Season 1 Episode 6: The 8 Step Financial Wellbeing Program; A New Beginning
IN THIS EPISODE
Explore the 8 Step Financial Wellbeing Program with Mel and Darlene as they unpack a little about each of the key areas and why they are critical to achieving an uplift to your financial wellbeing. These include having a vision, knowing your purpose, setting goals and priorities, knowing your numbers, understanding your financial products, creating a budget, growing your financial resilience, and more. They also discuss options and what to do if you’re unable to make mortgage repayments, offering a way forward for people unable to meet their expenses with the cost-of-living crisis.
RESOURCES IN THIS EPISODE
The 8 Step Financial Wellbeing Program is available in our premium personal coaching, and our online course which will provide the tools and information for you to work on yourself, is coming in 2024.
The National Debt Hotline phone number is a free and confidential service provided by Financial Counselling Australia. Call 1800 007 007 or visit their website: https://ndh.org.au/
KEY QUESTION IN THIS EPISODE
What can I do if I can't make my mortgage repayment?
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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
Hi, Darlene, Hi, Mel. How you doing? Welcome to episode 6. Thank you so much. And welcome to everybody else. So looking forward to a great episode today. Every episode we wanna kick off with a bit of a home truth. What's your home truth today, Mel? Well,
0:42
I thought I would let you all know that my fixed rate came off. Like I didn't have an amazing fixed rate of like 1.89% or anything like that. What did you have? I had about 4.5%. I have fixed it in 12 months ago, yeah, when rates started to go up and I'm like, writings on the wall here. So I was a bit of a late adopter. Do you know though in sometimes some of those strategies have been quite good. If you do, you know, you can never pick them up because you can't see the future. But
1:12
sometimes cause you're being able to ride the wave a bit longer while the rates are still rising. So yeah, it's actually, it's not, it's horses for courses and if you backed it over time, yeah,
1:30
sometimes doing it late is not such a bad thing if you're still doing it in a rising market. I did it by taking your advice at the time. Anyway, I remember that you're like, just lock it in. Do it!
1:41
And I was very grateful that I did. But, you know, 12 months doesn't last very long. Last exactly 12 months. Seems like a blink. Yeah, I know. And so it came off a week ago
1:56
and I'm up at 6.13%. So it went from 4.5 to 6.13. But I've been paying at a 6% on my home loan right from, you know,
2:11
back when rates were really super low because well, I think they're gonna get that, go back up. You know maybe when the writing was on the wall that they were gonna start going up. Yeah. You like. I remember you saying they're gonna hit 6%, just start paying everything at 6%. So I've been very grateful for that advice. I'm so glad that you took my advice and I've told all of my clients to do the same things as well. So yeah, I suppose it's good. So the point is that like I'm not like, it's not like I'm experiencing that mortgage
2:42
cliff or anything like that where I've jumped off the edge and my world is completely different. Though I have you know, experienced the from the lowest to the highest, my repayments have changed $1000 a month. Yep. Though because I have had all those incremental, you know they have. I've obviously had my rate really low in the twos and now we're at six percent. So that happened. And yes, I just wanted to say thank you for giving me the advice. Firstly to lock it in and then to pay it
3:13
at that higher rate. So all my extra repayments were going into a variable split that I had because that gives me a bit more flexibility but now you’ve got it in advance. Yeah, that's right. It's extra saving, yes. And but now I'm not quite happy cause when my fixed rate rolled off, the bank has just given me an average OK rate that I'm not really happy with it all. Yep. So I'm on to them and it hasn't resolved yet, but I do want to lower rate than what they've given me. So I've reached out to the bank and it hasn't been an immediate quick fix, but I'm gonna stay on to that
3:45
so that I get a better rate. Yeah, I think that's really, really important. And my tip would be, you know, be that naggy person if you need to and really, really push them from a for a better rate.
