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The Fierce Girl's Guide to Finance

Get your shit together with money

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July 2017

What I’ve learnt from a year of running a finance blog

Today is the first anniversary of The Fierce Girl’s Guide to Finance. Yay! I feel happy and proud about that.

It’s been fun, hasn’t it? If you’re new to Fierce Girl, thanks for coming here. If you’e a long-time follower, thanks for being on the ride.

This whole thing was born out of lunchtime session at work called ‘Get your shit together with money’, part of the now-defunct National MoneySmart Week (long story about why it was canned). Anyway, it was a bunch of passionate advocates for financial literacy trying to put it on the national agenda. I was the PR chick, working on it pro bono.

During MoneySmart Week, I ran a session telling people to roll over their super funds and explaining the wonders of compound interest. And guess what, they got really into it! Weird, I know.

Then my friend Mindy Gold dared me to start this site. She was originally my partner in crime, but selfishly went to live overseas. (With a decent pool of savings btw, because she’s a Fierce Girl.)

The Divorce Thing

The other element of this story is that I was going through a divorce. I’m amazed by how short that phrase is when you say it.

‘I got divorced’. It’s like ‘I got my hair done’.

In reality, it was a slow, painful unwinding and rebuilding.

From the day I decided to leave, until the day the financial settlement was agreed, three years went by. And that doesn’t include the time spent watching my marriage fall apart. I’d say the last five years of my life have been spent in the strange, murky land of relationship failure.

I don’t say this to elicit sympathy, but to provide context. I’ve learnt many things from the process, some of which I’ve written about here and here. But the mistakes I made about money during my relationship, and the important role it played in allowing me to leave, have fueled my passion for this issue.

Put simply:

If you don’t control your money, you don’t control your life.

This is why it breaks my heart to see women hand over control to a partner, or to the universe. The attitude of ‘oh, I’m so bad with money but, haha, aren’t I adorably helpless‘ is still far too common.

Nobody is perfect with money. We all make bad decisions from time to time. But we need to remember who’s in the driver’s seat.

Not your credit card, not The Iconic, not the hipster-bearded bartender, and most certainly not your significant other. You, and you alone. (And maybe me, a little bit, haha).

Getting the basics right is hard – and important

When you hang out in the finance industry, you think everyone cares about whether your fund has beat the benchmark. And if you don’t know what that means, don’t worry – you’re not alone.

Finance people live in a bubble of complexity, products and jargon. Most regular people don’t care about alpha (which is how much an investment outperforms the benchmark, if you’re wondering).

They want to know how to pay off their credit card debt. Or to spend less on groceries. Or to have more money left before payday.

While I love explaining economics and investments, the readership stats for those posts are relatively low. My most-viewed post of all time is … wait for it … about bank accounts.

Turns out, how to structure your banking is far more interesting than the ingredients of Gross Domestic Product.  But the people running the banks and investment companies of the world don’t understand this. It’s taken me a year to fully appreciate it.

And that’s why so many people switch off and fall asleep when it comes to finance companies selling them stuff.

Success flows where attention goes

That sounds a little Tony Robbins, I know. But what I mean is that, since I’ve been thinking about money and finances and budgets A LOT in the last year, I’ve become way better at all those things. When you focus on something, you get better at it. Who knew!

My budgets are less liable to blow-outs, I feel confident about meeting my financial goals, and I feel comfortable about spending money on something if I’ve mindfully allocated funds to it.

I feel more in control, more confident and more optimistic. And that’s the goal, right?

Plus, I guess I have to really practice what I preach. Don’t want the paparazzi snapping me in the Jimmy Choo store.

At some point, you just have to back yourself

For someone in PR, I have a weird aversion to promoting myself.

But I have to remember I’m on a mission: to help you all take control of your money, give yourself choices and live your best lives. And a mission needs an appropriate level of bad-arse bravery and hustle.

So , as I enter Year Two of the blog, I’m getting serious. Site redesign, e-book launch, PR blitz – the lot!

If you love what I do, please be an advocate. Share things you find useful. Send me your feedback. Sign up for emails. And tell me when you’ve had Fierce Girl wins!

We are all in this together, fighting, dollar by dollar, to own the world and everything it has to offer.

So, go forth and be Fierce! And remember…

4 tips to help avoid a spending blow-out

Do you ever feel like there’s an devil on your shoulder convincing you to spend money?

I’m not sure if it’s the same devil who says ‘yes, you need another shot at 1am’, or just a close relative of hers.

Either way, these evil little goblins like to ruin your bank account or your Sunday morning. But we don’t have to give in to them every time.

There are ways to tame the devil on your shoulder when it comes to spending.

