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The Fierce Girl's Guide to Finance

Get your shit together with money

Month

November 2017

Is the patriarchy making us poor?

Did you know that 2 in 5 Australian women don’t feel in control of their financial situation?

That’s according to an MLC survey of women, which also found that of the 43 per cent who do not feel in control, 61 per cent said low savings is the main factor.

While concerning, it’s not really surprising. But I’m not here to give you a lecture and say ‘girlfriends, think positively!’.

[NB: Feminist rant alert!]

You see, it’s not as simple as changing our attitude or outlook. We are not just struggling with our money; we are struggling with the patriarchy.

We are conditioned from a young age to think of money as something that buys us stuff. The kind of stuff that helps us win in the world of constructed femininity – first dolls, then clothes, then make-up, then diets, then surgery and then all of that shit that we convince ourselves we need. (Or society tells us we need).

I am guilty of this  – I got suckered into the Priceline 50% off sale last week too.

But before I beat myself up about it, I think about the forces at work. I’m nearly 40, single and work in a male-dominated industry. My appearance is part of my currency, for good or bad. I need that make-up, I need to cover that grey hair, or so my internalised misogyny tells me.

(OK, so, my boss hasn’t told me I need 10 shades of glitter eyeshadow – that is some creative licence from me).

The weight of it all

I am not suggesting we stop shaving or go bare-faced (unless we want to, of course). But when we look at how the beauty-industrial-complex sucks our money and attention away from us, we should have pause for thought.

Have you ever added up how much you spend on this stuff every year? I haven’t. On purpose – far too scary.

But even a vague mental checklist of hairdresser, make-up, fake tan and hair products is alarming. Add in all the clothes and accessories I buy, and it gets scarier.

And that’s me being a tight-arse, not buying anything full-price, having a low-maintenance hairdo, and refusing to get my nails done (oh how I miss thee, Shellac).

If I think of the women in my life, we all have those kinds of expenses. And it seems to be getting harder, with Instagram beauty demanding all sorts of high-maintenance appearances, including botox, fillers and surgery.

Now I’m not saying these things alone account for any money troubles we have. But there are two things to note:

  1. Men don’t have these costs.
  2. We are highly distracted by them.

Being chained to the costs and worries of our personal appearance, our body fat levels or our emerging wrinkles – this chips away at our sense of confidence, not to mention our bank balances.

What’s the solution? 

Being ‘woke’, as the young folk say these days.

In other words, being conscious of the impact the patriarchy has on us and our confidence.

Being alive to the impact of our socialisation as young girls, where money was rarely on the agenda but being pretty was.

We don’t have to burn our bras (that would be both toxic and wasteful). But we can rebel in our own ways.

  • We can take on the knowledge that has traditionally been the domain of men – finances, investment, capital.
  • We can create boundaries for our spending, so that we do the sensible stuff – like saving and paying off debt – before we rock up to David Jones.
  • We can make a plan, set goals, educate ourselves and take on financial planning with the same enthusiasm as we take on a Kayla Itsines bikini body challenge.

Knowledge, attention, action. Pretty much the key ingredients to any great social change. And remember:

Some realtalk about buying property – and how to get it done

I’ve changed my mind about something. Something important.

I’ve said on this blog before that if you don’t buy your own home to live in, it’s not the end of the world. As long as you choose some other way to build your wealth, you don’t have to freak out about not getting on the property ladder.

And financially speaking, that holds true.

But I think I missed something important: human emotion.

Having just settled into the new apartment I bought, I realised I’d been denying something to myself. I like having my own ‘patch of dirt’. It fulfils a deep human desire to be settled and to feel some control over my destiny.

This feeling was compounded by the dramas of trying to get my bond back. The exit cleaners didn’t do a good enough job, so I found myself Gumptioning walls in my lunch hour.

A detail was missed in my ingoing condition report, so I was accused of leaving holes in a wall. And then there was the threat to make me pay for an electrician to change a light bulb that was out.

I fought tooth and nail, and in the end they only withheld $8.80 for said light bulb. But it reminded me of the way the cards are stacked against renters in this country, along with short leases and pet bans.

So, this is my advice for the yet-to-be-homeowners. Do everything you can to get your foot onto the first rung of the property ladder.

It might take a while, and it might mean making sacrifices, but it’s one of the most important things you can do with your money.

“But wait”, I hear you say. “I’ll never afford a property in this crazy market”.

And if you’re in the very lowest income band, that may be the case. But for someone earning  decent (or even ok) money, especially early in your career, it’s totally possible.  And here are three ways you can go about it.

Rentvesting – There are two hard parts of buying a property to live in. Scraping up the deposit and then repaying the loan (known in the industry as ‘servicing’).

If you go down the route of buying where you can afford and renting where you want to live, you remove that second challenge by having rental income.

