She's On The Money - Who you gonna call? (MONEY) MythBusters!

Episode Date: March 17, 2020

IT'S MONEY MYTH BUSTING TIME GUYS! It's no secret that there are a WHOLE lotta money myths out there, from "my dad says investing is a scam" to "the only safe investment is property" and with so much misinformation floating around, it can often be hard to tell fact from fiction. BUT IT'S OKAY GUYS THIS IS WHY WE'RE HERE, THIS IS WHY WE'RE HERE, THIS IS WHY WE'RE HEREEEEE. To help you make sense of the icky contradictory info, we've whipped together an ENTIRE myth busting pod to dispell the myths we hear the most. We hope you learn, laugh, love etc. 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! Your podcast 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 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 Mythbusters. No, I'm just kidding. It's She's on the money, the podcast for millennials who want financial freedom. Today's show is brought to you by UP, the digital bank designed to help you organize your money and simplify your life. My name is Georgia King, a 25 year old who is okay with money, but still has heaps to

learn. Luckily, I am joined, as always, by my friend and millennial money expert, Victoria Devine. Hello, V. Hi. Now, today's show is going to be a little bit of a fun one. Victoria and I are going to be assuming the roles of Mythbusters' own Adam and Jamie. I'm Jamie. I'm Adam. Dispelling a myriad of myths in relation to the world of financial investments. While believing in investing myths may not physically damage you, like dipping your hand into molten lead wood, just like on Mythbusters episode 136 in 2003. It will likely cause significant financial damage to you. Before we get there though, let's rein in the excitement and chat money wins and confessions. Victoria Devine, how did you go this week, love? I went really well. Did you? Talk me through.

So this is a pretty good money win, although it could be considered a money loss. Okay, I'm intrigued. The She's On The Money office has recently moved to a different location, which is great fun times moving is always you know love moving just getting your stuff having to unpack having to repack it's not exhausting at all a dream no no no it's been a really energizing process um we've recently moved and in my old office i had a car park in the new office i do not have a car park so my money win is that i now am catching the train to work each day good on you. Yes, because parking in the CBD, if you get early bird, is like $25 a day. But I drive around the city a lot. I drive out to clients. I'm a financial advisor. I'm on the road a lot.

It ends up being $80 or $90 a day for parking if I do that, because you don't get early bird if you come and go from the park. Of course. So train it is. Here we are. Money win, because I think catching the train is obviously a cheaper way to get around. Yeah, it's a cheaper way to get around, but maybe money loss because I no longer have a car park of my own. So not sure. Double whammy. I'll give it to you. Will you accept that?

I'll accept it. Do you have a money win, money loss or a combo for us this week, J. King? Okay, it's kind of a combo. It's mainly a confession. You guys may notice my voice is a little bit husky this week because I did go to a music festival on the weekend, Golden Plains in regional Victoria. Shout out, guys.

It was amazing. Hashtag not sponsored, but George would love that. Yes, I really would. yeah it was an amazing weekend but as festivals always do it added up you got the cost of the ticket your alcohol your outfits all of the things I don't regret it but you know it was 48 hours of fun are you a wild festival goer though like are you going all out with your outfits or are you just more low-key not extreme I'm low-key it's like head to the op shop get some cool stuff but I'm not like bindis all over me and like body paint and nipple tassels and stuff like yeah I

No one needs to see that. As someone who cannot relate because I am wildly uncool. You're not really the festival type, are you, Bea? I wish I was. I'll take it next year. We'll make it a date. I just think I'd ruin your time. Alrighty, enough of the shenanigans there, Victoria.

Let's move right along to the Facebook community, which was impressive as it always is, week on week. Which post stood out to you this week, Victoria? Alright, I have a favourite post and it is from our friend Sarah and she posted this this week she said first time poster I have just made a raise account because I have been so impressed and inspired by this group plus there's a really great promo code from she's on the money really excited to see how my investment goes and now that's not sponsored I'm just really excited to see that during such a tumultuous time in the world and in the investment

market yes we have people in our community still seeing the value in investing and getting into the market and not running away. Yeah. So to me, I loved that. Did you have one that stood out to you? I do. Mine is from Jessie, who wrote that she had a small money win. She paid off her afterpay and shut her account down. Yes. Boom. She also bought her first festival ticket today, which I am. Your people. She's one of my people. She was able to do it without denting her savings. Impressive. It is. She's also written in that she's sorted all of her budget for the next few months to pay off all of her debts. She's on the right path and she wouldn't have been heading down the right path if she hadn't heard of our group. And it's made such a difference to her. Thanks

