Speaker 1: Welcome to How Do They Afford That? The podcast that
Speaker 1: peaks into the financial lives of everyday Australians. I'm Michael Thompson.
Speaker 1: I'm an author and the co host of the business
Speaker 1: news podcast Fear and Greed, And as always I'm with
Speaker 1: Canna Campbell, financial planner and the founder of Sugar Mummer TV,
Speaker 1: the financial literacy platform that covers YouTube, podcast, books, TikTok threads, everything,
Speaker 1: including our upcoming book that we wrote together called Twelve
Speaker 1: Months to Financial Freedom. You're excited about it coming out.
Speaker 2: I'm really excited. I'm really proud, and I think this
Speaker 2: is going to make life so much easier because you've
Speaker 2: got literally a roadmap to follow, step by step, month
Speaker 2: by month, and you can take it at your own pace.
Speaker 2: And this is what creates real results, something that you
Speaker 2: can actually see and feel and enjoy. It hopefully inspires
Speaker 2: you to just keep going with it.
Speaker 1: Yeah, and it deals with that issue that I always have,
Speaker 1: which is where do you start and if you hit
Speaker 1: kind of roadblocks, how do you get past them? We
Speaker 1: talk through all of that.
Speaker 2: And we share all of hacks and secrets and tricks,
Speaker 2: you know, and it's I think I must say it's
Speaker 2: life changing. Oh I like that.
Speaker 1: We shall put that on the cover twelve Months to
Speaker 1: Financial Freedom, which is coming out on the first of September,
Speaker 1: but pre orders are available now. A fun one for
Speaker 1: us today. Well, I think it could be fun. It
Speaker 1: should be fun for you as well. Because you have
Speaker 1: been a financial planner for quite some time.
Speaker 2: I think, like twenty four years. I'm feeling really old.
Speaker 1: That's that's it just means you're experienced.
Speaker 2: I got in the industry very very young. Yeah, and
Speaker 2: it was all males. I was the only female.
Speaker 1: Yeah, you're the only four year old working as a financial.
Speaker 2: Best friend just paid for itself, that's all it took.
Speaker 1: Okay. I want to know today, the financial advice that's
Speaker 1: been around forever, like those the old advice that you
Speaker 1: hear about kind of save ten percent of your income
Speaker 1: and stay loyal to providers and they'll look after you.
Speaker 1: I want you to give me ten. Just the look
Speaker 1: on your face, the y heart is boiling, the eye
Speaker 1: rolling that is going on right now. Ten pieces of
Speaker 1: financial advice that don't actually work anymore easy, I'll give
Speaker 1: you twenty.
Speaker 2: Yeah, I mean I have managed to keep this at
Speaker 2: ten because you've worked with my OCD issues.
Speaker 1: Yes, you do make it tough on occasion. Let's go
Speaker 1: with number one.
Speaker 2: All right, just work harder.
Speaker 1: That's that is Actually I have heard that.
Speaker 2: You know what, Tom says that to me. Really, I
Speaker 2: don't know if we can swear, but it really pisses
Speaker 2: me off. He's like, I just shut up and work harder,
Speaker 2: just work harder, just to get a rise out of me. Really,
Speaker 2: maybe a pot thrown.
Speaker 1: And it doesn't work, doesn't necessarily because yes, there are
Speaker 1: times when just maybe changing your attitude to work is
Speaker 1: going to help, but it's not.
Speaker 2: But also like a lot of people, including myself, are
Speaker 2: already working incredibly hard and you know, and a lot
Speaker 2: of people are you know, also working really hard, still struggling,
Speaker 2: So it doesn't Actually it's not actually good advice at all,
Speaker 2: doesn't help at all. The reality is that today, you know,
Speaker 2: getting ahead is a combination of different things and essentially
Speaker 2: working smarter, not harder. But you know, it's a combination
Speaker 2: of investing, negotiating better terms and conditions, upskilling, investing in yourself,
Speaker 2: you know, building up other income sources, whether it be
Speaker 2: you know, a side hustle or even learning how to
Speaker 2: use technology. To add more efficiency in your life. So no,
Speaker 2: it's not about working harder, it's about working smarter.
Speaker 1: Okay, shall we put that one in the bin?
Speaker 2: Yes with Tom?
