WEBVTT - Encore: Why it's time to set a money goal 0:00:00.430 --> 0:00:02.469 Hello and welcome to It All Adds up the podcast. 0:00:02.470 --> 0:00:04.390 So we chat about money, how to get it, how 0:00:04.390 --> 0:00:06.550 to spend it and how to invest it. I'm money 0:00:06.550 --> 0:00:08.650 and a dumb pal. And you're listening to our summer 0:00:08.650 --> 0:00:10.570 series as well, where we're playing some of our hottest 0:00:10.570 --> 0:00:14.470 hits to help you get in shipshape financial form for 2023. 0:00:15.040 --> 0:00:17.680 It all adds up will resume normal programming in February 0:00:17.680 --> 0:00:19.810 with a brand new season full of money saving tips 0:00:19.810 --> 0:00:23.680 and insights. So until then, sit back, relax and enjoy. 0:00:31.530 --> 0:00:34.110 Hello and welcome to It All Adds Up the podcast 0:00:34.110 --> 0:00:36.180 where we chat about money, how to get it, how 0:00:36.180 --> 0:00:38.370 to spend it and how to invest it. I'm money 0:00:38.370 --> 0:00:39.269 editor Don Powell. 0:00:39.360 --> 0:00:42.690 And I'm senior economics writer Jess Irvine. And today we're 0:00:42.690 --> 0:00:44.700 going to talk about money goals. 0:00:44.820 --> 0:00:46.680 Is that like where they get the people at the 0:00:46.680 --> 0:00:48.870 footy and they line him up and they give him 0:00:48.870 --> 0:00:51.300 100 bucks if they can kick a goal from 50 0:00:51.300 --> 0:00:51.750 metres out? 0:00:53.010 --> 0:00:55.380 No, I actually did know a guy who did that 0:00:55.380 --> 0:00:58.680 and managed to kick the the goal. I'm not a 0:00:58.680 --> 0:01:00.960 sports person so I don't know the technical terms anyway. 0:01:01.140 --> 0:01:04.740 But he won $100,000, so that's not actually bad money. 0:01:04.740 --> 0:01:08.130 Go 100,000. I mean, I knew I should have been 0:01:08.130 --> 0:01:10.140 a footy player, but now I definitely should have been 0:01:10.140 --> 0:01:10.680 a 40 player. 0:01:10.740 --> 0:01:13.470 That's it. Maybe that's a money tip. Just everyone go 0:01:13.470 --> 0:01:16.170 be a money footy player. I think actually the footy 0:01:16.170 --> 0:01:18.680 players themselves at a lot more than $100,000 today. 0:01:18.730 --> 0:01:18.990 Yeah. 0:01:19.470 --> 0:01:22.920 So not quite. But identifying your money goals is really 0:01:22.920 --> 0:01:25.470 important and knowing how to achieve them of course is 0:01:25.470 --> 0:01:26.970 important too. We're going to get to that. 0:01:27.390 --> 0:01:28.770 Yeah, and do stick around to the end of the 0:01:28.770 --> 0:01:32.130 episode because we'll be answering another listener question about paying 0:01:32.130 --> 0:01:34.949 off the mortgage versus putting money into your super. And 0:01:34.950 --> 0:01:37.170 of course, Jess's budget tip of the week. 0:01:37.680 --> 0:01:40.770 Yeah, that's a really common question about the mortgage versus super. 0:01:40.800 --> 0:01:41.759 So I'm looking forward to that. 0:01:42.540 --> 0:01:44.610 So first off, what is a money goal? I mean, 0:01:44.610 --> 0:01:47.369 it's I'm sure they're different for everyone, but just fill 0:01:47.370 --> 0:01:49.280 me in. What when you're talking about a money goal, 0:01:49.290 --> 0:01:50.520 it's not at the footy. What is it? 0:01:51.030 --> 0:01:53.100 Have you ever been to see a financial advisor? 0:01:53.220 --> 0:01:53.900 I have not. Not. 0:01:54.210 --> 0:01:56.490 Hey, all I have. I think this is an age 0:01:56.490 --> 0:02:01.860 related thing. I turned 40. 