She's On The Money - You must be some kind of SUPER star

Episode Date: February 11, 2020

It's time to talk SUPER SOTM-ers! You guys have waited so long for us to do a podcast on this topic AND TODAY IS THE DAY! We've got a jam packed superannuation show for you today friends so prepare yourselves for electric chats about why super is one of the most important things we can be sorting to financially secure our futures - we promise it's a goodie. 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 She's on the Money, the podcast for millennials who want financial freedom. Today's episode of the show is brought to you by Verve Super, who we'll be chatting about in a little bit more detail later on in the show. My name is Georgia King, a copywriter and TV assistant with many a thing to learn about money. And across from me today is the illustrious, the intelligent, the enigmatic, finance fiend, Victoria Devine.

Hey, Vy. I can't deal with you sometimes, Georgia. Please. I love to compliment you. It's a lot. It's a lot. Now, today on the show, we are giving the people what they want. It's our super episode, guys, a whole ep where we dive deep into the world of superannuation.

Now, we know this topic is one so many of us want to know more about because it's kind of this elusive, distant thing we can't quite fathom. And like, to be frank, it probably sounds pretty dry to a lot of us. I know it's dry to me, especially because it is so far away and we're so far away from retirement ourselves. But as Victoria, super divine, we'll soon explain. Prioritizing our super now is one of the most integral things we can do to secure our future selves financially.

Absolutely it is. But before we whip into the main topic of today's show, let's chat money wins and confessions from this week. V, are we confessing or are we celebrating this week? I feel like you guys need to congratulate me for my excellent money performance. Talk to us. I have another money win. I feel like I've been so full of money wins recently that I was racking my brain before we recorded this episode to think of a confession, yet I do not have one for you. So here is my money win this past week or a couple of weeks actually the start of this year i made it a goal to not use city link or you know my toll roads as much as i did and i have found a new route to work that does not include any toll roads stop it and i am saving a lot of money because of that so that's

amazing yeah i didn't realize how expensive toll roads i have no idea how much toll roads are i just refuse to like look at well i looked because i was changing up my banking over christmas yeah And I logged in and I thought there were fraud charges on my card, except there weren't. It was me using CityLink and it is actually more expensive than I had anticipated it to be. So when I logged into the account, I expected to see some other car on my CityLink account. But it was you. Alas, it was all me.

So I resolved to not use toll roads in 2020. And now I have a money win to share. That is a win. Well done, girl. Thank you. Have you got something just as exciting? I know toll roads are hard to compete with. Okay, this is obscure.

So mum has been clearing out our house. Yes, I see where this is going already. No, I don't think you do. In my room, she found $50 worth of coins, guys. Yes, the winning. I know, bizarre. So she's going to transfer that to me, which is lovely. Should you not have cleaned your own room though, Georgia?

Yeah, I know I sound pathetic. Also though, I've like inherited lots of crockery and silverware and really cool things from the 90s. So it's a money win. Absolute money win. I remember when I moved out, I got a pot set and I loved it. Yeah, it was the best thing I ever got. Anyway, I feel like we've got a show to do.

We do. Again, before we head into the main chat, V, how did our Facebook community go this week? Did anyone stand out to you? Yes, actually, I have a money win from our friend Caitlin. She posted in the group this week and said, I moved to Canberra three months ago and today I decided to deep clean my apartment. I was just finishing the kitchen and looked in one of the corner cupboards

and saw a brand new Breville Cafe Roma coffee machine. She's double checked with her real estate agent and her landlord and the previous tenants and they all said it wasn't theirs. She's not sure how it came about, but she's not complaining one bit. She says, this means I now don't have to buy a morning coffee anymore and I don't have to go out and spend a few hundred dollars on a coffee machine, which she was actually already saving for. so that's my favorite money win she can't believe her luck I can't believe her luck and I feel like

that's a great money win that is a great especially at the start of the year just opening your cupboard and finding a little coffee machine in there is there a coffee fairy I'm not sure can he visit my house I know I want one too gee have you got a money win for us I do mine is from the lovely rose who has written money win smiley face with the tongue poking out with the money dollar sign on it my gym my gym runs monthly challenges each time you enter a new challenge your name is put into the box and at the end of the year a winner is drawn out and you've received six months of free membership this year rose won meaning she can contribute the money she would usually pay for her membership to her savings for a holiday later amazing amazing rose what i love about that

