She's On The Money - What is a recession? What does it mean for us?

Episode Date: September 15, 2020

Australia is officially in a recession, so what does that actually mean for you? Today, we unpack it all and we also break down exactly what we need to do to safeguard our finances during this fraught time. If you do need additional guidance, please get in touch with the National Debt Helpline on 1800 007 007.Do you love the podcast sick and want more SOTM? We had a feeling that was the case. 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 absolutely subscribe to our newsletter, the written recap of the pod’s key takeaways, including some bonus bits you won’t want to miss. Finally, if you’re in a money mess and need help untangling the muddle - we’ve got you sorted – simply record your question and send it through to us at [e-mail] and you may just end up on the podcast!  Your hosts are Georgia King and Victoria Devine. 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 and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Australia Pacific Funds Management Proprietary Limited ABN 34 132 463 257 - AFSL 339151. 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. My name is Georgia King. I'm a copywriter and journalism student. And each week I have the pleasure of sitting down with millennial money expert, Victoria Devine. Victoria, hello. Hello, Georgia King. How are you? I'm good thanks buddy. Now today's show is one we know you guys will get a lot out of and that is how to manage your money during a recession. It was announced a couple of weeks ago now that

Australia has officially entered into a recession so we decided it would be worth dedicating a whole show to unpacking what this means for you and how we can be best protecting ourselves financially during this time. Which I guess the point of it is to hopefully leave you guys feeling okay about things and in control of your financial well-being. Now sticking to the regular format we will also be hearing from a very inspirational money diarist and we'll be answering a question from a listener about whether she should move out of a toxic household or if she should stay put at home and save. But first, Victoria, talk to me. Money wins, confessions from the week that was. What have you got for me? Georgia King, I have not one but two money wins for you. Get out of town. I know. Thank

you. They are both not great, but I just figured if I put two together, it would be so much better. So first things first, right now at the supermarket, $1.50 a punnet for strawberries. If that's not a money win, I don't know what is. Second money win. I was on a walk yesterday around my five kilometre radius and was having a very delightful time. Georgia, as you'd know, this weekend, the weather was absolutely gorgeous here in Melbourne. So I was definitely making the most of my one hour outside prison time walk. And it's hard rubbish in my suburb this week.

and I walked past an absolutely delightful I don't know what you'd call it is it a dresser is it a chest of drawers is it a mix of both I don't know it's two gorgeous drawers on some really nice tapered legs great condition fantastic wood obviously needs a little bit of a DIY has no handles that's okay I asked the old man in the front yard who was clearly doing a bit of clean out if it was okay because I did feel a little bit weird just taking something off his front yeah front yard so Aston he was absolutely delighted that I was actually going to do something with it because he thought it was junk but whatever maybe it is maybe I've just got deluded sense of what is in fashion but I'm very excited about this chest of drawers and for those

of you following me on my personal Instagram you already would have seen it I'm actually going to just document my little journey of like trying to flip this yeah as cheap as possible because Georgia it's going to become a gin bar in my lounge a gin bar a gin bar I'm very excited I'm going to put some nice trays with my favorite gins on top and hopefully make it look as fancy as the ones i've seen online that i can't quite justify yeah yeah a few 200 a few 200 a few a few too too many dollaroos yeah yeah yeah we got that dollaroos love that yeah a few too many dollaroos is this something you would usually do i feel like you are not the hard rubbish type of gal you kind of there's a different vibe to you you're a little bit fancier dumb okay i'm not going to

say I feel attacked by that comment but I feel a little bit disappointed no it's absolutely something I would do and I just think that you can actually find some really cool stuff there in saying that I'm not someone who kind of goes around looking for hard rubbish but I'm a massive believer in second hand and you know repainting things growing up my mum was so savvy at being really crafty and like making things for us and like you know changing furniture and like yes we always had like really beautiful baskets that she'd kind of found thrifted in our bedrooms and if they weren't the right color she'd like spray paint them and I always found that really cool so I've wanted to thrift things but I often find that it has to match with my house so for me it's not

just about finding a chair on the side of the road and being like yay a chair like I was genuinely looking for something to go in my lounge room as a gin bar and when I saw it I was like oh my gosh that would be beautiful so it was kind of like a really good coincidence and that's why it's a money win because it wasn't just a free piece of furniture it's actually saving me from purchasing something I was going to anyway oh that's a beautiful tale my love happy for you thank you we have no idea how it's going to turn out it could be horrendous you just wait I'm going to try some DIY in ISO George King though let's move on from my terrible my terrible hard rubbish finds to your money win or confession what have you got this week I've got a fusion this week guys

it is a double whammy like yours which is funny I didn't know you were going to have two but I've got two as well so my money win is off the back of last week's episode my mum bought this schmancy shampoo didn't like it so who ends up with it this cat yes money that was a money win um and i was needing more as as you said last week like i always have like seven shampoo bottles and no conditioner like full shampoos you know what i mean like why is that i feel like that's serious that's very serious I feel like it's actually an issue and I feel like I always buy shampoo and conditioner in the same size bottles I should learn yeah different size bottles the other part of my little spiel here is my confession and that is that I just spilled half of my oat milk latte

on my laptop Georgia it's still working at this point but that could set me back a couple grand in like a week so have you got the milk out well I just grabbed my towel from the bathroom and like patted it but I'm a bit I'm a clumsy person and mum was in the other room so I tried not to make a big deal because she would have yelled at me anyway I'm 26 so yeah good on me and you're still worried that your mum's gonna yell at you I love that I'm just clumsy but yeah watch this space it might be fine but let's move across now to the Facebook community Victoria it's been a busy week it always is busy on that little page have any posts stood out to you this week yes Georgia I have one from Jessica and she wrote a beautiful post this week she said money win just wanted to

