Author: Vanessa Stoykov

By now the lockdown has really taken hold and we are all starting to understand what it really means living with social distancing and essential services only for up to six months at least.

It’s tough, and our way of life has been challenged in every way. Our kids are with us full time, our workplaces are home, or even harder, our workplaces are no longer working. No matter what financial position you are in at the moment, there are stresses and changes around money that are starting to make themselves obvious. Rents, mortgages and school fees were due on the 1st of the month, and the pressure is now on for survival – with nobody knowing how long this change in income will last.

For those with savings, life is infinitely easier than those who lived week to week. And the reality of our situation is that around 50% of Australia has less than $1000 in savings. Which means the government stimulus packages are the most critical thing for a large portion of Australia at the moment.

If you do have a level of savings to see this through, but you still want to tighten the belt (which is the thing to do in this environment) there is one thing that you can do right now that will change the way you come out of this COVID19 era and spend in the future.

It’s simple. Observe and reflect.

What do I mean by that? Over the month of April, the first full month of lockdown, observe what you are spending money on every day. And I do mean log into your internet banking daily, and note what goes on there – both credit cards and transaction accounts.

We all have more time, and making a 5-minute moment to check out your balances for the day will help you come to a big conclusion. What is essential that you must keep paying for, both now and in the future?

What are the things that come up that you can live without? Memberships? Subscriptions?

And what are the things you are saving money on, like eating out or take away, that you can live without when this is all over.

If you think about these three very important but distinct things, you can, over the coming months, paint a picture for you and your family, of what life will be like on the other side. Will you be eating out less? Walking rather than going to the gym? Spending less on fuel and working from home more? There will be dozens of ways you can see you are saving money. Some of those are surely sustainable even when this pandemic is over and we have a vaccine.

While there is no sugar coating how hard it can be to change our lives and our living/ working habits, there is an opportunity to change our habits and views on money, that can be of benefit to us and those around us, if we become conscious of it now.

And that is a silver lining.

Until next time,

Vanessa

There are many things we are all having to relearn during this pandemic.

While it was certainly challenging to begin with, it seems as time rolls on, and Australia seems to be successfully combating the spread of COVID19, more people are learning very positive lessons about life, business, and money from this environment. Here are three that I see as key lessons that have appeared very early on, as the world is gripped with the lockdown.

Number 1: Cash is king

Whether as a business or an individual, the big lesson is that it is crucial to have cash at hand. The liquidity cash gives needs to weather storms for both everyday life and business. The bigger reserves you have, the more confident you can be about your future, and take the time to look for opportunities to pivot and regain ground once social distancing measures are over. At least six months of savings to cover expenses is a necessity in the new world order.

Number 2: Debt can take you down

When things are going well, as they have been in our economy for well over 20 years, it is easy to see debt, with low-interest rates, as a key part of building wealth and getting what you want.

Many investment property holders have been left in a difficult position as a consequence of the pandemic, with their income slowing or stopping, but their debt still needing to be serviced. While not all debt is bad, the lesson from the pandemic is to keep light – the lighter the financial load you have to carry, the easier it is to survive.

Number 3: We can all live with less

While at first, it was almost maddening to slow down and not go on holidays, work trips and shows/concerts and theatre, it has now become obvious that not only can we survive without spending and doing as much, we can also save money and spend on what’s necessary, not just what is nice to have.

While I am not suggesting a life with no experiences, it is clear that we can all look at consuming less – which helps both our financials and the planet as a whole.

There is no denying this environment has held many challenges, there have also been some good and valuable lessons, which we should take with us into the future, to be better off in the long run.

Until next time,

Vanessa

As the dust settles on the shock of COVID-19, and the social isolation rules start to relax a little, it is time to reflect on what we have learned from going through this experience.

While there have been outcomes good and bad, with much stress and rush to change, one of the biggest things to become obvious is that individuals or companies that did not have adequate savings have suffered the most by far. While it has affected everyone, the people who have been thrust into the most difficult situations are the ones that have immediately lost their livelihoods and their security. We have been incredibly lucky that Australia has been able to deliver a comprehensive support package for people in the crisis, but the reality is in 5 months’ time that support will be withdrawn, and people will be expected to be back to normal.

While thousands of Australians have lost their jobs, even more of us have been forced to work from home, and also have our kids at home for homeschooling. The pressure this puts on the family unit is only made worse with the pressure of mounting financial doom – and there has been a scramble in both small businesses and individuals to try to understand how long they can last, with the cash they have.

It seems the pandemic has caught so many of us off guard. But what it has also done is give us a tide line for our money – a rule of thumb that most people can aim toward over time to make sure if anything ever happens again, they are secure.

The government support package lasts six months in total – and it appears that six months is a rule of thumb for the time needed to pivot, take stock, and head in a new direction. Which is why six months’ worth of savings is a mental must to feel secure in a world that is changing faster than ever before.