Speaker 1: Did you just put your life partner in the bin?
Speaker 2: It? He says it just to get a rise out
Speaker 2: of me. The love of your lifey and churist. That's
Speaker 2: his hobby.
Speaker 1: Oh that's good. See, that's probably why he and I
Speaker 1: would get on so well so well, because we share
Speaker 1: a hobby which is antagonizing you. Okay. The second piece
Speaker 1: of bad advice or outdated advice that can get in
Speaker 1: the bin.
Speaker 2: And that is buy a home as soon as possible.
Speaker 1: Okay.
Speaker 2: Yeah, So look a lot of people renting. Besting is
Speaker 2: actually the smart thing to do and actually works better
Speaker 2: for their their needs and their tastes. And you know
Speaker 2: where they might work their finances. That's where you live,
Speaker 2: rents somewhere and then buy a house as an investment property,
Speaker 2: you know where it suits your goals.
Speaker 1: Perhaps more affordable like a royal.
Speaker 2: Regional bub yeah, or you know an apartment in the
Speaker 2: city and whilst you go and live and rent a house.
Speaker 2: The other thing is you know some people and I
Speaker 2: know personally these people they don't want to go and
Speaker 2: buy a home. They don't want the responsibility that the
Speaker 2: idea of a mortgage creates a huge amount of financial stress,
Speaker 2: but also emotional stress, feeling that they are trapped, they're stuck.
Speaker 2: You know, they're going to have to stay living in
Speaker 2: that area, you know, for a long period of time,
Speaker 2: so you know, and for some people not the right
Speaker 2: timing as well.
Speaker 1: It's kind of the Australian default though, isn't it that
Speaker 1: you are going to buy a place at some point
Speaker 1: and live in that, whereas other countries, particularly European countries,
Speaker 1: that the rental culture is fantastic and that's all you
Speaker 1: will do, yeah, for life.
Speaker 2: And the rental rules also very very different as well.
Speaker 2: You can do what you want to the property. You
Speaker 2: can have like a ten year rental agreement if you want.
Speaker 1: Yeah, so you've got that security, that stability over a
Speaker 1: long period of time.
Speaker 2: So I think it's about doing you know, if you
Speaker 2: want to buy a home, that's great, nothing wrong with it,
Speaker 2: but do it on your terms and conditions. You know,
Speaker 2: that works for your cash flow, your goals and of
Speaker 2: course your lifestyle.
Speaker 1: Okay.
Speaker 2: At number three, loyalty pays so This obviously applies to
Speaker 2: things like employers, banks, insurers, utilities, but we've all seen
Speaker 2: loyalty tax is really expensive. Actually, I was talking about
Speaker 2: this with Ali from the Today Show because I do
Speaker 2: this segment every Sunday morning on my personal Finance, and
Speaker 2: you know, she said, oh, you know, Lord, you tax
Speaker 2: sometimes gets called lazy tax, and I said, you know what, No,
Speaker 2: I think's actually now time poor tax because we're all
Speaker 2: working so hard. You know, we don't have the time
Speaker 2: to often pick up the phone. You know, it's too overwhelming,
Speaker 2: but a long list of things to do with responsibilities,
Speaker 2: and you know, we just don't we find the time.
Speaker 2: But loyalty tax is really expensive. We are sadly being
Speaker 2: ripped off, particularly when you look at what your banks
Speaker 2: are offering new customers versus what you're currently paying.
Speaker 1: And it's so counterintuitive, isn't it. You would think that
Speaker 1: you have been loyal, that you've been with something for
Speaker 1: ten years, and you always used to see kind of
Speaker 1: like the three year no claim bonus and stuff through
Speaker 1: your insurer, and you would assume that that's because you've
Speaker 1: been really loyal over a long period of time.
Speaker 2: And it's actually not, Well, you've been very trusting, but
Speaker 2: unfortunately that is ultimately a sense of being naive and
Speaker 2: we're wasting money.
Speaker 1: Yeah okay, I like that one, but the way that
Speaker 1: you have characterized it there as a time poor tax
Speaker 1: one hundred percent because I think everybody knows that you
Speaker 1: can get a better deal for most things if you
Speaker 1: shop around, but who has the time? I know it's
Speaker 1: because we just need to work harder. Okay, Tom, all right,
Speaker 1: settle down number.