say thank you to the pod and everyone in this group for their inspiring stories and for motivating me to save and get my finances in order. Nine months ago my partner and I were able to purchase our first home and I normally would be one to get the trades people in for help but since being in this group I figured what's the harm in giving it a go ourselves. We spray painted our whole exterior, pulled down all wallpaper, ripped up the shag carpet, painted and patched every single wall ourselves and that's just the start of it we've literally done hundreds of little things ourselves and saved literally tens of thousands of dollars so thank you all and i loved this because she's got this beautiful home honestly it looks stunning now if you guys have seen it in the post i'm not

really sure why she got rid of that r60s wallpaper but that's another story i actually like the wallpaper i feel like you're joking but i was like is that the after is it the before because george king would be into it guys i'm not joking yeah i know but i loved it i think ryan john even got in on this and was like what the wallpaper personally i do think it's hideous so i'm glad it's gone but georgia if you love it i'm sure she might have some left over because it looks like there's more than enough of that to go around but georgia do you have a money win from our community that you want to share this week of course i do be so mine is from emily it's a short and sweet one she has scored a 600 plus lecker bike for 250 on marketplace she's shared

it there it is gorgeous it's got the basket on the front rather little bell it's one of those classic like very instagrammable that's 100 instagrammable and it's in this like lemony color would you call that lemony cream with yeah lemony cream tan seat and handles like it is 10 out of 10 bike would ride that around in iso yeah so as she's written there it always pays to look around. 100%. Alrighty, let's move on to the main chat of today's show. How to manage our money during a recession. Now, recession is a word that for many, myself included, is shrouded with fear and a kind of uncertainty as it's not something we've really lived through. There was of course the GFC of 2007, but Australia fared relatively well through that. However, the recession which

we are currently faced with does seem a little more real. Though it's daunting that we wanted to use today's show to take some fear out of 2020 and provide a simple guide on the best ways to manage your finances through this recession so that you feel educated and in control rather than unsure and vulnerable. Victoria, before we do chat through the things we need to do to safeguard our finances during a crisis like this, can you please define exactly what a recession is and what the implications are likely to be for our listeners? Georgia, the definition which is used by economists is two consecutive quarters and a quarter is a three-month period within a year and in each and every single year there are always four quarters when an economy declines or two

consecutive quarters of decline in GDP and GDP stands for gross domestic product recently or in the last three months Australia's GDP has fallen by seven percent which is the biggest quarterly drop since the ABS actually began tracking it in 1959 so that's quite significant and generally when we see a recession we see kind of like a domino effect that impacts pretty much all of us so it's not something that is only going on in the share market it is going to impact every single part of the world so just to make it really clear if the economy stops growing businesses need to really reduce their costs which means that people are going to sadly lose their jobs or portions of their salaries because we're not earning as much on an individual level and then Georgia our personal

reduction in spending then impacts local businesses who have always had our support before and then they have to lay off staff because they aren't making enough money and it becomes a really vicious cycle so it is not something that is just in the share market it impacts us all and that's why we have to care about it and we have to understand what is going on because at the end of the day we can control what we are going through but we can't necessarily control what's going on with our jobs and I think it's really important especially during a period like this that we do not see this stuff as a reflection of our own capabilities, which is so easy. You often see during a recession, an increase in mental health issues and mental health decline. So I

think that's really important to call out really early that if something like this is going to ultimately impact you, you don't feel like it's a reflection on your ability as a person because it absolutely doesn't mean that at all. Recessions are surprisingly, Georgia, considered a really normal occurrence and a part of the regular fluctuations that actually occur in a nation's economy like this is normal this has been predicted for a while and they are often spurred on by sudden economic shock or unanticipated events that create really serious financial damage obviously this recession is due to the economic shock of coronavirus which has essentially seen the entire world closed down for months and this has sparked a recession which we kind of saw coming

from the beginning and it's not like people weren't predicting that it's just what has happened and it's something that we will deal with but the important part to understand is that regardless of how long a recession lasts we do come out of it the other side and what would you say just to go back to that question what what will the implications likely be for our listeners so in terms of what a recession actually looks like and what it means for our listeners in short the answer is it's going to look so different for everybody generally speaking employment rates are greatly reduced which we know is the case in Australia especially right now lots of businesses close as they can't afford to stay open the value of stocks they plummet wages are reduced and there is a rise

in poverty sadly people stop spending there's a higher government borrowing and so on and so forth on a day-to-day level though for our listeners I would say that the main thing that could be compromised is employment and the ability to save and the ability to get ahead financially which if you're listening to this podcast I'm assuming is a priority for you it can also have a massive impact on our mental health which I touched on before but we spoke about it recently Georgia so if you go back and listen to our money and mental health episode I think that was a really powerful one because at the end of the day nothing is stable we're really unsure of our finances and we can be really stressed out and actually become quite depressed and vulnerable if we don't feel

like we're in control of our personal budgets. So Georgia, this recession is going to differ from the one that we had between 07 and 09. You remember Kevin 07? But in that, it's going to really impact those in lower income areas like the leisure and tourism sectors, obviously because of coronavirus. So while many of us are actually able to work from home, those who can't will be absolutely more adversely impacted as a consequence of this which is really sad and we've already seen this for like the last six months so yeah that's where we're at george king so how long you probably i don't know if you can answer this but how long does a recession typically last look sadly i can't actually answer this and it totally varies and the simple answer is we don't know i'm not going