guys. Kiss. She's written. And lots of her friends or our friends. So we're all friends here. Liked that post. So I love that. Yes. Well done, Jessie. And now into the main part of the show. There are so many myths out there about money. It's something that pops up in our Facebook group time and time again. And even in the age of the internet where we literally have all of the answers at our fingertips, which sometimes can actually lead to overwhelm, it seems there are still so many myths out there. And frankly, we think it's time to put them to rest for good. Last week, we reached out to the She's on the Money community to find the most common investment and money myths. And then we collected our

favorites, which today Victoria is going to help us confirm or deny. That I am. Now, when it comes to money, just like religion and politics, everyone has an opinion. So instead of listening to what Janine's sister's unqualified, untrained, unfinancially literate Uncle Greg thinks, let's make the most of our very own financial expert to get to the bottom of it. Victoria, our first question of the day comes from Fern, who wants us to bust the myth that investing is the same as gambling. Myth or myth busted? I love that question because I get it so often and I also hate that question because I get it so often. I'm hearing it. And it's something that we hear time and time again from a generation that have experienced significant loss in the

share market. And the first thing to preface here is if someone lost money in the share market, it is because they pulled money out of shares when they were not performing well. If we look back to the GFC in 2009, we see the people who lost the most money were those people who pulled their money out of their investments because often they were panic selling or they were in a situation where they actually couldn't afford to keep their investments. And whilst they'll panic selling, there were a lot of people who were in positions where they were over committed to an investment. So therefore they actually didn't have the capital to back up what they needed to do when the market was falling. So they had to pull their money out. So people

lost money there. If you had invested before the GFC and remained invested, your money came back whilst not quickly, it did take a while for the market to recover. When it did recover, your shares outperformed anyone else's shares because you experienced this lull. A lot of people purchased while the market was off and then made a lot of money because those shares were essentially discounted. And whilst I'm not going to get into the semantics of what happened in the GFC, I mean, if people are interested, we can do a whole podcast on it. I would love that, but I don't think that that's what Shares on the Money is about. I think we need to understand that people who have negative experiences are more likely to talk about it predominantly than

people who have positive experiences. It's always the same. Exactly. But good investment is so boring. It's not worth talking about. Right. So to actually answer that question about investing and gambling, we actually need to understand the difference. So investing is committing money or capital to something with the expectation of obtaining income or profit or both. And as you guys know, I love it when I get both of those things. But what this definition actually lacks is the real difference between investing and gambling. And that is research. Gambling has no basis. It has no backing. It is you taking a punt, making a pure chance, pure chance that this will happen. And whilst a lot of people will jump in and say, oh, well, but I've done all my

stats on football. I've done all of this and I completely understand it. That's why I'm betting on this I'm not saying that you didn't do your research but when it comes to investment we are far more comprehensive and have research to back us and past performance to guide us albeit past performance is not a reliable predictor of future performance hashtag financial advisor but many investors think that if you're investing in the stock market it's like going and blowing all your money in a casino they throw money at a stock or into a basket of stocks based on rumors or tips or something that they believe that they heard at a barbecue one time and they don't do a lot of research. And that is where you lose money at your casino or in your share market. But for the

amount of people that are doing their investment legitimately and putting themselves in a position where they have done their research and understand it or spoken to a financial advisor or chosen a product that actually has a really good research house behind it or investment team behind it, you are investing. You are not actually gambling. You are not here to take a chance. we are here to put money in a place where we know it will grow over the long term. Like we can say with certainty that if we look back on the Australian share market over the last 30 years, any 30 year block in the history of the Australian share market has never had a negative return. And I think that that is something that is really impressive, but also worthy of consideration

when we start talking about investment. Like with investment, you never lose if you're invested for the long term. Exactly. That's what you always say. The longer you're in there, the more beneficial it's going to be. You're not just in it for two years or whatever. That's not going to be exactly. And I think that it is one of those things where it is so easy and so flippant to say, oh, investing and gambling are the same. That's fine. And to that, well, actually they're not, they're not the same thing. Understand the definition of both of those things before you wildly go scaring other people, because it's really easy to say that it's gambling. And the reason I hear so many people saying it's gambling, especially when I'm talking to them

face-to-face is a lack of education and they are scared of things that they don't understand and if you don't understand it you are more likely to deny something than accept it as oh you know what Victoria I hear you talking about investment I'm interested to learn more. A lot of people have too much pride to say hey I don't really know what you're talking about could I understand more could you tell me a little bit more they just go no investing is like gambling it's throwing money at something that you can't guarantee a return for. Yep another thing G to note on the investment versus gambling is that often with gambling, you're gambling on one specific thing. You are going and you are betting on that AFL match. You are going and you are betting on a horse race.