Speaker 2: Four, Get a secure job and stay there. And this
Speaker 2: is you know, something like our grandparents or if our
Speaker 2: parents did you know they stayed with the one employer
Speaker 2: for like twenty years, wrapped up that long service leave.
Speaker 2: You know, yes, when our careers are you know, a
Speaker 2: linear back in the day, but today it's so different.
Speaker 2: You know, we all know that the biggest and best
Speaker 2: pay rises we get now when we move companies, yea,
Speaker 2: even move industries. That's when we've seen the big step
Speaker 2: up in our earning capacity. And a lot of us
Speaker 2: have multiple careers, multiple income sources. I mean, look, I podcast,
Speaker 2: do television, I do keynote, speaking books you know, books, yes, books,
Speaker 2: books very important and lead with that, you know, so
Speaker 2: that it doesn't actually work like that, and you know,
Speaker 2: careers really do evolve, and also because of AI, we
Speaker 2: do need to adapt and change, you know, and pivot.
Speaker 2: And there's obviously contracting work that side hustles, you know,
Speaker 2: it doesn't that is not the world. Really, It's about
Speaker 2: staying in a work or a job that's actually enjoyable
Speaker 2: and fulfilling and satisfying and never getting to that dangerous
Speaker 2: zone of actually staying comfortable and lazy.
Speaker 1: I find that one interesting because that has been an
Speaker 1: evolution away from that. Whereas security was valued, it seemed
Speaker 1: above security and loyalty to an employer, that the employer
Speaker 1: was loyal to you and you had security for a
Speaker 1: long period of time. But that has changed, and it
Speaker 1: has changed over the last few decades. And I think
Speaker 1: one of the recent stats that I saw when we're
Speaker 1: preparing for the book was a statistic around young people
Speaker 1: these days can expect to have I think it is
Speaker 1: seventeen different jobs across three to four different careers. Yeah,
Speaker 1: isn't that credible? And that is there is actually something
Speaker 1: quite fulfilling out of that as well, that not necessarily
Speaker 1: staying in a job that you may not enjoy, that
Speaker 1: you're actually chasing satisfaction and fulfillment as well as just
Speaker 1: financial security, which I think is really rewarding.
Speaker 2: Definitely and you know, your creative of your own destiny.
Speaker 2: It puts you back in the driving seat.
Speaker 1: Yeah, number five on this list of financial advice that
Speaker 1: doesn't really work anymore.
Speaker 2: So deep breath, this one gets me annoyed. Saved ten
Speaker 2: percent of your income.
Speaker 1: That is actually a real that used to be a
Speaker 1: piece of advice.
Speaker 2: Yeah, it's still unfortunately has a bit of a heartbeat.
Speaker 2: But Okay, it's not that the ten percent is bad.
Speaker 2: Is the problem that it's an arbitrary number and it's
Speaker 2: not reflective also of where we are in the world
Speaker 2: right now and the economic and financial challenges that most
Speaker 2: of us are facing. And it's very circumstantial. And this
Speaker 2: is why I have a big issue with this whole
Speaker 2: budgeting system of ten percent should go into this account,
Speaker 2: ten percent should be in this account. That percent, I
Speaker 2: don't believe. I'm really very much about that Pigeonholing prescription.
Speaker 2: It's very subjective as to how much you earn, but
Speaker 2: also what your budget is, what your living expenses and
Speaker 2: lifestyle is. You know, for someone who's earning say three
Speaker 2: hundred thousand dollars a year, saving ten percent, you know,
Speaker 2: is obviously going to be very different from someone who's
Speaker 2: earning seventy thousand dollars a year. And of course, whether
Speaker 2: they have children, whether they have a mortgage, you know,
Speaker 2: whether they have debts in their lives, what their their
Speaker 2: lifestyle taste is going to be. But that also holds
Speaker 2: people back because what if you're in a situation where
Speaker 2: perhaps you've paid your home off that guidance of ten percent,
Speaker 2: it was actually going to hold them back because they
Speaker 2: can actually get capable of saving more. And then people
Speaker 2: who feel that they can't actually reach that goal of
Speaker 2: saving them being ten percent are going to feel deflated,
Speaker 2: you know. And it's not about saving, it's about investing.
