Season 1 Episode 3: Writing Our Kids Money Stories
IN THIS EPISODE
This episode discusses what we’re teaching our children and modelling for them when it comes to money, and how our money story impacts them. As a very common thing we discuss in financial wellbeing coaching, the money relationship with children and young people is important, and understanding the balance between truly helping, versus creating the ‘I’m bad with money’ feeling or the weight of expectation.
This episode unpacks how everything we do and the conversations we have as parents forms part of our children’s personal money story and impacts their view and feelings about money with lasting effect. It highlights the importance of being real, honest, and open about money and how things work for your family.
KEY QUESTION IN THIS EPISODE
Why do I have to close off my credit card to get my home loan?
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0:00
Welcome to The Money Collective Podcast. We're here to uplift your financial wellbeing. Your hosts are me, Mel Pearce, and Darlene Neu. We are the cofounders of The Money Collective and together we have over 50 years of finance and banking experience. We provide the tools, information and guidance to better understand your money and feel confident making money decisions.
0:22
Well, welcome everybody to season one episode three of our podcast. Yeah, that's right. And we're just getting started. That's it. So here we're just talking about how to uplift your financial wellbeing and every single episode and how it plays out in everyday life. Yep. So we're going to kick it off with a truth of ours. We are. What's your truth today? How does it play out in my everyday life? Well, my brother, I have a brother. I've also got three sisters.
0:52
No, I don't. I have two sisters,
0:56
I am the third sister and we have a little brother and he lives in Vancouver and I haven't been to see him and he's lived there for about 5 years and he's getting married
1:12
to the beautiful Colleen. Welcome to the family Colleen and she's Irish and I have met Colleen only the one time cause they came over to Aus for Christmas. But we are planning to go to their wedding in July next year so and we haven't taken it overseas holiday ever.
1:33
Yeah. We like to holiday and go on road trips around Australia. So we have to do the passports and yeah, all the stuff. Work out the itinerary. We're gonna get an RV. You're so cool. And be that crazy family the Griswolds. We're talking about that at work the other day and yeah, normal family and yeah, it's gonna be funny and like I've got a huge he'll be 18. We're taking an 18 year old man child and a 15 year old daughter, me and my husband
2:04
in one car for four weeks. Anyway, this is the exciting for us, so we'll be so white will be awesome. Ah, so we're basically money wise. We've been planning for the trip since we saw them at Christmas when they got engaged. A did you say Canada? Vancouver is in Canada going to Canada, in Northern America, the other side of the world, flying across the Pacific Ocean
2:26
and plan on doing this road trip, flying into LA and driving up the West Coast. That is the plan. And so money wise, do you know I actually originally budgeted 20K for this trip? Oh was that under done? Yeah.
2:45
Yes it was.
2:47
Sorry is very helpful. Anyway, hopefully the Aussie dollar picks up between now and then as well. But I'm gonna have on it. I have to at the moment I've still only been tracking to save this 20K so I need to up that. I need to relook at all my accounts. We have canned our normal Christmas road trip. So because we've been planning to go to WA for years and it just has never happened, one day whether our
3:18
kids want to come or not, I don't know. That may not happen. They did try once but got caught up by fire and had to turn around and come back. Yeah that's true. Then we had a COVID situation. So anyway, that's me at the moment, so I've got everything else on hold on pause to prioritise this family trip. So my husband's super excited because all the money's going towards the in-laws family holiday trip.
3:42
So we are overcoming those emotions as well. Cool thing. Yes. It really happy. No I think he's happy to go but it is a little bit of resentment also and a lot of money and so his self employed as well and so planning for that downtime because we're not income earning during that time. So the time we take off is also important. Yeah cause that's also a time of year that we wouldn't also take off. So all of that is playing out for us at the moment. Hmm. The how exciting though and
4:14
my thought when you talk about that Mel, is the idea of a goal that's really important and this is really part of financial wellbeing because then you've got the burning platform to really you know really prioritise your money and where it's going because you really want this fabulous holiday. So yeah, so, the message for everyone is, that's why we, feel goals and they can change all the time. It's not necessarily
4:44
about the destination, but, you know, sometimes goals are really important. Yeah.