You are going down and, you know, putting however much money you're putting into sports bet. We talk about investment all the time. And one of the most important things for me about investment is being well diversified, not putting all your eggs in one bucket. And what is happening with gambling is you are putting all of your eggs in one really risky bucket instead of creating a portfolio of shares that diversifies your risk to make sure that if one thing isn't performing well, something else is. There's also a lot of loss associated with gambling because it's win or not. Whereas a share, once you purchase a share, it might decrease in value, but you do not lose money unless you sell your share whilst it's valued at less. So if you look at your investment portfolio

and you've got 10 shares worth $10 and your investment portfolio is worth $100 in total, and then the next day each of your shares has dropped by 10% and your portfolio is now worth $90, you actually still have 10 shares. You haven't lost anything technically except the value of your portfolio. And I get quite passionate about this because especially right now, we are seeing crazy things happen in our share market, crazy things happening with our health. All of that is going on at the moment. A lot of people are wondering if they should pull out. Exactly. There are so many questions around, oh my gosh, I've lost so much in the share market. You haven't actually lost anything unless you sell your investment and you exit the investment market.

Yeah. So gambling is not the same as investing. That is a myth. Christina wants us to bust the myth that you will lose all of your money when the market drops. And Tori wants us to bust the myth that coronavirus will leave her with no superannuation. That's a great question, G. And because I am ranty and love to rant, I've actually already answered that. And the answer there is that when the market drops, you aren't actually losing money at that point in time. Please don't get me wrong. There are a lot of semantics that need to be taken into consideration here, but you lose money when you take your money out of the share market and you sell your shares. You are not going to lose your money just because the market dropped,

but you will if it drops, you panic, you try and get out or change your investment strategy, or you go into your super fund and you go, oh my gosh, my aggressive share portfolio within my superannuation has dropped in value, I'm going to switch it to conservative because I want to quote, preserve what I've got left. That is actually you selling shares from your aggressive portfolio to convert it to cash, to hold a cash investment instead of holding shares. And that means that you are choosing an investment. And we know that at this point in time, cash is returning that one and a half percent, which is not much at all. And you'd be lucky in any high interest savings account nowadays to even cap it too. Like you're not getting 2% nowadays in savings

accounts. That's what cash is performing at. You are swapping the opportunity to get your average of 7.5% over your 10 year period for your 1% in cash. And if that's what you want to do, you are more than welcome to go ahead and sell up and go into cash. But what we want here is people to understand what it actually means to sell in a falling market. All right. So in summary, myth busted. Emma and Acacia want us to bust the myth that buying property is safer than purchasing shares, which I've heard a lot as well. Talk us through it, Victoria. Is it a myth? Is it a myth busted? It is a myth because this is a myth busted episode. They're all going to be myths, I've got a feeling. However, I think that this is a really impressive one because it is such a common thing for people

to say. We see our parents having purchased property and a lot of our parents have made money by purchasing property because when they were growing up, they were able to purchase their first home for $17,000. If they held on to it until 2020, they're selling it for $1.2 to $2.5 million. And it's sweet. It's happy days. Maybe along that period of time, they also picked up a couple of investment properties, which to them would have been no brainers because the entry point for those properties was a lot easier than it is for you or I today, Georgia, because their pre-existing properties had a lot of equity in them, which meant they were valued a lot more and they could use those properties as leverage to get into other properties. And when you have

an asset that is increasing in value, like property did over the 30 years that we have had that property boom in, it was a no brainer. That is now no longer how the property market is performing. And it's important to go back to potentially listening to our investment episodes where I go through the four different investment assets that we can hold in Australia. But no, property is technically not a safer purchase than shares. Shares actually have a higher rate of return on average than property. But property is the Australian dream, right? Like we can see it, we can touch it, we can taste it. We can go and eat a pizza on the front lawn of that property should we wish to. But having an investment portfolio is a really private, hidden thing.

