Kia: Hey, it's Kia. Throughout this series, we've been exploring different
Kia: ways to save and grow your money. In this episode,
Kia: I want to focus on what your money can actually
Kia: get you. Everything's changing. It used to be you'd work
Kia: one job all your life and then retire, but these
Kia: days there are so many different approaches to work and
Kia: leisure. So today, I'm talking to Jenny Hazan, Director of
Kia: Customer Value Management at Legal & General, about all the different
Kia: choices out there, and the freedom our finances bring us
Kia: to make these choices. So, Jenny, there are many different
Kia: approaches to work and finances out there. People are doing
Kia: FIRE, they're taking sabbaticals, they're having portfolio careers. Can you
Kia: talk me through a few of these different options?
Jenny Hazan: Yeah, totally, Kia. So as you said, that distinction between
Jenny Hazan: working life and retirement used to be really clear. In
Jenny Hazan: fact, we worked at one organization, probably stayed in the
Jenny Hazan: same industry, maybe even at the same company for all
Jenny Hazan: of our career. And then on a set date, we
Jenny Hazan: suddenly became retired, and hopefully by that point the kids
Jenny Hazan: have moved out, you paid off the mortgage, and now
Jenny Hazan: was the time that you got to enjoy life. And
Jenny Hazan: I think people are looking for more financial freedom, flexibility
Jenny Hazan: and choice, and they're looking for different options. Even just
Jenny Hazan: friends of mine actually, that have taken on new ways
Jenny Hazan: of doing this. So a portfolio career, for example, is
Jenny Hazan: where you may choose to be freelance, you may choose
Jenny Hazan: to work on a number of projects that are related
Jenny Hazan: or unrelated, working for companies and organizations that are interesting
Jenny Hazan: to you, that you're passionate about. I also have a friend
Jenny Hazan: that's recently taken a sabbatical. So a sabbatical is a
Jenny Hazan: period of time where you will agree with your company
Jenny Hazan: to take unpaid, usually unpaid, time off, so maybe three
Jenny Hazan: months or six months, to focus on other passions or
Jenny Hazan: things like travel. And then in addition to that, because
Jenny Hazan: of the pandemic and because of our ability to connect
Jenny Hazan: with the working world from lots of different places, lots
Jenny Hazan: of people are choosing to be digital nomads, work from
Jenny Hazan: wherever they are, abroad. And I think people are really
Jenny Hazan: looking for opportunities to do things a little bit differently.
Jenny Hazan: So there's definitely a push for people to think about, "
Jenny Hazan: Well, can I work for a certain period of time?
Jenny Hazan: And then only work if I need to work?" And
Jenny Hazan: we mentioned FIRE, so FIRE stands for financial independence, retire
Jenny Hazan: early, and that's a movement that started off in the
Jenny Hazan: US and became popular probably from about 2010 onwards. And
Jenny Hazan: the main principles are about saving as much as you
Jenny Hazan: possibly can, investing as much as you can, living off
Jenny Hazan: less of the world's resources, but living well. But people
Jenny Hazan: that are taking on the FIRE movement, are tending to
Jenny Hazan: save a lot more than what most people can usually
Jenny Hazan: save. So up to 70% of their income. And they're
Jenny Hazan: usually aiming to get around about 25 times their living
Jenny Hazan: expenses, so that they can invest that money and live
Jenny Hazan: off the investment returns. Now that might seem a little
Jenny Hazan: bit extreme and it does mean a lot of sacrifice,
Jenny Hazan: but I think what this shows is that people are
Jenny Hazan: looking for different options for themselves. I know for me
Jenny Hazan: personally, travel's really important, and so I want to be
Jenny Hazan: able to have a lifestyle that over time my working
Jenny Hazan: life will allow me to do that.
Kia: It is great hearing the different ways that people are
Kia: actually taking charge of their finances and taking charge of
Kia: how they work. It is so key, because this generation
Kia: is very much thinking about the future and thinking about
Kia: different ways, like you mentioned, our parents or our grandparents,
Kia: their generation was like you said, one job, work till
Kia: you retire, retire, then that's it. And now we're kind
Kia: of saying, " No, I actually want a bit more freedom.