Speaker 2: Like but Anya will come to that.
Speaker 1: I mean to play devil's advocate on that one. For me,
Speaker 1: that's more just about the idea. It is almost just
Speaker 1: about being almost responsible. It's just old fashioned being making
Speaker 1: sure that you are not just spending everything prioritizing a
Speaker 1: little bit of financial security, even if that is for
Speaker 1: your emergency money or you're putting it then towards investing.
Speaker 2: Well, look, it's the rainy day idea but I think
Speaker 2: it's more about creating the habit. But it's really not
Speaker 2: going to take you very far, particularly over the long
Speaker 2: run when you think about inflation. That money is then
Speaker 2: essentially sitting in savings account for ten years and it's
Speaker 2: not actually being used with any sort of purpose.
Speaker 1: All right, Okay, so save ten percent of your income
Speaker 1: or pop that in the bin with the others. So
Speaker 1: so far we've got just work harder, buy a home
Speaker 1: as soon as possible, loyalty pays, get a job and
Speaker 1: stay there forever, and then save ten percent of your income.
Speaker 1: Quick break, and back with the rest of the list. Cana.
Speaker 1: We're putting together a cracking list today of the top
Speaker 1: ten pieces of financial advice that just don't work anymore.
Speaker 1: And I've enjoyed these. Verse five. Give us number six.
Speaker 2: Pay off your mortgage before investing. Now, this may have
Speaker 2: been sensible when you know you didn't have the opportunity
Speaker 2: to perhaps say, look at something like debt recycling, or
Speaker 2: you didn't really know about investing, wasn't something available to you,
Speaker 2: or they weren't sort of the options there. But most
Speaker 2: Australians are able to actually tackle both of these goals
Speaker 2: of paying down home loan and investing at the same time,
Speaker 2: And the fact is actually really efficient way of achieving
Speaker 2: two goals, diversifying outside of the family home, starting to
Speaker 2: build a long term growing passive income, obviously the compound
Speaker 2: and growth opportunities, and even obviously the benefits of debt recycling.
Speaker 2: But you know with the tax deductible interest, but you
Speaker 2: don't have to do that first. You're actually there is
Speaker 2: actually a danger of doing that because you're missing out
Speaker 2: losing time.
Speaker 1: Because just just through the timing of it. If you
Speaker 1: were to say, put all your money into paying off
Speaker 1: your mortgage and instead of thirty years, you're able to
Speaker 1: do it in twenty years, that is still potentially twenty
Speaker 1: years of investing and compound interest and growth in your
Speaker 1: investments that you will have missed out on during that
Speaker 1: time because you've decided to do them one then the
Speaker 1: other rather than at the same time. And it doesn't
Speaker 1: need to be big.
Speaker 2: Well about to say, it doesn't need to be aggressive.
Speaker 2: You don't need to go and borrow hundreds and thousands
Speaker 2: of dolls. You can start with a very small amount
Speaker 2: and slowly and steadily increase it over time as your
Speaker 2: mortgage comes down.
Speaker 1: Yeah, yeah, and when you mentioned debt recycling just reminds
Speaker 1: me that that's a fantastic thing to talk to a
Speaker 1: financial planner. It's a slightly more complex, it's been.
Speaker 2: More sophisticated, but it's very it's a very powerful strategy
Speaker 2: if you're in a position where you can do it.
Speaker 2: It's worth knowing and understanding about it so that when
Speaker 2: the time comes by you'll know orry actually think we
Speaker 2: should be looking at this.
Speaker 1: We're ready number seven on the list.
Speaker 2: You need to own a property to be calm, wealthy,
Speaker 2: oh dear. Yeah, So it's deeply embedded obviously in the
Speaker 2: Australian culture, but there are lots of people that have
Speaker 2: built enormous wealth through ches, through ETFs, through investing in
Speaker 2: businesses and of course supernuation. In fact, some of the
Speaker 2: wealthiest people I know don't own a home. They know
Speaker 2: worth millions of dollars sometimes even hundreds of millions of
Speaker 2: dollars and don't own a home.
Speaker 1: Really yeah, oh wow, really cool.
