Month: December 2022

Categories
Financial Freedom

It Was the Best of Times, It Was the Worst of Times

beautiful christmas decorations

Start Courageous Conversations About Money This Christmas

The headline for my latest story was first written by author Charles Dickens in 1859. And yet it could describe pretty much the last three years for us all. In many ways it’s comforting to know that yes, this too shall pass. There have been pandemics, wars, and natural disasters many times before. As humans, we are adaptable and resilient and the work I have been doing with my beloved investment community in Wicked Problems has shown me that giant minds all over the globe are deploying capital and resources into solutions to save our planet and equalise great inequities.

But having said that, it doesn’t take away the emotional toll that circumstances have had on us all. There is a heaviness in the air this year, as we go into Christmas in an environment of high inflation and interest rate hikes. People are worried, and we are all trying to look into the future to see what’s coming next before we commit or invest in anything new.

So rather than trying to see the bright side in everything (yes, I am a Pollyanna and proud of it) I thought I would use my last article to reveal what I have learned about myself and business over the past year that has helped me.

Everything I have ever told over the past 23 years at evolution media (EMG) has been created with an outcome in mind.

To help you understand your own potential when it comes to money.

To help you define how to live a life that is defined by your values, rather than living someone else’s.

How to overcome the challenges of your childhood and the lessons you need to unlearn.

To give access to understanding money to everyone, regardless of education level or geography.

And of course, it has been about me finding out these things too.

As someone who grew up in the town of Gunnedah, the coal miner’s daughter of an immigrant father from Eastern Europe, and an Australian mother who grew up in the bush, I have had a lot to unlearn about money I was lucky enough to be raised by parents who encouraged education, access to opportunities like music lessons and a belief that I could be anything I set my mind to.  That with hard work and a never give up attitude I could achieve all my goals.

However, as the years have passed, three kids have been raised (and continuing to be raised, I realise now it’s a lifetime gig!) and life has given me more than a few kicks in the proverbial, including lessons in money and business that have been very painful, and quite frankly I am so grateful are behind me. The financial pressure of running my own business, the juggle and dance of who does what in marriage when you have three kids, and the regret of making some decisions that put us back financially and resulted in having to sell our family home.  All very real lessons that have helped me understand and relate to what everyone else is going through every day.

Our stories are all different, and hold their own pain and triumphs, but when it comes to money, the older you get, the more you realise that living true to your own values is what living free is all about. I learned that a big house (with a massive mortgage) did not bring the happiness I thought it would. Seeing our kids get access to education opportunities and moving to the mountains for five years to slow life down did give us immense satisfaction.

When you have been in a relationship for many years you realise that it is a partnership and a journey that ebbs and flows. Sometimes it is great, sometimes it’s average and other times it’s the pits. Compromising and listening to each other is the only way I have found to stay together. And when it comes to money, you need to have shared goals and a vision for your future. Otherwise, you’re out of balance and it will cause rifts and separations.

Money can represent power in relationships, not just with your partner, but with your extended family and friends. I have learned to really look at my own relationships with those around me and money. Who pays for and organises family gatherings, who contributes more at work and in your relationships. These can lead to resentments involving money that take an emotional toll. Looking at each aspect of my life has helped me assess where I am investing my time, effort and money – so I can decide which are good investments that bring me joy, and which are draining me and need to be left in the past.

I have learned to value and treasure those who show up in your life when things are tough. They are true friends and should be kept tightly to your heart. It is very easy to get on board when things are good. I have also learned that your word is your bond, and when it comes to money, people have very long memories.

I have always been ingrained with an internal compass of honour with money. Call it karmic law or something more tangible like reputation, but in 23 years of business I have forged some incredible (and profitable) relationships with people based on transparency and delivering on what was promised. You can never go wrong running your life and business this way. While it may be tempting to act like those who have no honour  – especially when people hurt and betray you – karma will catch them in the end. I have seen it time and time again.