The first step toward getting this six months is to understand how much you need on a six-month average. I say this because you cannot think it is just a replacement for your monthly salary. Do you put things on credit card? Do you forgo savings to spend thinking you will catch up next month? Do you have big bills that come in quarterly? Like electricity? If so then you need to average out all costs over a six month period, to truly understand what covering your life or business for six months looks like.

Of course, saving is always a choice, and some of us don’t have the luxury of paying for anything beyond essentials. But for many of us, we have lived beyond on our means and been caught in an unexpected turn of events. I imagine the task of saving and building security will be more important than holidays and material goods in the next few years, due to COVID19.

Once you have your six months of savings, you can start thinking about other things. But there is no point distracting your financial goals if you don’t have your emergency savings in place. In times like this, cash is king.

So take stock of your own financial life before things return to the new normal. Understand what you need, and set yourself a goal. Because what you are really doing is buying yourself peace of mind. And you deserve it.

Until next time,

Vanessa

My first blog back for 2020 – after an eventful holiday period, mainly dominated by bushfires.

Yes, Australia is still burning. The crisis is far from over. But to be honest, there is not too much left to burn. In fact, I just read that 80% of the Blue Mountains, my home, has been burned. What started in November (the first of several evacuations!) to the horror that continued in January, the fires have forever changed the way we all see our future in this country. It is shocking and we are all still coming to terms with what it means. Stories are starting to emerge of people urgently waiting for funding, and there is no solid plan in place for rebuilds yet.

So what does it mean for us as Australians, and what does the future hold for our children? While nothing is clear, there are a few things we can count on. The financial impact on our country of climate change will be huge – and affect all of us.

So how can we prepare? Rather than just point out the doom and gloom (as the daily press does a great job of this), I would like to offer some ideas on what we can all be doing right now to be proactive in preparing for the changing environment.

1. Lean on your super fund.

Most not-for-profit funds offer free or low cost financial advice. If you are worried about your financial situation, contact your super fund and ask for help. This will help give you peace of mind about your financial future. If you can also spare even $10 a week more to go into your super, do it. Your future is that little bit more secure if you can spare something now to help.

2. Pivot.

Do you own your business? How can you change your offering to somehow cater to what’s happening? Can you build a new offering? Change your target market? For example, my husband is a horticulture consultant. He is now looking at ways to help people change their gardens – losing water thirsty plants and putting in natives and drought resistant species. If you don’t own your business, and work for someone else, how can you get ready for changing markets in what you do? The sooner you start thinking of it, the more secure your income stream will be.

3. Educate your children and get them thinking early.

Climate change may likely the biggest threat most of our kids will face. How can they contribute to making it better? Can they choose careers that will be of benefit in the new world? Our old way of thinking will not cut it in the future, so don’t get them thinking like we do. Rather, aim to expose them to new ideas and the latest in tech and science.

4. Stay positive.

While we are facing a real crisis, and it can be hard to see the bright side. It’s important to keep thinking of all the good things happening in the world. Mental health is critical to surviving and thriving in this new world order.

While nobody has all the answers, it is so important to keep moving forward and to do everything we can to build a future world we all want to live in. Australians are amongst the most resilient people on earth – we can and will overcome our challenges together.

Until next time,

A very interesting statistic came to light in the recent Australian Talks National survey, in which more than 50,000 Australians took part.

While there were many fascinating insights in the report, one of the most interesting ones to me was the magic number of $3000.

It seems that those people who earn $3000 a week or more worry less about pretty much everything. The worries that the rest of Australia listed they were grappling with included loneliness, crime, job security, getting older and cost of living.

In reverse, the only thing that the magic $3000 folk worried about more than other Australians was work-life balance. I read this with great interest. I have always wondered what the magic number is. The figure, financially, that people can hold up as the amount that could help their worries disappear.

Well, according to this survey, $3000 a week is it.

That seems like an awful lot. When 80% of Australia earns $80,000 or less, there can’t be too many Australians who are not particularly worried about the state of their world. And with 700 Australians retiring every day, we all march into the great unknown of an uncertain local economy and global environment. It seems the worries of this aging nation are going to continue to grow.

Other big issues facing Australians, according to the survey, varied state by state – the survey showed that in NSW, water was the biggest issue of national concern. In Victoria it was cost of living, while Tasmanians cited drug and alcohol abuse as the biggest concern they have.

The other big issue which haunted over 45% of all the people in the survey was housing affordability. Most people believe they won’t be able to afford to own their own home one day, and it scares the hell out of them.

So Australia as a nation has a lot of changing to do – about the way we think about home ownership, how we regard our retirement plans (push them back is the logical way of thinking about it) and how we deal with an ever-increasing epidemic of drug and alcohol abuse.

This problem is surely about people trying to escape their worries and circumstances – and leaves a legacy that is hard to change when the next generation has grown up in that environment. We are, and have always been, the lucky country. But it cannot be just lucky for those earning $3000 or more a week.

It has to be a shared good fortune. How this unfolds will be a challenge for us all.

Until next time,

Vanessa