Speaker 2: And of course you know superannuation as well. But you know,
Speaker 2: property is just one path and you know it's not
Speaker 2: the only path. You know you want to be building on,
Speaker 2: you know, focus on building assets that not just about
Speaker 2: necessarily collecting properties and you want assets where your money
Speaker 2: is working for you.
Speaker 1: And I suppose yeah, the property investing scenario.
Speaker 2: Has changed changed, yes, hugely.
Speaker 1: Yeah, And it is worth going back and having a
Speaker 1: listen to the episode that we did recently on the
Speaker 1: property and property investing for passive income as opposed to
Speaker 1: this idea of the short term benefits of negative gearing
Speaker 1: and the tax incentives. Okay, number eight, Well, this is
Speaker 1: one of my top five lists I reckon that you
Speaker 1: have put together.
Speaker 2: All right, cut out the coffee and the avocado toast.
Speaker 1: Oh, that's one that always gets people a little bit
Speaker 1: riled up.
Speaker 2: So yeah, drives people wild.
Speaker 1: So it feels like it's the just work harder.
Speaker 2: Yeah, it does have a very underlying vibe about that.
Speaker 2: So it's not just the you know, the small expenses.
Speaker 2: You know, we obviously do need to remember was it
Speaker 2: tiny leak sink ships still, But at the end of
Speaker 2: the day, you need to be focusing on the biggest
Speaker 2: expenses first to look at saving money. So if you
Speaker 2: can save obviously we've got to say two thousand dollars expense,
Speaker 2: and you can save ten percent of that, which is
Speaker 2: say two hundred dollars a month versus saving ten dollars
Speaker 2: a month expense saving you know, ten percent off, that's
Speaker 2: a dollar. Like, you've got to look at the efficiency.
Speaker 2: Hit up your biggest most expensive expenses first for the
Speaker 2: biggest amount of savings and the impact, like.
Speaker 1: You call up your bank and talk to them about
Speaker 1: a better deal on your homeland. Exactly.
Speaker 2: That's what I mean. Sometimes the biggest savings are right
Speaker 2: under our nose, all.
Speaker 1: Right, So we don't have to cut out the coffee,
Speaker 1: we don't have to cut out the avocado toast, and
Speaker 1: we can pop that whole piece of advice just straight
Speaker 1: in the bin with the rest of them.
Speaker 2: Number nine, keep your money in the bank where it's safe.
Speaker 1: I just love how you just loaded that with so
Speaker 1: much just sarcasm and judgment. So this is what I
Speaker 1: think of this advice.
Speaker 2: Well money, Okay, First of all, inflation mean if your
Speaker 2: money is not all the time obviously it depends on
Speaker 2: the economic climate, but inflation, and they also you've got
Speaker 2: to pay tax on the interest do you earn, and
Speaker 2: then you add inflation, sometimes your money is actually going backwards.
Speaker 2: And you know, we saw was it during COVID We
Speaker 2: had those bank guarantees that came through. No was, it
Speaker 2: wasn't even it was before COVID actually where the banks
Speaker 2: had to start guarantee They had guarantees on savings deposits
Speaker 2: to help protect your money, and then the limits started
Speaker 2: reducing and reducing the GFC. GFC, yes, I knew there
Speaker 2: was a major economic event. So like, obviously it depends
Speaker 2: it's where you deposit your money, but it's not guaranteed.
Speaker 2: It's not obviously it's highly unlikely, but it's not one safe.
Speaker 1: But also it's not necessarily the best use of your money.
Speaker 2: Yeah, you want something that obviously gives you the financial security, absolutely,
Speaker 2: but you also want something that grows with you.
Speaker 1: Yeah.
Speaker 2: And the.
Speaker 1: We do have one of the best banking systems though
Speaker 1: we did compared to compared to elsewhere in the world.
Speaker 1: The stability and the strength of Australian banks is it extraordinary.
Speaker 2: Yes, absolutely, And that's why I said it's a very
Speaker 2: very small risk. But we can't bury our hits in
Speaker 2: the sand say there's no risk, because that's not technically correct.