As I head to the momentous age of 50 in 2023, a practical thing I have learned is that carving out time for myself every day helps me stay on track with my own goals and aspirations. Even if I have to get up at the crack of dawn to do it, creating the space for listening to motivational and inspiring music, journaling, and mentally preparing for what I want to achieve keeps me moving forward. (Check out my playlist)

So, I wish you all a Christmas filled with the people you love, gratitude for all you have achieved this year and a knowledge that everything will work out in the end. And I hope that in 2023 you decide to invest in yourself and start the process of designing your life the way you want to live. You are so worth it.

Vanessa wants you to start courageous conversations about money this Christmas. Access the first chapter for free here.

Until next time,

Categories
Financial Freedom

Books that might just change your life these holidays

Lou Johnson smiling and sitting on a couch

As a publisher I’ve always been driven by the power of storytelling to connect and empower.

I was Vanessa’s publisher for The Five Conversations About Money That WIll Radically Change Your Life and her mission of financial empowerment inspired me so much that we are now working together.

We have big plans and I can’t wait to get started.

In the meantime, the countdown to the end of 2022 provides an opportunity for reflection about what we all want in our lives for 2023 and beyond.

So I thought I’d share some of the books I’ve had the privilege to publish that might inspire your own thinking or be a perfect gift for someone else.

The Five Conversations About Money That Will Radically Change Your Life

Of course I have to start with Vanessa’s latest book.

So many of us have experienced the fallout that comes from avoiding talking about money; family tensions, financial hardship, fractured relationships.

Packed with conversation starters, scripts and other practical tools, Vanessa’s book breaks down the taboos around talking about money and provides a framework to have the life-changing conversations that will avoid unnecessary angst and put you in the driver’s seat of your financial future.

And believe it or not, the most important conversation is the one you need to have with yourself.

Different, Not Less
Chloe Hayden exploded into public life this year in her starring role in the reboot of Heartbreak High and ground-breaking authentic representation of autism.

Chloe’s book, Different, Not Less is an insider’s guide to neurodivergence and exploration of neurodiversity, autism, disability and mental health.

It’s also a call to action to all of us to create a world where no-one is put in a box but celebrated for who they are. Chloe has also been a powerful role model to my own daughter, who opened my world by introducing me to Chloe’s feed, which led to a conversation that led to this amazing, joyous, colourful, mind expanding and inclusive book.

The Mindful High Performer
Chelsea Pottenger, founder of EQ Minds, works with thousands of professionals to take charge of their mental wellbeing. Her calling to help other people is very personal as it is fueled by her experience of severe postnatal depression that led to radically shifting her priorities to put her mental health first.

Chelsea shares the simple science-based tools she has developed to support mental wellness and high performance and avoiding the traps of overwhelm and burnout.

A Repurposed Life
You may know Ronni Kahn as the indomitable and inspirational CEO and founder of food rescue organisation OzHarvest.

But there is so much more to Ronni than that. Her unflinchingly honest memoir explores her unexpected path to finding her true purpose in her fifties and reminds us of both our human capacity to do good things in the world and that it’s never too late to start doing it.

The Mind Strength Method
Dr Jodie Lowinger, clinical psychologist, executive coach and founder of The Anxiety Clinic has worked with thousands of people experiencing challenging anxiety.

Dr Jodie’s ground-breaking approach challenges the stories we tell ourselves and provides straightforward, easily actionable, evidence based techniques to ease anxiety and build resilience.

Journalist Hugh Rimington sums it up perfectly, “​​Dr Lowinger has the measure of your amygdala…her real gift is her techniques for reframing those responses to return power and strength to our daily lives”

Categories
Family Inheritance

Good time guy learns hard money lessons

Three man drinking beer at a club

Key points:

  • Jasper needs to change some habits around spending and saving,  starting with monitoring where his money is going and starting to build up a buffer savings fund.
  • His mum should seek advice before handing him the inheritance money so they have a plan in place, including ensuring he signs a pre-nup before going into a long-term partnership and making considered decisions with what he spends the money on.
  • It’s important to educate yourself. While a low-income earner may not think they can afford financial advice, there are plenty of free resources out there such as the MoneySmart website, or other low-cost online resources or books.
  • He should be consistent and disciplined with this money, including checking in regularly with his plan or planner, being aware that changing behaviours takes time.