is not only did she win the competition but she actually reallocated the funds instead of just letting it go dormant. So Rose, you're a legend. Thank you so much for sharing that with us. Today's show is all about superannuation. Now, in the lead up to this, I've been talking to you, Vy, a lot. Yes, you have. Yeah, to do some learning. And the key thing I have learned is that super is not an investment, is it, Vy? No, it is not. It's a tax structure. Bingo. Yes. It also turns out you have to have it and nearly 10% of your salary is going into it. so we need to be taking it very seriously we do now v before we do talk about the difference between a tax structure and an investment can you please tell us exactly what super is super

annuation is designed for us to have to ensure that we save enough money through the course of our working lives to make sure that we have sufficient funds available to us in retirement so we're not retiring and stopping work without having an income so we want our income to continue long after we stopped turning up to our jobs. So if you're employed you're probably going to be qualifying for the super guarantee contribution so the SG as it would appear on your pay slip from your employer which requires them by law to contribute 9.5% of your salary into a super annuation account on your behalf. This amount is often subtracted from your salary before you actually get your pay packet although some employers do actually pay your super on top of

your salary and that's a really good point as well gee actually to make sure that when you're talking about your income you know if your salary is including or excluding superannuation so often people will say it's fifty thousand dollars plus super or it's fifty thousand dollars including super understanding that difference and what that actually means for you is really important it's actually a difference of 9.5 percent or more depending on what industry you work in so it really pays for you to understand what you're worth and how that works. Because it also comes into consideration when negotiating salaries and when going for jobs and understanding what your rights are and what you're asking for. Because all too often do I see people saying, oh, I got

$50,000. That's fantastic. And you go, all right, including or excluding superannuation. And they say, oh, I don't know. So it's worth fighting for because it's an additional 10%. And you know, it's important to understand exactly where you are standing. And I think that everyone should know what their SG actually looks like. So G, as you were saying before, a super fund is not actually an investment, but super funds do take the money you put into your super accounts and invest it on your behalf. And the purpose of that is to grow your wealth over time so that when we get to retirement, we have more money than what we had saved. I've used this example on the podcast before, but it's one of my favorite ones because it's super, super powerful. I think I'm funny

using super as an example there. But if you are 21 and you started saving $500 per month until the age of retirement, you would have $240,000. But if you'd taken that same amount of money and invested it instead over the long term, you would have a investment portfolio worth $1.2 million. dollars. That's insane in comparison to what you would have just saved. So it's really important that we actually take into consideration where we're putting our money and see super as an investment for the long term. Because if you're starting small and starting early, that compounds really quickly over time. Your super fund will invest your money in line with the risk profile that you chose when you selected your super fund. Hang on V, what super profile did I select? I have

no idea what you're talking about so gee i know you've already picked your super fund right like we're talking about this before when you pick your super fund you actually pick a risk profile so that could be a conservative risk profile it could be a high growth risk profile but it is actually completely in your control how exposed to the share market your money is right is there a default that i would have selected conservative is quite often the default or it's called balanced with most super funds and that means that a very large percentage of your super fund is actually sitting in cash. When I say that it means that that money is not exposed to the share market and therefore is not getting the returns that you might be expecting it to get because it's in super

so it's definitely worth checking and going onto your super fund website and checking what risk profile you're invested in and working out if the risk profile that you have chosen or you're invested in is actually in line with your values. Okay, V, so I want to put my money in shares. How do I go about making that happen? So you need to log into your super fund and check what you've ticked. It's very, very simple to change. It's often just a tick box. So go in and have a look at what the risk profile is on all of the superannuation websites. There will be an explanation of the risk profiles that they have on offer. So read through those, make sure it aligns to your values and then pick the profile that is most suited to your situation. If you're a little bit

confused. I know this is really early on to say go see a financial advisor, but literally talk to a financial advisor really early on because if they put you in the right fund from the very beginning, you're going to be in a position where you are quite literally hundreds of thousands of dollars better off. V, that is literally insane. I had no idea that this was a thing. Well, no one seems to care about super because it's so far off. Everyone talks about superannuation as something that we should care about when we're in retirement because it is for retirement, but it is absolutely worth caring about right here and now because I want future me to have $100,000 more. I don't know about you. I would like that too. And I didn't have to work for it. So I just had to