4:00
A topic for another day is how banks give new to bank customers better rates than they give existing customers. Yeah. And they don't reward loyalty. So you've got a call that out a lot about how long you've been there and also what those competitive rates are to new to bank exactly and really be, you know, like a dog with a bone and till you get what you want. Yeah. So I'm currently the dog with the bone not gonna let go of it. So I know that's not particularly exciting and it's not really interesting
4:30
about my home. Truth about home life, it's just numbers and mortgages for me this week. I think there's a couple of really great tips there. Yeah. So thanks. That's really cool. And my truth this week is I've talked about my children a bit and it's my son again about should I pay or should I charge him board or not. What a dilemma. Well Mel’s going to give me the answer and I'll probably know what she'll say. But are you charging him board at the moment? No, I don't
5:01
charge board and he is, he finished up a job. For those who might have listened to previous ones, I may have mentioned it. He finished up a job that he wasn't that keen on and he's trying to work out what he wants to do with his life and next year and he's applying to university. So I think he's gonna go back to school
5:20
in the meantime because he lived at home for nothing. He saved a lot of money and he does, he's a good saver and he has his systems which is great. But now he and I'm, I'm so excited for him; he is off to Europe and he's going on the 10th of December till about 17th of January and he's going to some fantastic countries and what an amazing experience
5:47
and I'm really glad that he's doing that. But you know it's just some things around home and being an adult that I think he needs to maybe learn a bit more about. Teaching a lesson hey? But we all have to juggle and budget and prioritise and I'm not fooling his trip. I think that's really great. But when he comes back, I'm thinking, you know, New Year, set some
6:17
new boundaries. And maybe charge board. I'm happy for input. I am really feeling uncertain and uneasy. I listen to somebody else talking about this topic recently, and I love the way that they explained it, where they said that, you know, just paying some board. I can't remember what the figure was that they chose, but let's say you're paying even $100 a week or something. It's going to be much cheaper than living outside of the home.
6:49
So cheap. Like it's so cheap. Like you're never gonna even if you know your board was $200.00 a week, you're not gonna be able to live in a share house plus pay the utilities and groceries and for anything near that price, you know. So it's almost like the option hey, if you can go and live somewhere else or you can stay at home, there's going to be some responsibility with contributing to the household cost of living. And then the person said that person,
7:20
you know, charge their child for the six years that they were at university and it was something like 20 or $30,000 and they ended up giving the money back to the child at the end of the day. I don't mind that. Where the child never knew, or the child, the young adult, the adult. What am I saying? They're our children forever, but like, far out. These are. Well, this is just the point, too. That there. Hey, come on. You're grown up. You're in your 20s. I know he's only 23, mate. Yeah, come on. So we think about time. You learn how
7:50
cost of living in life works. Yeah, that's it. Yeah. And reality, I was gonna say, I don't mind the idea of giving the money back, but
7:59
you would have seen some of our previous episodes too. We've really gotta remember about what lessons or what we are taking away from our kids by giving them stuff. And I think if it's a wow moment or something that they're not expecting, possibly. I like it when they don't expect it. Yeah, particularly. But at the same time, I think there's like with no expectation, because what happens if times get tough and you've got that money? Like it is yours to spend, You know? Definitely. Yeah, yeah. And I just think you know, kids that are, you know,
8:30
pulling weight at home, and you're doing their share. I mean sometimes I feel like, you know, I, you know, we work, my husband and I work and we love what we do and you know, but we work long hours and we are committed to what we do. The kids mentality is so different now. He's home each day and it's a dinner on the table. You know, some washing on the line, folding his washing up. You know, when I'm coming home, you know, sometimes I work till 9:10 at night, you know, doing the stuff to keep on top of everything. And I'm thinking, yeah, something's
9:01
not right. You sound like my partner, he is very much like that. He talks in all of those terms and I just like let everything wash over and it'll be fine. But I think too like a moment in time. So it's good to do it like, so that return from the overseas trip, right. Next year, you know, start of a new year type situation. Yeah. And these are the new rules. Like it's good to set these up from, you know, the expectations with somebody as well to go, hey, this is it. Just have a regular adult conversation with them.
9:32
Exactly. And I think it does need to come from also that, you know, when our kids leave home they've got to learn to do all this stuff on their own anyway so the more they can understand the cost of living and you know things and, you know, really sharing that stuff. Yeah. I know my son's really grateful. You know. Yeah. He he's that sort of, you know, inside I know he is. But yeah, some I just, yeah, sometimes we're doing our kids in injustice. And it's so obvious too like
10:02
that when we have these conversations, the difference between the generations, like our expectations just don't match what theirs are. And there's like, I don't know what is going on. I'm yet to break that code. That's right. Who's got it right? Have we got it right or have they got it right? Do we need to do the tough love that we got, because we hated the tough love. So then we're easy on the kids and let them get away with so much more stuff. Well, it comes back to, you know times our most, you know, our best commodity, right. You know, so. And I feel
10:33
our younger generations that we're talking about, they won't spend time where they don't value it, you know. Right. And who necessarily says that's a bad thing? Maybe it's, I know, a good thing because I would say that a lot of our generations being taken advantage of, like, so we will go to work and then we're expected to do 4 jobs, sometimes with no extra pay rise and limited chance to really reap the financial benefits of putting in. And we we've been drilled into us that just do you know putting the grunt work and you'll be rewarded. Yeah a lot of the time.
11:04
you’re not, and I think they're seeing us and going hey I'm not doing that. That is ridiculous. Would I do that? Why would I do that Why would I do that too myself Worth I can see what it's doing to you go. I can see my parents like you said I've worked all day. I've come home. Why would you they want that? That looks ridiculous. That's exactly. And you can see that is dumb. So I think they're trying to change it up and look all yeah I'm happy to see how it plays out.