41. When you turn 40, 0:02:02.100 --> 0:02:05.220 you'll become absolutely obsessed with retirement too, whether you've got 0:02:05.220 --> 0:02:08.550 enough money, Right. It's an age related thing. So I 0:02:08.550 --> 0:02:10.950 did actually go to see a financial advisor, and one 0:02:10.950 --> 0:02:15.060 of the first things they will always ask you is great. Hello. Welcome. 0:02:15.540 --> 0:02:18.180 Sit down. What are your money goals? And if you're 0:02:18.180 --> 0:02:20.310 anything like me, you'll probably sit there and go, I 0:02:20.310 --> 0:02:22.200 don't know. To have some money. 0:02:22.290 --> 0:02:23.940 Yeah. I mean, that's what I would have said. Just 0:02:23.940 --> 0:02:25.890 like a little bit of cash in a bag. Like, 0:02:25.889 --> 0:02:26.340 that's it. 0:02:27.120 --> 0:02:30.360 To have more money. So, you know, if you haven't 0:02:30.360 --> 0:02:32.850 seen a financial advisor and lots of people can't afford 0:02:32.850 --> 0:02:34.350 to at the moment just to know that this is 0:02:34.350 --> 0:02:37.650 part of the process of of starting to think big 0:02:37.650 --> 0:02:41.220 picture about your finances. What are you even trying to do? 0:02:41.250 --> 0:02:42.990 Getting off the rat race of just I just got 0:02:42.990 --> 0:02:45.570 to earn more money. Well, how much money? What are 0:02:45.570 --> 0:02:47.880 your goals? What are you trying to achieve? So what 0:02:47.880 --> 0:02:50.250 we know is that the money goals that you have 0:02:50.250 --> 0:02:53.310 should and will change through the life cycle. So no 0:02:53.310 --> 0:02:55.830 person's money goals will be the same at any one 0:02:56.130 --> 0:03:00.330 point in time. So, for example, if you're younger, money 0:03:00.330 --> 0:03:03.390 goals that you might consider setting for yourself are things 0:03:03.389 --> 0:03:07.200 like buying a first home travel, paying off your hex 0:03:07.200 --> 0:03:09.630 and whether that's a good idea. You know, then there's 0:03:09.630 --> 0:03:13.919 weddings and babies starting a business, all the good stuff. 0:03:14.250 --> 0:03:17.280 They could be considered money goals that you have. And 0:03:17.280 --> 0:03:19.950 then as you sort of progress into middle age, you're 0:03:20.190 --> 0:03:24.000 talking about investing, you're topping up your super. Maybe there's 0:03:24.000 --> 0:03:26.700 some home renovations. You know, you always want to be 0:03:26.700 --> 0:03:30.480 looking at, you know, retirement planning, as I say, comes 0:03:30.480 --> 0:03:34.890 into play. Minimising tax. Having proper insurances in place. So 0:03:34.890 --> 0:03:36.450 maybe your goal is just to make sure that your 0:03:36.450 --> 0:03:40.050 financial house is sorted. And then, of course, towards the 0:03:40.050 --> 0:03:42.150 end of life, you know, you're protecting your assets. You're 0:03:42.150 --> 0:03:44.700 thinking about whether you want to leave an inheritance to 0:03:44.700 --> 0:03:48.840 any children. Bit more travel, get a caravan, you know, 0:03:48.870 --> 0:03:51.390 live that, live the dream life in retirement. 0:03:51.510 --> 0:03:53.240 And then go to Broome. 