tick a box. Awesome. Go tick the boxes that make sense to you. Before we go any deeper, V, can you please explain what kind of super funds are out there? Good question, G. There are so many different types of super funds and I'm not going to get into the ins and outs of the specific brand names or the companies that are there because there are so many things that you need to take into consideration when looking at super funds, but let's really consolidate this. And I will say that there are four main types of super funds. So there are corporate funds. These are funds that an employer sets up with a financial institution on behalf of their employees so that they have group discounts and benefits associated with it. You then have personal super funds, and these are

retail funds that are available to individual customers, like anybody listening to this podcast there are then industry superannuation funds and these funds are open to everyone but if you work in a particular industry or under a particular industrial award your employer may contribute to your super guarantee and other super monies to an industry fund and then there is a thing called smsf and that sounds really fancy but it stands for self-managed super fund and these are often referred to as the diy version of super funds so members of a diy super fund are responsible for the investment strategy for the operation and administration and all the accounting on this. So it's a lot of responsibility. It is something that you don't go into lightly

and you need to really consider. And my personal opinion on this, and I'm just putting it out there because I see so many people using SMSFs incorrectly, is that if you have less than $300,000 cash in your super fund, do not consider an SMSF. That's straight advice and I'm just not interested in hearing people telling me that it's a good idea with fund balances less than that because the amount of accounting fees on the flip side don't make it worth it plus that sounds so complex for me to manage myself like that just doesn't sound plausible absolutely I think there are a small amount of people though that really like managing their super themselves whether they are savvy investors or they are higher net wealth individuals it does work for some people I do have

clients who have SMSFs, but I think it's really worth pointing out here that so many people have fallen into the trap of getting an SMSF because you can buy property in it or getting an SMSF because you can use the funds in another way. And I strictly do not believe in that because it's not diverse. We talk about diversification all the time. If you're taking all your super money and putting it in one of the plan apartment, you're not diversifying your investment strategy. future you is not going to thank you if someone has said to you you need to get an SMSF we can use that money to buy property go consult a good quality financial advisor and get some alternative advice to make sure if that actually works for you because more often than not it's not a good idea

would you say for your average gal like me on an average salary is there a fund that I should be choosing no and I know people are listening to this going Victoria tell us which super fund to And I'm so sorry that I'm unable to actually say that. One, I can't give you guys personal financial advice, but two, I don't believe in only one fund. I have clients that are in numerous different funds and they're in different funds for different reasons. So my personal opinion on this is that your super fund changes over your life. When you have just started working, a really basic retail fund with really low level fees is perfect. As you get a little bit more complex and you start to increase the amount of money in your superannuation, that's when you

start to look at a little bit more of a complex strategy. You start looking at super funds that have more options available to you because it becomes worth it. What kind of options? Sorry to interrupt. So different options to diversify the investments that you have. As we know from the investment episodes we did last season, brokerage can be really expensive and this actually applies to the money that you're investing in superannuation. So if you don't have much money and it's being invested for really high levels of brokerage, it often ends up impacting your performance and putting you behind. Higher levels of brokerage are only applicable when you get to a point where you have enough money to play with. So your super fund actually can change over your

lifetime. As I mentioned before, you've gone from having a retail fund to something a little bit more complex and closer to retirement, you could and probably should have more than a million dollars in superannuation, that's when you and your financial advisor might sit down and go, all right, well, we're going to do a self-managed super fund because you've got enough cash. It is really financially viable. The accounting fees are absolutely worth it. And this is why we're doing it. And you might end up in a self-managed super fund, but it's not something that I would ever recommend to someone who is young or has a lower balance. So Bea, would you say there's any benefit to staying with the one fund your whole life? Not necessarily. If you're super

comfortable with it and you're really passionate about that fund then absolutely stay with them but it's something that you always need to review it's like a financial plan I can't hand you a financial plan and expect that that plan makes sense for you for the rest of your life exactly 10 years from now your life's going to be completely different so we need a different strategy and super should be looked at in that way it's not something that we set and forget it is very easy to set it up make sure it's okay and check back in a couple of years to see if we need to update the strategy it's definitely not something we need to look at on a monthly or weekly basis but being on top of it and understanding all of the features that are