to pretend to be like oh my gosh last for a year it lasts for four years it'll last for 12 years like we cannot tell you how long it's going to last and I think that coronavirus is going to be incredibly tied to this recession and as soon as we understand what's going on with COVID we're going to be able to understand what the financial or the lasting financial impacts of a recession are going to look like so instead of having the global financial crisis whilst where 99.95% of people did not predict that once it started happening people could see where they fell short Whereas a virus is something that we don't ultimately have control over the spread of. And once we understand what's going on there, we'll be better able to work out what this

recession actually looks like and the bigger impacts of it. So instead of me talking at length and jumping in with my questions, we thought it may be more digestible to list the four most important things we can be doing to manage our money during a recession. I love a list, Georgia. This is going to work really well. The first step is to pay down our debts as soon as possible. Can you please talk us through why this is such an important step?

Obviously, debt reduction is one of the things I talk about a lot on She's On The Money and eradicating bad debt is something that we are all striving towards, but it is especially important during a recession. So during a recession, there are job losses, which we've already seen hundreds of thousands of them happening here in Australia. And many people see their income decrease with little to no notice, which can be absolutely devastating if you have repayments to make that you can no longer afford. If you are still employed and have debts, the main debt I want you to really focus on

paying down, if it's possible for you, is bad debt. And this is credit cards and personal loans. So basically any debt that has a high interest rate related to it, I really want you to prioritize and concentrate on. If you can get on top of them now, then if the worst should happen to you and you do lose your job, your finances won't be completely derailed because you've currently got a safety net for yourself. But if you do have multiple personal loans, you could make things a little bit more streamlined by consolidating your debts.

It is absolutely not integral right now, Georgia, for you to be paying off your HECS early as that's not a loan that includes a high interest rate or any interest rate at all. So don't feel as though during a recession you need to be making extra contributions to those. I care far, far more about concentrating on your bad debt and concentrating on building a solid emergency fund for you. I think at this point, it's also really important to remind you that whilst I know a number of people in our community are focusing on paying down their HECS debt earlier, which, you know, you go friend, like do whatever makes you happy. If you do not have a job, you do not have to pay your HECS debt back. So don't feel stressed or pressured that if that happens, you've got $100,000 looming because you're in a situation where you have a super high HECS. You only have to pay that back once you meet a certain threshold. threshold. Really important as well, rank your debts and prioritize them. So I've talked about

the snowballing method, or you could use the avalanche method and go back and listen to our debt episodes if you don't know what I'm referring to, but use a method to get rid of your debts and create a plan. That's really, really important. And if you are struggling or have been let go and you don't have any idea what to do, please remember our friends at the National Debt Helpline, which is a service that gives you access to financial counselors for free like these guys will actually help you figure out a plan to move out of debt and won't cost you anything they are absolute legends and some of the kindest people I know we also know that many banks are actually quite sympathetic to the current situation so give your bank lender a call and see if they are

offering either a financial hardship plan or if you can defer some payments because you're definitely not the only person feeling this way and it's definitely best to call and see if you can pause a repayment rather than just missing it and racking up late fees and getting into more debt and feeling really overwhelmed. At the end of the day, these are things that are beyond our control and I think it's really, really important to just put your hand up and be like, cool, something's impacting me. What can we do about it? Take the judgment away. Take the bad feelings that you potentially have about this away and just ask because if you don't ask, you don't get. And at the end of the day, I know for sure if you will put in a position where someone

said, look, let's just defer that debt for six months, you would sleep so much better during that time instead of wondering, oh my gosh, what am I going to do about my home loan or what am I going to do about my personal debt? Like at the end of the day, the banks want their debts paid back. So they're going to put you in a position where you can pay back that debt reasonably, but they are also very aware of the recession. They are also very aware of what's going on with the current economic situation. so I think just put your hand up ask for help when you need it don't be too proud like it's not a good

idea and then George to continue my rant once your debts are paid down we really need to focus on building up your emergency fund now I don't believe in just getting rid of all your debt and then focusing on an emergency fund I think that regardless of what debt you're in you should be creating an emergency fund at the same time getting out of debt is really important but if you're putting yourself in a position where you do not have an emergency fund at all and something bad happens, you're going to end up in even more debt, which is a terrible idea. So I talk about this a lot and there is no right or wrong when it comes to having an emergency fund. Like as I've said before, I have clients who have three months worth of their living expenses. I have a client

who has three years worth of her living expenses in her account. It is so up to you what sits in that account but put in an account some money that would make you sleep well at night that would help you be in a position where if you're suddenly out of work you're not in a position where you can't afford your grocery bill so for me that is absolutely the priority and Georgia I'll let you move on to step two because I am very good at ranting no it's all good I'm loving it all right so the next step which I think probably most of us knew was going to be on this list is to overhaul our budget and cash flow and also limit our non-essential spending where possible. Can you please talk about why this is such an important step? Now I talk about budget and cash flow all

the time because I truly believe that it is the only way we can take control of our finances. Obviously I'm wildly passionate about investing and creating financial freedom but if you don't understand your budget and cash flow you can't create financial freedom, you can't start investing, you can't actually have an impact and you don't know what that impact is going to be. So if you listened to our recent budgeting and cash flow episode, you would know I spoke at length about how to get a handle on your budget and cash flow. And it really just means establishing and understanding the money that you have coming in versus the money going out and where your money is allocated to. Personally, I believe that it is the best way to make sure that you are putting

