Month: August 2018

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Financial Freedom

Unlearn Action – Part 2

Action is the Unlearn Pillar that most people don’t know quite enough about to really make it work for them.

Part One of exploring the Unlearn Pillar of Action I revealed what questions my husband and I had to hash out in order to take some more solid actions.

In this Part Two of exploring the Unlearn Pillar of Action, I’m going to reveal more step-by-step plans I uncovered and how I got there.

 

How much per month did we want to spend in retirement? I realised my fantasy life as an oldie was going to cost 50 percent more than what we would have in super by the time we retired. This helped us to understand how much extra we needed to put in super now, in order to hit our goals then.

We also put a solid timeline around the following:

  • Credit cards – how long it would take us to pay them off and never rack them up again
  • Emergency savings – could we get three months salary in a high-interest account and never touch it unless we were burning?
  • Our kids’ future – could we put away money every month that earned compounding interest for our kids’ university fees, cars, lives?
  • Living money – how much did we really need in order to have a good life every month? The rest we moved at the start of the month so we did not get tempted.
  • Investing outside of super – what funds, what timeframe, and what should we pay?

While I have been in the financial services industry for well over 20 years, and probably knew the investing part pretty well, the other steps, which are in fact far simpler, were the ones I needed to take to get my wealth plan on track.

These things don’t all happen in a matter of months. This cascading plan takes years to achieve – but with a plan you can tick the list off – knowing that you are moving ever closer the future you want.

It’s a great feeling. Remember that show The A-Team? I always loved it when Hannibal would say “I love it when a plan comes together.”

That’s how I felt when we found the right adviser. And you can too.

Which is why I delve so deeply into how to find the right adviser. I know you may have read the press: “don’t trust advisers, they are dishonest.” Or thought there was no way you could afford one; or that it would be embarrassing to share just how bad with money you were.

Let me tell you, while there are some advisers who are not the ones you want to pick (just like in any other profession), there are thousands who are incredible at what they do.

You just need to know how to find them, what questions you should ask of them, and what to pay them.

I am going to help you do just that. Read The Breakfast Club for 40-Somethings and see what effect a financial planner can have on your life. Download the free guide on How to Find the Right Financial Planner.

Because I wholeheartedly believe in the power of great advice. There’s no financial gain in this for me. In fact, my education business spends its time training financial advisers, and making them even better at what they do, to help you.

So think carefully about the action you need to take to get peace of mind and what you want.

Because you deserve it.

Categories
Financial Freedom

Unlearn Action – Part 1

This Unlearn Pillar is a big one: action.

It’s the pillar that can make or break your financial success. It’s also the thing that most people don’t know quite enough about to really make it work for them.

The thing about action that most of us need to unlearn is that there is no single thing you need to get or do in order to make your financial goals a reality.

Rather, a cascading set of actions is needed – it’s not difficult once you understand what you need, but is it impossible to truly succeed if you don’t know what you need to get you there.

There are many aspects of action that most of us need to unlearn. The most basic one, but often the toughest, is actually doing something. I know I want to lose five kilos, but am I really prepared to give up that morning muffin? My lack of action toward losing that five kilos means it’s a pipe dream: not something I am prepared to action to get what I want.

Funnily enough, money works pretty much the same way. Know you need savings, but there is never anything left at the end of the month? Well, pay the savings first, before you spend a cent of your income, and adjust to living off the rest.

Know your family would be in trouble if you got sick, or worse? Do something about it and look into the right kind of insurance.

Most of us delay action, because we are delaying, on a grander scale, pain. It’s been said by many psychologists that as human beings we are either moving toward pleasure, or moving away from pain. So the muffin is short-term pleasure, and the tight pants are long-term pain.

Getting life insurance is hard to understand, expensive and just plain boring to organise, but having the worst happening would create deep long-term pain.

So at this point in the journey of unlearn, I am going to share with you the biggest single thing I did to change my financial future and take action.

My husband and I picked the right financial adviser.

That’s it.

 

“What?” I hear you say. “It’s got to be harder than that?”

No, not really. Of course, there were many lessons along the way that I had to learn. You can read about the other of four pillars and my challenges with them here.

But, to take action, the best thing we did was to find the right adviser.

It was through this relationship that we were able to come up with a solid plan of action. One that gave both my husband and I total peace of mind about our future – across all scenarios.

The process they went through was fascinating – and it included a lot more couples counselling in there than you might suspect.

This was because the really big, hard questions needed to be asked of us by our adviser, in order to get to an actionable plan.

Questions that we had to consider included:

  • Who would get the kids if we were both to croak?
  • What money would we leave individual family members?
  • How much insurance did each of us need if the other one died? What would the living one do with it?
  • If someone did get the kids, how much money would we leave them to look after them?
  • What would we do about power of attorney if a terrible accident happened?