associated with a super fund is really really important just to clarify gee when I say have multiple super funds over your lifetime I'm not saying multiple super funds at one time it's moving into different funds that then suit your situation as opposed to the fund that you were in before so it's not necessarily like oh have five funds because we'll get to that I don't believe in that at all. Okay, V, so now I know how super is invested. Is there anybody that super doesn't apply to or should everyone be getting around it? Really good question because SG actually applies to everyone who is an employer. Like if you employ people, you've got to pay super, but generally the super contributions only have to be paid if an employee is aged 18 and over

and earns more than $450 before tax each month or an employee under 18 who works more than 30 hours a week and earns more than $450 a month before tax as well. There are rules and you know if you were working casually all the way through high school and you just did like four hours a weekend like I did at the ice cream shop you probably weren't being paid super because you didn't actually qualify for it. So if you did though or you feel like you did you can lodge a claim. In some instances though your employer will also need to make super contributions for you if you're actually a contractor. So this is a really complex area. So if you feel like someone was meant to be paying you superannuation and hasn't, jump on the ATO website. They've got

really good calculators for working out one, how much super you should have been paid, but two, instructions to follow up if you haven't been paid super and you feel like you were entitled to that. Now, V, we've spoken a little bit about this in the lead up to today's EP, but can you please explain for the listeners the difference between a concessional and a non-concessional contribution? Oh I'm excited you did your research and want questions to ask me. Yes. Yeah good work. A concessional contribution is also called a before tax contribution and this is money that goes into your super account from your before tax income. So this is the contributions that your employer is making or a salary sacrifice amount that you've already arranged with your employer

or a tax deductible contribution that you're making for example if you're self-employed or decide to make extra contributions for yourself. Concessional contributions typically make up the bulk of your super savings and they are generally taxed at 15%. Previously there were different limits for concessional contributions depending on your age or your situation but 2017-2018 when they did their tax stuff onwards the rules have been simplified. Now there's a new limit and it is $25,000 regardless of your age and that is the maximum amount of concessional contributions that you can add to your super fund each and every single year without paying additional tax. So let's flip this. Non-concessional contributions are contributions that as G you've probably guessed

it are made from your after tax income. It adds up. It does make sense. Concessional pre non-concessional post. Previously there have been different rules much like the concessional contributions about how much money you could contribute non-concessionally to your superannuation but since 2017 the annual cap is now a hundred thousand dollars so it doesn't matter who you are what you do you can only put up to a hundred thousand dollars with a bring forward rule which i'll explain in just two seconds to your superannuation fund so this money is not subject to the usual superannuation tax rate of up to 15 you only get that on your 25 at the beginning Does that make sense? It does. So example, your employer could have paid you $6,000 worth of

super. You can then add enough to get to that $25,000 cap without having to pay additional tax, but any more than that $25,000 and you pay your concessional tax rate. This makes sense. Makes sense. I know. I can contribute up to $25,000 a year to my super fund, but is there a cap on this over my whole lifetime? Yes. So, G, as I mentioned before, there's a thing called a bring forward rule and that means that if you're under the age of 64 you can make a larger payment now but it will reduce the future contributions you can make so in this way you can contribute up to $300,000 in a financial year but that means that you won't be able to make further contributions for the next two years once you use up your cap if you

actually go over like you mentioned before like is there a cap yes there are there are a couple of rules if you exceed the non-concessional contribution cap it actually gets really expensive so it's worth keeping an eye on it and I know not many of us can actually do this but I think we should be educated and know the rules if you exceed the contribution cap it's expensive because it'll be taxed at 47 percent that's a lot of percent that's a lot of percentages so keep that in mind and also take into account that if your total super balance if we all should be so lucky goes over 1.6 million dollars you're actually not allowed to make non-concessional contributions anymore what that doesn't mean though is that your super fund can't keep growing

it just means you can't add to it yourself but you could have 1.6 million dollars sitting in superannuation and it could grow over time so often people are trying to cap it out really early and reach that 1.6 million dollar contribution cap so that they achieve it early yeah so that their money compounds over time and everybody knows how obsessed i am with compound interest money doubles technically every 10 years or so, that amount of money could be worth significantly more in the future if you have enough time to wait for it. This is all sounding amazing and I'm feeling inspired to start making those additional contributions to my super, but we have discussed super before and I remember you saying that you personally don't make any additional contributions

