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The Fierce Girl's Guide to Finance

Get your shit together with money

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investment

I got totally rejected by a guy the other week.

Baffling, I know.

So, we met online, organised to meet for a drink and he walked in and looked pretty cute.

He’s gainfully employed, seems to have his life together and has a command of basic English – all of which you can’t take for granted in modern dating life.

We are having a good conversation and it turns to investment. He has a couple of investment properties; one of them is okay-ish and one of them is a dog. But he’s planning to buy another one.

So in my very direct way I’m like, ‘what about diversification?’ and ‘why go further into something you’re clearly not great at?’. Then I continue, ‘Haven’t you thought about shares? Can I recommend you research low-cost indexed funds? Your investment strategy sounds pretty dumb’.

In the retelling of this to my friends, the general consensus was (in Whitney’s words) ‘boner-killer’.

Whereas I thought I was helping him reassess his life choices in a positive way, apparently I was just coming off as a difficult, mouthy blonde.

You won’t be surprised to hear I didn’t get asked for a second date.

All week I kept thinking of Clueless, when Cher says, ‘did I stumble into some bad lighting?’.

Money, men and masculine energy

But my sad/non-existent love life is not the point of this post. What I started thinking about was the great sense of confidence old mate had about his investments, even though, in truth, he was not that good at it.

To his credit, he has done something. He’s made a move, and he’s owned it.

I think of this as a masculine kind of energy. Apparently I have a bit too much of that myself, because no guys ever want to date me. But what’s wrong with backing yourself sometimes?

What I see sometimes in the women around me is a lack of confidence in their financial ability. They see money as something complex and threatening. They think of ‘investment’ as a big, scary word.

So they leave it alone,  do a budget that gets them through to payday, buy a house they can just afford, pay their compulsory super … and that’s it. They don’t plan world domination.

Or they let their partner do the heavy lifting on the finances, and thereby open themselves to him making a bad decision on his own.

So I’d like to throw a challenge out to all my ladies. How about we all be a little more blokey when it comes to money?

And I don’t mean ‘use things without reading the instructions and then screw it up’.

I mean ‘hell yeah, I’ve done the research, spoken to the experts and educated myself. I’m going to take action’.

What sort of action? Well that depends where you are on your journey. Perhaps it’s starting out with the above-mentioned low-cost index funds. Maybe it’s buying an investment property. Maybe it’s adding more to super. Maybe it’s just setting up a high-interest savings account.

The key is to make a decision. Don’t second-guess yourself to the point of paralysis. Educate yourself to the point of confidence. Then go out and OWN IT.

Just don’t use it as a dating strategy, or you’ll end up like me, watching Chvrches concerts on YouTube, in my underwear, writing blogs and eating 85% dark chocolate.

Wait, that sounds fucking awesome … no wonder I’m single.

Three truths about money to make you feel better

We could always be doing better than we are today.

I could be a little leaner, could lift heavier weights, could be more flexible.

But hey, I’m trying. I’m lifting four days a week, tracking my food, making it to yoga when I can. I’m putting in the work.

And while I’m not perfect, I’m in the gym four days more than the person who stays in bed. And I’m making choices my future self will be grateful for.

The same goes for money. None of us are perfect. We often feel like we should have saved more, invested more, been further along, have learnt more about this finance stuff.

But I’m here to tell you: you’re doing fine.

If you’re reading this blog, you have taken one small step. And you’re doing better than the person who’s currently reading about a Kardashian on their phone.

So I wanted to share a few thoughts to inspire you on your money journey.

Truth #1 – Success flows where attention goes. 

I met comedian Claire Hooper at an event last week. If you haven’t listened to her podcast, The Pineapple Project, you should get on that quick smart. She tackles money as someone who has no idea about it, and asks a bunch of experts for their help.

Not only is it entertaining and educational, she also showcases some amazing talent. Like, oh, I dunno – me. Yep, check out this episode for my two cents’ worth.

Anyway, I asked her about her life since she made the series, and whether she’d got her finances in order. “Yes, I’m fabulously rich now!” she said – jokingly of course. In all seriousness though, she said since focusing on money, she had really improved her situation.

I quoted Truth #1 to her and she agreed. So many times in life, we let things languish on a to-do list at the back of our brains. We don’t know how to start, or we think it will be too hard, or we are too dumb, or whatever.

But once we actually pay attention, it comes together. We have useful conversations that move us along. We start reading things that make sense. We take small actions – whether it’s setting up bank accounts, reading our insurance documents or calling our super fund. And then, all of a sudden, we’ve got our shit together with money!

Truth #2 – There is more than one right answer

I sometimes toss around the idea of buying an investment property. Other times I think about whether to buy more shares. But the property market is in flux, and now is not the time to move. Sharemarkets have been doing so well that it’s possible there will be a correction soon.

So, I’m just chucking a bunch of money at my mortgage, paying extra into super, and sitting this one out. I’m totally fine with that.

You see, there is no one right answer when it comes to investing. There are people in the industry who would fight to the death in a cage to prove their investment style is the best. Not just their asset class (shares! property! bonds!), but their style within it (value! passive! unconstrained!).

I’m here to tell you, the successful investor is the one who invests. Of course, follow the basic rules of investing. Like balancing risk and reward (read more here). Not putting all your eggs in one basket (hello diversification!). Reading the fine print. All that grown-up stuff.

But the key thing is to do something (other than piss your money away on shopping and dinners and drinks and manicures and whatever).

Ultimately, the way to build wealth is to spend less than you earn and do something productive with the leftover money. That’s kind of it. As simple and as hard as that.

If you’re wondering how to get started, check out this post.