11:34
But there is always two sides of the coin and I'm with you. I have really no idea what's good or not. I'm really keen to see how it plays out but you do need purpose right. You need to know what you're doing you know and even if you go and do a job or something else even though you might not think you'll like it there's always benefits or things you learn along the way that you might not have learned otherwise. Exactly right. Life experience versus yeah. You can’t just sit in your bedroom and think you're gonna get somewhere This is an old mentality. I'm such an old
12:05
person now. Far out. That's doesn't sound like Mel at all. No, it sounds like me all the time now. What happens when you hit 40? Yeah, and it's so funny. Yeah, we should talk about how our kids do our makeup for us because we don’t know how to even do our own makeup. OK, next episode. That is great. I'm gonna talk about my experience and my daughter and makeup. Yeah, I love that. OK, I'm. I'm banging on on that too. Alright, so today we wanna talk
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about financial wellbeing. Last week we or last episode whenever you listened in we asked you what financial wellbeing meant to you and it means a lot to us. Tell us and we hope it resonates. I think we live our whole life and how many times a day do we say that these words financial wellbeing,
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you know, endless, you know and what is financial wellbeing. So if we start financial wellbeing is around how do you feel about your money? Like when you think of money and you what's that feeling you get on the inside, you know, is it keeping you up at night? Do you feel good about it? How much time do you spend thinking about it? A day is affecting your productivity at work, you know. So financial wellbeing is, how you feel about your money
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and uplifting your financial wellbeing is all about changing the way you feel if it's not where you want it to be. So the two things you can really do in that space is build your financial capability, which is understanding your own money and how it works in your life and getting more deliberate with it. And also from a capability perspective, it's understanding the products that you have or you may want to engage in like you know loans, credit cards, you know everyday accounts, you know
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investments, understanding the, you know the nitty gritty of that so you can make a decision for yourself and whether they're good for you or not. And then the other component is financial resilience, which is about
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what would I do in case of, and really financial resilience is about your net asset position. So it's building assets, so you've got options if and when you need them. And you know one day you might want to retire and you know you've got enough money to live on. That resilience piece is really linked to how you feel about your money because if you know you've got like not much backup resources and you've got your back against the wall and things are not looking so great financially, that's the resilience piece. It means you're not strong enough in the resilience. You haven't got enough
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back up. Or maybe you don't have a clear plan to know what to do next. Yeah. And then capability is just all about knowing your numbers because how do you create a plan for yourself if you don't know your financial situation? So they go completely hand in hand. Like you can't have one without the other. That's right. If you don't know what you've got to work with, how can you know what to do with it? That's right. And if you don't know exactly what you're working with or where the money is going, then we operate from this state of emotion and fear. Fear. And that's what impacts our relationships,
15:02
you know. And we all have our own defaults. We've spoken about many personalities. Yeah. That's how we what we'll go to and revert to. We do. We just go and spend. And I yeah, you know, I know like my mother in law her health, she thought that at one stage that she was going to die. So she gave up. Hmm. You know, for this is just a different analogy, you know. So she had a heart condition and a heart bypass. And the surgeon said to her, she got 10 years to live in. As she got to that 10 years,
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she's like, I've that's it, I'm done. Everything was fine. She was perfectly healthy. But she had been counting down that time and to go, that's it. And I'm gonna give up. And I think
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that was so interesting to see her mental state do that. But then I just relate that back to money, because if we don't have a plan, some people will just go right. Well, it's it. I'm a failure. I'm done. And they just will go and spend all their money. Or they'll just say I'm no good with money. Most common thing, we're here. Other people will do completely different things. So if you don't have a really good plan or a backup or you haven't thought about it, or stuff's not going well, then we're going to revert back to things that may not be serving us
16:15
in our life. And that might be everyone's gonna do that in a very different range of ways. Yeah. Yeah. Yeah. So we're very passionate about this. And I think too, this is the feminine side of money. Financial wellbeing. And it's a very new term. Like, I think everybody knows what we're talking about now, but it's something that nobody was talking about a few years ago. Exactly. Because money was all about finance and a bank being a banker. Exactly. What are you invested in?