to super. What's your story, girl? Why is this? Well, well, well, if it isn't my own words coming that to bite me. So you are correct, G. I have said publicly and to you a number of times that I don't make additional super contributions. And whilst I do still have my 9.5% of my salary going into my super, I don't put any more money in there. So I don't want anyone to listen to this and think, oh, well, Victoria does it, therefore it must be the right way. There is no right or wrong way about this. It actually all comes down to your values. And my values are that I don't want my money sitting even though there's so many benefits to having superannuation i.e lower tax rate secure structure etc i don't want my money locked away for that period of time so you can't

actually access your superannuation until you get to a certain age what is that age at the moment in australia it is 60 where you can start accessing it and 65 where you can start accessing it tax free i don't want to wait until i'm 60 to have financial freedom financial freedom is something I am wildly passionate about. And I don't want all of my money and my main investment to be an asset that I can't access until I'm older. So I don't prioritize additional contributions to superannuation because I am using those contributions to put into a separate investment fund. And whilst you might be saying in the back of your head, but Victoria, you could be saving so much money on tax. To me, sacrificing that additional saving on tax is absolutely worth it

to me personally because I know that I could access it tomorrow or I could access it in 10 years and create that financial freedom for myself. I have so many things I want to do and so many things that I want to achieve over my lifetime and having access to those funds is really, really important to me. However, that doesn't mean it's important to everybody and you might prioritize getting your super to a certain level and doing something else with your money. So definitely talk to a financial advisor if you don't think that's right for you. But I wouldn't ever say that it's a terrible idea to contribute additional funds to your superannuation fund, but I would be getting some advice first. dot com dot au and you might find yourself on the show but for now here's this week's listener

question hey victoria i'm just getting my finances in order i've got a couple of super funds and i'm going to consolidate them together really soon but i keep getting stuck because i don't know which super fun to pick there are so many options and i'm getting really overwhelmed looking at everything how do i pick and what do i need to be looking out for all righty v i'm going to leave you to answer this one go right ahead gee i feel like i've harped on to you over the last couple of weeks about the importance of consolidating super so maybe you could have addressed this but i'll leave it to you there's a couple of components to this question that i want to jump on first is yes it is so important to consolidate your super fund so i'm going to address the

consolidation part first and then i will talk later about which fund to pick but really important to consolidate your super for a number of reasons and there's so many things you need to think about when trying to do that. But the average of the fees that you'll pay over the lifetime of a super fund is $14,000. So that's how much you'll pay in 14 years. So average of $100 in annual fees and $250 each year in insurances really adds up. So that $14,000 sounds like a lot of money, but I promise you it's actually quite reasonable for a super fund fee. But if you had five super funds. Times that by five. Times that by five, you're paying $70,000 worth of fees over the lifetime of having all of those funds. And you're still paying that $100 annually in fees for each

of those funds. And you're also paying $250 in fees every single year for those insurances. So it really pays in the long term to actually consolidate your super. How do you consolidate your super fee? So you can actually jump on my gov website and it is quite simple but my recommendation isn't to just jump on there and consolidate your super whilst I'm saying the process is easy there is so much to take into consideration when consolidating your super fund so the first is to look at the super fund that you want you're looking at fees you're looking at past performance albeit that is not a reliable predictor of future performance you are looking at the way they invest you are looking at if they're invested ethically or not is that something that

as a value to you? If so, do your research. Understand what you do and don't accept when it comes to the investment world. It's a really good idea to compare super funds online and just weigh up your options. So the Smart Money website from the Australian government is a really good place to start because it can help you understand what fees and charges you need to be taking into consideration. And if you're a member of our Facebook group, this week I'm going to be posting a little bit of a comparison chart so you guys can do your own comparisons, which will be really exciting. But when weighing up your super fund, also, please, please, please take into consideration the insurances that you have as standard on those funds. Now, I know this doesn't sound very sexy.