yourself in a good financial position. And it's actually the way I personally ensure that my spending remains in line with my values and keeps me on track financially so that I know what I can spend and it's stupidly important during a financial climate like now like to me it's really really important to be in control of these things i think we really need to take our heads out of the sand georgia and just stop being worried about checking our bank accounts like remember it is what it is like do not judge past you for you know the spending habits you had or the debt you got in or things that you regret like there's no point regretting anything there is no point putting yourself in a position where you are judging yourself or feeling overwhelmed or upset about

looking at it. And I know this is common because I get so many messages from people. They're saying like, oh, Victoria, you talk about budgets. I really want to start budgeting, but I just get so anxious looking at my bank accounts. Like I get that. But at the same time, don't feel bad looking at bank accounts. It is what it is. Also, if you can cut back on spending, I've mentioned this on the show before, print out your last month of spending, take two highlighters to signal essential and non-essential spending, and then ask yourself if there are any ways to cut down non-essential spending so that you can save a little bit more. So it might be Uber Eats, might be takeaway coffees, it might be that online shopping that you're doing that is building up

anything that is sabotaging your saving efforts. It's going to put you in a better financial position. Also, Georgia, negotiation, really important. Can you negotiate a lower interest rate on your personal loan? Can you negotiate rates and payments? There is absolutely no harm in asking. Can you call your energy company and ask for a better deal? Can you go on a comparison website and see if you're getting the best value? Like get bang for buck, especially right now, all the little things they are going to add up. And then Georgia, another one is housing costs. We know that housing is one of the biggest expenses we have to fund. So consider where you can save some money here, especially right now.

If you're renting, can you move somewhere cheaper? If you actually own your own home, refinancing right now to a lower interest rate could save you so much money. We are actually in a very lucky position, and I'm not sure if other people are going to see it this way, but I see it this way, is that every other time we have been in a recession, we've had really high interest rates on home loans. whereas arguably we have some of the lowest or we have the lowest interest rates at the moment like we can refinance your home loans to like 2.5 percent quite easily and that's something that

we've never seen before and I think that that not not never but you know it's really really uncommon so I think now is a really great time to go you know what can I save here because 2.5 percent I know 20 years ago it was 18 percent to get a home loan so at least we are not going through a situation where we have 18 home loans and we are also taking on bigger loans i'm not saying that you know there aren't heaps of other factors in place like don't get me wrong i'm not saying oh my god money's so cheap now like just buy a property it's not the case at all it's more just be aware of this and you know save money where you can also really great can you complement your earnings with a side hustle or a second revenue stream that would be so helpful so finder

or our friends from finder found that you can earn up to ten thousand four hundred and ninety dollars per year with the side hustle so if you can consider the skills that you do have and potentially monetize them there could be a fair bit of money in that and we've seen a lot of our community take to sewing masks at a time like this as a really incredible little side gig we've seen people jump on survey websites and air tasker all are great little money spitters and even georgia this week i was talking to one of my girlfriends and she said that she was on air tasker just doing off of your writing jobs oh really she was like oh I'm just responding to people who want help writing their websites I'm like oh I didn't even know that was a thing on Airtasker that's the

thing you never know what there's a demand for out there right like you may as well 100% honestly I thought Airtasker was for like you know hey I have a table in Newport that I want picked up and brought over to Malvern yeah like I thought that was a thing turns out the Airtasker is so much more than that so I think it's just about you know putting your hand up and having a bit of a look around and seeing what you can do but even things like online surveys can be quite lucrative like you know I'm not saying you're gonna earn millions from it but like can we please remember that cash flow is cash flow and any type of side hustle is a hustle like it is amazing do a survey takes 20 minutes you might get five or ten dollars that's five or ten dollars

you didn't have before yeah so just on that guys if you are struggling with saving we obviously did a big bumper episode on our saving hacks last week. I actually, I put it out to the group to let me know their favorite saving hacks and I have compiled them into the biggest blog post you've ever seen. So I might publish that. I love it. I haven't even read it yet. I know you've written it. It's yet to be published. So I'll pop it up on Wednesday and everyone can have a read of it. Yeah, it'll be exciting. But yes, go over that to see if there are some extra ways you can save. So the next step here is to not sell our shares if we are investing. Bea, can you please talk through why now is not the time to be selling our stocks and how should we be investing

if we are thinking of doing so right now? Is it a horrible time to invest? Is it a good time? So there's no good slash bad time to invest. Sadly, if I could time the markets, I'd be a very rich lady, Georgia King. But at the end of the day, I think it's really important. If you have not listen to our investing episodes, and there are two of them back in season one, go and listen to them because we need to really deeply understand emotional investing and how our emotions actually play into the way that we make decisions about our money and the way that we make decisions about shares. We know during the global financial crisis, and now this is obviously a very, you know, a large thing to say, but a lot of people lost a lot of money because they panic sold. And at the end of

the day, those people that were able to hold their shares during the global financial crisis and come out the other side are far wealthier today because of it. So I think it's really important to not panic sell your shares because you see them decrease in value. It's really important to remember that a decrease in value is not real lost money on your behalf. You are only losing money, Georgia, if you are pulling that money out of the share market and crystallizing those losses which means accepting those losses so you might have a share that's worth ten dollars georgia and then you go and you look at the asx and you're like oh my gosh georgia it is worth you know six dollars that it's plummeting i don't want to lose all my money and you pull your share