Yeah. You can't see it. You can't see it. You can't touch it. You can't taste it. It's not that. No, you can't have your friends over on your new patio to celebrate with a bottle of champagne because I'd be pretty annoyed if I showed my friends my share portfolio on my laptop and they got champagne on my keyboard. I just feel like it is just not as tangible as property. And we as humans are going to gravitate to things that we can tangibly see. Absolutely. Because it's also very hard for us mentally to comprehend how shares perform and what that means. And there's more of an emotional rollercoaster associated with shares because their value is calculated on a daily basis. So instead of having a property where you know you purchased

that property for $400,000 and there's hearsay around what it's now worth, like maybe it's worth $500,000 if we're lucky, but we're not sure. But Barry down the road recently sold his property and he also has three bedrooms and it's sold for, you know, for 70. So, yours must be worth the same. There is actually no valuation methodology on property until you actually sell that property. And even when you sell that property, your property is only ever worth what someone is going to purchase it for if you have a buyer. So, I think it's very scary when you look at what shares do because the volatility of them is really visible. It's not to say that volatility doesn't exist in the property market, we just can't see it as easily as logging into our share

trading platform. Yeah. And I guess there's that feeling that you still have your house when, you know, when the property market's going down, you've still got it. Exactly. Yeah, exactly. And that can be twofold. So, sometimes it's really nice to know that you still have an asset. In saying that, if you have a share that's worth less money, you don't not have that share anymore. But then on the flip side, you also have people where, what if the property market goes off what if interest rates increase a property is a very big commitment with shares you're going into an asset where you are purchasing a direct share and you usually whilst you can you usually just go straight in and purchase this asset with cash you already have

you do not do that with property unless you've saved your four hundred thousand dollars so if you are purchasing a property you're putting yourself at a lot of risk and in a lot of debt that if the market performs differently and the interest rates rise can you still afford that or are you going to be forced to sell and potentially make a loss? So I think that we really need to consider all of the ramifications that exist around property. And that's something I'm really passionate about. I'm not saying it's a bad asset. It is a really great asset and property does make up a very important part of a well-diversified investment portfolio, but it does not mean that it is the be all end all and only being in property means you're not

very well diversified. Right. So it's definitely not safer than purchasing shares. No, it's not, but I can absolutely see the merits of wanting a physical asset. So I guess we'd say that that is a myth busted. Moving along to the next one. Jessica wants us to bust the myth that Fred's uncle's cousin's sister lost all their money in the great crash of 1974 and therefore investing means you too will eventually lose all of your money. We have kind of touched on this.

Oh, look, Fred's uncle's cousin's sister lost all their money. So it must be true. I don't even know if the semantics of that family tree actually add up, G. But if they do, and that is true, I'm interested to know where that came from. So people's opinions are always based on their experience. And we need to make sure we're taking those things into consideration when taking on the person's, when taking a person's opinion. One of my favorite books is called The Richest Man in Babylon.

And it is the most boring investment book that you will ever read, but it is my favorite. And a quote from that book is, would you take advice on buying diamonds from a bricklayer? You wouldn't. You wouldn't. So why are you taking Fred's uncle's cousin's sister's advice on shares or on investments if they aren't an investment advisor? So I'm not saying don't talk to people who have knowledge and insight in this area, but always take people's advice with a grain of salt.

Because whilst their experience is really valid for you to learn, it doesn't necessarily mean that they are right or correct. It could just mean that they are wildly opinionated and you need to make sure that you are making the right decision for you. In saying that, people who, quote, eventually lose all their money in investment, it's not really a thing. You lose all your money if you sell out of the shares that you own. It's not to say, gee, that there are not bad investments. So, sometimes organizations do go bust. Sometimes they go into liquidation and they have to shut down. We as investment advisors have a job to make sure that that risk is mitigated. And that is why we want really

well diversified investment portfolios so that if something bad does happen to one of your shares, that's okay because you've got another 10 different eggs in your different buckets. So I think it's really important to take into consideration what that actually means. And if Fred's uncle's cousin's sister lost all of their money, ask them how, ask them why. Why do you say that? What is your experience here? How does that impact me? What could I do to avoid that? And if they just go, oh, just don't invest, maybe look for another opinion. Yeah. So that's myth busted. Next question. Diane wants to bust the myth that you need a stockbroker to buy shares.

Diane is correct. You do not need a stockbroker to buy shares. Nor do you need a financial advisor. up. How do you do it? Albeit, Jay, we do recommend getting financial advice because it takes into consideration your holistic financial life. So, they're not just looking at how to invest. They're looking at whether investment is actually a good option for you at this point in time. Like maybe you've got a mortgage and it's better for you to pay that off depending on what the interest rate on that mortgage is. Or maybe you've got children that you need to be saving school fees for. Or maybe you've got something going on. They're across your whole situation. Exactly. They're across your whole situation and investment isn't just about going and buying some shares. Investment

is about making sure that that is the right thing for you to do at that point in time. So no, you do not need a stockbroker to buy shares. You can start investing on your own quite easily. You are going to need to do some research on making sure that you are investing through a platform that you know and trust and gives you access to the investments that you want to access. That gives you access to something that is able to be well diversified and doesn't have a ridiculous share brokerage and I think that that's something that's really important to take into consideration because if you take our advice which we've said you know go into the market invest $500 each and every single month or whatever amount that we want you to invest it's very important to take into