0:03:53.280 --> 0:03:56.250 HURST And then, you know, the less fun stuff like 0:03:56.250 --> 0:03:59.550 maybe planning for aged care facility funds and you know 0:03:59.580 --> 0:04:02.010 much less estate room and wills yet this is a 0:04:02.010 --> 0:04:06.600 lovely life arc there. So money goals change, but it's 0:04:06.600 --> 0:04:09.990 important to have some idea at any one point in 0:04:09.990 --> 0:04:12.570 time of sort of what you're trying to achieve. And 0:04:12.570 --> 0:04:15.120 then I you know, when I think about it with 0:04:15.120 --> 0:04:18.299 my economist's hat on, if you don't have a money 0:04:18.300 --> 0:04:20.910 goal and if you want a money goal, I've got 0:04:20.910 --> 0:04:24.150 one money goal that will just suit everybody alive today, 0:04:24.600 --> 0:04:26.940 which is the whole point, you know, of your personal 0:04:26.940 --> 0:04:29.880 finances and looking after what's the problem you're trying to solve. 0:04:30.089 --> 0:04:32.640 You're trying to have enough money to buy all the 0:04:32.640 --> 0:04:35.720 stuff you need, not just today, but when you're older. 0:04:35.730 --> 0:04:39.900 So economists talk about consumption, smoothing, being that process of 0:04:40.140 --> 0:04:42.630 trying to match at any one point in time having 0:04:42.630 --> 0:04:45.510 some income coming in. You know, when you're a child, 0:04:45.540 --> 0:04:48.090 you don't earn much of an income. And then when 0:04:48.089 --> 0:04:50.580 you're retired, you don't earn much of an income. So 0:04:50.580 --> 0:04:53.130 your overall goal is to try and sort of smooth 0:04:53.130 --> 0:04:56.279 that over your your life cycle and have enough money. 0:04:56.490 --> 0:04:57.810 Yeah, I think I was when I was a kid, 0:04:57.810 --> 0:05:00.089 I had about five bucks a week and I thought 0:05:00.089 --> 0:05:01.350 that was a load of money, but. 0:05:01.650 --> 0:05:03.390 That's pretty good. Did you have to do anything for that? 0:05:03.420 --> 0:05:05.070 Yeah, I did some like chores and stuff, like putting 0:05:05.070 --> 0:05:07.679 the washing out the lawn. But yeah, I mean, I 0:05:07.680 --> 0:05:09.250 think it's funny that you think it's a you mentioned 0:05:09.250 --> 0:05:11.100 some age thing because I'm 26, and if you'd asked 0:05:11.100 --> 0:05:13.290 me what my money goal was, I would have been 0:05:13.290 --> 0:05:15.900 like to have some, you know, I just don't, you know, 0:05:15.900 --> 0:05:17.669 it's just one of those things that I don't really 0:05:17.670 --> 0:05:21.180 think about in depth. But I think you're right when 0:05:21.180 --> 0:05:22.770 it when it comes to sort of younger people in 0:05:22.770 --> 0:05:25.680 my age bracket, it's definitely more about like life events, 0:05:25.680 --> 0:05:29.080 I guess. Like it's like having. Going to going overseas, 0:05:29.080 --> 0:05:30.669 like a lot of people like to go overseas and 0:05:30.670 --> 0:05:32.470 live overseas for a year. Like, that's something that I 0:05:32.470 --> 0:05:34.210 wouldn't mind to do it and mind doing at some 0:05:34.210 --> 0:05:37.180 point and having enough money to do that comfortably is, 0:05:37.510 --> 0:05:40.479 you know, it would be considered a money goal, right? 0:05:40.690 --> 0:05:43.150 Yeah. I was going to ask you, do you have 0:05:43.150 --> 0:05:43.660 money goals? 0:05:43.839 --> 0:05:46.000 That would be possibly one of my money goals, you know, 0:05:46.420 --> 0:05:50.710 And I said I'm sort of over services living arrangement. 