out you get your six dollars and you walk away what you're doing is accepting six dollars for that share instead of waiting for that share to increase back in value and it might come back to $10, might go to $11. Do you know what? It might even drop down to $2, but you still own that one entire share and you only lose money if you accept to sell that. Does that make sense? I feel like I get on this high horse all the time and it makes a lot of sense, but our emotions come into play and I'm not going to lie. Obviously I'm an investor. When I see a drop in my portfolio, I feel a little bit sick. I get a little bit antsy and I should know better. Like I have a podcast on this stuff. But I'm not going to say by any stretch of the imagination that I don't feel

anxious when I see a loss on paper. It does make you feel anxious. What we need to do is make sure that we are educated enough to make the right decision for us and not invest via how we are feeling. Because often we will invest or sell shares when they go low, but then also we'll buy shares when they're really overpriced. Like right now we're seeing in our Facebook group, a lot of people posting about Tesla and afterpay. I'm like, oh my gosh, I bought afterpay shares or I bought Tesla shares. And you're like, wow, congratulations. Like, you know, you took a punt as a financial advisor. I don't usually take a punt at all. I didn't buy these, but you would have seen posts in our community about people buying afterpay. But at the same time, like a lot

of other people saw those and they're like, wow, George King made a lot of money on afterpay. I'm going to go buy some, that's a great investment when that share is actually overpriced. So I think it's really important to just, you know, stay in your own lane, watch your own stuff and understand why you want to make that decision. It is not saying Georgia that if you need access to that money, you shouldn't pull it out. You know, if you lose your job and end up in a situation where you need access to that, then I totally get it. It is very different to panic selling and selling something because you're worried about a future loss so for me yes it's really important really important to remember that the share market is long term like it's not just a six week or six

month period that you're investing and i think it's really really important to just understand that and you know make sure that you're staying solid on the decisions that you're making and not being emotional about money decisions yeah and it does it completely makes sense that people would be emotional about it right now like it's a very fraught time um one of my friends actually did just panic sell their shares and i was like dude why did you do that you literally had that stock for like eight weeks and he was like no i just can't i was like oh what would victoria say um but yeah i get it but that's really important right like i feel like this is such a convoluted area because you can obviously go and buy shares yourself it is not hard to go and purchase a share

there are so many platforms to do that on but seeing a financial advisor is going to make sure that those shares are in line with your values and you get it and you're able to sleep well at night and you fully understand the decisions that you're making around it. And you also have someone on your team who can bounce ideas off and go, ah, Victoria, like, can we sell those? I'm so stressed. And I sit you down and go, hey, all right, Georgia, is that a good idea or not? And I think that that's a really important thing to have. And having someone on your team is really important. But also, if you're thinking about it, like that's what the She's On The Money community is for as well whilst we can't provide you personal advice we can definitely you know remind you about

emotional investing post in the group be like hey i'm really stressed out like we can absolutely be on your team so that's what we are for 100 so say b if someone came to you like they're new to she's on the money and they're like wow investing sounds great i'm gonna be wealthy one day would you say that now is not the time or it is the time i mean you said maybe that there's no a good or bad time but is now not the time wow what a weird question for me but you know what I'm trying to say I know I know exactly what you're trying to say you're saying is now a good time to invest I can't answer that yes or no because it's going to depend on your personal situation if you've lost your job no not a great time to start investing in shares because you'll

need access to that capital we need financial security if you've been looking at some shares though I think it's really important to follow that share and work out what its journey looks like is it currently undervalued is it currently overvalued like what does that actually look like because as much as the share market has taken a hit does that actually mean that you're picking up a bargain and we know that during the GFC a lot of people made a lot of money by buying really undervalued stocks so maybe it is a good time for you but it would have to be in line with your goals and your values and you would actually have to potentially get some advice on that especially if you're thinking about making a bigger punt but what I can say is that if you are going to

be putting your money into the market right now please do not expect to see a return don't go get one of these micro investing platforms and say all right Victoria well I started investing it's been eight weeks it was meant to be a good time to buy and all of a sudden you know you're down another five percent like it's going to keep going down but at the end of the day the less the stock is valued at the more value you are buying in at if that makes any sense so if you're buying 10 one dollar shares and they're a dollar and then they plummet down to 50 cents a share fantastic you're getting double the shares for the same amount of money so i think it's really important to understand that as well whether it's a good time or not completely dependent on your

personal financial situation it's so hard to answer and just quickly property is obviously looking a little bit cheaper at the moment yes would you say in a recession it is a good time to buy because the prices are low or is it like risky because we'll have mortgage repayments and we might lose our jobs like what is your take on that again so hard to say and so hard to answer this but when the stock market is shaky it's so tempting to forget everything we've absolutely learned about investing and turn our focus instead on to property which is not necessarily a bad idea it is a very stable choice it is less exposed to economic disasters so on so forth but I would still say you need to be doing what is right for you buying property now is still going to be

locking you into a 30-year mortgage and that's a massive commitment even if you're saving some money at a time when jobs may not be stable and our incomes may not be as healthy as they once were so if you're going to go down the property line really consider what you are purchasing and aim for an area that is somewhat recession proof investing in areas that are reliant on a single industry like a holiday destination can be really risky especially at a time like now the last step I have here is all about superannuation so can you please talk to me about why you think pulling money out of your super is a risky call if you I don't know if you do think that I'm assuming you do you know me too well Georgia King yeah well can you talk to

me a little bit about the whole super theme so essentially it's all about future you right like Taking $10,000 out of your super right now, which if you're in a situation where you qualify to do that, is going to ultimately be, if you're 20, it ends up being like $350,000 due to compound interest that you're taking away from future you. Whilst it might be nice to go, oh, that'd be good. I'll take my 10 grand out. Unfortunately, I've seen a lot of this in our community and outside of our community being like, oh, I'm going to take that out. I really need a new car and I don't want to get debt like I don't want to get a loan or I've got a personal debt and I'm just going to pay that off with the 10 grand and then you kind of go great idea but furthering that that ten