consideration brokerage fees because if you're paying $33 per transaction to purchase shares that actually needs to be taken into consideration with your share purchase price because that's $33. Your now $500 worth of shares needs to make before it's breaking even and then it needs to perform above and beyond that to actually get you a return. So, I think we need to take that into consideration. So, if you're going to look at share trading platforms and going to go down a DIY route, make sure you understand brokerage and any other fees that exist and also exit fees. So if you want to take your money off their platform, how much is that going to cost you? But then on top of that, there are a heap of really good just micro-investing platforms

out there. And I don't have any that I specifically recommend because it's going to be really based on your personal situation. And I can't give you guys personal financial advice via a podcast. However, just do a quick Google search and a heap of them come up. Understand why you would invest in them. understand what their underlying investment strategy is, their fees, their terms and conditions, and always, always, always read a PDS or a product disclosure statement before making

any decision. Alrighty, so I guess once again, that was myth busted. Now, Amanda wants us to bust the myth that all it will take for Gen Y to purchase a home is to stop traveling and eating smashed avo on toast. Oh, that's not a myth. That's reality. In fact, all of our problems come from smashed avocado. They do. Yeah, absolutely. I love that because it is such a flippant way of calling us underprepared and a really flippant way of telling us that we are irresponsible with our money. That's so patronizing. It is so patronizing and it is just so rude. And whilst I think it is quite funny in theory, because don't get me wrong, our generation quite clearly loves a good smashed avocado and a note latte. However, we are in a world where purchasing

a home is not nearly as accessible as it was 30 years ago. And I've harped on about this before, getting into property is not easy. Nowadays, it takes a 20% deposit, which looks a lot like to most millennials, more than $100,000 in savings. And by the time a lot of millennials save up $100,000, the bars changed and now you need $120,000. And then people aren't taking into consideration the fees and charges that getting a mortgage includes. So I think that it is a very easy and flippant way for past generations to essentially throw shade at us and say, well, oh, you guys don't care about your financial futures. But if you look at the statistics, Gen Y are the most financial literate generation to exist. Exactly. It is very true. And we are

the most money conscious generation to exist. We're also in a whole heap of debt, but that is not the point. We're aware of it. We are aware of it and we are making decisions based on our personal situations. We are often setting goals that aren't based on property. And I think that that blows the minds of a lot of people who created their wealth in property. So we are now talking about purchasing shares or saving or traveling, or we have other goals. And whilst we have a YOLO mentality, it is actually not an entitled thing to have. It's I would like to enjoy my life instead of commit to a mortgage here and now because you can buy a home five years from now and pay it off and we can do that. There doesn't actually need to be this sense of urgency to get

into property ASAP. However, I think it is really unfair that we are being lumped into a situation where previous generations are saying, look, it's because you're traveling too much and you don't care about anything and you guys are eating too much avocado. It's a terrible mentality to have about us because we are one of the smartest generations to ever exist. Okay. So that was another myth busted. Okay. Next question, Victoria. Erica wants us to bust the myth that you don't need to stress when you're 30 years from retirement. Oh yes, you do. You really, really do. Tell us why. Whilst you don't need to stress now, we do need to be making retirement a priority. And this is

something that I have had a lot of conversations today actually about. And that is that 30 years from now, you are going to have so many financial commitments and you are going to be in a position where saving the amount that is necessary to save to reach retirement comfortably is going to be significantly higher than what it is if you started planning for it today. And I use this example all the time, but I want to keep using it because I give you consistency and hopefully one day at a barbecue, you can whip it out and tell people that, you know, this was a wise lady once told me that if I was 21 and I invested $500 on a monthly basis at retirement, I would have an investment portfolio worth $1.2 million. And that is a lot of money. And we start talking about,

okay, well, that's $500 a month when you're 21. Once you are in your 40s, that looks more like $8,000, $9,000, $10,000 a month, depending on your retirement timeframe. That's a lot of money. And the important thing to take into consideration here is we as young people are very easy at saying, I'll do it when I earn more money. I'll do it when I have finished at that festival. I'll do it after my Europe trip next year. I'll really knuckle down after we purchase a home. We are very good at thinking that future us is going to look after us when it's actually