Sorry, G and everybody listening, but insurance is incredibly important. And if we were given insurance when we were young and had nothing physically or mentally wrong with us, we are in a position where we don't have any exclusions on this insurance cover. So therefore, it's quite valuable to us because it covers everything. But if we close our superannuation accounts without considering the insurances, we're in a position where we might have lost cover that we actually needed. For example, I had a client who came to me and said, Victoria, I've got this back issue. I really need insurance. And because he had a pre-existing condition, no insurer would touch him because they're like, well, we're not insuring your back. We'll insure every other part of you,

but we're going to exclude your back. But it was incredibly lucky that he hadn't cancelled his insurances in his super yet because they didn't have any exclusions so therefore we were able to work out a way to keep some of the insurance that he had pre-existing in super to cover his back and top up outside of super to make sure that everything else was covered so if you're going to put yourself in a position where you're like all right need to consolidate super funds take into consideration the value of the insurances there now i'm not saying that they would be perfect for you from the get-go you know they might be really expensive or they might not be a value to you but definitely look at them before choosing to cancel and make sure that you are

making the right decision for you because too many times do I see people cancelling their super fund to find out they've also lost the cover that they actually really wanted. Jay I know I just focused a lot on insurances and I'm not going to continue that I'm sorry I know insurance is sexy that's why one of our episodes coming up is actually on insurance and you can listen to that to get some more information but it is really important to take into consideration so I just wanted you to know here too but other things you need to take into consideration with your super fund are the values that you hold the beliefs that you hold and the things that you actually hold close to your heart so what are your goals for the future what should your investment risk profile look like what

are the options that are available through your super fund and now I'm not going to tell you which super fund to go with. One, because I'm a bit mean, but also because I'm legally not allowed to. So if you want to pick a super fund, do all your research, understand what each fund does, do a comparison. Often super funds have comparisons on their website of them comparing themselves to other super funds. Don't take those as gospel because they're often not comparing apples with apples. Yes. A little bit of bias in there, I'm imagining. Yeah, just a little bit of buyers, but then also people put fees in in different ways. So they could say, hey, our account fees are really low, but then they have a really high administration fee, which they haven't

disclosed because, well, it's not an account fee, is it? Sneaky. Exactly. And then some other super funds have performance fees. So if they outperform the average, they take more or some other super funds have just a flat fee. So it's really important to make sure that you're not comparing apples with pears. You're actually comparing apples with apples. Alrighty, V, this is making sense. So I now know how I should be comparing my super funds by taking into consideration risk profile, the insurances, the performance and the fees. Good work wizard. Thank you. But my last little question is how much money I actually need in my super fund to be able to retire. So Jay, I think this is a really interesting one because it's very hard for us to start

prioritizing something if we don't have clarity on the final goal. I harped on an episode or so ago about the importance of setting SMART goals. And it's really hard if we're not specific about it. So to get into it, let's be a little bit more technical. The ASFA estimates that the average Australian superannuation balance needs to be $640,000 for couples and $540,000 for singles, which actually assumes that you withdraw your superannuation as a lump sum and you receive a part-age pension. Now, I'm pretty opinionated on this because we are young, we have so much power and the ability to create financial freedom for ourselves that I don't necessarily agree with this. Why don't you agree with that, Bea? So whilst they're saying that that's a comfortable

retirement, I think I need to contextualize it a little bit so you understand why I think that. So if you had $640,000 invested within your superannuation fund that is making an average return of 5% that's about $32,000 per year and I know that most of my clients and myself wouldn't be very comfortable if I only had between myself and my partner $32,000 to spend. So I think it's important to look at this personally and work backwards. Let's dream for a second if you owned your family home completely outright which if that's a goal of yours let's do it. If you don't cool. Let's just put rent into the consideration later down the road. This is going to change for each and every single person. So some people might say, well, Victoria, $32,000 suits me fine. And I

go, okay, no problems as long as we're on the same page and you know what you're going to get at the end. Whereas I have a lot of clients that say, well, Victoria, I want to have a spending money of $50,000 a year that I've done myself and I don't have the age pension. Well, gee, that actually means that you need to have a million dollars within your superannuation fund. That's a lot more than what the average is recommending for a couple. And if you extrapolate this out a little bit, if you want an income of $100,000 a year, you actually need the goal of having $2 million combined in superannuation to achieve that as an individual. And that's just super. As I mentioned before on the podcast, I don't personally invest additional into my superannuation fund. So my

