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Speaker 1: Hey, Kennah, I'm about to receive a large inheritance, so

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Speaker 1: I need to know how do I protect my financial future?

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Speaker 1: Answering this question right now as part of Start Here.

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Speaker 1: Hi everyone, and welcome back to Start Here, the very

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Speaker 1: special mini series within Sugar Mama's Fireplay where I answer

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Speaker 1: your real life money questions with calm, practical, empowering guidance

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Speaker 1: to help you take your first step or perhaps next step,

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Speaker 1: with clarity and confidence. Now, today's question is a deeply

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Speaker 1: important one, and I want you to listen closely, even

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Speaker 1: if you're not personally receiving an inheritance, because this episode

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Speaker 1: is really about financial independence, financial protection, and not becoming

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Speaker 1: a statistic later in life if you're a female. Now,

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Speaker 1: this message comes from a lady who I all call

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Speaker 1: Jane for privacy reasons, and I'm going to read out

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Speaker 1: part of her message because her words really do matter.

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Speaker 1: She writes, Hey, Canna, my mom passed away in September

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Speaker 1: twenty and twenty five. My brother and I will be

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Speaker 1: recipients of her assets. My share will be approximately eight

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Speaker 1: hundred and eighty thousand dollars. I'm currently separated from my husband,

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Speaker 1: but we believe we will reconcile, I became painfully aware

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Speaker 1: of how little I actually have to my name. My

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Speaker 1: superannuation sits at only ninety two thousand dollars. My name

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Speaker 1: is on the mortgage, but both cars are in his name.

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Speaker 1: I never want to find myself in a situation like

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Speaker 1: this ever again, no matter how much I love someone.

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Speaker 1: All Right, Jane, thank you so much for trusting me

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Speaker 1: with this, and to anyone listening, this situation is not

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Speaker 1: uncommon and it is not a failure. It's actually a

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Speaker 1: wake up call and one way you are choosing to

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Speaker 1: actually act and honor the hard work and generosity of

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Speaker 1: your late mother. So in this episode, right now, I'm

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Speaker 1: going to break down this into nine clear steps so

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Speaker 1: that it's really easy to follow, it's easy to absorb,

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Speaker 1: and everyone who's listening knows exactly what to do and

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Speaker 1: ask when you do see a financial planner for personal advice. Now,

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Speaker 1: as a quick reminder, this episode, like all my other episodes,

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Speaker 1: are always general information only and they're for educational purposes.

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Speaker 1: But this episode will most definitely help you ask the

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Speaker 1: right questions and make far stronger financial decisions going forward.

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Speaker 1: So the first thing we need to talk about before

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Speaker 1: we jump into the nitty gritty strategy is actually about reality.

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Speaker 1: The stats right now in Australia, women retire with twenty

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Speaker 1: five to thirty percent less super than men. Now, this

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Speaker 1: is really scary. Over one third of single women over

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Speaker 1: the age of sixty five live in poverty or near poverty. Divorce, separation, caregiving,

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Speaker 1: time out of the workforce. These are the key drivers

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Speaker 1: of these horrible and disturbing, frightening numbers. So Jane's intuition

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Speaker 1: that she doesn't want to be financially vulnerable ever again,

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Speaker 1: is not actually fear based. It's data driven. And I'm

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Speaker 1: so glad that Jane is aware of this so that

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Speaker 1: she can intentionally and proactively do something to protect herself.

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Speaker 1: And for the record, this inheritance isn't actually just about money.

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Speaker 1: It's an opportunity to change her long term financial future

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Speaker 1: and avoid becoming a statistic all right. So, now that

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Speaker 1: I have just made everyone aware of these important factors,

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Speaker 1: we now need to think about what do we actually do.

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Speaker 1: Now This is going to sound a little bit counterintuitive,

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Speaker 1: but the first thing right now I would actually recommend

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Speaker 1: is pausing. Yep, do nothing, Do not rush to pay

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Speaker 1: anything off, do not rush to go and spend or

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Speaker 1: invest that money. Do not rush to combine funds or

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Speaker 1: think that you have to try and fix everything at once.