Speaker 2: And oh yes, emergency money must be in cash. Absolutely,
Speaker 2: short term goals, yes, it must be in cash, but
Speaker 2: you know particularly, and I've seen this backfire with people
Speaker 2: in retirement because they've had that mentality and then they're
Speaker 2: wondering why they're savings account is now dropping at a
Speaker 2: faster rate. And you know, this is the heartbreaking side
Speaker 2: of inflation in the environment we're living in the moment,
Speaker 2: is those people that are left with their wealth diminishing
Speaker 2: away at a rapid speed.
Speaker 1: Yeah, I mean yeah. Emergency money is an interesting example
Speaker 1: or almost an exception to the rule, isn't it, because
Speaker 1: you need to keep it in cash, and it's probably
Speaker 1: it's definitely better tucked away in a safe Aussie bank.
Speaker 1: You're ten in cash under your mattress.
Speaker 2: Well obviously because it's not on any interest and it's not
Speaker 2: even short.
Speaker 1: If you get robbed, it could be accumulating dust though,
Speaker 1: so it is accumulating something.
Speaker 2: Number ten retire at sixty five. Say that I'm wannertire
Speaker 2: sixty retiring at sixty five?
Speaker 1: Okay, are you saying that that is out of date
Speaker 1: or it's just it doesn't it's not a one size
Speaker 1: fits all anymore.
Speaker 2: Well, now, it's more I think of a semi retirement,
Speaker 2: that transition to retirement for a lot of people and
Speaker 2: you know, that whole idea of stopping waking up one
Speaker 2: day and stopping work completely and going fishing is not there.
Speaker 1: People.
Speaker 2: Actually, I know a handful of people who've retired but
Speaker 2: actually are still in the game. You know. They love
Speaker 2: building things, they love being part of a community, they
Speaker 2: love the connection they you know, they've shifted on something
Speaker 2: more meaningful that they've been wanting to do for a
Speaker 2: really long time, something that connects to their heart, you know.
Speaker 2: And sometimes obviously just is that sort of part time work.
Speaker 2: Or I've seen people going to start new businesses and
Speaker 2: great businesses and and take on a whole nother.
Speaker 1: Career, partner, another career.
Speaker 2: I think there's something really important about this about you know,
Speaker 2: the keeping your cognitive skills, you know, keeping fit and strong, key,
Speaker 2: staying in the community, having those relationships, that connection. You know,
Speaker 2: that relevance is really important.
Speaker 1: It is, Yeah, and just for that mental fitness, that's
Speaker 1: just it is so so.
Speaker 2: Important, you know, designing your life for meaning and substance
Speaker 2: and still continued growth, you know, not because of your
Speaker 2: own arbitrary age.
Speaker 1: All right, those ten pieces of financial advice that they
Speaker 1: just don't work anymore. Number one, just work harder. Number two.
Speaker 1: Buy a home as soon as possible. Number three. Loyalty pays.
Speaker 1: Number four, Secure a job and stay there. Number five
Speaker 1: Save ten percent of your income. Number six. Pay off
Speaker 1: the mortgage before investing. Number seven you need to own
Speaker 1: a property to become wealthy. Number eight. Cut out the
Speaker 1: coffee and the avocado toast. Number nine whack all your
Speaker 1: money in the bank. And number ten you must retire
Speaker 1: at sixty five. And that is it. You know what
Speaker 1: all of them in the bin done. I think I
Speaker 1: have longed for the opportunity to do that close to
Speaker 1: the microphone for some time, and we have not done.
Speaker 1: This is nearly two hundred episodes, and this is the
Speaker 1: first time I've actually had the chance to do that
Speaker 1: and just throw it away. You need to get out more.
Speaker 1: They've just quite cathartic. Actually all right. If we want
Speaker 1: more information from.
Speaker 2: You, the best place to get in contact with me
Speaker 2: is on Instagram at sugar Ma my TV or Canna
Speaker 2: Cambell Official.
Speaker 1: And you can hear me every day with Sean Aylmer
Speaker 1: on Fear and Greed business News. You can use thank
Speaker 1: you for listening to how do they afford that? Remember
Speaker 1: to hit follow on the podcast and spread the word
Speaker 1: about how do they afford that? And keep an eye
Speaker 1: out as well for our book, Twelve Months to Financial Freedom,
Speaker 1: coming out on the first of September. Pre Orders available now.
Speaker 1: Thank you for your company, Join us again next week