You may ask what has this got to do with wealth, but the reality is, all these questions really need to be answered in order for you to have a fail-safe future plan that is to weather any storms.

Once we hashed these out (and boy, that was an interesting process) which actually took a few weeks, (lots to think about!) we could then set-up tick boxes for some more solid actions that took us step-by-step towards our financial goals.

How much per month did we want to spend in retirement?

We realised some shocking stats which meant we had to make some timely decisions, fast.

I cover that in my next blog.

Until next time,

Categories
Financial Freedom

Stop Talking About Property

There’s no doubt if you live in a major city in Australia, you have at some point, indulged in talking about, speculating on, and trading gossip surrounding real estate. How much that house down the street went for; how much you made on your last house sale; how much you overcapitalized; or who had to sell for a song.

While much is talked about in the world of real estate, I have found it to be the case that not much else is talked about at all in the way of investments. Sure, you may have someone give you a hot stock tip (usually things to avoid), but as a general rule, you don’t find people sitting around talking about ETFs, microcaps, or global equities.

This is a shame. A lot of the time, some of the biggest barriers to more people diversifying is lack of knowledge. And if these topics were more widely explored, then more people would have access to them and an understanding of them.

I find it particularly useful to talk to people in their 20’s about these asset classes. Why? Because people in their 20’s are much less averse to risk, and much more open to new ideas. As we get older, we get more conservative, and it’s much easier to expose someone earlier than later to concepts on building wealth.

Now more than ever, it’s easy to experiment with alternative investment strategies. The advent of savings and investment app raiz (formerly Acorns), and fractional investment property app BRICKX, means you can start with a few dollars, and watch daily to see how it behaves, and how to manage it. I have recommended these apps to a number of people, as a way to start talking about, and experimenting with online investing. It’s been particularly well received by 20-somethings as they grasp the technology quicker, and have more trust in the process.

If anyone with some innate knowledge of investing were to pass it on to people in conversation over a number of years, the compounding effect of this knowledge might see more people ready to live a life without relying on the pension, and being able to afford the things they want in life.

So, perhaps if we stopped talking so much about real estate, and turned the tables on the conversation, we would become a better diversified, better financially educated nation.

In a recent conversation with leading investor Kerr Neilson, who appeared in Season Four of The Investment Series on Channel 9, his advice was that people should just start reading, because to understand the nature of investing, you need a knowledge that’s been built up over time, rather than a lack of understanding and blind trust. This is especially true as events like the GFC have eroded trust and created the opposite: mistrust in the financial services industry.

So go ahead, start talking about your investments and asking questions about what you don’t understand. A little knowledge will surely make your world a better place.

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Uncategorized

Unlearn Belief

In my third instalment of the “unlearn” series – on the key issues that are holding people back around creating the financial outcomes they dream of – I explore the key issue of belief.

To be honest, this is one of my favourites. Why? Because from a very young age, this came naturally to me.
What you believe about money and your ability to attract it is usually what happens. Never think there is enough? That it is hard to get? That other people have more? That it is a struggle? Then you’re likely to experience it that way.

Try to trace back where these thoughts first started. Usually we find our core beliefs are intrinsic to our very nature and started when we were very small children.

I also believe it’s not just our environment that shapes this belief. Many times personality also plays a role. A natural optimism usually goes hand-in-hand with a belief in the ability to make money. If you are someone who usually sees the glass half empty, it’s pretty hard to believe that you are going to attract all the wealth you need.

Growing up in Gunnedah, I always had a fascination with what I would describe as beautiful things. Sure, these may have included knee high white marching boots at aged seven (okay, it was the ABBA era!), but as I grew, the things I admired did not make me feel they were out of reach. Rather, I believed that I could get them all, and more, one day – I just had to figure out how.

 

As a teenager, my parents would give me a budget of $100 to buy all my winter clothes, and I would come home with one pair of jeans. From a young age they really began to wonder where I came from!

However, I displayed what I now know to be an innate belief to attract the things I wanted in life. I then backed it up by working (from age 13 in a chemist, which I actually loved!) to get it.

Going to university and studying journalism became the second input for me understanding that self-belief and an optimistic attitude were big attractors of money. Our class was full of bright, ambitious students, but it was those who were full of self-belief who were able to turn that into career (and financial) gold. My flat mate, Wil Anderson, the comedian, was at the time, the top student in our class. Sure, he was bright, but Wil had something else going for him that was a huge competitive advantage. He believed, without wavering, that he was going to make it to the top. And he did.

Not without hard work and sacrifice, but his belief was one of the biggest factors in driving him forward, and ensuring his financial success in what is one of the toughest gigs out there.