Truth #3 – You have time on your side 

This could also be expressed as ‘it’s never too late’. Of course it’s better to start early when it comes to investing. There’s a wonderful concept called compound interest, which means the longer you let your gains pile up on each other, the more you make.

But there isn’t a magical number where it’s too late to get started. Ideally, you’d  kick off your great saving and investing habits in your early 20s. But really, who does that? (Well, I did make extra superannuation contributions).

By your thirties or forties you still have a LOT of decades left to live, based on average life expectancy. In fact, at around age 42 you’re still only halfway along the journey. So don’t tell me you can’t do some solid saving and investing for the remaining four decades.

In your 50s, there are still plenty of things you can do for your 80-year-old self. By your 60s, sure there are more challenges, but there are still positive steps to be taken.

You can get started with better habits on any day and at any age. Don’t waste time – even small steps now can make a difference to your bad-arse 80-year-old party-girl self.

Instafamous nanna, Baddie Winkle – Source: Instagram @baddiewinkle

Four things rich people do … that you can too

There’s a section in my favourite gossip mag, ‘Celebs – they’re just like us’, where photos like Reese Witherspoon hauling groceries to her car make us feel good – as though there’s not much separating our humble lives from theirs.

Well, I’d like to propose a column called ‘Rich people – they’re just like us. Except not really’.

My career has thrown me in the path of many rich people (who, curiously, don’t call themselves rich most of the time).

They are like us in that they struggle with personal relationships, self-esteem and whether to eat dessert or avoid the calories.

But they are unlike us when it comes to money. I’ve noticed a few things that they have in common with each other, and it might help you too.

Like another favourite section of the gossip mags, here’s my version of ‘Rich People: steal their style’.

1. They spend money to make money

Wealthy people have wealth managers. It might be a financial adviser or private banker (probably both). They have an accountant to minimise their tax, a lawyer to set up trusts, and then they pay fund managers to invest their money. And they’ll pay a lot for these services, if they see value.

The reason for having a coterie of advisers is that each one has specialist skills to maximise return and minimise risk.

Key take-out for you? Don’t be afraid to invest in professional advice. A good financial adviser could make a difference of tens or even hundreds of thousands of dollars over your life.

A good accountant will make your tax and investments work harder for you (and likely give you a way better tax return).

Even a good career or business coach can make a difference to your earning potential and success. (Mine pushes me to be tougher than I naturally am)

2. They don’t avoid risk, they manage it

I get it: you work hard for your cash so you don’t want to risk it in investments you don’t understand. But shoving your cash in the bank will not build your wealth these days.

Most bank deposit rates barely keep ahead of inflation. For example, inflation is running at around 2%, you’re getting 3% interest, so in fact you’ve only made 1% on your money.

The key is to understand risk management. Diversification is key to that – having your eggs in a few baskets. Another is paying attention to the fine print, so you are only taking risks you understand.

Related to the first point above, good advisers will help you manage risk according to your timeframe and goals. And I’ve written a whole post about risk here – check it out!

The other thing rich people do is insure the hell out of everything. There’s a place called Lloyd’s of London that’s been around since the 1700s, where you can go and get insurance for anything from a giant container ship through to J-Lo’s butt (true story).

It’s a global institution, because insurance has been at the heart of the economy since men were wearing wigs in an un-ironic way.

Insurance is a crucial part of risk management, so if you haven’t seriously looked at your income protection and life insurance, now is the time. (Oh wait, here’s a handy guide I wrote!).

3. They are masters of debt, not slaves

There’s a concept called ‘productive debt’ (aka ‘good debt’), and it’s worth understanding. It’s the debt you take on in order to invest and make more money.

A home loan is the most common form of this debt. But there are also investment loans, such as a margin loan to buy shares. Business loans are also in this class – borrowing to build and grow a business is a big driver of our economy.

‘Unproductive’ or ‘bad’ debt is borrowing money to buy something that just costs you money – a car loan for example. The car you have at the end of the loan will be worth less than you paid for it. Credit cards generally fall into this category too.

I know, you may feel like the investment you made in an Urban Decay Nude II palette at Sephora is productive and will improve your life. But unless you’re an Instagram sensation, or land a millionaire husband who was lured by your perfect eyeshadow contouring, you will not make money out of it.

Good debt still has to be carefully managed, as there are risks associated with borrowing. For example, if the value of the asset you bought goes down, it can create issues. But when used well, leverage (as debt is also known) can magnify your gains.

I’m not saying all rich people use debt to build wealth.  I’m saying that many of them use debt strategically and with a goal in mind … not just because they can’t manage their cashflow in between paydays.

You can learn from these people by thinking about debt as a tool, not as a fallback for bad money habits.

4. They pay attention to their finances

One thing you learn in consulting is this: big clients paying $20K a month have zero shame in questioning a $25 taxi fare you’ve added to their invoice. The same goes for rich people. Just because they’re rich doesn’t mean they’re careless with money.

In fact, they are generally the opposite. They won’t begrudge spending $20 on a cocktail, but they will check their bill in a restaurant. They won’t mind spending thousands to pay an investment manager, but they will expect strong returns.

And they will ask questions. Lots and lots of questions. The more money they are going to hand over, the more questions they’ll ask.

You should do the same. Whether it’s a phone bill, a bank statement, a payslip or an investment statement, pay attention to the details. People and companies frequently get things wrong. Some will deliberately rip you off.  Get ahead of them.

And more broadly, take just as much interest in your finances as you do in the ASOS sale email or the finer points of make-up contouring.

Ultimately, nobody will ever care about your money as much as you, so you’re in the driver’s seat.

 

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