current us that needs to be looking after us. Because when we get to that point in our lives where maybe we haven't taken into consideration how much we really need to be investing to achieve our goals, the financial commitments and the lifestyle we lead right then and there is going to need to dramatically change for us to actually be in a position where we can achieve that bigger financial goal. To ask someone in their fifties to change their lifestyle so significantly that they go from having their really nice car, paying off a mortgage, probably still paying some private school fees to saying, okay, but I need you to be investing $8,000 a month requires significant sacrifice. And you

don't work your entire life to get to a point where you actually need to sell your car, sell your home, start investing really aggressively. When we could give you this gift of knowledge right here and now, and you just start putting $500 away from the age of 21 to achieve this goal that you pretend you never had. So I never, as a financial advisor, have to sit across the table from you and say, I need to drastically change your lifestyle for you to achieve this goal. So for me, no, you do have to make retirement a priority now. And the sooner that we can do that, the better. Retirement doesn't mean you have to stop work. Retirement doesn't mean anything other than when we are planning for it, it's the age at which you are financially free to make any

decision you would like to make. So it's a point in time when you can say, no, I'd prefer not to go to work. I have enough investments and savings and a financial backing that I don't actually need the income. And when we go back to that $500 example, that is important because of investment returns. If we look at, and I always say seven and a half percent, but let's drop it back to 5%. If the share market was returning on average 5%, that's $60,000 you have coming in each and every single year in investment returns that you then live on instead of the money that you are earning from your job. The idea is to create an investment portfolio that returns you enough money in dividends so that you can live off that without ever having to spend the money that you've invested.

So basically, do consider it now. Don't stress about it, but the earlier you get in, the better. The earlier you get in, the less of a monthly contribution you are going to need to make to achieve exactly the same goal. Yeah. So that's another myth busted. Hi there. You've reached the Shiz 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 shizonthemoney.com.au and you might find yourself on the show. But for now,

here's today's listener question. Hey Vy, I've got a sticky one for you. I've been part of the community for a while and realized that I have a lot of financial changes to make. I actually have a really high income, which I know I'm lucky to have. It's at about $200,000 a year. However, I have no savings or assets to show for it. I'm 35 now. And whilst I know I need to change my ways, where do I even start and how do I manage to get back on track? All my friends think of me as the rich friend because I've got a nice car and live in a really nice apartment. So how do I change my ways without turning into an absolute singe and ruining the lifestyle I love? Thanks girls. Bye. Where does she begin, Victoria? I think that this is far more common than a lot of people would like

to admit. Really? Whilst a lot of people would love to, I guess, see it as more common that we all have $200,000 incomes. And whilst that's not necessarily the norm, what we do see is people who do have really high incomes spending beyond their means or spending everything that they have earned and lifestyle creep is real guys like yeah you spoke about that last week yeah and we talk about it a lot and I think it's really good to reiterate because as your income increases so do your expectations and so do your standards and the way that you spend like I think I gave the example and I'm not sure if I did this in a workshop or on the podcast I'm really confused right now but I gave the example of when I was in uni first year uni didn't have heaps of money

I was just saying to you before that I remember one time where I didn't have money to put under my key so I had to walk to uni and that was a bit painful but I was purchasing makeup from the supermarket and I'd always look for it on sale and that's just where I purchased makeup yep and then I got my first really good part-time job started having a good income you know I ended up in a position where I was earning a full-time salary while still at uni which was great and I started shopping at Priceline yeah and that was kind of like a little bit more luck yes a little step up little step up good step up but also we are starting to spend more money on products that I was already spending a little bit less on now I'm a business owner and I am in a position where

I do have more income than I had out of first year uni I'm obsessed with makeup and it's not a bad thing. And I think that we need to just understand our financial decisions that we are making, but it's not bad. It just is what it is, but it's so easy to creep up and our expectations creep up. And once we've been to Mecca, then we start going to Mecca and it just becomes, well, where do you buy makeup? Okay. Well, that's where I go. Instead of remembering, I guess, quote, where we came from and actually going, all right, well, I was able to live within my means then. How come I can't do that now? I'm the same person. Exactly. I'm the same person. Why was I totally happy with that. And now I'm not. So I think it's a really good reflection point,

but this is really common. It's very keeping up with the Joneses. It's very spending in line with what you are earning and proving that you are earning a lot of money. And it's just detrimental for your future. Like I say it all the time. If you live fake rich now, you will be real poor later. And this is the perfect example of that. I have clients who have been on really normal salaries, like $60,000, $70,000, $80,000 for their entire lives, but they have prioritized saving and investing and now they are retiring millionaires. Really? Yeah, yeah, absolutely. I mean, I'm too young to have had them for their entire financial lives, but that's what they have done. And now I'm working with them and they will retire as millionaires. And some of them

