first person to say you need to live within your values so if travel is something that you value the most contribute a lot of your income to that goal put money aside to make sure that that's happening don't live your best life here at home and then also expect to be able to travel as well just because you enjoy it savings and investments are something that require a significant amount of you know compromise we don't all have unlimited funds so we need to work out how to use our funds most appropriately i'd probably be encouraging people to just really take control of their finances do a cash flow course do a budgeting session organize something so that you are saving

every cent and making the most of the money that you earn but the fact that 56% of millennials are going into debt for travel is actually pretty scary because that's 56% of millennials that aren't working towards their bigger goals. Do you think that that 50% of people have travel in their money values or do you think that maybe they're feeling the pressure from social media and Instagram? I think that it's a bit of both right like I think that if you value going overseas you're going to spend money on it I don't think it's you know just societal pressures I don't think it's just Instagram because I think a level-headed person will look at Instagram and go wow that Italian holiday that my friend is on who knows how much debt she's in or who knows how long

she had to save up for that and we see it all the time but we don't actually often see people celebrating that they worked really hard for it. Someone that I actually follow on Instagram is Olivia Molly Rogers and she recently got back from a holiday and a couple of her posts were really around how hard she'd worked to go on that holiday. And I really appreciated that. Like I could see that she'd worked really hard over a really long period of time to afford that holiday. And you know, her and her partner had saved up for it and, you know, made a number of compromises along the way. It's not often that we see people being transparent about how they got to where they're going. I think a lot of people just think it's a given. I would love to see more of that on social

media. Absolutely. I saw that they used a spreadsheet as well, which is your thing. Oh my gosh my favorite thing so Victoria as someone who studied psychology like yourself why do you think millennials are willing to splash so much spending money on a holiday when they potentially wouldn't do that back home I think it's really easy to justify spending that you're doing on holiday because you wouldn't do it at home and you know you only come here once and this is the only time I'm in Europe and you know I'm in France so I probably should just make the most of it I think that we just spend more because we want to make the most of things, but we're not pre-planning that spending more. So as I mentioned before, when I budget for a holiday, I'm pretty lenient on how

much I'll spend each day. Like there have been a couple of times where I've gone overseas and, you know, recently we're talking about my New Zealand trip and it wasn't in budget to go to a couple of restaurants, but we did have the cash and that was okay. It just wasn't a part of the plan. I think over-budgeting is fantastic because it'll mean one of two things. Either you get to have the best time on your holiday that you didn't realize you know there are a couple of things that you planned for or you come home with extra cash that's a fantastic position to be in and I don't think the pre-planning necessarily means that we're being the fun police here I think it means that you can just travel without the stress absolutely and I think by pre-planning it puts

us in a position where we are leading up to these holidays excited instead of worrying how we're going to pay for them. So for example, if you're wanting to go on a $5,000 holiday in two years, starting now means you only have to put around $200 away per month. Like that is pretty doable for everybody. It just means starting early and being consistent with your savings. If you really want to go, you'll put that money aside. Exactly. There's this really widespread attitude between millennials that an overseas holiday every year is normal. Do you agree with that? I think you're absolutely correct. Is it normal? Absolutely not. I think that it is something that is portrayed in social media as the norm. It is something that our friends talk about, but what we don't talk

about is that we're not achieving bigger financial goals. Too often do I talk to people who are telling me that they'll never be able to afford a home or, you know, it's too hard to save for a home deposit, but you look at their history and they've had an overseas holiday every single year. I think we really need to re-evaluate what our values are and how we're prioritising them. If travel is important to you, fantastic, but how is that impacting your other goals? Should you be going on a trip every year or can we stretch it to every two or three years and just really put a focus on really enjoying that holiday and really looking forward to it? I also think we can't forget that a lot of the people we see on social media are influencers

and they maybe get paid to go overseas and it's easier for them to do so. 100% and I think that that's something that we we also don't talk about enough we're introducing all of this you know hashtag sponsored content which I think is really important but also those people often have higher salaries than the average person it is really unrealistic for a couple who have a combined income of $100,000 to be able to go on an overseas holiday each year if you're in a position where you earn $60,000 a year $5,000 holiday each year is a lot of money that is not something to kind of blink at and just go, well, it's related to my values. That's fantastic. But what are you compromising in the long term? And are you actually happy to compromise that in the

long term? Or are you going to get to a point 10 years from now and say, I haven't purchased a home I wish I'd known earlier that I needed to save or that I needed to make some different decisions? So with all that we've said in mind, what are some tips you'd give to someone who's about to book holiday? Is it a case of picking our travel buddies wisely and knowing our limits? I think that's really valuable I think being open and honest with your friends about your budget is really important too if you're going overseas and you have a budget of $50 a day but your friends have allocated $100 a day you are quickly going to run out of money because their expectations of the activities you do on your holiday are going to be different so I think being really upfront

