Despite many years in the world of finance, Reality Cheque podcast host Genevieve Frost admits there was one simple money-saving trick she always put off – reviewing how much her various providers cost her each month.
Not anymore. Her secret? Tackling one provider each month – whether it be her home loan, insurances or credit cards.
It’s just one of the money management techniques Frost, who in her day job is Business Development Manager, and Manager Technical Services Jenneke Mills shared in their International Women’s Day webinar on breaking down biases around money.
“Your job in April is to review your home loan,” Frost said in the webinar. “That might be finding your statements online and reviewing how much interest you’re paying. Then it might be calling up your mortgage provider or walking into a branch of a bank. Whatever it is, I want you to see if you’re paying the interest you should be paying on that home loan. You have the 30 days of April to achieve that.”
On May 1, she continued, you move on to another provider, and so on.
This tactic helped Frost not feel overwhelmed. “It’s about feeling empowered – that you can take control.”
Break down mental barriers
That feeling of empowerment can be life-changing, and it starts with getting comfortable talking about money. Startlingly, 61 per cent of women admit they’d rather talk about their own death than about money, according to a Merrill and Age Wave study.
Influencing this reluctance to discuss money, Frost and Mills pointed to beliefs many women hold: that money isn’t as important as other areas in life, that they don’t have the ability to deal with it, and that it will take up too much time.
Both our finance professionals agree that simply being aware of these underlying biases is a great first step to having a healthier relationship with money.
Get across your finance facts
As we’ve already seen with Frost’s ‘one-a-month’ move, positive changes don’t have to be difficult.
For instance, understanding your actual spending and saving is key. As Mills explained: “Once you’re conscious of your financial reality, you can make conscious changes.”
Here, Mills suggested downloading your banking transaction data and taking an honest look at what’s going in and out of your account.
While that can be confronting, particularly in front of a partner, Mills had this practical advice to take the sting out of it. “If there’s a loved one, commit to each other that there’s not going to be any spend shaming.”
Choose your cuts… and your spending
If outgoings against income don’t add up, you might want to consider how you can reduce spend in certain areas and reallocate that money where it’s most needed.
It might also mean pushing back on some goals – to downsize your holiday plans, for example.
It’s often this discretionary spending that we struggle with the most though. As Mills pointed out: “Emotions play a big part here.” In fact, both women admitted their discretionary spend went up significantly during the recent lockdowns. “I did look for that instant dopamine I get from online shopping,” Frost confided.
Surprisingly, however, emotions can be just as obstructive the other way, said Mills, who knows of people approaching retirement who are scared to spend. “They’re so emotional because they don’t know whether they can afford to retire. The lifestyle they’re living just doesn’t correlate with the lifestyle they could be living.”
All the more reason to be aware of what you actually have money-wise, she said.
Grow your nest egg
Beyond shorter-term goals, you’ll want to think about growing your long-term nest egg – the earlier the better. As Frost said: “Time is an absolute blessing when it comes to money and investing.”
Your superannuation will be important here – it’s usually your largest source of retirement savings. That means being across things like your investment choices, nominated beneficiaries and level of employer contributions.
You should also check your super is on track for your retirement. Particularly for those approaching the end of their working life, this can provide considerable comfort – even if it’s the realisation you need to make additional super contributions. As Mills said: “When I was a financial adviser, whenever there was a sense of anxiety, it was simply the not knowing.”
Diversify for security
You might also want to think about investing outside super. However, be aware of the risk of putting all your eggs in the one basket and think about the risk you’re comfortable with.
As Mills explained, while we love property in Australia, it can be at the high end when it comes to risk, as are shares. A better strategy might include a mix of property, shares, cash savings and bonds.
This diversification is an important part of an investment strategy.
Of course, this summary of Mills’ and Frost’s discussion is general advice only. To understand more about how you can take control of your finances, speak to us on [phone].
In the meantime, for resources to help you better understand your own financial situation and how to take steps towards improving it, start with some helpful tools and calculators to calculate your savings and track your retirement.
Important information
This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. NULIS is part of the Insignia Financial group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at March 2022 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.