super, maybe my values will change, but my super isn't actually going to look like $2 million just yet but that's as a whole I need two million dollars invested to generate that investment return and that's the investment return that replaces our salary so on the day you retire you stop having an income from an employer and your investment takes over with the dividends and the returns that it is making to supplement the money that you were spending from your income so I think it's really important to point out we want to enjoy that journey there as well and I mentioned before that I don't want to wait until I'm 65 to be able to access my funds. I want people to have the freedom and flexibility that investment actually affords us. So that means that my money

is invested outside of superannuation. I think it's important to point out here that whilst the average life expectancy is increasing, the potential retirement age is actually going to increase. There's a lot of talk about that retirement age stretching out to 70. Exactly. Exactly. And I think that we need to create a life for ourselves that is financially stable, where we're not dependent on an asset that we can only access after a certain age. Because let's be honest, getting to the age of 65 is a privilege that is actually denied to many people. And it's about the journey. So how are we going to support ourselves before we get to that age where we can access our superannuation? So when I say if you want an income of $100,000 a year in retirement,

that your goal needs to be $2 million in an investment, I don't mean just in superannuation. That could be in investments that you hold outside superannuation, but more often than not, a bulk of what your future wealth is going to be is going to be inside the superannuation vehicle. So it's important to take that into consideration when you're investing inside and outside of super and making sure that you're prioritizing your super and looking after it in exactly the same way you would if you were looking at an investment that's held outside of superannuation. Okay, now for the fun stuff. What good would a money podcast be without the pervy bits? Now it's time for Money Diary. Let's get into it.

I feel like my relationship with money is a pretty positive one. My dad always was the one working and my mum would stay at home. So I always wanted to have my own money and be financially secure in myself I didn't want to have to depend on somebody else. Today's money diary is from 22 and self-employed who's just bought her first home. I work in the beauty industry I'm self-employed and I just rent a chair at somebody else's salon however I'm in the process of building up my own brand in the hopes of eventually working for myself in my own salon. I'm currently living with my boyfriend and we've just purchased a house and we settled last week. Okay, so now we know what she does, let's get into the juicy stuff. How much does

she earn and how much is sitting in her bank account right now? I earn around $60,000 a year and my partner earns about the same. I currently have about $5,000 sitting in my savings account. however if you had asked me a couple of weeks ago I would have had $40,000 saved so I saved up an extra amount just as a security blanket to fall back on if anything had happened with the house and we were really fortunate that I had saved that amount up because we had had a couple of issues with getting our loan because I was self-employed and I needed to find $30,000 so really fortunate to have had that extra money there so we could cover the rest of the loan and everything went through okay. And what exactly happens to that money after it's been deposited

into her account? After my money gets deposited into my bank account, I have already automated transfers set up with my bank. So the day that my money gets put into the three separate bank accounts, money gets automatically transferred into my spending account, our holiday account, and then our own personal savings accounts as well. So all of that I don't have to touch. I just have to make sure that I'm not going over the amount that I've allocated for the week for my own personal spending. I'm not really too sure about where I should be putting that money that I am putting aside for super, whether I should be putting that into a super fund or because I'm working for myself, I'm lucky that I have options of where I want to put it, whether I should be putting that into my personal account or if I should be putting that back into my business. Okay then, so how does 22 and self-employed feel about investing? Does she invest? And if so, how? Yes, I do currently invest. However, I'm not investing too much at the moment. I'm using a

micro-investing platform and I have just $30 a week coming out of that into that account. Also, I use the roundup feature. So whenever I pay for a coffee or whatever, it just will add a little bit of money into my investment account. I hadn't really been prioritising it too much as our main goal was to buy a house. So we managed to save $100,000 for our deposit. So once we've settled into the house and we're used to, you know, how much is coming out, I'd like to focus a little bit more about doing investing this year. What about debts like credit cards or personal loans? So I do have a mortgage. I'm currently owing $580,000 on the mortgage. I do have a small hex debt, which is about $2,500, but it should get paid off by itself. I'm not really focusing

on paying that down. Does 22 and self-employed have any good money habits that she's especially proud of? I would say that once I've set up a budget and how much I'm allocating myself to spend I won't go over that so I don't tend to take money out of savings accounts or draw it out of other places I tend to try stick with how much I've allowed myself to spend for the week and also when we've been trying to furnish the house we've pretty much gotten everything off Facebook marketplace so we've gotten everything secondhand it's all been really nice furniture and stuff but before I try buy anything new I try look on Facebook marketplace. And what about her worst money habit? So my worst money habit is definitely feeling anxiety around spending money