4:49
Hmm. That's really cool. Yeah. Yeah. My truth this week is we are my family. We're starting to think about whether we move house. So we live in suburbia in Melbourne and we also bought a van last year and so like caravan caravan, so we can go Outback and do all the road trips that Mel was talking about, which we also love. But in suburbia, it's sitting on our front lawn at the moment
5:20
and we also got a dog in COVID, a beautiful cavoodle. It's my third child and his name's Apollo and we don't really have a backyard for him to run around in. So there, that's the burning platform to move. And they seem like small things, but that is the reason. The thing is our life is really settled where it is. We are close to where we go to work everyday and school everyday. So it's very convenient where we live but it just doesn't
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you know have those extra bits and pieces and background wise. I'm from Tassie and so is Mel, and I grew up in the country and I really love the rolling hills around me. So it's my safe good place. So if I could you know tip that into the equation that would be really great. So Long story short, we start looking at houses and if there's any people out there you knowing or doing this, it is very addictive.
6:23
To start getting out there and looking what's available and really trying to think about those things that we really want in a place and then doing the trade off to say, OK, well what are we losing? Is it worth it, you know, you know, so it's gonna have to be something really special to do it and then what you get for your money and and doing those things about how practically it would have to be and whether we can afford it and all those things. So where I'm at the moment is did a bit of that
6:53
for, you know, every Saturday and Sunday going out some open homes and getting really, you know, excited. Then doing the math and saying ohm maybe it could, maybe it couldn't even put in a couple of offers. And now I've stepped right back and saying, how about we just sit tight
7:07
and I think our spring's coming too, you know, just some other priorities going on. So, yeah, we'll see. So it sounds like you're the same as me, then it's goals. So, like you have these big burning goals and platforms. Yeah. We'll force change. Yep. And then that forces you to look at your money situation and make those plans practically. How are they gonna work? Yeah. Yeah, exactly. So if we don't have goals, there is no change. And I don't know, you must, must be very satisfied with your life. But it's not very human, or
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realistic. That's right and goals are, financial wellbeing is, linked to optimism. So optimistic people the studies show have better financial wellbeing. So having goals and and thinking a little bit into the future and having some grand plans are good, you know so but they also have to be realistic as well. So listening to what our grand plans are, because they are quite grand, Yours don't need to be that grand. And mine haven't always been this grand, you know?
8:09
Yeah, that's right in my mind. And this is where you gotta stay in your lane, too. Yeah, that's right. It's not about comparison at all. And they're little goals, big goals. It it doesn't, it doesn't matter. It's just stages of life or what's coming up. Yeah, that's it. So as you've probably figured, we've got children. And today we want to talk about how those relationships around money work with children and paying it forward to our younger generations. Yeah, that is
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the topic of the day. It is the topic of the day and I'm really, really passionate about this as we won the most common things people ask us about because we coach financial wellbeing is is what advice and things we can give for children. So to put a bit of context around that, so we provide one on one coaching services where we actually deep dive into somebody's life with them and it's just fascinating the things that come up. And this one is
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it's been really triggering for us too, because when we see it in other people, we realise what we're doing ourselves. Oh, I think absolutely we do. Yeah.