Unexpected windfall
A low-income earner living paycheck-to-paycheck receives a huge cash windfall from his mum. Will this save him from the financial turmoil he’s inevitably going down or will his bad habits sabotage the potential financial freedom he’s been given a ticket to?

Introducing Jasper
Jasper is a low-income earner living one pay to the next. With nothing in savings and no financial plan for the future, at 43 years old he’s moved back in with his elderly mother where his rent money can be spent at the pub. One dead-end job to the next and only $50,000 in super by mid-life, it seems like there’s little hope for Jasper’s financial future.

That’s until he unexpectedly receives an $800,000 inheritance from his mum, who wants nothing more than to help her only son have a better future. But with Jasper’s bad financial habits stemming from his “live for the moment” mindset, she’s rightly concerned about handing the money over.

Financial Advisor at Federation Financial Services, Dave Rae, explains that people like Jasper, who are living day by day with little concept of how to manage or grow their money, need to get really clear on their future path.

“It’s not uncommon for someone to get to age 43 and not really have a plan. It’s really important for him to start to become clear on the path he wants to take and where he wants to get to,” Dave says.

 

Disciplined decisions
Dave says people like Jasper need to consider their discipline around their spending choices. This means setting up automated savings, monitoring spending and having an awareness of where the money goes.

Jasper needs to be willing to change some unhelpful habits, and start sooner rather than later, as it will only get harder to get on the right path as time goes on. “If we start to put the right things in place, we can get on track to where we want to be – but it’s going to take discipline,” Dave explains.

“Like most people, Jasper’s someone who doesn’t do budgets – and they don’t necessarily work for everybody. I think a lot of people struggle with a budget. What seems to work better is monitoring your spending, looking at what you’re spending over time and having that awareness,” he says.

“Often it’s easy to see those things that don’t seem like a lot that you’re spending but when you add it up over a period it actually starts to look like a lot, so having some awareness can start to help.”

Jasper’s main priority should be growing his savings buffer and building an emergency fund above anything else. When it comes to putting away savings, Dave suggests having funds automatically withdrawn on a regular basis, so the money is put away before you can spend it.

“I’d suggest, as much as he can, he takes the decisions away from his spending, putting in an automated savings plan to have money going away from his transaction account before he can spend it,” Dave suggests.

“Each month $200 will automatically go into a savings account that’s harder to touch, something like that. Too often people will just spend whatever is in their account and just save whatever is left over, but if you’re just spending everything most likely there isn’t going to be anything left over.”

 

Handing over an inheritance
Baby Boomer parents want to help their kids out financially if they can, but Dave says it’s paramount for parents to seek advice before handing the money over in order to try to keep the inheritance in the family and protect the assets.

“It’s very common these days that parents want to help out their kids. It might be a property purchase or a loan or help them start a business, for their kids or grandkids,” Dave says. “Make sure you’re getting some advice from a solicitor as to how you can protect that.”

Being aware of Jasper’s behaviours around money –including his inability to hold onto his earnings – his mum is apprehensive about him having access to that sum of money.

“The first thing she should have been doing, knowing Jasper and how he’s been unable to save money and the lifestyle he has led up to this point, is getting some legal advice as to the best way to help him out,” Dave says.

“In this case, it could be advice to help protect Jasper from going and blowing it all to protecting him if he goes into a relationship without a pre-nup and potentially a lot of the money that’s come to his mum ends up going to someone else after a settlement. I think that’s really important to protect the assets as much as you can.”

Jasper ends up marrying a soccer mum and gets divorced five years later – without having signed a pre-nup to protect the assets, going against his financial planner’s advice – and he loses half of the home he purchased with his mum’s money in the divorce settlement.

 

Receiving a windfall
“One of the things I think would be really important for him is to make sure the advice that he’s getting is regular. He got some really good advice but, left to his own devices, he slipped into old habits,” Dave observed.