thousand dollars due to compound interest is actually costing you hundreds of thousands of dollars I'd much prefer you to just be in that personal debt for another year and smash it down that way instead of kind of getting that instant gratification of pulling it out and paying it off It's also not teaching you anything about getting out of debt and gives you an easy exit point so you feel as though, you know, that didn't hurt as much. So I'm not worried about getting into debt another time and you're probably more likely to get into debt in the future. Most of our listeners, Georgia, are women and we already know that we are worse off super wise. We already know that we have significantly less than men in super. so making these decisions not one that I would take lightly in saying that I do think it's a

really beautiful option for people who are in terrible financial situations at the end of the day that $10,000 or a total of $20,000 that we can take out of super is going to potentially be the difference between poverty and surviving for a lot of people so it would be very naive of me to only mention oh you're taking lots of money away from future you but if you do find yourself in a position where you do need to take money out of super have a think about it first make sure it's the right decision for you our friends at the national debt hotline they'll be able to tell you whether it's a good idea or not for sure but also when you are in a better financial position really try to put that 10 or 20 000 back like really make some extra contributions because i

would hate to see you guys behind and the whole purpose of she's on the money is to make sure that we all finish ahead really well said there v i think that does make a lot of sense and 100 percent it's a lifeline if you need it but don't just be pulling at it willy-nilly like you need to be understanding what you're taking away from your future self so to wrap this part of the show up I thought we'd make it really simple do a bit of a quick fire round where I give you a topic I give you a topic and you give me like the one liner of what we need to be taking away from today's show in terms of the recession all right I'm here for this Georgia let's do it okay so first one jobs all right so georgia because of the recession there are going to be fewer jobs

lots fewer jobs that might be super hard to believe but given there is an estimated one million of us who have already lost their jobs or become unemployed this is just going to increase spending jeking fewer jobs mean fewer people are cashed up to buy stuff especially non-essential stuff so whilst our supermarkets might take a little bit of a hit because we're no longer buying sirloin steak it's the cafes and restaurants and pubs and clothing and you know small businesses that are actually going to start falling over first. So I think it's really important to put ourselves in positions where if we can spend on small business,

right now is the time to really prioritise them. Salaries. Oh, they're going to decrease. Fewer jobs, unsurprisingly, means that we will have stagnant salaries or even declining salaries. So with more people chasing less jobs, there's less incentive for employers to actually be really competitive on pay. So that's definitely worth taking into consideration.

Got it. How about debt? all right so we've been over debt pretty significantly but if you are unemployed or underemployed or just working the same hours for less pay your bills can actually add up our government has already issued a plea to energy suppliers and landlords and home loan finances to exercise compassion during these times but it doesn't necessarily mean it will happen so make sure you are putting yourself in the best financial position right now even if nothing has impacted you yet and property look we already talked about property probably not a time to buy first or not not time to invest in a you know holiday home in an area where it will potentially decrease

but according to economists if Australia's unemployment rates actually reach 10% which is we're honestly not far off which is terrifying then housing prices could drop as much as 20% so that's terrible news for anyone who sees the outstanding balance on their home loan become higher than the price of the property if they sell it which is a bit terrifying that's actually called negative equity. But during a time where, you know, you might end up being in a really grateful position where you are, you know, in a stable, really good paying job, you might end up getting a property that you were planning to already purchase for a little bit less, which is not terrible. And last, last rapid fire topic here is travel. Okay. Well, I mean, currently we're in

a pandemic. This recession has been triggered by a pandemic. So have fun trying to travel. I don't think anyone's going anywhere for a long time but on the positive side georgia recessions do not last forever so in fact they have a lifespan between 18 and 24 months it just takes years to recover from one so i think we won't be traveling for a while but at the same time like we'll be in for some hard times probably for about two years yeah but we'll see the impacts of this recession for for a fair few years to come after that if you had kind of one one last little line for our listeners what would it be in terms of how they should be thinking about the recession i think that this is just one of those things that i say often it's just don't panic things

gonna bounce back like this too is going to pass like focus on you focus on your mental health focus on just making sure that you get through this and you're okay and make sure that you always always remember that this none of this is a reflection of your personal performance if you get let down from a job or you find yourself in a really upsetting situation just remember that this is so much bigger than just us and it's not you it's Australia yeah not the world also I was wondering if you had any insights on obviously a lot of our listeners are maybe finishing up at uni they're you know younger people is this going to have a massive impact on entering the job market so Georgia less jobs means that we're going to have more competitive hiring processes

so if you've just finished university you're going to end up in a position where the lower level roles and graduate roles are often the ones that get cut the first, right? Because they're non-essential, like they're obviously doing a lot of really good work, but because they are positions that, you know, they go, all right, well, what can we cut without absolutely having our business fall over? There's honestly just going to be less of them going around. So I think that we're going to be in a position where you're applying for grad roles or jobs, and you actually put yourself in a position where you're not going to hear back from employers because they're going to be absolutely inundated and we are going to feel really flat about this or you might lose

your job in an area where you think you know what like I should find a job really easily and then you might find yourself struggling a bit more so no it's definitely not a good thing or a bit like it's just one of those things that is going to really suck but as I was saying before like this too shall pass like we've just got to get through and a job is a job like at the end of the day you are super incredible if you're providing an income for your family whether you work a job that you don't want to do or you're working your dream job like I think just being employed is impressive and I think that not enough credit gets given to people who are just doing the right bloody thing for their family like if you're in a position where you've lost your job I think it's also