9:20
And that it's so similar when we hear somebody's story, how similar it is across everyone and it really helps us to coach too. Like to, oh, it's so helpful because there's no, there's nothing right or wrong. It's just you know by learning and reflecting and yeah and we do have that benefit like I said when we coach people we're sort of the outside of that situation so. But
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in a nutshell, the most common thing that I see and it it's from 2 perspectives. So we coach people that have had a lot of family support in their life, but they feel really bad about money. There's a clear correlation
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of that, so we'll talk about that and unpack it. And the other one is we coach people that give a lot to their children and to their own detriment. Hmm. So I
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I don't think either one of those is serving anyone. Hmm. Yeah. So do you want to talk through an example of the first instance where we've got we're coaching adults and they have got issues as in and what are those issues that they've got. Yeah. So they're not feeling good about their money. Right. They're not feeling confident. Not at all. And they think I think what we hear is that they think that they're bad with money. They do think they're bad with money. And so the message is, is if you
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you are receiving, you know, if you've received money over a long period of time, what does that look like receiving money. Yeah. So it it can be in all sorts of ways. So in think about this and how you support your children maybe is if we are
11:13
you know in buying them cars, supporting them with houses, supporting them with everyday living, then what message are we sending our kids? And and we think that we are helping them because we don't. We want them to be happy and we want them to be comfortable and live a good life. But the effect is the opposite. We're saying you haven't got this so we will do it for you. You're not capable of doing this. Yeah,
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and working through this stuff for yourself. And the resilience is so low, isn't it, of those people. They don't have high resilience. It is. And they don't know how to future plan because they're so reliant on the money. And then it's like the situation has caused them to perpetually feel bad about themselves. Yeah, so all aspects of their life. So the parent has tried to do something extremely helpful by supporting them financially, Yeah, but they are not helping them financially at all, really. At the end of the day, if there's no motivation for them to earn their own income or even
12:15
manage their money in an everyday sense. So if you're receiving money you feel like from a parent, right, who you look up to since the day you were born and they've given you so much help and assistance, then you're gonna look to them on how to manage that money, how your accounts work and things like that. So you're not actually, you've outsourced everything that you know about money to somebody else and there's that fear that creates is huge like that ‘you're no good’. It definitely is.
12:46
And I think about it from a perspective of if you've actually had to save for something yourself, remember that in you, hopefully as an audience, you've had that feeling when you're safe and you go and get that thing, how good does that feel? Because you've done it on your own. So that's empowered, right? Yes, you're empowered yourself and you've saved hard for that thing. You know, Maybe you've done that for a first car or a holiday.
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You know, how good does it feel that you've done that and that you feel really self satisfied. You're making your own decisions, you've saved for that thing and you're executing that thing. Like, you know, Mel was talking about Canada, for example.
13:30
I think we are taking that away from our kids by giving them that stuff. Whether we contribute to a holiday or to a car or, you know, bigger things over time, we we're not letting our kids feel that way. Hmm. So if you're in that situation, right. So you're a grown up and your parents have helped you a lot and you feel crap with money, what's a good way of getting out of that? What steps can that person take? Yeah.
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So to begin with is understanding your money. So coming through the first step to understand your financial wellbeing is look at your own situation. You know where what are you spending your financial situation, what income is coming in, what are your assets and your liabilities and understanding that total picture and we talk about understanding your number. So first of all, what is your number that you require to live? And then if you're not working,
14:32
work out how you get that number into the positive. And to be clear, like the adults that we're coaching in these scenarios are in their 40s, fifties and beyond. It has long, subtle impact over time, but it can be changed. I'm thinking of a client that we've coached that felt really, you know, bad, you know about money and definitely had support from family. And I see this actually in our workshops quite a lot. We did a workshop not long ago and we had a lot of young adults in that workshop
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and they had just by chance had particularly dads that was but doesn't have to be but had parents that were accountants, financial planners and that expectation that it had on them when they were unpacking their money story was how bad they felt about money and that they had to live up to their parents expectation of what to do with it and behave with it well, but actually it's their money journey to take. And I've spoken to young adults who are just starting out their
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careers and they've had parental assistance and they're almost doing their job so that their parents are proud of them rather than doing it for themselves. So there's so much obligation tied up with when you receive money. You actually challenged me on this once. You did. So I gave my sister some money and you said to me, cause I said, I gave it to her - I don't care. I don't care if she ever pays it back to me or not. And Mel doesn't care. Yeah. And you said that that doesn't exist.
16:06
There's no time that you can give somebody money without there being strings attached. I did. And do you know that how quickly that played out for me? Like my sister was racked with guilt about taking this money off me. So I gave her $5000 for a car. Yeah. And she had no mode of getting to work. So she's a house cleaner and she was taking her vacuum cleaner on a bus to get to somebody's house to clean it. And I'm like that can't be a thing, gonna help her out, right? Go and get a car. And then she said oh it came out, she was super frustrated,
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like she'd saved up money to pay me back a lump sum. But then an emergency happened and she needed to spend that money again. And then she felt so bad. I bet, so bad. And Mel didn’t even want the money back,
16:48
No, dude, sort out your life. That's fine. But that's not how it played out for her. And then she even made the comment that I would never have spent $5000 on a car. Never would I have done that. So she's throwing that back at me. I let that go. Cool. But. And it's also like, in a moment, emotional thing too. Hmm. So I now agree that you can't give somebody something that's without strings. You can't give people money without strings. There's always strings or impact or cause and effect. And it might play out from the giver or the receiver.