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How's your Bitcoin going? That's right. That's the BBQ talk, right? And it really and people don't wanna talk about
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you know when they’re maybe not doing well or you know how they really wanna learn those everyday skills. You know cause it seems like we all should know this stuff. You know we should have learned from our parents or you know, but really well how is it different to you know, going to nutritionist or you know going to the gym going to the gym or eating healthy. It should be exactly the same. And I I'm. And we don't put any weight on how it makes us feel like we know if we eat crap. Yeah, we see it
17:28
on our faces. Yeah, we see it in our bodies. And we're like, what are you doing to yourself? Yeah, but. And we kind of think the same things, but we're not joining the dots. We're like with our financial health, we have that ominous feeling that we're maybe not putting the effort in that we need to, but we don't know how to talk about it or go about it. Yeah. Which is why, you know, here at the Money Collective, Mel and I have put our heart and soul into developing our eight step program. We have,
17:58
Yeah, Yeah. Which will help people up with their financial wellbeing. Yeah. So the eight steps we're gonna talk you through them today but they took us
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well combined 50 years of our own experience in working with people to go hey how do you move from here to here. Yeah. And at first we thought that everyone was different and that we had to deal with every client, yes we were trying to tailor and be really bespoke, and everyone's gonna have their own journey. But it turns out that there's actuall,y you can have eight steps and they apply to everybody no matter how wealthy you are. It doesn't make any difference and you can, everyone gets
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benefit out of it and you can apply all your own personal stuff to it so it is tailored to you. But the steps relate to everybody. And I know that some of the things that we're saying, you know, particularly around, you know, being in hardship or not feeling great about your money or not managing it well. But these eight steps are for absolutely everybody. Like
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you could be earning hundreds of thousands of dollars and be feeling great. These eight steps are are gonna, you'll probably resonate with it. If you're actually doing well with money at the moment, you'll probably go probably doing some of the things that we're going to talk about in these eight steps. And there might be some things you're not quite doing which could elevate you further. Yeah, yeah. It's so true when people think, and I just want to put this myth to bed. People think when they think of financial wellbeing. They think budgeting or financial literacy.
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Financial wellbeing is holistic. It's much more than that. And as I described, it's how you feel about your money and it's what the impacts you can do to feel better. And that's just not setting a budget. That is, that is not what this is. This is looking at all aspects of your life and how your money works for you and the system, as I said, and how you know that we work in and understand it, being empowered to make your own decisions and be really deliberate about it. Yeah. So do we wanna talk about each of the steps? Yeah.
20:02
OK, step one. Yeah. So the first step is your vision and purpose. And so this is the soul really, isn't it? So it's like about you. This is the thing, the step that's all about you and nothing about anybody else. That's right. It's a, you know, two things is what's the reason that you would actually even tackle this stuff? You know, why? Why do I want to uplift my financial wellbeing? Well, it might be. I feel really bad and I can't sleep at night. That could be, you know, your reason to do some something
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different. It might be that you're worried about those scenarios that could happen and you don't know what you would do if you lost your job or you got sick or how you would make ends meet and keep, you know, food on the table and a roof over your head. That might be because you wanna go on a holiday. It could be, it could be a goal. It absolutely could be. It could be short term or long term. I think that's really key. It could be right now. You know, you've got one of those economic times that are going on where inflation's going up
21:03
and cost of living and you know our food bills are going up, everything's going up. So you feel like you're just not saving what you what you want to or just not getting ahead or going backwards. You might feel like you're going backwards or you feel like you could just be doing a bit better. I could be doing could be doing better. I want to be the best version of me that I can be because these steps and these skills are things that we should do throughout life, not when things get hard or bad. I mean, that is a good platform to get started, but it's throughout
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your whole life because then you'll ride these waves much more seamlessly. Yeah. Yeah. So that's purpose. But the first real step is vision, right? So vision, what is your vision for your life? And this is the thing that is like you and no one else. It's the when you really dream about the life that you want, what do you see when you close your eyes? Is it your family? Is it the what good memories are you making? That's usually what it is. So
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usually isn't monetary at all. It is the feelings that you want to live your life by, the values that you live your life by. Like what's super important to you? Like Darlene and I are always going to be talking about our families and this business. They're the things that we're passionate about and they're the things that we want to create, the things that we want to devote our time, energy and money towards. That's right. But what are the things that make you sing? What are the things that make you really happy?
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Because that's the leading thing that you never, never wanna lose sight on. Because when we're not, when we lose sight of our own vision, then we start looking elsewhere and we start thinking about really consumable things like cars and clothes and makeup and stuff. That doesn't really matter. Stuff, stuff. The stuff. That at the end of the day doesn't matter at all. Is it doesn't matter what kind of car you’re driving at the end of the day. That's right. Later on you'll really regret doing some of those things maybe. But yeah,
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it, vision is, because if you've got it you'll naturally move towards it or you'll look at the steps to move towards it. That's right. And we forget about our vision all the time and we get lost because there's so much going on in our lives. So we have gotta keep that very clear vision. And then the purpose links into that too because it's like, well, hang on, that's my vision for my life, that's where I want to be going. But I'm not currently heading that way. So my purpose for doing, working on my financial wellbeing is to get closer to my vision for my life
23:39
all the time. That’s ideally the answer for first step one to get closer to your vision. How do you always get closer to your vision? It's easy then when you're making financial decisions, right? So especially big, big or small, it doesn't matter. Yeah, when we need to learn to let go of something or something that's not serving us, you know, we can test it. Is that aligned to our vision or not? Is buying that, I'm going to use that car again, aligned to that vision? Is it helping us step closer to that vision or not?