1 – Remove temptation – There’s a difference between allocating extra funds to your mindful spending, and simply giving in to bad habits. (If you haven’t read this post, I recommend it).

Mindful spending is where you think about what’s important to you or brings you the greatest pleasure. For example, I spend an outsize amount on fitness because it makes me happy and is good for me. But I don’t buy designer clothes or eat at expensive restaurants. I give myself permission to spend on the priority.

This is not the same as the ‘treat yo’self’ mentality. Buying an expensive pair of shoes is only mindful if you’ve previously decided that it’s part of your Mindful Spending Manifesto. You’ve accepted that expensive shoes make a positive difference to your life, and you’ve cut back on something else to allow for it.

Something that seems to permeate our culture is a sense of helplessness in the face of spending. Yes, shops are good at marketing. Yes, we all have moments of weakness. But unless you have a legit mental addiction (in which case, you should be in treatment),  managing our spending should be something we work on with the same fervour as we work on our diets.

So, if you love expensive shoes, don’t go into that shop. If you overspend on boozy nights out, don’t take your card with you – make a cash budget and stick to it. If you can’t be trusted on the ASOS website, don’t click into their newsletter – which brings me to the next point…

2 – Reject reminders – I’ve heard two different people say recently that their worst habit is getting a newsletter from their favourite store, then splurging as a result. “It’s my weakness”.

Well this might sound obvious, but how about you unsubscribe? I’ll admit, these stores are clever. You can’t go to any e-commerce site these days without being offered ‘15% off for subscribing to our newsletter‘. What a bargain you say!

Sure, give them your email and get the coupon. But that’s it! No more. As soon as their welcome email hits your inbox, hit that ‘unsubscribe’ button faster than a Kylie Jenner lipstick sells out.

And if you’ve already got a bunch of these emails hitting you up, then spend 10 minutes – right now – getting them out of your life.

While you’re at it, you probably need to unfollow them on Instagram too. I know, I’m mean. But will your life really be worse because you haven’t been invited to ‘shop the new season look‘?

3 – Get off the spending merry-go-round – AKA: avoid recurring costs.

I love a Shellac manicure with all my heart. Those colours! That staying power! But I have no Shellac in my life anymore, because that shit is a revolving door of gel polish, UV light and acetone baths.

Even if you just want it for an event, you have to go back a few weeks later to get it taken off. And then while you’re there, you may as well get a new colour … and then boom! You’re back on the spending cycle. (And the impact of acetone baths on one’s health is also kinda questionable).

The same can be said for a lot of hair and beauty treatments, but also things like those ridiculous subscription boxes. Like, you really need a box of random beauty products every month? Puhlease. Tell those charlatans who’s in charge of your spending, thank you very much. (Hint: it’s you)

4 – Get smarter than the finance companies – One of the wonders of modern life is how it thinks up new ways to make you buy shit you don’t need. We’ve moved on from the old-skool credit card.

Now, we have Afterpay and zipMoney. Sure you don’t pay interest (although there can be late fees). But it takes a purchase that’s otherwise unaffordable or ill-advised, and puts it within your reach.

It breaks down the mental barrier of ‘my cashflow can’t deal with this‘.

So my advice here is simple: don’t use them. Don’t sign up to them. Don’t create an account (or cancel the one you have).

At the very least, give yourself 24 hours to consider a purchase using it. You’ll be surprised how often you change your mind.

Another trap is the credit card balance transfer. ‘Move your debt to us‘, the banks say. ‘Pay no interest!‘, they say. And you think ‘right, this is the time when I stop adding to the balance and pay off all my debts’. 

If that actually happened, these things wouldn’t exist. It’s a trick. You sign up and spend more.

If you really are paying a lot of credit card debt off, and being slugged with interest, you get ONE GO of moving to a no-interest card. Then you ditch it. Freeze it, stash it with your parents, hide it somewhere. Whatever you do, don’t give yourself room to add to that card – all you’re allowed to do is pay it off.

And that, my friend, is how to slay the devil on your shoulder.

Photo credit: https://www.flickr.com/photos/devignelements/

You have 300 paydays left. Seriously. So, what’s your plan?

Last week, I ruined everyone’s Friday by dropping this truthbomb.

Seriously, if you’re in your 30s and plan to retire in your 60s, you don’t actually have many paydays left.

It’s easy to work out (if you get paid monthly). Pick your imagined retirement age, minus your age now, and multiply by 12. Because I have aggressive early retirement plans (and am kinda old), it’s an even lower number.

Yep, just over 200 times to wake up and feel rich for three days. 200 times to scour my payslip working out how much leave I have accrued. 200 times to go down Pitt St Mall feeling like a baller.