17:19
Yep. And short term. Long term, But there will be impact even. What are you saying about that relationship again, in that case, with Mel’s sister, you know I've given you the money. So as a receiver, she might feel, well, I'm not worthy enough and I'm not good enough and I can't do this myself. So Mel's better than me. Yes, totally. Just by default. Yeah. So
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yeah, it's really important to think about and that is from we're talking about the emotional level of what happens when you are giving money to your kids in different ways and how that plays out. Can I just tell you how this one played out? How did it? So me and my sister, my sister loves the work that we do and it came down to a story of knowing her number and she set up an automatic direct debit to my account weekly of $50. Like, I don't. But that's
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what makes her feel empowered. Yep. To give the money back. And it's within her control. Yep, definitely. And it Dings on my phone once a week. And I can see the deposit going in. Yeah. Yeah, No, I know. Right. But then she still has to clear that. Like, I don't know how to overcome that. Like, no. Do you know what I mean? Because that's what's gonna make her taking responsibility of her own money is what's ultimately important. Yeah, definitely. Yeah. And yes, I think by openly being able to… cause lots of,
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there's also situations where this might have happened or you can see you can see now maybe the cause and effects of that. So I think if that has happened, it doesn't mean you never, you know what can you do now is have open communication about it and yeah, acknowledge you know what each other needs in that situation. Because some of the time is like if you don't know how, like let's say it's a parental thing and you're feeling like this. Sometimes you might not even be aware of how you're feeling by the way or the behaviours are caused by
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this. But once you start having the awareness, which is the first step having those conversations because the story that we're probably making up in our head isn't the reality for the other party, there's usually a complete mismatch. And yeah, but then imagine all the time lapse too. So if you don't acknowledge these things, then from the time of acknowledgement, that's the time when you can move forward. But imagine if that's 20 or 30 years of your life or more. Yeah, definitely.
19:43
I mean, I think because this has changed the way that I behave with money in our household because I was like everyone else I, you know, want to give our kids a head start and you know all the things. And so we gave our son his first car. We upgraded our car and you know we had an old car and we thought, OK, well, you know, he like we can have that. And you know, I find I found myself, you know, like when it doesn't get service for example, you know I've,
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Not not intentionally, but by default, you know, you need to get the car serviced. You know, why aren't you looking after it? Out of respect. All those years. Now you've got it. Yeah. So you are making him feel bad about receiving the car. Exactly. And you know it used to come up from time to time and you know, I I've got a really hold my tongue even now. Not to say stuff about it, but yeah, I think you know as well. You know, what have we taken away from our kids?
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You would actually have had to get their own car, get a part time job, get a car, however they do it, you know. Yeah. So I've got a 16 year old son who's about to turn 17 and I'm learning from that experience and I'm not telling him that I'm matching him, you know, because a lot of parents do that. That's right. You save and I'll match you dollar for dollar. I just want you to be motivated to do it yourself. Yeah. I live your own life the way you want to live it. That's right. Yeah. I mean, go and do it. Go and get a job. If you really want a car,
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go and get one. What's your goal? And then, you know, our financial wellbeing program is exactly that. Understand your money, what’s your goal, where are you going to put your money? How do you save for it? You know, and I'm not saying I'm still caught up on myself here for a minute, but I'm not saying to my son Willow go like I am. Go and get it. That's exactly the message that I'm giving him. But I'm not saying at the end of the day we won't provide any assistance. I don't know. That's too big. But there's definitely no commitment from me. Yeah, none. I think that is. I want him in that mentality,
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the mindset that I have to do it on my own. Yeah, I'm responsible for myself. That's right. And the reason we do that is, is not hard lessons. You know, when I grow up, they, what we consider hard lessons. Hard. Yeah, I know. But no, I actually, the opposite is all the just giving it to him and that's not good. I actually think it's a better path to self esteem and happiness
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and that comes from your own home visibility of you know, our own lives. But you know the people we coach and joining those dots because that's the most common thing that I see plays out. Look, there’s so much more about in talking about what we're doing with our kids. So we're talking about that impact that we can have. But there's so much other stuff think about also, our money stories come from how predominantly we grew up in a house
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and what the money conversations might be and they could be. Your family never talk about money and it's hidden. And also we get feedback, you know, through the workshops and things that we do with people that they just wish their families talked about money in an open, non judgmental stigma way. Or because they would have learned something about that but they didn't even know what they're missing. So, like, people just assume what they had was right or normal. But then when you go into a workshop