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And so that's our guiding purpose all the way through forever and ever and ever. And that vision can change and grow, of course. Yeah. But it is always coming back to that. Yeah. Am I moving towards my vision, that vision. And yeah. And it keeps moving you forward and optimism is very linked to financial wellbeing. So by moving forward, we feel more optimistic. That's it. Yeah. So then, Step 2.
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Is doing a spending review. Oh, it's the best thing ever. Not.
24:43
It’s tedious and it's a chore, but it's a very necessary. In fact, it's the most important thing. It's the most one. It's the worst and best. At the same time, it's what we never wanna do. We never wanna know where our money is going. So a spending review is exactly that. You gotta go back and find out where all your money's going, right? So a lot of people go straight to sorting out a budget. We're not doing that, guys. You won't uplift your financial wellbeing because you haven't tackled.
25:12
Yeah, and understand what you're doing, now. Yeah, we need to get real with who we are and what we're doing. And even if that is completely light years away from the vision that you want from your life, we need to stare it down the barrel and look at what we're doing.
25:28
Critical. You learn so much by doing that. And you've gotta go down that path to set new things moving forward and leave some of it behind and, you know, set up new. And then, yeah, really important. Do the spending plan, gotta do the work. Yeah. So spending Review is actually going in and looking at the last 12 months of spending, where has where have you spent all of your money? So if you think about the net income that you've had from in your family, it's probably, I know could be over $100,000 coming into the family,
25:59
could be hundreds of thousands of dollars. Where are the dollars? Where are all the where is it gone and what's it been spent on specifically. So on our website we've got a tool and we can put it in the show notes, the spending plan review and what it is, is like a long laundry list. But you need to go into your banking, download your transactions and then line by line categorise all of your transactions. Banking's quite good nowadays to help. Like it, your banking will do some automatic categorization for you.
26:30
Yeah, but you gotta go in and check that and then you've gotta add it all up and analyse it and actually work out where the money's gone. Take the thought, you know, Do the thought while you're doing it. Cause if you do it manually and do it properly then you'll learn a lot.
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And we thought like, oh, there's gotta be an easy way of doing this, right? And you can just use download and app and because they're spending tracking apps, sure. But at the end of the day, what are we always come back to an excel spreadsheet Mel, because then we can see trends and lines and we can actually understand our behaviour better. You can't. You know A to B the quickest, A to B path is not always the most helpful. Yeah no it's not. Yeah. So getting stuck into it and looking at it.
27:18
And so with the categorising, when you've done that task, you'll be able to see,
27:24
like you probably know where your blowouts are anyway and you go right, well, I'm overspending on eating out takeaways or whatever, but sure, you might know that. And when you do the task, it might say exactly the same thing, but when you've done it, you'll see exactly how much, you'll know the dollar amount and then you know, well, hang on, I'm happy with that. I'm not happy with that. How much do I need to change? It would show you whether all your spending is aligned to your vision as well. Exactly. You know, like if you're a smoker, for example,
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and you think, oh, that's just who I am and a part of that. And that's totally cool. And then you do the numbers and you, you know, you'll know really how you feel about that thing because you can look at the number and say I’m comfortable with that and how much, you know, of my income goes towards that. Or you might not and it might really be triggering. So that's right. It really gives you a sense of what you really do look like, where your money goes or not, just how you feel about what you see. So, like being drunk might not be my highest value. Yeah, but my alcohol spend might be too high.
28:26
Yeah, maybe. When you see the number, does it does it align with how you feel or is it not. Yeah. Making you feel great. And this is how it's very linked to our mental health, our physical health and how we wanna like our money is going to paint a picture of 1000 words. Yep. And it will help you have better conversations too because instead of going, we're doing too much, we're spending too much. It's like, no, we just spent $25,000 on something that we. Yep. And you know, I mean, I'm happy to, you know, share,
28:56
You know the thing that I know that I hate looking at the most when I do this stuff is how much I spend on clothes. So why does that make me feel like that? If I go and spend and I like what I buy, but when I look at the numbers, I don't like it. It's telling me there's a misalignment.