If you live in Sydney or Melbourne, being a first home buyer is really bloody hard. There aren’t really any bargain suburbs left, even on the outskirts.

But if you look elsewhere, median house prices look far more manageable. Perhaps it’s just out of town, like the Central Coast or the Bellarine Peninsula. Or it might be regional, such as Wagga Wagga or Ballarat. Or a smaller capital city such as Hobart or Adelaide.

I am not giving you hot tips on all of these as investment property destinations. I’m simply naming places where you can pick up a house for the price of a small garage in Sydney.

How do you work out where to buy? Well you can do a ton of research yourself, looking at the supply and demand drivers. Talk to people in the area. Visit it for yourself.

Or you can work with professionals whose job it is to research these things, and provide recommendations.

I am most definitely NOT talking about the guys who try and spruik you an off-the-plan development in the outskirts of a holiday town.

No, I’m talking about real professionals whom you pay for their services. Like any such adviser, choose carefully, look at their results with other clients and use your bullshit detector. But for the clueless or nervous, this can be a useful way to avoid buying a dog of an investment in a far-flung place.

Family Guarantees – This approach works where you have the ability to service a loan (i.e. a decent income) but trouble saving a sizeable deposit. Your parents can use the equity in their own home to act in place of a deposit. Say you have 5% saved for a $500,000 property, but need 20%. They promise to cover the missing 15% if anything goes wrong and you default on the mortgage.

This is different to just getting a lump sum gift from the parentals (let’s admit, that’s the dream solution). It means they don’t have to actually come up with the cash (unless things go wrong – see below).

Of course there are risks involved. The biggest is that you default and the lender demands some or all of that money your parents promised. Some lenders also require the guarantor (i.e. your folks) to cover the mortgage repayments if you fall behind yourself.

And lenders will generally require the parents to get independent legal advice before going ahead, so that’s an additional cost.

You’ll still need to prove your ability to save and be a responsible adult – lenders want to see proof of ‘genuine savings’. But family guarantees can get you into your own place sooner and avoid the cost of Lenders Mortgage Insurance (which banks hit you with if you have less than a 20% deposit).

Play the long game – Maybe it’s going to take you five or ten years to cobble enough together for a home. But in the Monopoly game of life, that’s not actually very long. If you live to 85 that’s less than 10% of your life!

It drives me nuts when I hear people say things like ‘well I’ll never afford to own property so I’ll just spend my money and enjoy myself’.

No! Just because you can’t afford it now, doesn’t mean you can’t ever afford it.

First of all, there’s the power of compound interest: 10 years of slow and steady socking away will actually see you get some free money in there too.

Secondly, just because you earn this much now doesn’t mean you will forever. You can climb the ladder, increase your education, change career, start a side hustle, marry money … ok scrap that last one. But seriously, there is always an opportunity to do more, be more and earn more than you do now. So don’t rule out a big goal.

The hardest part in a long game is staying motivated. If your timeline is five years, saying no to another overseas trip or buying clothes from Kmart instead of Lorna Jane can get old real quick.

So, don’t be afraid to do things like set SMART goals, make a vision board (as cheesy as it sounds) and track your progress regularly. Hey, maybe even ‘treat yoself’ to a reasonably priced reward when you hit milestones.

I have a plan to pay off my mortgage in 12-15 years (depending on what interest rates do), so some of this stuff will be going on in my little world.

I have specific and aggressive retirement goals, and this is what will keep me from making poor decisions about money.

I’ll never give up martinis, but will I drop twenty bucks on them in a fancy bar? Hell to the no! (I will totally make them at home.)

Oh hey, homemade martini!

That’s because I have done the numbers on repayments, and I know that paying an extra $250 a month can cut five years off my mortgage. And then I think about not having to get up and schlep to an office five days a week, because I’m doing my own semi-retired thing, and it motivates me!

So, my message to you is: don’t despair! With a clear goal and some good behaviours, you too will one day have the pleasure of telling your property manager to get fucked. (Note: this only happened in my head, not out loud).

 

 

 

When should I pay other people to do stuff?

Sometimes, it pays to pay a professional.

Anyone who has ever walked out of a salon with a kick-arse blowdry knows this. Never in my life have I got my hair as good as Millie can. I always book an appointment on a day that I have some major social event, so I don’t waste that hotness.

Look at that salon-perfect hair!

But there are other important things we should pay for in life. I’m often surprised how people who would spend a hundred bucks on drinks and dinner, will blanch at the idea of spending that to see a health professional.

So, I want to have a conversation about things that might be a really good investment, even though you have to shell out some cash.

Some of these have a material return on investment, while others just have a positive impact on your life. But it’s a version of mindful spending – ‘how am I going to deploy my money in a way that gives me the most happiness?’.