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situation, you're sitting there with 20 or 30 other people sharing how well their childhood was like with yes, maybe you can hear somebody's story and go, wow, wish I had that. Like, I wish my mum told me that. Yeah. And I think in real time, me being a parent, I'm like, well, I'm gonna tell my kids everything. Yeah. If they've got a question about money and my money, that is, that is, I'm gonna show them my bank accounts and how it works and not pretend to be perfect about it because I'm not. No, I agree with you should show share our money story,
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warts and all. Because if you are somebody that thinks you've got all your money really sorted and and you're really good at this stuff, I would challenge you to actually how that's playing out and and what message you're passing on to your children. And if it is, is all of that actually really great? And in the reverse of this? And if it is really great to share how you're doing that, like break it down, like sit with your children or the young people or your partner and go, hey, I'm really proud of our money
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situation, how I'm managing it and these are the accounts. Because in relationships we need, we call it interdependence where we are all have a some level of understanding and knowing numbers. So if one person holds that, that's what you're saying. Like if one person says I'm great at managing money, I've got this, I'm so fabulous, then that could make you feel inferior. Yeah, it feels like I'm never gonna do it as well. So you you have to be open and share it, but not from a righteous perspective
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because you know, maybe some of the stuff cause there are trade offs. If you're, you know, people think Saver being a saver is wonderful, but maybe it's not if you're living completely in the future and you're not spending quality in present time with your relationships and your connections, then maybe not. So Saver is somebody who likes to save, right? And we'll have structures in place to put the money away like they're squirrelling away, their brain has already thought about the future and they've already spent all the future money, right? So it leaves in sometimes in that circumstance,
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no gaps for the everyday. That's right. And so what are we actually missing out on? And so even though you think, alright, I've got it all planned, I'm all organised. I have fully got this nailed. Yeah. Have you? That's because, how do the people around you feel? What's the relationship with your kids? You know, have you got a good connection? Are you present enough? So if that is you. I love hearing people who say they've got it nailed. People just think that that's the end of the sentence. Oh no, I'm great with money. I don't need your help. All good. Hang on
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tell me can you please tell me? Cause I wanna learn from you, right. Tell me how you're doing great, what these awesome things are. And do you know what I learn every single time from these people? Yeah about how great their money is potentially and sometimes they can be conversational pieces in there about how there could be improvements or cause I can then share the knowledge that I've learned from other people cause everybody's got and most the best conversations to me love them great. And then and there's never right or wrong
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there's not one person better than the other. It's just about openness and communication and how do we empower those young people to feel great about their money especially if you’re aspirationally amazing. But then there's also the people we alluded to earlier who feel crap. Yeah. On the other side of the coin, and I think how sometimes that plays out in the household, is that you don't talk about money at all because you think you're just rubbish out it and you don't want to share that with your kids and you don't want to be vulnerable enough to say maybe I am fallible.
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That's right. But the sooner you can be open with it and honest and you know you know, work through the actual numbers knowing your number and get a process in place. I had a I had a client once and this was one of you know the happiest moments for me about the work that we do when she mentioned to me. So she came, she was self employed and we worked through understanding her numbers and what they meant and cause she thought she was really bad
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with money. And then when we did that, even through the journey and she shared that she had a 16 year old daughter and she shared where she was at, and she was vulnerable enough to say I didn't, you know, I felt I didn't have this, this is where I am and this is what I've learned so far and Oh my gosh, that day it still gives me you know, little tingles because that's what it's all about. If she's, she's actually sharing the journey and she said her daughter was so interested in how
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money actually worked and what the practicalities of it was and wanting to learn, she didn't care about actual the numbers and the status and what they had and what they didn't have. She wanted to learn how to do it. Yeah. And she was so, you know, excited that her mum was sharing that and didn't judge her Mum. And imagine, like, if your kid, because I think we could get really scared of our kids asking us questions that we don't have answers for. Right. Like, and especially if you're on that side of the coin where you are not
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confident, then own that with your kid and go, I don't know, but let's find the answer together. So good. Yeah. So good. Yeah. Just breakdown those barriers. Yeah. Yeah, definitely. So talk about it at home. Yeah. No. So, so good. And, you know, just to finish off that other side of it though, we do also coach people that are in that mindset. They've gotta do everything for their children. Hmm. So question actually
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what you are spending it on for them and what is the trade off for you are your own situation and we've just talked about actually is it serving them? Do you wanna give a real example of that?