 

To really understand if belief is one of the pillars you need to unlearn, I suggest asking yourself these three questions. The answers will tell you what you need to know.

  1. Would you consider yourself an optimistic person? Do you think you may have been, but the world has knocked it out of you? An optimistic attitude is the first weapon to attracting what you want.
  2. Do you believe you have put in place all the ideas/actions you have thought about in relation to making money? If not why? Is avoiding risk eroding your belief that you can achieve your financial goals?
  3. What are your family and friends like? Are they financially successful? Do they have a strong belief system around money? Usually our belief sets tend to match those around us.

Once you start to really self-assess the answers to the above questions, you can start your journey to either repair your belief, or build it. Luckily, this is an area where there is a wealth of information and inspiration. People like Tony Robbins have spent a lifetime changing people’s core beliefs and mindsets so they can get what they want.

If that seems a little too out there for you, try books grounded in experiences from those who have done it themselves. Everything you read and watch has an impact, whether you feel it at the time or not.

I read at the end of most days – usually something to inspire me that I know will be ticking over in my mind while I am asleep. This is a great way to activate your subconscious to stimulate new ideas that can drive you forward.

For some inspiration, here are a few things I am reading, watching or listening to at the moment, or have read and loved. My backlit Kindle is one of my favourite tools for browsing the book store every day.

  • The Alchemist by Paulo Coelho – I read this years ago and it is the ultimate in belief and the journey to your dreams. It’s also spent 405 weeks on the New York Times best seller list.
  • The Magic of Thinking Big by David Schwartz – this was written in the 1950s and has some hilarious comments on the traditions of the time. However, its tips on outlook and attitude are timeless, and it has inspired me.
  • Tony Robbins – I love his seven simple steps to financial freedom.
  • “Mr. Money Mustache vs. Tim Ferris” podcast – this guy’s attitude to money and what it takes to have enough really changed my thinking.

 

Which pillar you need to unlearn?

 

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Uncategorized

5 Clever Ways to Manage Your Money, Monthly

Being paid monthly can be tough. While it feels like you have lots of money that first week, it can quickly be spent, and leave you living on beans by month end. But I’ve discovered 5 simple things you can do to help you manage your monthly budget, and come out with savings at the end.

1. Pay yourself first.

What do I mean by this? How much can you really afford to save? For the rainy day, the holiday you’ve always wanted to go on, or a deposit for a house? If you don’t wrangle your monthly budget to allow for saving, you are putting yourself last. Some people have a rule of 10% of your monthly earnings. But make your own rule – you might be able to save more. Whatever it is, decide the amount and have it automatically deducted into a high interest savings account the DAY you get paid. And then forget about it. It’s that easy.

2. Look at your calendar and plan your expenses based on what you are doing.

If you know you have an event, outing or family occasion thats going to cost, budget that in. That means spending less on other things, unless you want to go into debt (which believe me, you don’t want to.) Plan your budget based on your monthly activity and make sure you set aside enough to pay for it – and don’t get sucked into unexpected purchases. If you don’t need it, don’t buy it. If you keep making these good decisions you are ultimately buying your way to financial freedom.

3. Set aside monthly amounts for your quarterly bills – electricity, gas, etc.

These are the expenses that usually blow our budget when they roll in. If you are setting aside the amount divided by 3 each month, you have the money ready when its time to pay. And make sure you pay by direct debit so you can get the pay on time discount – it can be significant. Use a seperate bills bank account if you can – then you are never tempted to spend it once it’s set aside. Have the direct debit come from that account.

4. Try at least one side hustle every month.

What do I mean by that? Find another way to make money outside your main source of income. It could be selling something you don’t use on gumtree, or a bit of baby sitting on the side. There are thousands of ways to side hustle – why not think about driving an uber? It’s easier to get ahead if you can bring a little something extra in each month.

5. Eat in more.

I know this is hard. While it might feel tempting to grab takeaway when you are flat out and tired, it always costs more. If you can cook some meals on the weekend and freeze them during the week, it makes it so much easier to eat at home when you are time and energy poor. Plan ahead to save yourself money – and set in advance what you would like to spend on eating out – that way it is budgeted in.

None of these tips are difficult. The one thing they all have in common however, is the ability to look ahead, and plan. Its the planning and pre-preparation that allows you to have success, whether it be a budget, an eating plan, or to be honest, your life!

Once you start getting in the habit, it will start to become second nature. Force yourself to try these habits over a couple of months and see if they work. Your new-found discipline will help you reap the rewards of financial freedom over time, and thats worth planning for!

Vanessa Stoykov has spent the last 24 years in financial services working with some of the best investment experts in the world. She believes most people need to unlearn what they know about money to get ahead.

Start the journey by taking the free quiz to find out what Pillar you need to Unlearn.