I sometimes won't give myself permission to spend money or I'll feel really really guilty doing things like paying to go to a holiday or you know going out for dinner or that sort of thing So I'm really trying this year to work on my mindset around money and giving myself permission to spend and that, you know, money is to be enjoyed. It's not just for me to save. As long as I'm, you know, setting future me up, then that's good. So what's today's money diarist actually saving for? What's her big money goal? My biggest goal was buying a house. So I'm really fortunate to have been able to do that. So I currently don't have any really big money goals. However, my partner and I think that we would like to buy an investment property within the next three to five years.

And for me personally, I would like to get into investing in shares. So how would today's money diarist rate her own relationship with money if we forced her to give herself a grade? I think I would give myself an A. I've achieved a lot that I've set out to do. However, I would be more confident giving myself an A plus in the future once I've gotten rid of a lot of that anxiety around spending money. as well as once I'm doing a little bit more of my own personal investments. 22 and self-employed. My goodness, Victoria, she is amazing. She was incredible.

Can you believe it? No, I can't believe it. Can you imagine buying a house at 22? No, I cannot. And then being like, oh, okay, my next goal is to buy an investment property. What an actual legend. She's a baby. Yeah, she's an absolute baby, but an absolute darling.

I cannot believe how well-adjusted she is, and she's just such a good saver. I'm so impressed that she's self-employed and totally across organizing her own tax and her own super and setting up separate bank accounts and I just feel like so many of us who are self-employed or are thinking about it could learn a lot from this I mean we did our side hustles episode yes with Emma a couple of weeks ago and that was really really great and had some great tips but I just feel like this girl is really she's across it yeah she's totally across it already and totally doesn't need that episode no just regard that one no just just don't worry don't don't waste your time babe um no I thought that that was incredible and what I loved the

most was she actually put a priority on paying super even though she said she didn't fully understand what she was meant to be doing with it or if she should be doing more or if she should be doing less I think she probably should seek some advice in that space so she knows exactly what she's doing and she actually feels empowered around that decision but the fact that she's prioritizing it is genuinely something a lot of freelancers and self-employed people don't do because they see cash flow coming into their business and they can see more appropriate or more important thing that they believe it needs to go to and then they've missed out and that's actually future you missing out on it and I think it's really important to see that that's actually

a priority now because superannuation compounds it grows it is something that we need to prioritize now. And given she's 22 and already across this, like I have no doubt she's going to be just fine. Yes. Was there anything you think she could improve upon? I loved that her feedback was that she didn't give herself an A plus yet, not for any other reason than she just wanted to get across her own personal investing and wanted to feel more confident around money making decisions. She mentioned that she got a little bit of anxiety around making money decisions. And I just think that's a really great thing to be aware of. It's something that if you feel like that, reach out, get help for that,

because that's something that a lot of people stick their heads in the sand about and don't actually action change off of. And if you're a little bit worried about the small things that also just like investment compounds. So the small things become bigger things and then those big things become really big things. So I think that her getting on top of her money anxiety at the very beginning of her journey is essential. And I really love that she was self-aware to know that. she's amazing it's a big tick for me 22 and self-employed I think you've got Victoria's approval over there as well absolutely but I also think it's really important to note she did live at home you know not everyone has that but she's obviously used the resources that she had access

to to the best yeah she's made the most yeah yeah she's absolutely made the most of them and I think that that's really impressive so as much as she is 22 and has just bought her first home I think it's really important that we don't then go oh well I'm 22 I'm definitely not in that yeah exactly that's absolutely not the case not everyone has access to the same resources and tools and we're all just doing the best that we can it's just really great for her that that's her situation and I'm so proud of that I see that as quite inspirational thanks so much for the amazing 22 and self-employed for sharing you're a wizard but sadly that is all we have time for today so just before we head off we're

going to need to wrap the boring but important stuff 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 and yes don't worry we promise victoria divine is an authorized representative of Consultum Financial Advisors Proprietary Limited, ABN 65006 373 995 AFSL 230 323. And thank you, of course, to our friend Ryan John for helping us produce this episode.

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