29:09
Putting you on the spot here? Yeah, that's OK. Yeah, so we might. We coach people. I wanna protect people's privacy. That's all. We coach people that,
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you know, might give their adult children monthly allowances and, you know, like that, have jobs that are working, but they feel like that's their responsibility and they feel like they're doing good for their kids, right? But for their own situation, they actually have dreams and goals of their own that can't be achieved while that's happening. And, you know, and the kids would just want their parents to be happy I suspect.
29:53
Yeah. Yeah. Hmm. That's really good. Yeah. Or thinking that we need to house our children forever, too. That's another thing, you know. So I'm supporting them through their adult, which is a reality. But then also, how do we get them into their own houses as well? And taking responsibility for that as well. House deposits guarantees. Yeah. And is that a good thing to do or not? We'll put it on our question and answer list. We can raise that as a good question topic. Yeah.
30:24
Yes, that's it there. My little last note was, yeah, do we have to do everything for our children. And there is no, I we don't think so. No, we don't think so. Let them go and fly. Yeah. Let them, you know, live life. And I feel we need to have less control or feel like we need to control that. Yeah. Less. Yeah. So today we have a question from the audience. Once again, we would like to encourage you to provide us with questions. And in the meantime, because we're at
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Season 3 and we're recording these podcasts very quickly. Right. So we wanna get to see. We will definitely get there. But yes, correct. Yeah. Episode 3, Season one. Yeah. Our question has come from an existing client that we have and I helped her with her home loan and her requirement of taking out that loan was to close her credit card. She did not like that news at all. What did she ask you? She. Well, she also said why? She said why do I have to close the credit card?
31:25
And um, because she loves her credit card. She does all her everyday spending on her credit card and she's really gonna mess up the system. It was gonna mess up our system. And so I challenged her on this because of all of the experience that we have combined over 50 years, there was not one shred of evidence that says during your spending on your credit card, even if it's interest free, is a good method and saves you money. No, no, no, I would actually. I don't have any data,
31:57
honest, but I would only for my own experience. This is, I'm going to suggest that if you do your everyday spending on a credit card that you might have more discretionary spending than you would otherwise. I completely agree. So let's imagine you've got a $6000 limit on your credit card and you've set that limit so you don't overspend and you regularly spend $4000 on stuff you know here or there. Then how much? Yeah. I'm just saying, if you had a more structured
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system that you'd probably spend much less money, definitely from my own experience, because credit cards give you that limit to give you that sense of autonomy. You're managing your money well. And we know that if we paid off at the end of the month, we're not paying interest. It puts you in that mindset. And I think the banks want you in that mindset. So banks, so if we bring it back to what banks and products offer and a couple of the banks now have moved away from it, but they offer these packaged deals and the packaged deal comes with a home loan,
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an everyday account or an offset account, and a credit card. So and the idea and I don't even know how far it stems back, but maybe 15, 20 years, was that you would put all the idea everyday spending on your credit card and bending the banks money, yes, and not paying interest and at the end of when the repayment was due, you paid it out of your savings account or your offset or everyday account. So you were getting free money
33:30
and you could use the other money to offset against your home loan savings. So you're saving some interest and yeah, you do the little system. Yeah, so it sounds good. And that's what got us all using credit cards. I would say that that type of mentality and the banks promoting these systems, it did, but everything's got cause and effect. And I would suggest then if you're doing that then maybe there's extra, there could be extra discretionary spending that you wouldn't have done otherwise. We are challenging that
34:00
you are spending more money on that credit card than you would otherwise. That's exactly right. That's right. And is it actually benefiting you or not?