really important to not be too proud like find a job this too shall pass it'll be something that you can go find your dream job later like we're currently in a recession find something that'll get you through that means your stocking shelves at the supermarket sick like awesome job like i have absolutely no issue with any of that and i think that all of us should really you know see the value in that as well hi there you've reached the she's on the money mailbox 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. Every week we'll be playing your questions to help make sense of a money mess you may have found yourself in. Make a quick recording on your phone and send it through to podcast at

sheersonthemoney.com.au and you might even find yourself on this show. But for now here's today's listener question. Hey Victoria and Georgia, I'm after some money and life advice. So I live at home with my parents in country New South Wales and we don't have a very good relationship. I don't like being there and I'm finding it's having a big impact on my mental health but they also don't make me pay rent which I'm quite grateful for I'm 22 and I don't have a lot of savings behind me but I'm wondering if you think I should try and move out on my own and make my own way for the sake of my mental health or do you think I should stay at home and build up some savings before I leave thanks all righty V this is obviously a very difficult one what

advice do you have here I think this is a really terrible one actually like like I'm glad we've got it on the podcast because this person cannot be the only person struggling with this but I think that your mental health is definitely worth more than your savings and I know that that's maybe not what you wanted to hear from me on a money podcast but at the end of the day if you're in a super toxic situation we have emergency savings to get us out of situations like this and I think we should all have an emergency account whether it's $500 or $5,000 that can get us out of a situation we no longer want to be in. Now I don't know how bad it is and she's obviously living with her parents in country New South Wales but at the end of the day I think she just needs to weigh up what

that means but right now as much as savings is super important and we need to get you on track to make sure that that's all well and good I think that mental health is arguably far more important because if you've got bad mental health you actually will maybe put yourself in a position where you can't earn an income you won't have savings and it becomes something that just kind of dominoes from there so for me yes savings is important during a time like this but if you're in a toxic situation and it's really bad and you've got a really bad you know relationship with your parents then maybe it's better to move out find a share house find something cheap like it doesn't actually matter what that property looks like it's just having your own space if

that's really important to you in saying that if you just have a bad relationship with your parents and you know it kind of sucks living with your parents maybe you could you know get some counseling or have a chat with your parents about what's going on so that you can better live together but i really don't want to put on her what my situation or what my outcome should be because i really don't know the situation enough yeah um yeah and again like plugging our pals at the National Debt Hotline. I just think that they're incredible and maybe a really good resource to reach out to because they're good at managing money on tight budgets. Like they do this every single day. So I think that you could reach out to them and just say, Hey, this is my situation.

Like, what do I do? And there are a whole heap of resources, which again, Georgia will link in the show notes that you could access to get yourself in a better position. But do you have anything to add to that, Georgia? Nah, I just really second what you say. Your mental health has to come first 100% of the time. Obviously, that's maybe easier said than done, but I would really make moving out a priority or speaking to those amazing services. Also, I just swallowed a fly.

Thank you for sharing that on the podcast. Also, though, I know houses regionally are less expensive than living in, like, Sydney CBD, so hopefully there are affordable options out there for her if she does choose that route. Yeah. And I think it's also, you know, I think we have to acknowledge our privilege because I know if I was in a situation like that, I am very grateful that I'm in a situation where I could just be like, all right, well, I'll move out. I know a lot of people aren't in situations like

that. So I think we also need to just be like, okay, cool. There are going to be some people listening to this podcast who are in toxic living situations or in situations that they don't want to be and they can't leave yet. And I think it is very valid that you are still there. Like, please don't get me wrong I want you out of that situation sooner rather than later but at the end of the day some people are financially trapped there for one reason or another and I think too much judgment goes into people who get told like oh I don't know why they didn't leave earlier like they didn't leave earlier because they couldn't and I think that that is something that we really should acknowledge as well and Georgia we spoke and maybe I'm being quite dramatic but I think

this is so important and I'm so passionate about it but we did have a whole podcast episode on financial abuse so go back and have a listen to that because we had so many great resources like Georgia I know you and I did so much research before we even brought that episode to the table to make sure that it was a really comprehensive list of resources that you could access so we'll link that podcast in the show notes as well as the resources to that so that you can be as empowered as possible in this situation. Yeah, 100%. So thanks so much for your question and hopefully that helped you in any little way. Hi, I'm a 27-year-old investing immigrant and this is my money diary. Let's get into our favorite part of the show, a sneak peek into

the financial lives of perfect strangers. It's time for money diaries. I was actually born overseas during a civil war and immigrated to Australia when I was around six years old. And so my parents basically started over back in 99 coming here. So I guess it's not like they ever told me, you know, you have to save every cent you have. But at the same time, I did notice that we didn't have a lot of money. And I remember making a deal with myself from when I was really young that I wouldn't be in the situation where we didn't have money. And we, you know, I had to struggle for money so I think that really influenced me saving a lot of my paycheck from the from when I got my first job when I was 19 you know at an RSL I don't think I really understood

the full effect of the war and what was going on you know we always had food on the table we always had clothes on our backs that kind of thing but yeah definitely I noticed you know my dad working really, really hard to learn the language and my mum was the same to make a life for us. Then only 10 years ago did we manage to buy a house here. I've grown up around people, you know, saving and kind of hustling and trying to make something in a place where you don't really know the culture, the language, the people, and you don't have those connections that make you so privileged, I suppose. So what does our investing immigrant do? How much does she earn and how much is sitting in her bank account? I'm a clinical psychologist working in the health department. I earn $102,000 a year