already are just because that was a priority to them. I also have clients in their fifties and nearly 60s who have had really high incomes think half a million dollars a year and they don't have anything to show for it because they've lived in line with their incomes yeah and so easily it's kind of like the rabbit and the hare like slow and steady wins the race I think it's really important to remember it's actually not about how much you earn it's about what you do with the money that you have coming in and making hay while the sun is shining like make the most of a good situation that you are in, if you have a really good income, that is really lucky. I'm not doubting that you worked hard for it. I'm sure you absolutely did, but let's make sure that you are setting future

you up to not have to work as hard in the future. So where does this listener actually start and how does she get her money on track? I think she needs to actually have a good long chat to herself, do her budget, do her cashflow, understand where her budget is blowing out. Put everything on paper, look at your budget and work out what your surplus each and every single month should be. And if you are not actually saving that, maybe you haven't done your budget correctly and we need to go back and review. A budget is actually something that takes a while to do. Sometimes it requires a couple of reviews over a number of weeks as you remember the things that you spend money on. For example, I remember when I first did my budget, I was like, all right, I spend this

amount on gifts. I know what I'm spending at Christmas. I know what I'm spending at birthdays. and then over the next couple of weeks I was like oh yeah actually I always buy my dad something for father's day yeah oh yeah I buy this gift for my friend when she graduated university and just making sure that you are capturing all the small things in your budget that add up because from little things big things really do grow and I think that we just need to have a good hard look at ourselves and go all right am I actually spending in line with my values do I actually need this really fancy one bedroom apartment in the middle of the CBD so that I can enjoy my lifestyle now? Or could I maybe move into a similar apartment that has a housemate? What can I do to

put myself in the best financial position? It doesn't mean that everyone is going to have the same goals or values or budget, but it does mean taking a little bit of a look at yourself and prioritizing to you what is important. As I've said a million times, to me, financial freedom is the most important thing and it is creating an asset that one day will completely support you. Would you recommend as well, Victoria, seeing a financial advisor or just starting off on your own and seeing how you go? I always recommend starting off on your own and seeing how you go because budgeting and cashflow are something that you can get a really good grasp on on your own. Sometimes it's just about having some hard conversations with yourself and printing out

those like three months worth of bank statements and just going through and going, what am I spending. I need to draw a line in the sand here and be really honest with myself, not judge myself, actually just go, all right, well, what am I spending? Do I want to keep doing this? No. Okay. Let's move on. So I think getting a really good grasp of your own financial life before you see a financial advisor enables you to get better value out of a financial advisor. Once you know what you're working with, because as someone who is a financial advisor, I love talking to people, but it makes my job a whole heap easier if you come empowered with, okay, well, I know that I can save X per month. And you know what? If it is all too hard for you, there are always ways that

you can work with a financial advisor to actually work that out. So it's not saying don't, but often it is a very reflective piece, something that does take a little bit of time, a little bit of consideration, and it's more, you're going to get more value out of an advisor if you know your goals and you know what you want to achieve. Okay, now for the fun stuff. What good would a money podcast be without the pervy bits? It's time for Money Diaries. Hi, I'm 30 and earning less. And the reason for this is because I have had a big pay cut, $30,000 less this year. So, I'm just having to readjust my lifestyle and work out how I can live the way I'd like to live on a lot less money.

30 and earning less. Explain to us what happened to her and her finances in 2019. So last year I was in an acting position, which was incredible. I jumped up 30 grand, was able to pay a lot off on my mortgage. I also purchased some nice boobs for myself. Yeah, quite happy with myself there. But now, unfortunately I was unsuccessful and I was kind of assuming that I was going to get the position as an ongoing. So now I'm in a situation where I'm earning now $700 less a fortnight. So, now I really have to look at my money situation and now my relationship is, I mean, it's definitely not dire. I'm living comfortably, but I do need to really evaluate where my spendings are going.

So, how much does she earn and where does that money go after it hits her account? I get paid a fortnight $2,100. $1,400 of that goes straight into my mortgage. Therefore, I'm living off $700 a fortnight and then from there that's inclusive of bills my other spendings which you know my values are going to the gym so I have my $120 a fortnight bill for the gym which is a lot I know and I've listened to the other podcasts on she's on the money and how you can save money going to other gyms that aren't as expensive but this is my value and I really like going to the gym and I'm not willing to change it. All right. So, in my bank accounts, I have $120 in one, $106 in another. And I've just recently opened an 86400 account. Thanks to

