Month: April 2022

In my job, I meet all kinds of people, with all sorts of money challenges. In fact, one of the main reasons I love the public speaking aspect of my work is so I can talk to people, who after hearing me speak feel free enough to be able to tell me their stories – and some of them make my heart ache. From divorce, to death and everything in between, the stories people tell me about their lives and their money situations always inspire me to keep getting the message out there –  it is never too late to change your financial situation and your life for the better.

You only have to read the news every day to see stories of people struggling with higher house prices, rental increases and the cost of living. Also the fear that rising interest rates will tip people into mortgage stress – I saw an alarming headline that said a one percent increase would put 150,000 households in Sydney alone in financial distress. It is a lot to deal with on top of COVID, and can make you paralysed with fear about what’s ahead.

“But this inertia will not help your situation. The only thing that will help is action.”

There are actions that anyone can take which can improve your situation, but doing it will not be easy, and there is not one size financial solution that fits all. But there are levers you can pull to change your situation over time. Here are my top three that may at first make you shake your head and say no way, but I encourage you to think about them over time, and really see if one of them is appropriate for you.

1. Lower your overheads. By this I mean, how can you reduce your cost of living each month? If you think there is absolutely no way you can do this, then perhaps it is time to step back and look at your whole life objectively. Is your mortgage huge? Maybe its time to sell the house, get some cashflow back and rent. You can invest what you have and take the pressure off paying every month for a loan that is only going up. I know this is not the popular decision, but your mental health is the most important thing to keep strong, and if this is a long term way to do that, then it is definitely worth considering. Is it school fees that are draining you financially? Can you make the decision to move to another school? Again, none of these are easy decisions, but to really change your life and your money stress you must be prepared to think of things that you may believe at present you cannot change. And to do it before things get worse.
2. Get more money coming in. Easier said than done? It is achievable, but again you must be prepared to do things that you have never done before. Can you sell your car and take public transport? Can you sell things around the house on Gumtree? Can you take on a side hustle, even one as small as babysitting or pet sitting? There are a number of ways you can bring more in – it may mean sacrificing time, or items you thought you could not live without. It is surprising once you do, you see it as not as hard as you expected.
3. Invest in yourself for the long term. If you aren’t happy in your job, don’t have a job or need to retrain, now is the time to start thinking about what could be different. Can you start training in another field? Study an online course? Get work experience somewhere that could help you land a better paying job? Putting yourself out there and studying are not an easy path, but this investment will pay off for you over the longer term. Because if you want things to change, you need to put one foot in front of the other and start the journey. It is not quick, certainly not easy, but it can make all the difference for living the life you want, even if it’s five years down the track. Because while making change is hard, sitting there and waiting for whatever is going to happen is much harder.

There is always a light at the end of the tunnel, even if it feels miles away. Don’t be afraid to start thinking about what you can change to make your life better in the long term. I know you can. You just have to start.

You got this.

There’s been a lot of talk lately about the role of financial influencers, and what they can and cannot do to teach people about money and investing. Namely because the Australian Securities and Investments Commission (ASIC) has recently held a private briefing by which they invited key finfluencers to understand the rules moving forward about giving financial advice.

What is a finfluencer?

Angel Zhong, a senior lecturer in finance at RMIT, says a finfluencer is essentially anyone with a following on social media who talks about finance and investing.
In the same way that a beauty influencer might share their makeup routine, a finfluencer might share their spending for the week or their thoughts on the stock market.

These people are content creators, who are using platforms like TikTok and Instagram to teach their followers about money. This is something I understand very well. Having started in finance journalism over 27 years ago, I have spent a long time creating content for multiple platforms. And I have to say I find finfluencers to be a much-needed resource for financial education that is entertaining and easy to understand.

“These creators have become really, really popular since 2020,” Dr Zhong says. “A lot of young people joined the share market for the first time during COVID and they were hungry for financial knowledge.”
Source: https://www.abc.net.au/everyday/finfluencer-money-advice-on-social-media/100959788

I also understand however, how easy it is for finfluencers to cross the line from education into recommending financial products, and this ultimately is where ASIC draws the line. There has been a long road for the financial advice industry to become a professional and trusted industry. Post a Royal Commission, an industry exodus, and an upgraded education requirement, being a licensed financial adviser takes study, skill and the right licensing requirements. Those requirements are expensive and compliance heavy.

For finfluencers to meet these requirements would be onerous.

“While there are some financial planners who are qualified and licensed who have their own social media following and influence, most finfluencers are speaking from their own knowledge and experience, without any qualification.”

Finfluencers are adept at making messaging fast, and entertaining, which is something the finance industry has failed to do. And perhaps it never will, with the level of compliance required.