29:15
There's something going on because I don't like that, you know? Yeah. So, yeah, sometimes we feel shame about some things and guilt over our spending, but sometimes you can go. Right. Hmm. Well, hang on. I do have a value of clothes. Hmm. I'm not happy with that amount, but I'm happy with some. Like, I don't wanna spend that amount, but I'm happy to spend this amount. Yeah. Because I don't want to stop buying clothes altogether and I don't want to feel bad about buying clothes. Exactly. And I think those habits like there's part of it obviously you enjoy
29:47
for me I enjoy about that. So if you go and go cold turkey I think I, know some people can break habits go cold turkey, but that is rare. You've actually got to step down little by little bit as well. Be kind to yourself I think. Yeah until you figure it out and own your values you know cause nobody else has shares the same values as what you do. So yeah just think and then it shines a light on our habits too. We doing, you know if you've got lots of late night purchases in there is there
30:17
something else emotional going on? You know is that really what I think you're buying?
30:24
I'm sorry. What were those feelings or maybe an argument with your partner you just had or I don't know, whatever. So when people do this exercise, they go, geez, that was hard, didn't enjoy doing it. But I'm so glad I did. We hear that every single time. I've never seen somebody do it and regret that they have done it. Not ever. So key. Step 3 and you know we will do more deep dives into each step in future podcasts as well. Are you reigning me in, Darlene?
30:56
Come join the TMC family, everybody find out my financial position. So Step 3. Yeah. So this is starting to consider your financial resilience as well. So when we talk about that understanding your financial position is your assets, your liabilities and your income and expenses and you're spending plan has started to look at income and expenses, yeah, but assets and liabilities and your net asset position, which is assets minus liabilities. Understanding that number, whether you're comfortable with that number, you know how diverse your assets are
31:25
what sort of liabilities you have. You know really understanding that and understanding which parts then you can leverage to move the dial of financial wellbeing because you're resilience that we were talking about earlier is dependent on your asset and liability position like how much do you have versus what you owe and what's left over and cause it can also change cash flow can't you reduce, you don't have to pay a debt back anymore. Whatever that monthly repayment is, you can keep going to go and put it somewhere else. Yeah, grow other assets. So knowing where your money is going and whether it's
31:55
being helpful and wisely used and helping you grow that plan for the future. Yep, Yep, Yep, definitely. And then we're up to Step 4. Is goals and actions. Yes. So, like, once you know all your position, So what you've done is taken a really deep dive into where your money is going. Are you happy with your asset and liability position? You understand what your vision and goals are, so you know what you want and what needs to change. Now's the time to start writing
32:26
what you want, what the goals are and what the actions and priorities are. Because you know how much you're working with. Yeah. And what needs to change and where you wanna be going. Yeah. And actually what is realistically achievable that you can set really time bound goals and that's it. Or, you know. Yeah, yeah, Yeah. So it's a great time to do it and it's absolutely, you couldn't have done it before. You've done this work beforehand. So you've gotta do those, the pre work to get to the goals and the actions. Yeah. Then the next step after that is financial education.
32:56
So why do we need to do that at this step? Yeah, so financial education is really important to this is about looking outside in and then overlaying it to your own personal situation. So what from a bank. So think about banking products that you're probably currently engage with. So you know, that could be, you know, an everyday account that your pay goes into. It could be a credit card. It could be after pay. It could be a home loan. If you've got those products you should absolutely know how they work
33:29
like because if you don't know how they work then you don't know whether they're actually good for you or not. And you also don't know how you can optimise your money to get the most out of those products. So really understanding those or any then potential ones that you're thinking about engaging in, understanding the terms and conditions, how interest rates are, sorry, how interest is calculated, when is it charged. All the how do I optimise my money in all spaces to get closer to my goals? Exactly. Cause you've just set your goals and your actions
34:00
if you don't educate yourself on what you need to do to hit the goals. Yeah, yeah, like that's how to really get the most out of where you're going. And every dollar and dime that you've got. Exactly. And how to make decisions. Yeah, cause there's lots of things. I won't go into all the details now, but there's lots of things you can actually do. And using a home loan as the obvious one is if you have a home loan and you do certain things like pay more regularly, pay extra, you know, those type of things, you can say years and years of interest.
34:32
It is a lot of money. So if you're not utilising those or even offsets and redraws and those type of things, then you've got money sitting elsewhere. You're not using it to your best advantage. Hmm. So you need to understand how it all works and then make the best decision for you about, you know, what products and where your money sets. That's so cool. So at this stage we've got a vision for our life. We know where our Inns and outs and our money is going, we've got our goals and we know how to optimise that. The next step is to create the new budget.