Kia: What can I do to get more freedom?" So I
Kia: want to ask you then, how can our finances help
Kia: us to access these different choices that we've got?
Jenny Hazan: Yeah, so I think the principles, even if we talk
Jenny Hazan: about FIRE where we say, " Oh gosh, that's quite extreme,"
Jenny Hazan: but the principles of it still stand strong, which is
Jenny Hazan: save as much as you can as early as you
Jenny Hazan: can. And the reason for that is because the earlier
Jenny Hazan: you save, the more time that money has to potentially
Jenny Hazan: grow. And I think with so many different choices available
Jenny Hazan: to us now, it can be quite difficult to think
Jenny Hazan: ahead to the things that you might want to do.
Jenny Hazan: So actually setting out some goals, whether those be long-
Jenny Hazan: term, medium, or short- term, so that could be anything
Jenny Hazan: from having flexibility around your career, to saving up a
Jenny Hazan: deposit, to just being able to afford some nicer little
Jenny Hazan: luxuries in life, is really, really important. But that takes
Jenny Hazan: budgeting, that takes saving, and also working towards a goal.
Jenny Hazan: I think sometimes it can be quite hard to think
Jenny Hazan: about starting these sorts of things, so one of the
Jenny Hazan: things about thinking about these goals, and actually starting to
Jenny Hazan: picture them in your head, is that you then have
Jenny Hazan: a much clearer motivation for doing the work that you
Jenny Hazan: need to do in order to plan for this.
Kia: I love goals so much. I'm glad you touched on
Kia: it, because I think when you come to your finances
Kia: and you come to planning, or saving, or anything to do with
Kia: your finances, and you're almost saving aimlessly, it can feel like, "
Kia: Why am I doing this?" But when you have a
Kia: goal in mind, that can help. And I'm someone who's
Kia: very visual, so I put my goals down on a
Kia: vision board-
Jenny Hazan: Same.
Kia: ... so I know... (inaudible) . ... so I know at the foot of
Kia: my bed or wherever I choose to place it at
Kia: my house, I can wake up, and when you have
Kia: those days like, " Oh, I just want to spend my
Kia: money on... I just don't want to do this," you can
Kia: kind of look at your vision board, and see, actually,
Kia: I know I'm saving, because I want to get to
Kia: this or I'm investing for this reason. And it helps
Kia: to keep you on track, which is so good. And
Kia: I'm so glad you mentioned goals, because it's just really,
Kia: really important. Now, you touched on it a little bit
Kia: just now, but what can our listeners be doing with
Kia: their finances now, that can give them as much freedom
Kia: as possible in the future with their finances?
Jenny Hazan: Once you're clear about your goals and what those goals
Jenny Hazan: might look like, what sort of money you might need
Jenny Hazan: to afford those goals, the first thing is really to
Jenny Hazan: have a look at your finances. So what have you
Jenny Hazan: got coming in, what have you got going out. How
Jenny Hazan: much do you think that you could save. And I
Jenny Hazan: think a lot of people sort of struggle with the
Jenny Hazan: concept of, " I don't even know how much to start
Jenny Hazan: with," or, " I haven't got much flexibility." So a general
Jenny Hazan: rule is the 50, 30, 20 rule. So 50% of your income
Jenny Hazan: would be spent on your essentials. So the needs. 30%
Jenny Hazan: on your wants or the fun stuff. And then 20%
Jenny Hazan: saving for the future. So you can start there, and
Jenny Hazan: it will be different for different people, but what you
Jenny Hazan: want to be thinking about is, " How do I build
Jenny Hazan: towards financial resilience?" So what that means is, " Can I
Jenny Hazan: weather the storm if something comes out of the blue?"
Jenny Hazan: all the way through to financial freedom, which is where
Jenny Hazan: you get more flexibility with your choices over the long-
Jenny Hazan: term. So to start off with, make a budget, try
Jenny Hazan: and stick to it, and keep going, be consistent. If
Jenny Hazan: you have a month that's tough, don't give up, keep
Jenny Hazan: going. The second thing is you need to think about
Jenny Hazan: emergency savings. So thinking about your living expenses and trying
Jenny Hazan: to put away three months to six months of savings
Jenny Hazan: that are in an easily accessible cash account, high interest
Jenny Hazan: if possible, that you can gain access to. So these
Jenny Hazan: are for the things that might go wrong in life.