Should you listen to advice from finfluencers?

• I believe it’s about reading, researching and understanding rather than blindly following.
• Follow more than one – follow several.
• Learn about categories not products.
• Understand how an index works so you can see how investments move up and down.
• Look at the government web site Moneysmart which will teach you about financial terms and help you use calculators to work out your own situation.

It’s estimated about 435,000 new investors bought stocks for the first time last year. Eighteen per cent were younger than 25, while 49 per cent were between 25 and 39, according to research house Investment Trends.
Source: https://www.abc.net.au/news/2021-07-14/finfluencer-tik-tok-instagram-social-media-financial-advice/100289102

I would hate to see finfluencers driven out of existence because they failed to understand the difference between financial advice, and financial education. Their ability to communicate so effectively is desperately needed for people searching to understand how to grow their wealth outside of buying a property.

How do finfluencers make money?

“There are 4 broad ways through which a finfluencer with a sizeable following can make money via videos.”

1. They make money from ads – the more views they get on YouTube, the more money they make. In fact Google will pay them around 4-5 dollars for every 1000 viewers.
2. They can earn through collaborating with brands. This is the thing ASIC is concerned about – any influencing people on investing with particular brands or services is considered advice.
3. They can use affiliate partnerships by providing links to companies or to sign up to a service. When they make a commission on each sale they make. While this is ok for beauty and fashion influencers, again it is considered advice to send someone to a specific brand or product.
4. Making money from selling their own education, learning and courses is the most viable way for finfluencers to make money moving forward. As long as they are not recommending a product this can work – and I hope that many of them will convert to this model so they can keep going.

While sectors like cryptocurrency are still as yet unregulated, I have no doubt there will be guidelines and regulations to safeguard investors as ASIC and other bodies grapple with the ramifications of this digital currency. But even outside of this, there are many things that can go wrong if you choose to listen to unlicensed financial advice.

“So what could go wrong with listening to advice by finfluencers?”

A lot. If they are talking up a stock or a product, you may be the last in to an inflated price. The price goes up, they sell and you are left holding the bag of a stock that had its price inflated and is worse less or nothing. Selling something that people don’t understand is also going to hurt when it goes wrong. This is why the industry is so regulated to try and protect against this.

Never act on unlicensed advice – rather seek advice about what you are interested in from a licensed professional. The reality is there are not enough advisers in the country to service everyone who needs advice. Finfluencers definitely have a role to play in educating people about growing wealth. So don’t give up on them. Just use them as research. You owe it to yourself to make smart money decisions and give your money the chance to work for you.

Good luck

Why I’m Grateful for The Things I Hoped I’d Never Need

For 51 years I was fit and healthy. I’ve always been a sports lover and was involved in some form of sport from a very young age. The only thing that really troubled me was arthritic knees caused by many years of playing netball. So each month when the insurance premiums were deducted from my account, I used to wonder why on earth I continued to pay when I had never needed it.

You can imagine my surprise when I found myself sitting in my surgeon’s office thinking I was going to have a growth removed from my foot only to be told that I had Stage 3 Melanoma. My cancer was aggressive and I was in for the fight of my life. The surgeon had booked me into a Private Hospital for surgery in 5 days’ time. The cancer had spread from my foot to my lymph nodes so the surgery was extensive. He told me the recovery would be at least 2 months then I would need 2 years of treatment. It all happened very quickly but there was no deliberating, the cancer had to be removed.

“However, anxious thoughts ran through my mind. I have my own business, if I don’t work, I don’t make money.”

That was when I became very grateful for the insurance I had taken out all those years ago. I was grateful that my parents had instilled in me the importance of both health and life insurance. I was grateful that I continued to pay these premiums even when my back was to the wall in business and the financial strain hit, as it can sometimes tend to do. I was thankful I didn’t make a potentially fatal decision and cancel it, rather managed my finances to ensure all the necessities were paid.

“The major benefit of having the various insurances in place (health and critical illness) was, I could basically push pause on my business, have the surgery, focus on healing and fighting the cancer knowing I had the financial freedom to do so.”

The day the critical illness payment hit my account is the day I breathed so much easier. I was also very grateful for the support of my Financial Planner and her team. They facilitated the claims process, told me what I had to do and made it as easy as possible. Without them, I would have had to sift through cumbersome forms – they did that hard work for me.

“Cancer doesn’t care if you have insurance or not.”

It doesn’t discriminate. It can hit you at any time. It will turn your life upside down. The last thing you want to be worrying about is if you can afford a treatment or if you can have life saving surgery in time or if you can take time off to heal. Investing in your long-term health by taking out insurance was a life saver for me – and it can be for you too.

www.juliehyde.com.au