1. A financial adviser – I know, you expected me to say this. And I don’t think everyone needs an adviser at every stage of their lives. But there are some points where it makes a lot of sense. For example:

Getting married – Do not tell me that you can drop upwards of $20k on a wedding but can’t spend a couple of grand on a Statement of Advice. Or, you could be really sensible and spend some of your wishing well money on it.

Getting hitched is a good opportunity to map out a financial future together, and ensure you’re on the same page about it.

Many couples miss this crucial goal-setting convo, and muddle along with different ideas of what they’re trying to achieve. Conflict ensues (every time you bring home new shoes).

Having kiddoes – This is more about getting your insurance sorted. If you’re responsible for  tiny humans, you need to think about  life, trauma and income protection insurance to protect them. If something happened to you, would your partner have the resources to keep working, cover childcare, educate the kids and pay a mortgage … until the kids are all grown up?

Australians are  woefully underinsured for things like this. But you can talk to a financial adviser just for an insurance review (i.e. you don’t get a full financial plan) and the fees are pretty low – under $500 in the network I work for. Sometimes they may even waive them (because they get a commission). Definitely worth looking at.

Becoming a grown up – I know, there is no real test for this point. But I think there is a solid case for sitting down with a professional at some point around your late 20s – early 30s mark. You’ve been working for a few years now, you’ve saved some money (or not) and you want to genuinely get your shit together.

But there are so many options! Speaking to an expert can help you clarify your goals and give you comfort that you’re on the right track. I went through this process at age 29 and even though none of the life plan worked out (the kids, the marriage etc), it was a great, educational process and taught me a lot about goal setting. (Side note – I didn’t actually implement the advice because it was very heavy on investing in equities, and I was worried about the markets. This was early 2008. In all of the good calls I ever made financially, this was the best).

Of course there are other triggers for seeing an adviser – these are just a few. So how do you find a good one? Well, same way you find a good hairdresser, to be honest.

Ask friends and family, look at testimonials, search online. Make sure they are qualified and part of a reputable group that holds an AFSL. Ask about their qualifications, and see if you like them in your first consultation, which is generally free. If the vibe isn’t right, look for someone else. Basically, find someone whom you trust and seems legit.

Then filter their advice with your own thinking and preferences – just the same as if your hairdresser were to say ‘I think you should try a fringe’ and you know you hate having one. That’s what I did, way back in 2008.

I worked with finance clients, I could see the sub-prime crisis brewing, my boss and I discussed how heated the market was – and I held off. Why didn’t my adviser do this? Well, I think people who are ‘in’ the industry often fit the old cliche: when you’ve got a hammer, everything looks like a nail.

Just like the sales lady in Kookai is going to tell you that a Kookai dress is the best solution to your birthday outfit quandary, an adviser probably wants to sell you a financial product. It’s up to you to decide if your bum looks big in it.

A Personal Trainer – I know, this blog is about money, not fitness. But I want to address this because a lot of people question spending money on a PT. Is it just an extravagance?

If you get a good one, it’s not. A good PT will push you to your limits (“just killing me enough” is a great description for my coach), correct your technique and create variety that makes your body respond and change.

I question the value of some PTs I see in the gym: having a chat, watching you go through the motions, being your bestie.

If you don’t hate your PT a little, for the hour they’re training you, you should probably find a new one.

I first went to my coach when I’d hit a plateau – I wanted to get leaner and stronger but couldn’t do it alone. Years of powerlifting later, I am both of those things (although annoyingly, my triceps mean I can hardly wear any suit jackets).

I have experienced both elation and disappointment in getting there. I’ve cried with frustration in deadlift sessions, celebrated PBs, competed in events and made my body do stuff I never imagined it could.

For me, that’s worth the money I spend. If you’re plateaued, frustrated with results, finding it hard to stay on track, or ready to push yourself to new places, get a good PT.

The caveat on this is – if you can afford it. i.e. if you’ve paid for all the other things like bills, savings and an emergency fund. And you may need to skip something else, like buying lunches and coffees out, or getting your nails done. You can’t have all the treats, all the time.

Cleaners, removalists, carwashes and any other service provider – I just moved house and paid a removalist to do it all for me. After years of borrowed utes, trucks and a Ukrainian guy off Airtasker whose offsider was his tiny girlfriend, this was a wonderful luxury. I had the money, so I paid for it. Didn’t lift one box – amazing!

Whether you pay for things like a cleaner is down to you. But I would argue you need to consider:

  1. Can I afford it? i.e. have I paid all my bills including my savings? Have I given up a different luxury?
  2. Does it make my life better? i.e. am I using that time I saved wisely, or defusing a relationship pain point (fighting over who cleans the bathroom).

You really need to answer both those questions before you can shell out, guilt-free.

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