Jenny Hazan: You know, your MOT just came through and your car's
Jenny Hazan: failed, or that you unfortunately lose your job, or maybe
Jenny Hazan: the washing machine broke down. So these are things, emergencies,
Jenny Hazan: that you need money for. And if you haven't got
Jenny Hazan: three months saved away and you're thinking, " My God, how
Jenny Hazan: do I do that?" start with one month, start with
Jenny Hazan: one week, step- by- step. The second thing that you
Jenny Hazan: can do once you've got an emergency savings budget is
Jenny Hazan: start to work on something that the industry sometimes like
Jenny Hazan: to call the FU fund. And that is really about
Jenny Hazan: having power and having choice. So this is the ability
Jenny Hazan: to walk away in situations where they're not serving you
Jenny Hazan: anymore. So that might be a job that you really
Jenny Hazan: hate, that's really impacting your mental health. It might be
Jenny Hazan: to walk away from a relationship. It might be to
Jenny Hazan: walk away from that awful flatmate that has not washed
Jenny Hazan: the dishes since the day they moved in. And over
Jenny Hazan: time you can continue to build that fund. So I
Jenny Hazan: think that's a really important one to think about. After
Jenny Hazan: that, you can start thinking about those savings goals. So
Jenny Hazan: the short- term, the medium- term, and the long- term,
Jenny Hazan: and think about what sort of money you will need
Jenny Hazan: for those goals, and at what point in your life,
Jenny Hazan: because that has an impact on where you want to
Jenny Hazan: invest that money. So I think from a longer term
Jenny Hazan: perspective, obviously a pension is a great place to start
Jenny Hazan: thinking about long- term saving. Pensions can be really tax-
Jenny Hazan: efficient, so if you wanted to put a hundred pounds
Jenny Hazan: into your pension, £ 80 of that would come from you, £
Jenny Hazan: 20 would come from the government. And also, your employer
Jenny Hazan: will, if you've got a workplace pension, will also be
Jenny Hazan: making contributions as well. And I think it's worthwhile mentioning
Jenny Hazan: that some employers will put more money in, they'll match
Jenny Hazan: your contributions. And if you're not going to that level,
Jenny Hazan: you're actually leaving free money on the table, and no
Jenny Hazan: one wants to do that.
Kia: I love the fact that you mentioned that fund, the
Kia: FU fund. I'm from a Caribbean household, so in my
Kia: background we call that like the vexed fund.
Jenny Hazan: The vexed fund. Love it.
Kia: So when you're, like you said, when you're annoyed, just
Kia: having that pot of money, but I think it is
Kia: about making your finances or making your money a point
Kia: to give you freedom. So like you said, freedom of
Kia: choice, to decide to leave a job that you don't like, all
Kia: the things that you mentioned, or freedom to cover your
Kia: income if you happen to lose it for a period
Kia: of time, or freedom to decide that I want to
Kia: retire at 45, but I'm going to put my money aside
Kia: to be able to do that. I think that's the
Kia: main key here. We're just trying to get our money
Kia: to work for us so it can give us more
Kia: freedom. We have been talking about this and it sounds
Kia: great, but I want to ask you, are there any
Kia: disadvantages to all of this? Is it maybe too much
Kia: to focus on so much of this for the future? Are
Kia: we putting too much emphasis and too much pressure on
Kia: a lot of things at once for the future?