That’s not really many times at all, in the scheme of things.

And if you’re planning to take time off to raise kids, then you can minus out at least 6 of those paydays,  and maybe a lot more.

So, now that we have all had a moment to face reality, let’s talk about what we do with this information.

Running the numbers

Our time in paid employment is a gift. Not just to our smashed-avocado-loving selves of today, but also to our future, chilled-AF party selves. We are all Baddie Winkle, somewhere in the future, drinking with Miley Cyrus.

Instafamous nanna, Baddie Winkle

How do we do we achieve this? We take charge, that’s how. We do a mutha-effing BUDGET! Woot!

Ok I said that in an excited way because I know you’re about to hit snooze. But go with me here.

How to do a Budget that doesn’t hurt your head or induce anxiety

A budget is all about giving you data that makes you better at decision-making. And information is power! So, I recommend a combination of:

  1. MoneySmart’s great online budget planner (click here), which sets out all the costs you have right now. You can choose weekly, monthly or annual for each item, and it averages it all out for you.Then you can run it as a monthly, quarterly or annual budget. It even gives you a pie graph – awesome!
  2. MoneySmart’s TrackMySpend app (in the App store or Google Play) – record everything you spend, and I promise you shit gets real very quickly. You can just do it for a month if you like – but it gives you powerful data.

Once you have this data – a combination of ‘forecast’ and ‘actual’ numbers – you can make informed decisions. In particular:

  • What does it cost to be me?
    These are your fixed costs. A useful way to think about this is to have different versions – the ideal you, the average you and the bad you. Kinda like Kylie Minogue in the awesome video for Did it Again.

    My ideal budget is when I don’t buy three pairs of boots at the Wittner sale (they were super cheap) and don’t have Priceline accidents (when you go in for Panadol and come out with three new lipsticks). My average budget is when I actually do those things.

    And my bad budget is when I buy stuff I don’t need due to premenstrual angst or emotional turmoil. To be honest that version of me has been tamed  these days, so I usually fall into the first two. And my latest budget has Priceline accidents built into it.

  • What’s a reasonable savings goal? 
    There is no magic number for this. At least 10% is good, but if you have done your real budget (the average you) and there’s genuinely not enough left over, then do 5% or whatever. If you can do more, then happy days! The key is to do something.
    Also, it may not even be real savings at this point – it could be paying down bad debt like a credit card. Or, at the other end of the scale, it may be going straight into an investment like a managed fund or ETF (more on that here). In any case, it’s the money you allocate to being a responsible adult who does sensible things with your future self in mind.

And once you’ve answered these questions, you can feel more in control and less like ‘it’s all too hard’. Simples!

Bad at saving money? Here’s why – and what to do about it

I got asked today ‘how do you have the discipline to diet?’.

Since I was eating a Bounty at that moment, I’m not sure why. (To be fair, it was a piece of someone else’s Bounty, so there are obviously no calories.)

My response was that it’s easier if you have a reason. In my case, it’s so I can compete in powerlifting in a lower weight class.

It’s the same with money. Another friend asked me, ‘What if you just can’t save?’. To which I answered the same thing: you need a reason.

AKA: a goal.

Goals, I know! So lame and hard and too much like adulting.

I’m not a massive goal-setter myself, but I have forced myself to create some clarity about where I’m going. So then I know how to get there.

Just before you get bored and switch off, let me offer you a gift. We’ll come back to it shortly.

Click here to download your printable A4 worksheet

Why do you need a worksheet?

So we can put the ‘plan’ into financial planning.

I know, a lot of people don’t trust financial planners. There are good and bad ones, just like any other profession. We’ve all had a hairdresser who takes ‘just a trim‘ and turns it into ‘radical hair makeover so you look like a lesbian biker‘. (Don’t get me wrong, I love lesbian bikers – I just don’t necessarily want their haircuts).

However, I’ve been having a conversation with a mate who’s a financial planner, and he messes with my head because he’s all about ‘plans’.

I would ask him ‘should I buy a property to live in or invest in’ and he was all like ‘well, what’s your plan?’.

I don’t know! I’m in my late 30s, divorced, childless. So far, all the ‘plans’ I made 10 years ago haven’t really turned out.

But that doesn’t mean I can get away without one. Without some goals, I don’t know where to put my money or how much to save.

And if you don’t know the destination, how will you know the how to get there?

Sometimes, choosing the destination is the hard bit

People often ask me about what to with their money. I can’t  tell them specifically (partly because I’m not licensed so it’s illegal). But I do ask them ‘what’s the goal’?.

Is it  saving enough for a property? Is it having enough to travel? Maybe it’s just being a bad-arse with a backpack and a round-the-world ticket (oh hey Betsy, how’s Iceland?).