35:03
Yeah, because you got all the information. Now we just need to set system up to work. So that’s step six, I had to count that, six. Step 6 is setting the budget. So this is where people usually go. But can you see now why you need to do that pre work to get to a budget? You can't just set go to set step set. You can't just start at step 6. If I don't have to do the, ohhhhh that is what is gonna break everything for you. And you wonder why nothing ever worked, but you when you set your budget up, you're not going to get it right anyway the first time. It is a trial and error
35:34
situation, yeah. And So what you wanna do is just align all of your, you know, spending and decide on where all your money is going, being very deliberate at this point for all of your money. So we advocate including your leftover money. Yeah, any leftover money. So all the money that's coming in to the household, you are now being deliberate on where that's going. So you need to pay everyday expenses, have some fun, save for things in the future, and then save for the really long term as well.
36:05
So depending on how much money you've got, you obviously got to meet the necessities first. You do, yeah.
36:12
Step 7 is your banking structure, Yeah. So that's setting up that structure and the bank accounts to optimise all that situation. So
36:23
you're making that, it's the system. It's the system. So every there's money where you need it when you want it. Yeah, so it automates everything. So again, it's that deliberate. Where is my money going? You actually set your the right bank accounts up to pay for everything so that the money is automatically going towards the goals that you have set for yourself and it's the coolest feeling when you get it done. Well, that's about that moving forward, creating resilience. You're actually feel like you're moving forward and you're more,
36:54
you know, we don't like the word control, but you're more empowered about the money and you know that will help you sleep at night. That's one of those key things. And this is what I've been talking about in some of my home truths in earlier episodes is like my system is a little bit out of whack at the moment because cost of living is gone up. So my automations aren't quite right. So you have it's a like a living thing that you need to kind of adjust all the time and that's OK because as life and this is the thing, cause life is going to change all the time on you.
37:26
And our goals are going to change. It’s no different to the analogy of health and diet and all that. We are constantly tweaking, getting up, having another go. You know, sometimes we're working on it more than other times. But when we've optimised our system we know, like it's gonna help us sleep better at night. It's like, well hey look, you might be, you know, crappy situation that you don't want to be in right now. But at least you will know that you've done the best that you can and that's going to help you sleep better. And then you're going to have to start thinking about what other things you're going to do or it's going to help you just optimise the whole thing and you're gonna be going to bed
37:57
going I’m a legend. I can't do better than what I'm doing right now. I am moving closer to that vision. Yeah. Happy days. So good. Yeah. And I think yeah, you go, no, I was gonna move on to the next step. So you got something to say? I was going to say
38:15
once you get to this stage too and you've got a system that you follow, you're in a really good position to use it as a decision making tool. So if something comes your way and someone offered you a great job and you think other than all the emotional feels and whether you you want that as well. But you can overlay it from your money situation and you can substitute in and out of your in your new budget and look at what it's going to do to your new number. You know, yeah. And is it worthwhile? All that effort, all, you know, extra responsibility and how you feel
38:46
about stuff. You know, you can also overlay that and say, yeah, financially it's, well, it's good for me as well. So yeah, you can use it for decision making. Yep, It's awesome for decision making. And the last step is tracking and reviewing your results. So this is about what I'm saying, like, is it working? Is it not working? And sometimes when the system's working, you know it's working, it's humming, You know, you don't really need to think about it. And then if it gets a bit broken, something's not working. So it means that a goal needs to shift
39:16
basically because yeah, you're taking your robbing Peter to pay Paul. Is that the situation? Saying. So what you had set up and and your goals and priorities is gonna slightly change which means it might change time frames of how long it might take to hit something. Yeah definitely. And when you track over, you know, we would recommend, you know each month, you know, look at your bank account statement put it in the, you know, the actual spreadsheet against your budget
39:49
and do that. And in a few months you'll start to see trends as well. Like if you're constantly over in one spot and under in another, you know, you know or maybe you just haven't allowed enough. You know cost of living is going up, supermarkets going up. Maybe you just have to allocate more to that and take some, as Mel said, off you know the goal. But constantly reviewing that discretionary spend or at least all yeah, just be happy with it. At least you know the situation and what you're doing, that's so clear in front that takes the fear out because you know what you're dealing with.
40:20
Yes, so good. That's it. So that's our eight steps to financial wellbeing. That's right. And it's not that it's not a line though, it's more like a circle. It's not a linear. I do 1-8 and my world is great. No way it's not. It's continual work. You have to do it for life. You'll have to keep revisiting. Sorry about, you know going through the steps. You know it is it's like thinking great, we gotta keep working on it. Yeah, that's it.
40:48
Cool. So alright, we have a question today which came to us around concern around hardship. Yeah, it actually. We do some work with some organisations and
41:04
you know, financial education and they were worried about, you know, find out how to teach. We teach financial wellbeing to workplaces and this question came from there. They are getting inquiries from some of their employees and team members and staff about financial hardship. So that could be, you know, what do I do if I, you know, can't make the mortgage repayment. They're worried about their staff not having enough money to eat, you know, coming to work hungry, those type of things as well.