0:05:50.830 --> 0:05:52.480 I'm not really sure. I haven't thought about it that 0:05:52.480 --> 0:05:55.630 much yet. But, you know, like things like preparing to 0:05:55.630 --> 0:05:59.349 have like kids and, you know, probably going to start 0:05:59.350 --> 0:06:01.600 a business any time soon. It's not really my thing, but, 0:06:02.410 --> 0:06:05.470 you know, I mean, I already own my own home, 0:06:05.470 --> 0:06:07.600 but I know a lot of my friends don't. So, like, 0:06:07.600 --> 0:06:10.179 that isn't like a major thing for them. That's you know, 0:06:10.180 --> 0:06:12.400 that would be sort of a short term money goal. 0:06:12.610 --> 0:06:14.860 What about you? Just what's what's your sort of money goals? 0:06:15.250 --> 0:06:18.370 Yeah, I'm very fixated on the consumption smoothing and just 0:06:18.370 --> 0:06:20.770 waiting until the point in my life where I can 0:06:20.770 --> 0:06:22.930 call it quits and just go, I've got enough money, 0:06:22.930 --> 0:06:26.260 I've earned enough income. So I'm quite attracted to There's 0:06:26.260 --> 0:06:29.830 a movement called FI, which is financial independence, retire early. 0:06:29.980 --> 0:06:32.409 And so just finding what is that point in time 0:06:32.410 --> 0:06:34.510 where I can throw in the hat and go, you 0:06:34.510 --> 0:06:36.760 know what, I'm going to just go for a walk 0:06:36.760 --> 0:06:38.230 or I'm going to sit on the couch. I don't 0:06:38.230 --> 0:06:41.320 have to earn any more money. So I'm very fixated 0:06:41.320 --> 0:06:44.650 on planning for that, you know, and figuring out what 0:06:44.650 --> 0:06:47.170 is the age at which I can retire. You know, 0:06:47.170 --> 0:06:50.169 you can get the age pension at 67, and I've 0:06:50.170 --> 0:06:51.880 figured out whether I can live on that. And I 0:06:51.890 --> 0:06:54.010 figured out if I own my own, I probably can. 0:06:54.520 --> 0:06:56.859 You can get your super if you retire and stop 0:06:56.860 --> 0:06:59.050 working at age 60. So I'm going to use my 0:06:59.050 --> 0:07:02.890 super to bridge from age 60 to 67. And then 0:07:02.890 --> 0:07:05.260 whether I can just bring forward the day earlier than 0:07:05.260 --> 0:07:07.779 60 that I can retire if I've saved enough in 0:07:07.779 --> 0:07:10.150 assets outside of super. So I, you know, do a 0:07:10.150 --> 0:07:12.550 bit of investing or whatever that is to sort of 0:07:12.550 --> 0:07:15.100 figure out how many years of annual living expenses I 0:07:15.100 --> 0:07:18.010 can save and then figure out the day when I'll 0:07:18.010 --> 0:07:22.000 say goodbye them, I'll hang up the podcasting. The Mike 0:07:22.660 --> 0:07:23.500 I've got podcast. 0:07:23.500 --> 0:07:24.880 Is going to run for 20 years. 0:07:25.180 --> 0:07:29.790 She's at the beach. As much as I am loving doing. 0:07:30.340 --> 0:07:32.170 It in 20 years time, I'm sure we'll talk about 0:07:32.170 --> 0:07:35.170 every aspect of money you possibly, possibly could. So how 0:07:35.170 --> 0:07:38.920 do you set a money goal, right? Like, I know 0:07:38.920 --> 0:07:41.230 it seems like a sort of a silly question, but 0:07:41.230 --> 0:07:42.910 for someone who's actually it seems like they thought about 0:07:42.910 --> 0:07:44.860 it a lot more than I have, you know, Is 0:07:44.860 --> 0:07:47.740 it where do you start? Is it just about picking 0:07:47.740 --> 0:07:48.370 an objective? 