34:11
So yes. Because what we want you to know is knowing your numbers and where the money's going, what you're spending it on, where a credit card doesn't really want you to think about those things. I would say historically. So the system that the bank set up there around the home loans and the credit cards and the offset is one thing. But then also like I'm thinking back around the same time, a credit card was the only way that originally we could buy things online. We didn't have these Visa debit cards, which are great now.
34:42
So historically we have these credit cards and then our parents have credit cards. So we need a credit card, but do we need a credit card? I don't think we need credit cards. There are so many other options. Well, the other thing your credit card does like if you step right back out of the situation, it means you're spending before you pay for something. So it's almost you're catching up versus if you've saved before you spend.
35:09
That's right. And so that would be a mindset of being maybe more thoughtful of what you're spending. Yeah that's right. Yeah. And so we really advocate for a system with your bank accounts where you have bank accounts that set up and support your lifestyle where you're managing and tracking your money as well where it's going cause that's gonna give you the most control over making future you know decisions. The time I do see it work, and again, you know your system and your structure has to be tailored to you and your needs,
35:40
is where fixed expenses only are coming out of your credit cards or what I mean by that are things that could go on a direct debit that you have to have for mandatory living and you don't use it for discretionary spending you just automated you can put the credit card away in the drawer you don't need it but automatically those things are happening. This. I just wanna round it off with a little comment around rewards. Cause people say, oh hang on cause I'm getting on my rewards points
36:11
and I have added this up. Like the rewards
36:14
programs out there. You’ve got to spend a **** load of money. You gotta spend so much more money and then they get you in that mentality. Getting my reward points. Getting my rewards points. Tap, tap, tappity, tap, tap. You don't even know how much it's benefiting you. Hang on, it promotes you spending more money. And then the discounts and benefits you get do not outweigh the extra spending that you've done. You've gotta spend a lot to be a benefit. Yeah. And then really is it a benefit anyway? Yeah that's counter-intuitive isn't it? Yes. Anyway, keep it simple. Yeah, that's that's right.
36:45
Yeah. The other thing though, just to cover off,
36:49
our client asked why did she have to close the credit card. From a bank perspective, why did she have to close it? She had to close the credit card to show affordability because if you don't pay your credit card off every month and you do have that $6000 limit, then they're gonna account for 0.8% I think that they allocate as a monthly expense to you. So she couldn't afford to pay the interest back on her credit card plus the home loan. So the bank said please close your credit card in the event that you are unable to manage that
37:20
credit card and you're paying interest back on it. Yeah, you cannot afford that as well as your everyday living expenses plus the new home loan that you have applied for. Yeah, and from your if you like, when you apply for a bank and they're working out the max, you know you're borrowing limits or how much you can borrow. Just as a rough guide, every $1000 worth of credit card is about $5000 for a from the home loan. So if you've got a $5000 limit means you can probably borrow $25,000 less on your home loan.
37:51
Yep.
37:53
Ah, very, very good. So the last little segment we have is a little provocative question to get you thinking about something in the meantime other than all of the great content that you've just heard today about your children and our younger generation.
38:11
So our question to you is what money supports are currently available to you and when would you use a financial, a money
38:24
coach, versus a councillor, or a financial advisor. When would you use those three services and what are they for?
38:34
Believe that with the yes you'd ponder and that will be our topic next episode. Excellent. Well, thank you so much for listening along today and we'll chat to you then. See ya. At The Money Collective we provide financial wellbeing, premium coaching, mortgage broking and workplace financial wellbeing programs which we couldn't do without the seamless support of our fabulous team. If you'd like to find out more, head to themoneycollective.com.au or our socials to take action and engage our services.
39:05
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This podcast provides general advice only. It does not take into account your objectives, financial situation or needs. Before acting on any information provided, you should consider the appropriateness of the information and the nature of the financial product in regards to your objectives, financial situation and needs. We recommend discussing your personal situation with a financial professional.
Podcast by:
MEL PEARCE & DARLENE NEU
Co-Founders, Financial Wellbeing Coaches and Mortgage Brokers
The Money Collective
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