with your friends about how much you're planning on spending and how much you're planning on taking is really important and if they're taking more maybe you need to be aware of that and ramp your savings up or vice versa. Maybe they need to realign their goals to a hostel instead of a hotel and make sure that everybody can enjoy that trip. I think also back to what I've been preaching and talking about pre-planning your trip. So not just saying cheap flights and going fantastic I really want to jump on these you know let's go to Bali. You know the flight and accommodation package cost me less than a thousand dollars that's fantastic. Do you actually have that a thousand dollars? Like Bali is going to be there next year. Maybe we spend a hundred or two hundred

more on flights, but we don't go into debt for that. I don't think cheap flights is ever an excuse for someone to book a holiday. And I think we really need to have a look at the way we're spending because that's quite impulsive. Those places will always be there. Those cheap flights will always be there. I think that's something people forget. Absolutely. And those cheap flights aren't that cheap when they're on credit. Hi there. You've called the She's on the Money hotline. Do you have a money problem you want help solving do you have a money dilemma you just want to chat about victoria is here to help each week we'll be playing your hotline questions to help make sense of the money mess you may have

found yourself in give us a call on 0435 293 886 and you might find yourself on the show hi guys i'm a big fan of the show i love traveling and i want to be able to go on yearly overseas trips whilst I'm in my 20s. So my question is if I'm earning $65,000 a year before tax what percentage of my income do you think should be put towards travel? I really want to make the most of my 20s and travel as much as I can but I also don't want to be living above my means. Anyway thanks so much guys. Thoughts Victoria? So while she's saying that she has a $65,000 income before tax any budget she puts together needs to be net income so that's actually what's going into her bank account each and every single month. Her net yearly income is about $52,000. So that's what

she's earning. I think that there's never actually an appropriate amount to put towards travel. Again, it goes back to your values. If $5,000 holidays each year are aligned to your values, that's fantastic. As long as you're not working towards a bigger goal that's suffering. So if you're saving for a home or you're putting money into an investment, or you are in a position where you just want to be saving for life is a $5,000 holiday every single year going to align to your goals or should you take a step back and say you know what whilst I earn $65,000 a year maybe I should be in a position where I'm taking a holiday every second year and maybe saving two and a half thousand dollars a year or potentially choosing locations that are a lot cheaper so we all know

European vacations are so expensive but Bali's a little bit more reasonable so maybe having a think about the style of holiday that you're taking and not assuming you can go to europe every single year maybe it includes some closer asian countries that are a lot cheaper and maybe once every five or six years you do the big european holiday you don't have to regret anything no absolutely not but i think that that comes back to your values and i sound so preachy when i talk about this but everybody's money story is different everybody has a different set of values and a different set of beliefs around money and if travel is something that you want to do and you think that that is absolutely appropriate go for it but I think that we should also be looking at our bigger

long-term goals because often travel is a really short-term goal that could impact our long-term goals. Now let's jump into our money diary segment. Let's go. Today's Money Diary is from 21 and Methodical, a woman who takes her relationship with money very seriously. I have a lot of bank accounts, but there's structure to how all of my accounts are set up. I have direct transfers, direct debits all set up so that I don't have to think about it too much and I can't be tempted to spend too much, yeah.

I was always a saver as a kid, but I think as I've grown up more and seeing how money has affected the lives of family and friends quite a bit in negative ways. I'm just really keen on making sure that I have myself set up financially so I won't ever have to depend on anyone else. We know 21 and Methodical is the kind of empowered woman who knows where she wants to go. So how much does she earn and how much has she got saved? So because I'm a full-time student, I work three days a week at a supermarket.

I earn about $450 a week and I have currently about $5,500 in savings. yeah so I have 25% of my wage gets transferred across directly to some of my savings accounts every week. So we know how 21 and Methodical gets paid but what exactly happens to that money after it's deposited into her account? A portion gets transferred into an account for investing and then another portion goes into an emergency fund and then another portion of that 25% goes into saving for trips. How does 21 and Methodical go with investing though? Yes so I do invest I've been investing for about three years now. Yeah. So when I was in year 12, a few months before I turned 18, I started doing a lot of research into investing because I knew it was something that I

wanted to get into so that I had sort of the research ready to go for when I turned 18 and I could legally invest. So over the past three years, I think I've invested about $6,000. That's a combination of investing in individual shares through ComSec. I've had a raise account for maybe two, two and a half years, an employee share plan. And recently I've started adding some ETFs as well. And what about her debts? So currently my HECS debt is sitting at about $30,000 just over. By the time I finished my undergrad degrees, I'll probably be sitting at about 50,000 in a couple of years time. And I currently have about $350 sitting in my afterpay account obviously i'd prefer to not have any at all on afterpay um but as victoria