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Speaker 1: This money, this inheritance, should be parked into a separate account.

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Speaker 1: It should be clearly identifiable and not emotionally spent. A

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Speaker 1: savings account, an online savings account with low fees high

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Speaker 1: interests would be perfect. We need to create space because

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Speaker 1: when we have that space, we're able to make healthier

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Speaker 1: decisions that honor not only our financial wellbeing, but also

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Speaker 1: our values and goals. Once we've put the money into

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Speaker 1: the savings account and taken that very important breather and

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Speaker 1: press pause, and we finally feel ready to get on

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Speaker 1: with the show, the next step is to get legal advice.

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Speaker 1: Legal protection always comes before financial strategy. Now, as mentioned

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Speaker 1: in her message to me, Jane is separated but actually

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Speaker 1: considering reconciliation. Now this is where legal advice is essential,

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Speaker 1: not optimal. Inheritance can be protected, Inheritance can be quarantined.

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Speaker 1: Inheritance can be unintentionally exposed. So if reconciliation occurs and

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Speaker 1: separation then happens again later, that inheritance may be considered

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Speaker 1: part of the asset pool. Unless it has been structured correctly.

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Speaker 1: And this is not about distrust, it's actually about self

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Speaker 1: respect and future certainty. You know. This is where a

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Speaker 1: family lawyer should really be part of the advice team

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Speaker 1: before any money is allocated or moved, and that is

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Speaker 1: a non negotiable from me. Once this is done, the

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Speaker 1: next step is to talk about the idea or concept

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Speaker 1: or even goal of being mortgage free. So Jane mentioned

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Speaker 1: in her message to me the idea of maybe looking

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Speaker 1: to pay off her remaining mortgage of sixty thousand dollars,

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Speaker 1: So I want to really validate that instinct. Being mortgage

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Speaker 1: free removes non deductible interest, It improves the monthly cash

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Speaker 1: flow and possibly lifestyle, you know, more money for experiences

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Speaker 1: wining and dining, possibly more holidays. And of course it

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Speaker 1: increases that emotional and financial stability, which is really important.

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Speaker 1: And obviously we have choice, we have flexibility, we have

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Speaker 1: options when we don't have, you know, to worry about

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Speaker 1: a mortgage anymore. You know, it's not just about saving

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Speaker 1: the interest, that monthly interest that the bank loves to

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Speaker 1: charge us on our mortgages. It's really about creating that

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Speaker 1: foundation of control and security. So yes, once that mortgage

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Speaker 1: is done paid off with that inheritance money, the income

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Speaker 1: can be redirected, that is, your mortgage or payments that

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Speaker 1: you're previously paying can be used elsewhere, and they can

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Speaker 1: be used things like investing or perhaps contributing to super

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Speaker 1: These things become so much easier and more ambitious. And

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Speaker 1: quite often once our mortgage is paid off or all

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Speaker 1: of our debts are paid off, such as toxic debt,

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Speaker 1: so naturally our risk tolerance tends to improve. We feel

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Speaker 1: more confident about taking educated risks. So this concept or

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Speaker 1: this idea or goal of wanting to pay off your

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Speaker 1: mortgage could most definitely be a really sensible, wise one.

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Speaker 1: But of course you need to speak to a financial

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Speaker 1: planner who can run all the numbers so you know

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Speaker 1: exactly what you're doing before you make any major decisions.

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Speaker 1: Now one of that conversation has been had. We need

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Speaker 1: to talk about emergency money and the fact that there

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Speaker 1: is no one size formula that fits everyone. You know,

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Speaker 1: you'll often hear this rule when it comes to emergency money,

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Speaker 1: of having three to six months worth of living expenses

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Speaker 1: or three to six months worth of income, whether it

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Speaker 1: we net or gross. No one seems to be able

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Speaker 1: to answer that, but personally and professionally, as a licensed

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Speaker 1: financial planner with over twenty two years experience, I don't

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Speaker 1: actually believe in generic rules emergency money. And this is

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Speaker 1: not just for Jane. This is for everybody listening. It

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Speaker 1: should reflect your real life. So to Jane and to