She's On The Money podcast for that. And I've got some money in there as well. I've got around $400. Okay, then. So, how does she feel about investing? Does she invest? And if so, how? So, I think investing is really important. I think that's been handed to through my parents as well. they've really shown me that you know in having a property is a really good investment and look I can tick that off the bucket list because I'm very proud to say I own my first property. I do have shares but I don't know where they are I don't know how much money is in them I'm very naive and I want to learn more about shares I want to know if it's worth me pulling out my money putting it into my mortgage or just re-evaluating where my shares are going but I don't know a lot

about shares and I want to. That's a bit of a goal for me for this year, learning more about shares. What about debts like credit cards or personal loans? Zero debt, no credit card debt, just my HECS set that I mentioned earlier and my mortgage, but I'm definitely paying off a lot more than what I need to. So I'm really smashing that out and trying to pay off as much as I can to not have a mortgage anymore. 30 and earning less has a habit that she says is both good and bad. Yeah, so my good and bad habit is that I do have a taste for expensive clothes, but I also do like to sell my clothes. So I try every six months to 12 months, sell my clothes at a market. Therefore, I'm getting money coming in and I can actually purchase other new, nice, expensive clothes.

And what other good money habits does she have? Recently, so I've deleted Uber Eats and Uber, which I actually got stuck out at a bar last night because I had to download the app because I didn't have Uber on my phone anymore which was quite hard to download an app after a few drinks but I got there in the wedding I got home safe so that was that was good another good habit is that I looked at where my money has been going and I've cut down I'm not buying lashes anymore which I worked out to save me 1400 for the year so that's a big bonus how would today's money diarist rate her own relationship with money if you had to give yourself a grade? I'd give myself a B, but I really want to be an A. So to

get there, I need to learn more about how I can budget better with my new income and how it's changed, trying to maintain the lifestyle that I like to live. I really want to get to an A, but I think I need to give myself a B because there's always room for growth. And I think B's a pretty good grade anyway, because I can see that I'm already starting to change, but I've got a lot of other areas that I can improve on. What did you think of that one, Victoria? I really liked it. I feel like she was really confident. Yeah, she was lovely. What did you like about her energy? I just feel like she was very positive given that she's now earning 30 grand less, which is

a huge number. It sounds like she knows what she's talking about. It feels like she knew how to allocate it to begin with. I love that she said she paid down some of her mortgage. I'm all for boobs if you're into boobs hard yes but then also I think it's really important that now she's on less she sounds like she knows what she's budgeting for while she said she didn't really know what happens when it comes to shares and definitely like we can educate her on that we have a couple podcasts on that I heard but I think that she was doing pretty well given she knew you know exactly what was coming into her bank account every fortnight and where it was going and what it was allocated to. What did you think about the grade? I think she gave herself a B. I think

that's fair. I never like, as you guys know, I never like arguing with people on their grades because I think that if you feel like you're a B, then you're a B. Yeah. And she did say that she wants to become an A plus or she wants to become an A. I can't remember which one it was. I think it was an A, but she also said how she's going to get to an A. And I love that she has a plan there. The one thing I would say though, is it sounded like she didn't have much of an emergency fund. Yeah. She only had, what was it? 200. She didn't have a lot. No, she didn't have heaps sitting in her various bank accounts. And I'm probably making some grand assumptions here. I don't actually know her full financial history or position, but I'm assuming that she put a lot

of her surplus cash into her mortgage, which would make sense given her conversation that she was having earlier. However, I really like the idea of people having access to emergency funds. Like, gee, we're seeing it at the moment. There is so much uncertainty floating around and we're just not sure what's going to happen with our pays. And sometimes we can't guarantee our employment is going to exist in a couple of weeks. So I think it's really important to have something to fall back on so that if we're out of employment or our financial situation changes, we're not stuck in the lurch 100 so love the energy overall happy with the grade anything else to add i don't think i have a lot to add i think she had a lot of conviction in what she was saying and knew what

she wanted to get better at and i have no doubt that over the next couple of months she's going to teach herself that because she sounds like a smart lady that is all we have time for today but before we head off let's quickly wrap the boring but important stuff the advice shared on Mythbusters. Just kidding. 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. And fear not, we promise Victoria Devine is an authorized representative of Consultant Financial Advisors, Proprietary Limited, ABN 65006 373 995 AFSL 230 323. And thank you, of course, to Ryan John, our audio

man for whipping our wild chat into podcasts you love we would absolutely love it if you joined our facebook group where our community shares money tips and tricks every single day free of judgment we also talk about myths so we bust them search she's on the money on facebook and join us if facebook's not your thing or maybe you like both join us on instagram we're at she's on the money aus see you next week guys see you next week guys We'll be right back.