0:07:49.360 --> 0:07:51.250 It is. I mean, it is. And I think most 0:07:51.250 --> 0:07:53.290 people sort of have a suspicion of what it is 0:07:53.290 --> 0:07:54.940 they want to do. You know, a big one is, 0:07:54.940 --> 0:07:57.640 you know, I would like to save for a home or, 0:07:57.670 --> 0:08:00.850 you know, I would like to start taking advantage of 0:08:00.850 --> 0:08:03.670 super tax breaks. I've heard that sort of thing just 0:08:03.670 --> 0:08:06.490 sort of coming up, even with a small list of, 0:08:06.490 --> 0:08:09.160 you know, what what things would I like to achieve 0:08:09.160 --> 0:08:11.950 for myself, You know, even if it is as audacious 0:08:11.950 --> 0:08:14.170 as I would like to retire early or, you know, 0:08:14.440 --> 0:08:17.260 just doing some sort of big, big picture thinking. And 0:08:17.260 --> 0:08:19.690 that's what the financial planners want you to be able 0:08:19.690 --> 0:08:21.490 to do is sort of, you know, given who you are, 0:08:21.490 --> 0:08:23.679 what you like to do, you know, what is the 0:08:23.680 --> 0:08:26.110 life that you have yourself. And we have an extraordinary 0:08:26.410 --> 0:08:29.920 difficulty as human beings trying to get across the idea 0:08:29.920 --> 0:08:32.980 that we will get old and we will eventually die. And, 0:08:32.980 --> 0:08:35.150 you know, we love to just live in the moment. 0:08:35.410 --> 0:08:36.160 That's not going to happen to me. 0:08:36.160 --> 0:08:39.179 I'm falling apart from Dom. We're all going to die. 0:08:39.309 --> 0:08:43.090 That's good news for you. Yes. So just confronting the 0:08:43.090 --> 0:08:47.209 future is can be scary. But, you know, it is 0:08:47.230 --> 0:08:49.449 scary if you get down the track and you haven't 0:08:49.450 --> 0:08:53.020 actually asked these questions, you know, and you are approaching retirement. 0:08:53.020 --> 0:08:55.420 So just starting to list down, you know, what are 0:08:55.420 --> 0:08:58.089 some of the things I'd like to to achieve and 0:08:58.090 --> 0:09:00.370 and I say, you know, start small. It can be 0:09:00.370 --> 0:09:02.290 as small as saying I want to have enough money, 0:09:02.290 --> 0:09:05.110 you know, to take a trip over the summer holidays, 0:09:05.530 --> 0:09:08.469 figure out how much that's going to cost. You write 0:09:08.470 --> 0:09:11.860 it down, then, you know, figure out how much time 0:09:11.860 --> 0:09:15.520 you have to for that savings goal and start setting 0:09:15.520 --> 0:09:17.890 aside some money so it can be as small as that. 0:09:17.890 --> 0:09:20.620 And I do say start small, don't suddenly just go, 0:09:21.520 --> 0:09:23.589 Oh yeah, I want to retire. Yeah. 0:09:24.429 --> 0:09:26.740 Especially if I'm quite young as it's a long life. 0:09:27.250 --> 0:09:29.830 Yeah, you will become very obsessed with it at one point. 0:09:29.840 --> 0:09:31.870 Oh, I'm looking for actually now I'm looking forward to 0:09:31.870 --> 0:09:36.640 that sounds whole idea of retirement. Not nothing's. Does it 0:09:36.640 --> 0:09:39.939 help to put a like a figure on it like 0:09:39.970 --> 0:09:41.800 you say, be thinking about your money goal. Do you 0:09:41.800 --> 0:09:44.440 want do you want to be like, you know, this 0:09:44.440 --> 0:09:46.150 is the amount that I need and you're working towards 0:09:46.150 --> 0:09:47.530 that amount or should it be a bit more sort 0:09:47.530 --> 0:09:48.490 of abstract than that? 0:09:49.400 --> 0:09:51.560 So a lot of people will tell you, don't get 0:09:51.559 --> 0:09:53.599 too hung up on the figures, just, you know, get 0:09:53.600 --> 0:09:56.480 the feelings right. And I'm like, no, no, your figures. 