Jenny Hazan: I think that's a great question. I think it's all
Jenny Hazan: about balance, and that balance is going to be really
Jenny Hazan: different depending on your own financial circumstances and what you're
Jenny Hazan: trying to achieve. And the worst thing that you could
Jenny Hazan: do is stretch yourself so far that you end up
Jenny Hazan: running up credit card bills whilst you're cleverly saving away,
Jenny Hazan: but actually you might have something that's a high interest
Jenny Hazan: rate debt, and you don't want to do that. You
Jenny Hazan: want to pay that down. So I think this is
Jenny Hazan: where it comes back to really sitting down with your
Jenny Hazan: finances, getting really clear about what it is that you
Jenny Hazan: really want. And I don't necessarily mean " things" in that
Jenny Hazan: sense. It will be, what experiences do you want? What
Jenny Hazan: sort of lifestyle would you like to have? How can
Jenny Hazan: you build up to that gradually? The plus point is
Jenny Hazan: if you're younger, then you've got a lot more time
Jenny Hazan: to do that if you start early. And I think
Jenny Hazan: sometimes we worry about whether or not we're saving enough,
Jenny Hazan: whether or not we're on track, and there's lots of
Jenny Hazan: tools that can help you with that. But I think
Jenny Hazan: the important bit is not overstretching yourself, making sure that
Jenny Hazan: you remain balanced. And if you align your savings to
Jenny Hazan: your goals and to your ambitions, then it becomes a lot
Jenny Hazan: easier to say, " Do you know what? I probably could've
Jenny Hazan: made my lunch at home rather than buying it out.
Jenny Hazan: I probably don't need that other coffee. Do I need
Jenny Hazan: those new trainers?" and still give yourself a little bit
Jenny Hazan: of flexibility to reward yourself. We talked about the 30%
Jenny Hazan: of income on fun, because life should be fun.
Kia: Life should be fun. Absolutely. I agree with you. As
Kia: someone who's in their 20s, I know how important it
Kia: is to balance your finances. Obviously it is very important
Kia: to make sure that your money's working for you and
Kia: you're planning for the future, but also, I want to
Kia: make memories. I want to have fun. So it is
Kia: about striking that right balance where you're not, like I
Kia: said, just spending tons of money on things. That maybe
Kia: if you sat down you're probably just like, "I could've done without that."
Kia: But equally, you're not saving everything or investing everything, so
Kia: that you can't go out with your friends one weekend and
Kia: have a good time, or you can't go on that trip
Kia: that you wanted to go on. It's finding that right
Kia: balance, like you said. Jenny, I always end these episodes
Kia: with the same questions, so I'm going to ask you,
Kia: what are your three pieces of advice to help our
Kia: listeners get a little bit richer?
Jenny Hazan: So we talk about money here, but actually it's about
Jenny Hazan: what it can allow you to do. So get really,
Jenny Hazan: really deep with yourself in terms of what you want
Jenny Hazan: your life to look like, what's important to you, what
Jenny Hazan: your values are, because developing your goals based around this
Jenny Hazan: will make it a lot easier to have the motivation
Jenny Hazan: to save. The second one is save as much as
Jenny Hazan: you can as early as you can, because it really
Jenny Hazan: does make a big difference to the amount that you
Jenny Hazan: can save over time, and you get the awesome impact
Jenny Hazan: of compound growth as well. And then the third thing
Jenny Hazan: is have fun with it. So I think sometimes we
Jenny Hazan: are at risk of not enjoying the saving that we
Jenny Hazan: do, because we see it as something to sacrifice. That
Jenny Hazan: we're sacrificing things in the now for things in the
Jenny Hazan: future. But actually, make it fun. Make it a game.
Jenny Hazan: Think about the rewards that you can offer yourself, and
Jenny Hazan: feel empowered. At the moment it can feel really stretched,
Jenny Hazan: particularly with rents increasing, mortgage rates increasing, the cost of
Jenny Hazan: just living is increasing, and so it can feel really
Jenny Hazan: difficult to think about saving. But ultimately, we can always
Jenny Hazan: start small, one step at a time.
Kia: Jenny, thank you so much. This has been just a
Kia: great episode for people to kind of have some food
Kia: for thought, to figure out what they want their money to
Kia: be doing for them. And like we keep emphasizing, striking
Kia: the right balance, and also enjoying life as well. That's
Kia: the important bit. So thank you so much for coming
Kia: on to the episode. This has been amazing. Some great
Kia: tips for planning for the future there, and that's really
Kia: key. You just never know what might happen. Which is
Kia: why, next week, I'm focusing on how unexpected life events,
Kia: like illness, can impact your finances. It's important stuff. So
Kia: if this is resonating with you, then follow the podcast
Kia: and tell your friends. See you next week.