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Speaker 1: everyone is right now. I encourage people to ask themselves

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Speaker 1: these questions. And the first one is what are my

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Speaker 1: top five realistic risks and how much would each of

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Speaker 1: these risks cost me if they happened. Next question, I

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Speaker 1: would ask, what if the top three most expensive risks

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Speaker 1: actually happened to me all at the same time, how

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Speaker 1: much would I need to cover the total costs without

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Speaker 1: having to borrow money from anyone? And another great question

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Speaker 1: I ask is if I had that total figure in savings,

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Speaker 1: say rounded up, would seeing that money in a separate

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Speaker 1: savings account give me a sense of peace or still

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Speaker 1: leave me feeling anxious? Because the answer to this is

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Speaker 1: a really good guide as to how much emergency money

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Speaker 1: you really do need. And if it leaves you feeling nervous,

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Speaker 1: well you might want to go north of that figure

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Speaker 1: when in doubt. So for Jane, this might include having

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Speaker 1: time out of the workforce with realistic timeframes to find

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Speaker 1: the right job, not just any job. It may consider

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Speaker 1: looking at health or dental costs. The other day, a

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Speaker 1: friend of mine told me that he had spent thirty

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Speaker 1: five thousand dollars on having to get dental work. Another

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Speaker 1: area of expenses for emergency money might include unexpected housing

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Speaker 1: or family needs. These things can be really expensive. Oh gosh,

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Speaker 1: the other day we had two toilets that broke in

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Speaker 1: our house. I think it costs about five and a

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Speaker 1: half thousand dollars to buy two brand new toilets and

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Speaker 1: get them installed. These are the things that can really

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Speaker 1: kind of catch us by surprise. But we need to

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Speaker 1: keep things real and emergency money is not about pessimism.

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Speaker 1: It's about freedom from panic. So after you've looked at

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Speaker 1: paying off the mortgage, you then want to think about

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Speaker 1: having the right amount of money as emergency money set aside.

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Speaker 1: The next thing I really want to talk about, and

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Speaker 1: this is really something I guess. The alarm bells were

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Speaker 1: going off in my head as I was reading Jane's message,

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Speaker 1: and that is talking about superannuation and exactly how much

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Speaker 1: money does Jane really need in her super investment portfolio.

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Speaker 1: So this is there's a really important step and I

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Speaker 1: really want to just tie this back directly to Jane.

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Speaker 1: Superinnuation is not actually about balances, even though we tend

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Speaker 1: to talk about balances a lot. It's really about income,

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Speaker 1: income for life, passive income for life. Even so, Jane

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Speaker 1: has got to go and see a financial planner and

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Speaker 1: get a financial planner to model a whole pile of

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Speaker 1: different strategies and ideas and situations. But the financial planner

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Speaker 1: is going to need some important bits of information. And

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Speaker 1: again this is not just for Jane, but for everyone

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Speaker 1: who's listening thinking about going and seeing a financial planner

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Speaker 1: about their super So the thing is, you need to

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Speaker 1: understand what are your realistic and your living expenses for retirement.

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Speaker 1: You know, some people's retirement will be a lot cheaper

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Speaker 1: than what they're spending at the moment, whereas for other

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Speaker 1: people it might be the other way around because they

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Speaker 1: want to have this wonderful, very lavish, luxurious retirement. You

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Speaker 1: need to know the answer to these questions. Another important

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Speaker 1: question is how long do you need that income to last?

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Speaker 1: And then, of course, if she or anyone listening right

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Speaker 1: now wants to actually leave an inheritance or spend all

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Speaker 1: of your money and literally die with nothing. And then

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Speaker 1: the financial plan needs to think about things like inflation,

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Speaker 1: changes in taxes, and of course you know the longevity risk.

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Speaker 1: So for example, Jane might need seventy thousand dollars and

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Speaker 1: then the financial planner can then work out, well, okay,

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Speaker 1: how much does she need in capital terms, and how

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Speaker 1: does the investment strategy actually impact the sustainability of this.