0:09:57.440 --> 0:10:00.559 You should know what things cost for you. So if 0:10:00.559 --> 0:10:03.349 you're thinking about retirement, you need to know how much 0:10:03.350 --> 0:10:05.120 you're going to need in retirement. And how would you 0:10:05.120 --> 0:10:07.340 figure that out? You could probably figure out how much 0:10:07.340 --> 0:10:11.569 you're spending today. So I am a really big advocate 0:10:11.570 --> 0:10:14.900 of people just spending more time looking at their finances, 0:10:15.230 --> 0:10:18.800 getting to grips with where their money is going, and 0:10:18.800 --> 0:10:21.110 then you sort of know how much you're spending on holidays, 0:10:21.110 --> 0:10:23.210 you know, And then so is it achievable that you 0:10:23.210 --> 0:10:25.340 would go to Europe? Well, oh, well, I did spend 0:10:25.340 --> 0:10:28.670 that much, you know, last year. Maybe that is achievable 0:10:29.360 --> 0:10:31.460 and sort of knowing, you know, I love tracking my 0:10:31.460 --> 0:10:34.370 spending and knowing what my monthly budget surplus is and, 0:10:34.370 --> 0:10:36.140 you know, how much how many months is it going 0:10:36.140 --> 0:10:39.170 to take me to save for anything in particular so 0:10:39.170 --> 0:10:43.069 that you cannot set goals which are completely unrealistic? You know, 0:10:43.070 --> 0:10:45.199 like I want to save a hundred grand by next year. 0:10:45.950 --> 0:10:48.350 Yeah. And I think being realistic is a big part 0:10:48.350 --> 0:10:49.940 of this as well. Like, you know, either over your 0:10:49.940 --> 0:10:53.690 timeframes or your goals. And this goes back to what 0:10:53.690 --> 0:10:57.020 you said earlier about sort of starting small, keeping it achievable, 0:10:57.320 --> 0:10:59.000 especially I think, for people on the younger end of 0:10:59.000 --> 0:11:01.130 the spectrum where it's like you might not be earning 0:11:01.130 --> 0:11:04.250 a great deal of money. So therefore thinking about, you know, 0:11:04.490 --> 0:11:06.950 really long term goals where you want to retire at 0:11:06.950 --> 0:11:08.510 50 or something like that, that might be a little 0:11:08.510 --> 0:11:11.660 bit sort of difficult or unrealistic. So those sort of 0:11:11.660 --> 0:11:14.270 shorter term things and also keep in mind what your 0:11:14.270 --> 0:11:17.090 expenses are at the at the current point. Like, you know, 0:11:17.120 --> 0:11:19.130 if you have any major debts, so you're paying off 0:11:19.130 --> 0:11:21.290 a car, a lot of young people paying off their 0:11:21.320 --> 0:11:23.270 checks like these are things that all need to come 0:11:23.270 --> 0:11:26.689 into consideration when you are sort of assessing your your 0:11:26.690 --> 0:11:29.210 financial future and setting some setting some goals. 0:11:29.960 --> 0:11:32.929 Yeah, because the the first thing financial advisors ask you 0:11:32.929 --> 0:11:35.420 is money, goals and objectives. And then they all start 0:11:35.420 --> 0:11:37.670 to grill you on your cash flow. So it's as 0:11:37.670 --> 0:11:41.030 simple as knowing money and money and don't you? Do 0:11:41.030 --> 0:11:42.650 you keep a budget or do you have any sort 0:11:42.650 --> 0:11:44.900 of system for tracking your spending? 0:11:45.770 --> 0:11:48.229 I'm very I'm pretty loose about it, to be honest, 0:11:48.890 --> 0:11:51.350 especially compared to you, though I'm not sure if if 0:11:51.350 --> 0:11:53.900 anyone really compares to the sort of meticulous nature of 0:11:53.900 --> 0:11:54.559 your budgets. 