41:35
Yeah. Yeah. So it's a, it was a really good question. So what would you do if. Yeah, if you the very first thing you can't, you know, don't think you can make the mortgage.
41:49
We've just gone through our steps like we would definitely recommend, you know knowing your number so going back doing your spending plan, really work out what is affordable and what's not. Have you got anything you can call on or
42:04
What can I do and what can't I do? So understanding that situation, first of all is definitely a number one spot, but then you cause you might need to ring your bank and have a chat with them about what they can do to support you through this time. And that conversation's gonna go so much better earlier the earlier you get on to it before you miss a payment. Yeah. And also if you come with your knowledge of your numbers and what your situation is and how you can,
42:34
how much you can afford to pay, maybe it's a partial repayment, for example, or how long you need before you can get this back on track. Then that, they’ll engage and enter into an agreement with you to support you through that. And that can be sometimes with the banks you can actually have like a what's called repayment holiday and you can get, you know, up to three months of that. You always have to pay it back and it's always gonna be consequences to that, which sometimes, which you really need to understand
43:06
what they are. Yeah. So because the holiday sounds great, it's only for that very short window of time and you still have to pay it back and it could impact your credit rating as well. Yeah. So understanding all of those things are reaching out to a mortgage broker is good in the situation. Anything to do with the home loan or mortgage. Even if you didn't get your home loan through a mortgage broker, then you will find the mortgage broker community to be so amazing. Supportive. Yep. And great advice can be found there. That's independent of the banks
43:38
as well too. Yeah. Especially if you're feeling bamboozled by the situation
43:44
is to keep reaching out till you find good support. Yeah. And that is key, to try and work a strategy out and in what the, you know, not just this immediate one payment or whatever, it might be up to three months, you know, what is the strategy out? So, yeah, a good mortgage broker, all the type of work that we do. Yeah. The other really good resource is the national debt hotline. Yeah, that is a great website. We'll put the link to that in the show notes as well. And they're almost
44:15
everything that you need to know is in there. So take some time to go through that website, actually have a really good stepped out, you know, 123456, you know, that's a really great resource. But I would like to say I think people get really concerned and there are some risks to understand. This is about financial education. So if I go in and, you know, ask for a payment holiday, what are the consequences? You know, I might not be able to refinance for six months or longer. I might
44:46
impact if it goes on long term, it might impact my credit rating. But you don't want to be fearful of that stuff. You want to step into it. That's right. And learn about that stuff. That's right. And whether or not you can tackle it and work through it, Yeah, is really, really important because
45:04
I think out of fear comes back to that. Again, we don't, we don't do anything because we are so worried about what the bank might do. Maybe they'll foreclose on my house, right. And that won't happen. You know that it's like anything, the earlier you engage, know your information, work with them, they'll be supportive because the last thing a bank wants to do is sell a home. They just don't want to do that, and the regulations and your rights are really well protected in Australia. So
45:35
yeah, really I would say, the last thing I would say on that note is to know what your end game is as well. So you're in a painful situation right now. How are you gonna get out of it? Something needs to change and things may need to be sold. So potentially the house being sold, may be, some other assets and calling on friends and family maybe for support, changing your income position. You really need to be very strategic about getting out of the situation and how long it's going to take. It might
46:05
mean changing your housing situation or a lifestyle change in some way. Yeah, that's right. But really planning it out, writing it down, knowing your numbers can what are you doing that can change? Exactly. Have you got a liability or a car loan? If you sold the car, is that gonna fix something? I know you might need the car to get to work. Yeah, that's right. But it's saying all that up in your strategy, right? And The thing is,
46:30
be empowered and take control of the situation because you don't want something done to you. If you left it too long, the bank might, you know, decide to sell the house. That would absolutely be a last resort. You wanna be in the drivers, you wanna be in the driver seat. Do it on your terms. You know it's your self esteem, your confidence, your wellbeing. Do things, you know, you make the decisions, do them on your terms. And that's what actually you know. Understanding it will give you and you'll feel better about yourself at the end
47:01
no matter whatever. Yeah, that is good. So
47:05
we might just wrap up and leave you with one last question.
47:09
And that would be, what is, what are all the things that have led you to feel how you do about money? What's your story with money? Yes. Yeah.
47:24
It's a it's a it's state is date because we learn all the things we do in the way that we behave is basically come from all of our past experiences. So what we learnt with our parents and as young adults and as we've continued through life. And do you like the beliefs you have? Yeah. Have you thought about that? Ponder. Yeah like your money beliefs. Well thanks for joining us this episode and we will see you next time. Yeah. See ya.
47:54
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. In our Facebook group, join the conversation and help us break down the taboo around money. All content in this podcast is for educational purposes only and is general in nature. For tailored personal advice, please seek out a professional.
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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