“That regular advice and reminding him of the plan and what that better future could look like for him could come from that more regular check-in.”

Dave says, without a doubt, he should have listened to the advice to get a pre-nup before committing to his partner. “It’s a really difficult conversation to bring up with a prospective partner but I think you’ve got to look at the statistics of relationship breakdowns,” Dave says.

“In this case for Jasper, it’s money that’s come from his mum where she’s built up her asset base over her life. He’d also be doing the right thing by her by protecting those assets,” he adds.

“She wants that money to be protecting him, not somebody who he might be in a relationship with for a few years, so it’s very critical that he does get one. It’s important they have that conversation and discuss the merits of it.”

 

Intergenerational wealth transfer
There’s a huge windfall of $3.5 trillion expected to be handed down from parents to the next generation in Australia over the coming years, as outlined in a Griffith University and No More Practice Education report, ‘Reinvention is the New Retirement’.

“If you think about this intergenerational wealth, a lot of it is going to be almost like a lottery win because it’s going to be quite substantial as the next generation receives money via substantive property assets and the like,” Dave says.

“I think it becomes an issue for not just the person receiving it, but it becomes a family responsibility as well,” he adds. “There’s a real family planning aspect to it.”

The age of the kids and how the assets are being passed down all need to be considered. “Parents who are going to be passing this wealth on should be thinking about the kids they are passing it onto,” Dave says.

He says it’s important to be careful not to pass large capital sums to children who are still young, and if they’re older to consider what they’re doing in their lives –such as if they’re running a business which could pose a greater risk if something was to go wrong.

“Often it’s going to be happening to kids under the age of 30, and at that age, dealing with hundreds of thousands of dollars or what could be millions, people just don’t have experience in dealing with a windfall of that extent,” Dave explains.

When it comes to passing on and receiving a significant inheritance, it’s important to get sound advice to know how to handle this sort of wealth transfer.

“Seek out some advice for the best way to handle that sort of sum of money, because you’ll be dealing with the same sort of issues we were talking about here with Jasper – do I buy a property, and should I have a pre-nup if I’m in a relationship?” Dave explains.

 

Changing behaviours
Self-sabotaging behaviours, like our spending and savings habits or our unwillingness to earn more, can be difficult to break because they stem from old patterns of repetition over the years.

“In Jasper’s case, he remembered how hard his dad worked and he didn’t want to do that, so his behaviours came from his family experience. These kinds of things can be really difficult to address and it’s not something he’s going to be able to do on his own,” Dave says.

Dave acknowledges that getting financial advice for low-income earners might be out of the question, but there are plenty of free or low-cost options out there to help you monitor your spending habits.

He suggests starting to educate yourself using free resources like the government’s MoneySmart website, trusted online education resources, or reading a book about money and behaviour.

“I appreciate that on a low income it’s easier said than done but it’s having an awareness of where you sit today and what the consequences are of not changing and starting to have some understanding of that,” Dave says.

He said it’s about taking a look at where you are now and where you want to go, taking into consideration what you’re going to need for a comfortable retirement. “It’s having awareness and trying not to bury your head in the ground and starting to take some interest in it,” Dave adds.

Categories
Manage Finances

Chapter 2: The Eye-Opening + Confronting Conversation You Need to Have with Your Partner

A couple of man drinking coffee and discussing

Money Matrimony
On a scale of one to ten, how honest are you with your partner when it comes to money?

Come on, come clean.

If you’ve lied to your partner about money—sneaky credit card use, being deceptive about how much you paid for something, buying shoes or stocks without telling, secretly slipping some extra cash to the kids when you said you wouldn’t—you aren’t alone.

Look, we’ve all scuffed up a pair of new shoes and told our partner they’re old (or maybe that’s just me, but hey, I learned this behaviour from someone!).

Maybe you’ve done something bigger, like gambled the savings away or put money into an investment that went bust. Maybe that money you’ve both been putting away for your kids’ education has been funding a little side project for some time now.