Tactics are useless without a strategy. And a strategy is nothing without a goal.

If you’re  like me though, you find big life planning stuff daunting at best, terrifying at worst. But don’t worry, Fierce Girls, I got ya.

I came up with questions to help you create some clarity. And then I made a fucking worksheet! I know, I am crafty AF.

Doing the worksheet

Now, you can do this and not necessarily come up with a special number. You know, a savings goal or something. That’s a topic for another day.

But you will think critically about the factors that shape your decisions. So the questions in the worksheet are (and you can totally pick the timeframe that applies to you):

  • Where do you want to be __ years from now?
  • What things do you want to experience?
  • How will you spend your time? Who with?
  • What will you own?
  • What is a must-do or must-have?
  • What can you give up or cut back?
  • What is the ‘why’?

When I did this exercise, I came up with a general plan that I don’t want to be a full-time, salaried employee much past my mid-fifties. I want to write books and hold workshops and coach people and be generally useful. I also want to travel as much as possible.

So that means I have about 15 years to build wealth, take holidays, smash a mortgage and sock away superannuation. Scary huh?

It also means I can give up expensive cars, too many clothes, and general unnecessary ‘stuff’. When I am considering a purchase, my decision tree is something like ‘Could I better spend this money on my trip next year?’ or ‘Wouldn’t I be better to chuck this into my mortgage?’.

Of course I won’t be perfect. But I have a plan and sense of direction. And then everything else is easier from there. Try it yourself!

Next week: The Track Your Spend challenge: finding where your money goes and working out how to save more of it. Yep. I’m gonna make another worksheet. It will be amazing.

 

The secret to guilt-free spending

Sounds too good to be true huh? Like the promise of diet cheesecake or hangover-free wine.

But I spent a whole day with a guy last week, who I can only call the Money Whisperer, and he explained how it was possible. Plus, he was so full of good sense that I had to share some highlights with you.

Steve Crawford, from Experience Wealth, has built a whole business wrangling the errant wallets of ladies like us (or me, at least). Gen X and Y, mainly professionals, often in media and finance. We all earn good money but somehow it slips through our fingers faster than we’d like.

So, he is a Money Coach. That’s actually a thing (that people pay for, not just me scolding you for free). I’ve told him he has to do an interview at some point, but in the meantime, let me paraphrase one of his concepts.

Banking – sooo boring. Or is it? 

I know, setting up bank accounts sounds so dull. But it’s all about earmarking money in a way that makes things more organised, and less tempting.

This is essentially how I do my banking, and while I am not perfect, it certainly keeps me in line. Steve has helpfully refined it and given it better names. I, however, made that fancy little graphic.

The Banking Buckets

These are the key elements:

Main account – your pay goes in here and pays all those annoying fixed costs, like rent and bills. You pay the Boring Bills straight out of here, with direct debits.

Storage – this is money you know you’ll need later, but not right now – in other words, short-term savings. This is the most ‘sensible’ account – the one that grown-ups have because they know car rego is due in January and they don’t want to put in on a credit card. I’d also argue this is the hardest one to nail – but still, we have to try!

Hot tip – have this one with a different bank, so you don’t see it and remember it every time you log on to internet banking.

Savings – This is the long-term stuff – the home deposit, the potential share portfolio, or the emergency fund (real emergencies like your car breaking down, not needing to buy new moisturiser so you can get the Clinique gift-with-purchase). This should be in a high-interest account with no card access – meaning you can’t get drunk and dip into it at 3am in the casino.

Spending – This is the guilt-free account. Sadly, you can only put money in there after filling up the other three. Sucks, I know. BUT – whatever is in there is totally guilt-free. Spend it on hookers and coke, if you feel so inclined. Jokes! We don’t need to pay for sex. Or coke, for that matter.

This account is like when your mum let you have ice-cream for dessert, but only after eating all your vegetables at dinner.

Once you’ve done the sensible things, then you do the fun things.

How much goes in each account?

That’s quite a detailed discussion for another time. But briefly:

  • make sure you work out the Boring Bills stuff properly – and don’t forget to shop around if they seem unpleasantly high
  • give yourself a decent Storage buffer, as that’s where the big costs often come from
  • be realistic with Savings – even just a little bit is far better than nothing at all
  • make Spending somewhere between what you’d really like to play with. and what you realistically can afford.

And if this all sounds like a great idea but you don’t where to start, you should give Steve a call. He will make rude jokes about Sydney people (he has a habit of saying #sosydney in conversation), but other than that, he’s the real deal.

photo credit: suzyhazelwood DSC01149-02 via photopin (license)

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