said in the afterpay episode i believe it was um i kind of use it if i'm buying if i have to buy something specific like a outfit for an event and i buy a few options that's pretty much the only time i use it um the reason it's sitting at 350 at the moment is because i've put a couple of my boyfriend's birthday presents on it because i'm not sure that i'll keep them like they might be returns so when I think there's a good chance of I only use up to pay when I think there's a pretty high chance of that I'll be returning stuff just so that my money doesn't get caught up in limbo yeah. Hex debt wise I mean it's not really anything I can do about it I'm not too worried about it because I don't know it's the one debt that dies with you so it's the one I'm

the least worried about. So does 21 and Methodical have any good money habits that she's especially proud of? I think how I have my bank accounts structured is pretty good because I have accounts with multiple different institutions um it's all quite separated so I can't dip into savings accounts too easily yeah I think yeah that's probably my best I don't spend too much I'm not an impulse shopper or anything so I always sleep on a purchase like a significant purchase before I make it and yeah I'm really good at prepping lunches and things like that for work and uni I kind of let myself buy lunch out at uni once a week and I don't let myself buy a coffee unless I've got a keep cup that's my and I'm notoriously bad at remembering to bring

my keep cup so it stops me from wasting money on coffee so what about her worst money habit up until this year since I finished school I've normally save up really hard throughout the year and then blow it all on an overseas trip um so this year is actually the first year that I don't have an overseas trip planned and I won't be going overseas which is not too bad I guess because it's an experience it's not wasting money on material things um but I'm at the point now where I want to start knuckling down and saving rather than coming back from a trip to a very low balance in my savings account and I also spend a lot of money on gifts that's probably I waste a lot of money on gifts I kind of have money is no object rule when it comes to presents which I mean it's

good for other people's benefit but I mean yeah I kind of need to start writing that in a bit because I'm not an impulse shopper for myself but when it comes to presents if I see something that I think someone will like I'll just buy it and stockpile it for when it is their birthday or Christmas. So that's where quite a bit of my money goes. So what's 21 and Methodical actually saving for? What's her big money goal? So my biggest at the moment now that I'm not planning on doing many more overseas trips for the time being is saving towards a house. So I mean, I'm not, that's not going to be anytime soon. I'm still studying, but ideally if I could have my half of the deposit for a house in about five years time, that's the goal at this point. So we'll see how

that goes so how would today's money diarist rate her own relationship with money if we forced her to give herself a grade i was not looking forward to this question um maybe an a yeah i'd say about an a because yeah i think now i'm really starting to get my act together with money but um there's room for improvement so i love her i do too i think she's doing incredible stuff researching about investing in shares before 18 which is so cool that is amazing I think she's fantastic I thought that she had a really great little money story and I really liked that she'd planned so much of it to be 21 and have a six thousand dollar share portfolio that is going to compound over time that is incredible also having a good savings buffer fantastic and I loved that she talked

about after pay so I think that we throw that under the bus so often but it sounds like she's using it really constructively so I think that if she's putting a lot of thought into it like and you're using it in a way that is constructive for you and it's not putting you into debt and you're not purchasing things that you wouldn't otherwise purchase like go for it but at the same time it sounds like maybe she needs to put a little bit of a budget in place around gifts so I'm a massive spender on gifts as well that's why we're friends yeah so I feel like gifts are something that make me feel really good about you know our friendship or you know what I want to give other people I think it to me makes me feel really gratified but I think making sure it's in the budget is

really important so as a part of my budget that I keep and guys that template is actually in the she's on the money group if you want to copy it it includes gifts so I include gifts for Christmas and for birthdays and I try to be quite generous with that amount so that I don't end up over spending and not meeting my goals in other areas. So potentially having a sit down, writing down the names of people that you purchase gifts for each year and allocating a specific budget to them is important. I really like that she said that she plans for it sometimes and really stockpiles gifts for Christmas. I think if that's the case, potentially don't purchase it yet. Maybe if you're already stockpiling things, have a bit of a shop around online and see if you can get it cheaper

or there's an alternative that you could present that maybe doesn't cost you as much. It could go on sale yeah exactly so maybe having a list like I do in your phone of all the present ideas that you've got could help but I loved her I thought that she was doing really well and she's absolutely on the right track and I'm so excited that we finally got someone on the podcast who rates themselves as an A because I think that that's really important I think she's quite inspirational very self-aware and she sounds like a planner which we know you love I do love that I'm sure her spreadsheets are really pretty as well that's all we have time for today unfortunately just before we head off as always let's quickly wrap the boring but important stuff the advice shared

on she's on the money is general in nature and doesn't consider your individual circumstances she's on the money exists purely for educational purposes only and shouldn't be relied upon to make an investment or a financial decision and of course we promise victoria divine is an authorized representative of consultant financial advisors proprietary limited abn 65006 373 995 afsl 2303 223 i bet you know my afsl and abn more than you know your parents mobile like i'm pretty sure i don't know those numbers by late but i'm pretty sure i've memorized it yeah i'm impressed i'm gonna try going off script next time all right i'll wait for it all right so facebook group guys we have more than 15 000 women sharing money tips and tricks every single day free of judgment in

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