I have friends who’ve been victims of systematic lies where their partner has racked up a lot of debt and taken out a secret second mortgage—I mean, that’s serious stuff. But I’ve seen it happen.

Transparent Talks about Money
Lying to a partner about money is more common than you might think. Research shows that anywhere from a third to almost half of us admit to having lied to our partners.

Lying is human nature, and we do it for several reasons—to protect ourselves and to try not to hurt the people around us. Maybe we do it to avoid conflict and keep the peace and avoid disappointments. Maybe we just know our partner wouldn’t agree, so we do it anyway and avoid having the conversation about it.

Most of us could probably be a little more honest with our partners when it comes to money. And it’s important for several reasons.

You probably don’t need me to tell you that money is one of the leading causes of separation and divorce.

It’s something couples argue about all the time, no matter how much each partner is earning, and financial stress that builds over time can be catastrophic in a relationship. Whether you have a lot of money (individually or combined) or not, money can cause major rifts in relationships.

Being Financially Honest with Your Partner
Do you feel you need to sit down with your partner to discuss some bigger things you’ve been putting off? When was the last time you sat down and really opened up to your partner about something you’ve been avoiding—something that’s been giving you grief and you haven’t told them yet?

Maybe you don’t want them to go out drinking on the weekend, or you think it would help you both save more for a house if they didn’t order from Uber Eats so much. Maybe you’ve seen the hidden shopping bags or found out the credit card was over the limit again.

Opens on Jane and Jasper having wine in the lounge room of her house.

Jane: I love this wine. Who made it again?

Jasper: Friends of mine who own a vineyard.

Jane: Cool, how much is it a bottle?

Jasper: I am not sure; I buy it by the case.

Jane: Case? That’s a lot of wine! What does that cost?

Jasper:(knowing he spent $180 on that case) Not much. Practically a freebie.

Jane: Oh, okay. That’s good. I can take a bottle over to Mum and Dad then.

Jasper: Ah, sure, no problem. (Awkward silence.)

 

Jasper didn’t want Jane to think he spent too much on booze. He was hoping to make a good impression and did not want how much he spent on alcohol to be an issue. This is only going to be obvious later in their relationship, as Jane realises how much Jasper does spend on drinking.

If we’re going to live together, share our lives, and maybe raise children together, we’ve got to be honest with each other. A good relationship starts with trust and honesty, and it all comes down to clear communication. The healthiest, happiest (and wealthiest) couples don’t hesitate to talk about their finances, even if it’s a bit uncomfortable at times. The more you do it, the easier it will become. You’ve just got to get comfortable with being uncomfortable to start the conversation.

We have a long way to go to get past the shame and social stigma when talking about money with our partners, no matter how long we’ve been together.

It’s easy for me to say you’ve got to be open and transparent with your partner about your finances. If that is not how you have done things before, then it might take some setting up for that first conversation. If you are in a new relationship, it is easy to watch for the signs on money. Are they spending on credit cards? Do they seem stressed about money? Or ultra-tight? The signs of money personality and situation are clearly there from the beginning.

When you are in a relationship, sometimes approaching a topic like money is all about timing. Don’t bring up money when your partner is stressed or focused on something else. Set a time. Make a date. Yes, bring wine, or chocolate, or any other conversational lubricant that will help this go smoothly.

Because this isn’t the conversation you have where you pull out the credit card statement and ask about the line items. This is much bigger. Much more crucial. And you won’t get to any sort of resolution in your first conversation—so don’t go in expecting this to be a one-off.

Taking the time to check in as a partnership is important on a number of levels. Money is just one of them, and most of the conversations we all have about money are usually about what bills are coming in, and who is paying what by when. They are very transactional and don’t really give either partner a chance to voice their goals, dreams, or worries when it comes to money and how things are tracking for you.

So, this is it. Relationship dream time. This first meeting needs to be the start of a two-way, ongoing dialogue. How’s it been for you? What are your frustrations or fears around money? What would you love to do? Together or separately? The aim of this session is to talk about the bigger picture of life and money. And it will only be effective if both of you go into it committed to being honest and open.