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Speaker 1: You know, superannuation is incredibly powerful because you know, a

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Speaker 1: lot of the contributions can be tax effective, and the

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Speaker 1: earnings when they're switched to pension phase can also be

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Speaker 1: tax free, and the income from that allocated pension is

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Speaker 1: generally tax free after age sixty, which can be hugely

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Speaker 1: beneficial for making sure that that money lasts as long

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Speaker 1: as possible. But the thing is, superannuation only works if

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Speaker 1: enough money actually goes into superannuation in the first place,

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Speaker 1: and that money is invested appropriately, doesn't just sit around

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Speaker 1: sitting in a cash account or a term deposit, possibly

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Speaker 1: going backwards with inflation. And of course it needs to

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Speaker 1: be structured correctly, correctly, the right way the first time,

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Speaker 1: because it's expensive to try and change things around, and

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Speaker 1: that's why a great financial panel will be really valuable here.

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Speaker 1: And you can't just set and forget the super. You've

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Speaker 1: got to review it on a regular basis, make sure

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Speaker 1: the contributions are going in, you're making use the most

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Speaker 1: of all the deductibility, you know the investment strategy works,

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Speaker 1: and you're happy with the returns. This is where this

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Speaker 1: inheritance money can now really transform your life and for

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Speaker 1: anyone else it's about to receive an inheritance or has

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Speaker 1: recently received an inheritance, this money to support your retirement

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Speaker 1: can be incredibly powerful and really change the quality of

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Speaker 1: your life. So, whilst on this topic of superannuation, I

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Speaker 1: want to just very briefly go over some key factors

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Speaker 1: everybody should know and understand at all times about super preservation.

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Speaker 1: Aged for most people is generally around age sixty, which

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Speaker 1: means once you put money to super, you can't get

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Speaker 1: it out until you meet a condition of release, which

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Speaker 1: is for most people age sixty. From retirement, your superannuation

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Speaker 1: can be switched into what we call an allocated pension

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Speaker 1: and the earnings that is the investment earnings from capital

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Speaker 1: growth and income in pension phase are generally tax free.

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Speaker 1: Then the pension payments after age sixty are also generally

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Speaker 1: tax free. And we have various caps and rules and

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Speaker 1: regulations that you really need to know and understand and do.

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Speaker 1: But a financial plan will actually go through the ones

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Speaker 1: that are applicable to you. But these simple things to

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Speaker 1: know and understand about super ad all times really does

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Speaker 1: shine a light as to how powerful superannuation can be

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Speaker 1: when used deliberately in a wealth accumulation and even wealth

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Speaker 1: preservation strategy. All right, the next topic we need to

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Speaker 1: move on with this start here conversation is investing outside

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Speaker 1: of superannuation because this can add another layer of confidence

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Speaker 1: and flexibility. Now Jane and her message and also meant

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Speaker 1: starting her one thousand dollar project. She mentioned she previously

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Speaker 1: had built up an eight thousand dollars share portfolio and

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Speaker 1: she had really loved building this and felt really proud

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Speaker 1: about it. I will say this investing out of superannuation,

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Speaker 1: like outside of the super environment, is really beneficial as well.

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Speaker 1: They worn't powerfully you know, combined together, because you have liquidity,

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Speaker 1: because you can obviously sell that portfolio or access and

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Speaker 1: spend the dividends should you wish. You can make changes

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Speaker 1: to your portfolio, and of course it helps build financial confidence,

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Speaker 1: creates a passive income, and as I said, it really

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Speaker 1: can complement a superannuation strategy. And as financial literacy grows,

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Speaker 1: particularly for Jane, you know, it really does improve both

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Speaker 1: portfolios because superannuation is simply another investment account, but obviously

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Speaker 1: with a different tax rapper. So yes, continuing on to

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Speaker 1: build that thousand dollars project portfolio after you've prioritized, you know,

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Speaker 1: paying off the home, building up emergency money, and contributing

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Speaker 1: to super this is something you can definitely keep doing

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Speaker 1: at your own pace as you wish, and obviously create

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Speaker 1: that additional liquidity and confidence and opportunity. So as we

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Speaker 1: work towards wrapping up this episode, there's another topic I

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Speaker 1: really want to talk about, and that is legacy and

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Speaker 1: the next generation. Jane mentioned the idea of also investing

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Speaker 1: for her teenage children. Now I love this idea. I

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Speaker 1: think it's really beautiful and there's something incredibly empowering about

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Speaker 1: this because if you can gift money in the right way,

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Speaker 1: you can actually teach some really powerful financial lessons. You

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Speaker 1: can teach children about dividends and the power of passive income.