and currently I have approximately, oh, I'd say $100,000 split over various accounts. And what happens to her income once it hits her account? So when I get paid, approximately, I'd say 20% goes into my investment account. Approximately $500 for the fortnight goes into my daily expenses, so my groceries, my rent, that kind of thing. And the rest goes into my house savings account. What is her attitude to investing? I place a high importance on investing. I've read a whole bunch of books and She's On The Money really got me into it and really got me thinking about it. So I do place a high importance and I put a significant portion of my earnings into my investing yeah and how does she invest so i invest via nab trade i invest in an lic which is a kind

of like an index fund does the investing immigrant have any debts i don't have any consumer debts my only debt is an 86 000 hex debt i don't like having such a big hex debt however the more research i do into it the more i realize there's no point paying it off and i really wouldn't have my current job or be where I am without that Hex debt. And that was the only way to get to it. So my Hex debt was definitely a good investment for me. What is her best money habit? So my best money habit is that I have pretty good self-control and inhibition when it comes to money. So I can kind of think long-term and put off those short-term purchases. And what is her worst money habit? I kind of really struggle when I have money to know what to do with it. So for example,

I'm getting a pretty good tax return in a couple of weeks and I've just spent days talking with my partner about what do I actually want? What am I actually going to do with this? Everything seems so frivolous other than putting it in towards our savings goals. So I'd say my worst thing is that I don't know actually how to spend money when I actually have it. What is her big money goal? So my big money goal at the moment is saving up for a property of some sort, though I am thinking it over and deciding, well, is it better to do a property or is it better to invest it? But at the moment, we're just saving. So my hesitation about buying a house is the more I read about it, the more I realize that there's a lot of upkeep when it comes to property,

a lot of hidden costs. So it's not as simple as your money grows with indexation or your money grows with time or with the property market. You do actually have to put a lot more money in and it's a lot of outlay at the start and you have to go into debt. Whereas if you invest in a stock market or an index fund, you can invest how much you have, how much you want. You're not in debt. And also there's no hidden costs. The money just grows at a similar rate as the house. And finally, what grade would the 27-year-old investing immigrant give her money habits? I think I'd give myself an A and mainly not an A plus because I still haven't figured out my insurance and through superannuation, I haven't done that. It's still on my to-do list,

but I feel like it's something big that I'm just putting off. But otherwise, an A. I think I'm pretty good. Alrighty, V, what did you make of our investing immigrant? oh my gosh i love her can you imagine how proud her parents are of her oh 100 they'd be so proud oh my gosh like if you're an immigrant i just feel like your parents are bringing you to a country like australia to get you know a better lifestyle and you know get a lot of different you know privileges and for a lot of people that's a massive struggle and i just think that your parents obviously you know put in a lot of hard yards gave you a really great money story and taught you a lot about wealth and wealth management and now she's 27 and has a hundred

thousand dollars across accounts and has an incredible income and what a legend like I literally love her I think that that's you know just so inspiring like I don't have any feedback for her because I just feel like it's such an awesome story the only thing I wanted to ask you was about her perspective on property versus investing what was your take on that so I really liked that take because it's a super valid point. And we touched on it a little bit earlier in this episode, where a mortgage is a massive commitment. And I think that people forget that it's so much more than just saving up for your home deposit and then getting a mortgage. That mortgage is going to be a very significant amount of money that you owe a bank each and every single month.

And you can't get out of that. There's no flexibility in a mortgage. If it's a $3,000 a month mortgage, that is $3,000 a month that you're not putting somewhere else. whilst I'm not saying that property isn't an investment it well and truly is you just really need to make sure that you're there for the commitment as well and it sounds like she's young and has a lot of goals and that whilst she's saving for property she also is very aware that it's a massive commitment and so she's kind of diversifying her investment options which I think is really intelligent like Georgia the amount of women I see who you know come into my office or now into my zoom meetings um and they're like victoria i thought i wanted to buy a property

and i have this house deposit and now i really just don't want that commitment what can i do instead and we're finding alternative ways to invest their money so that they're still creating wealth while not missing out because obviously having a hundred plus thousand dollars sitting in a bank account earning next to nothing because our savings interest rates are not great i just think it's really intelligent to make the right decision for your personal situation love it love it thank you for your insights there i think that is all we have time for today miss victoria divine i think it is miss georgia king but just before we head off we'd really like to acknowledge and pay respect to australia's aboriginal and torres strait islander peoples

the traditional custodians of the lands waterways and skies across australia we thank you for sharing and caring for the land on which we are able to learn we pay our respects to elders past and present and we share our friendship and our kindness now it's time for the boring but important stuff the advice shared on she is on the money is general in nature and does not consider your individual circumstances she is on the money exists purely for educational purposes and should not be relied upon to make an investment or financial decision and stress less we promise victoria divine is an authorized representative of australia pacific funds management And as always, a big old thank you to Rye and John

for putting together today's podcast. And for putting up with us. Guys, we would love it if you joined our Facebook group where our community shares money, tips and tricks every single day, free of judgment. Please search She's On The Money on Facebook and join us. If Facebook's not your thing, you can also find us on the gram. We're at She's On The Money AUS.

Find us on the gram. um if you are i'm just getting cooler georgia i'm just getting cooler as time goes on thank you learning from you uh if you guys do love the show please rate review and subscribe if you don't just don't worry about it just give it to yourself um but yeah we do read everything you guys write so we love hearing from you really makes our day it totally does and the amount of beautiful emails we get georgia king oh you guys are delightful anyway we will see you guys next week have a See you next week, guys. Bye.