You: Okay, I’m glad we are doing this.

Your Partner: Well, I am glad we have this beer and cheese platter.

You: Me too. So, I will start. My big dream is to buy a home. I am so sick of not having a garden and being able to put pictures on my walls.

Your Partner: Yes, a garden would be good. But a mortgage? I grew up in a family that was a slave to the mortgage. Not keen to repeat that.

You: Hmm. Okay. Well, I guess we would have to be able to afford it. I figured out we would need a $100,000 deposit to start to look.

Your Partner: What! How are we ever going to save that?

You: I am not sure. We would have to figure it out together. But first, do you even want a home that’s ours?

Your Partner: I am actually happy living close to work and renting. We would have to move way out to buy.

You: That’s true. Maybe we could look around here and see what things cost.

Your Partner: Looking would not hurt, I guess.

You: Okay, deal. We can look for six months and assess again where we are at.

Your Partner: Sounds good. Cheers to that.

Happily ever after begins with a brave conversation around money. And also time. You cannot change mindsets quickly. Each conversation has to be about progress, not the final solution.

 

Modern Money Relationships
So much has changed societally in the way men and women interact about money.

Talking about money with our partners is actually quite a new thing, historically speaking. Our grandparents and their parents would have rarely, if ever, talked about money together. Our own parents would have found a simple system that worked for them early on, and that was that.

When I was growing up, Dad was the money earner and Mum would manage it and buy what we needed. As far as I know, they didn’t discuss it further than that, except when big purchases like a holiday came up. Having regular check-ins about the finances wouldn’t have been a thing. They would have known what was coming in and what bills needed to be paid and would have occasionally made a decision to buy something. One would have said, we can afford it, or we can’t, and that would have been that.

These days, the typical conversation isn’t about what one partner is willing to give the other as housekeeping money, it’s whether a couple will open a joint bank account. Many couples keep their finances separate nowadays, especially millennials. Some couples have had other long-term relationships, have kids with an ex-partner, maybe own their own house already, or have some other investments or properties stashed away, before they found each other.

This means that we also come to our relationships with a whole bunch of financial baggage and beliefs about money. We’ve written an entire collection of our own stories about money growing up, and we bring all this into our relationships.

Something that is crucial to figure out before committing to a partner is how financially compatible you are with them and what it means for your relationship. Do you have the same ideas and values about money, or are you on completely different pages? Do you even want the same things? It’s so important to iron this out now.

If you can get that right, you will save yourself a whole lot of heartache later down the track, when you wake up and realise you were not a match made in heaven after all. It’s always better to know up front.

Talk Soon, Talk Often
Whether you’re in a new relationship or you’ve been together a while, it’s always a good idea to have regular money talks, after you have your first “deep dive” session. It doesn’t need to be boring with spreadsheets; you can pour a wine (if you drink) or order takeout together and make it fun. It doesn’t matter how long you’ve been together. You can use it as a chance to get to know each other more. It’s a good opportunity to check in and iron out some money tension that may be lingering.

You: Hey, here’s wine. Let’s chat about where we are at this month with money.

Your Partner: Really? Can’t we just watch Netflix?

You: Well, I had some good news. I checked out our shared account and we have $150 more left over this month than I budgeted for. We can add that to our holiday account.

Your Partner: Oh. Well, that’s good. Actually, I forgot to tell you, I won’t drive to work anymore. Petrol’s too expensive, so I will catch the train. So that’s another $100 a week we can put to good use.

You: Wow, great idea! We are killing this budgeting thing.

Your Partner: It feels good to know we are kicking some goals. Let’s cheers to that.

The earlier you can get on the same page and start talking openly and honestly about money, the better off you will be in the long run. Because this is really about aligning your personal values and goals together and supporting each other through whatever life throws at you. If you avoid these conversations, things can turn really sour, especially if they’re left under the rug for quite some time

This is an extract of Chapter 2 from Vanessa’s new book. You can order it here

https://vanessastoykov.com.au/books/the-five-conversations-about-money-that-will-radically-change-your-life/