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Speaker 1: You can teach children about the power of compounding interest,

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Speaker 1: particularly over the long run. But most of all, you

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Speaker 1: can teach your children about financial independence, what that really is,

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Speaker 1: and what that really looks like, and how to actually

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Speaker 1: realistically do it for themselves. And that really does help

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Speaker 1: break cycles. So for Jane, after she's prioritized taking really

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Speaker 1: good care of herself, making sure that she is never

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Speaker 1: left in a financially vulnerable position ever again, and that

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Speaker 1: she honors this financial blessing that comes from her late mother,

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Speaker 1: and she's set herself up without ever jeopardizing her own

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Speaker 1: financial situation and particularly that longevity risk. Looking at doing

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Speaker 1: something for her children where it comes from a place

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Speaker 1: of education and empowerment, where they can actually start building

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Speaker 1: and contributing towards their own share, follow could most definitely

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Speaker 1: be very, very powerful. And I would also suggest that

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Speaker 1: the children be a part of this. That if she's

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Speaker 1: going to get them started with say one thousand dollars

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Speaker 1: each or five thousand dollars each, or whatever she feels

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Speaker 1: most comfortable with, that they also step up and also

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Speaker 1: try and match this for dollar for dollar or whatever

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Speaker 1: they can afford to do at the time. And she

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Speaker 1: chose them how to create a regular investment plan so

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Speaker 1: that they have that inbuilt investing habit system established as

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Speaker 1: soon as possible in life, because we all know the

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Speaker 1: earlier you start, the better, and Jane, as a mother,

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Speaker 1: can help be the catalyst for starting this incredible habit

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Speaker 1: for her children. So, Jane, your instincts in sending me

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Speaker 1: this message are incredibly strong. This inheritance is not about

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Speaker 1: lifestyle upgrades. It's about never feeling financially invisible ever again,

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Speaker 1: with the right legal protection. Getting some advice around your

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Speaker 1: mortgage in having a mortgage free life, and obviously setting

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Speaker 1: side emergency money the right amount of emergency money, and

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Speaker 1: getting some concrete advice as to how to set up

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Speaker 1: your superannuation, how to make sure you build it around

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Speaker 1: your life, your values, your goals that can be a

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Speaker 1: great investment of your time, your money and building peace

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Speaker 1: of mind, and of course adding in an ongoing investing

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Speaker 1: plan both for yourself and for your children. If you

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Speaker 1: can do this, you're not just protecting your future, your

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Speaker 1: financial future, you're actually rewriting it. So I really hope

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Speaker 1: that everything in today's episode has given you a great

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Speaker 1: sense of clarity, direction and instructions as to what you

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Speaker 1: need to ask a financial planner to do for you,

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Speaker 1: and to everyone else who's listening. If you are about

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Speaker 1: to receive it inheritance, or you have recently, or you're

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Speaker 1: expecting to, please use this as a general guide so

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Speaker 1: that you can know and understand what to ask a

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Speaker 1: financial planner and what to turn up to their office

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Speaker 1: with understanding what you want to retire on, what's important

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Speaker 1: to you, where your values are, what all of your

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Speaker 1: goals and dreams are, Write them down. The more information

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Speaker 1: that you can give a financial planner, the better. All right, everyone,

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Speaker 1: thank you so much for listening to Start Here. I've

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Speaker 1: potted my direct email address in the podcast notes so

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Speaker 1: you can send me a DM directly to answer your

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Speaker 1: question as part of Start Here. Have a fantastic weekend everyone,

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Speaker 1: and I'll see you on Monday. More wading for Sugar

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Speaker 1: Mama's Fireplay