0:11:54.980 --> 0:11:57.270 I think most people are pretty loose. If I said. 0:11:57.790 --> 0:11:59.630 I have a sort of a general budgeting system where 0:11:59.630 --> 0:12:02.689 I have like a like a series of different sort 0:12:02.690 --> 0:12:05.060 of saving accounts, which money gets put into each week. 0:12:05.059 --> 0:12:06.859 And I use the money from those accounts to pay 0:12:06.860 --> 0:12:09.770 for different parts of my life, which helps me sort 0:12:09.770 --> 0:12:13.580 of track how much I spend every fortnight on different 0:12:13.580 --> 0:12:16.069 parts of my life. But that's not particularly regimented because 0:12:16.070 --> 0:12:17.870 I've got like a slush fund which can just be 0:12:17.870 --> 0:12:20.150 used for anything. So therefore it does get just use 0:12:20.160 --> 0:12:22.130 for anything. So I'm really I'm all over the shop. 0:12:22.640 --> 0:12:24.500 It sounds like you get money in a paper bag 0:12:24.500 --> 0:12:25.459 or something from me. 0:12:25.460 --> 0:12:27.530 No, I don't. I don't. It's just sort of like 0:12:27.530 --> 0:12:31.650 a generic savings account. Yeah, that doesn't have a purpose. Therefore, 0:12:31.650 --> 0:12:33.800 it doesn't. It just gets used for stuff that it 0:12:33.800 --> 0:12:34.429 shouldn't be used for. 0:12:34.429 --> 0:12:38.270 So when people are thinking about their personal finances and 0:12:38.270 --> 0:12:41.720 that people always want to get into like, should I? Well, 0:12:41.720 --> 0:12:43.040 and we are going to get into it. Should I 0:12:43.040 --> 0:12:45.679 invest in shares or property and you know, what's the 0:12:45.679 --> 0:12:48.859 optimal this and that and, you know, sort of highly 0:12:48.860 --> 0:12:52.550 theoretical things of like which asset classes will go higher 0:12:52.550 --> 0:12:56.060 or lower in the future. And, and it's always brought 0:12:56.059 --> 0:12:58.100 back and when you see an advisor and you know, 0:12:58.100 --> 0:13:01.280 the sort of things I write about knowing your income, 0:13:01.429 --> 0:13:05.449 knowing your spending, knowing your surplus cash flow, that's like that, 0:13:05.450 --> 0:13:08.420 that is the foundation of knowing what you can do 0:13:08.420 --> 0:13:11.000 with your money and knowing what goals are achievable. So 0:13:11.000 --> 0:13:15.110 it's going to sound boring, but tracking your spending, knowing 0:13:15.110 --> 0:13:19.370 exactly what your income is, is is really the foundation. 0:13:19.370 --> 0:13:21.080 And you know, it doesn't need to get much more 0:13:21.080 --> 0:13:23.740 fancy than that. And then once you know that, know 0:13:23.840 --> 0:13:25.429 what do I want to do with my life? How 0:13:25.429 --> 0:13:27.800 much is that going to cost? Yeah, and just breaking 0:13:27.800 --> 0:13:31.010 it down and having some sort of vision for yourself 0:13:31.010 --> 0:13:33.140 in the future I think is really important. 0:13:33.590 --> 0:13:35.780 And I suppose once you've got all this in mind, 0:13:36.260 --> 0:13:38.150 you need to then think about what you might need 0:13:38.150 --> 0:13:41.179 to do to achieve that goal. Obviously setting a goal 0:13:41.179 --> 0:13:43.370 is great, but then actually doing it is the hard work. 0:13:43.370 --> 0:13:45.140 So I mean, if you do, if you do all 0:13:45.140 --> 0:13:47.060 the sums and you realize you're already on track to 0:13:47.059 --> 0:13:50.929 retire at 60 or whatever, right. Good job, happy for 0:13:50.929 --> 0:13:52.699 you sort of thing. But that's probably going to be 0:13:52.700 --> 0:13:54.470 the case for a lot of people because it's it's 0:13:54.470 --> 0:13:57.410 you know, usually these things are quite long term. So 0:13:57.740 --> 0:13:59.840 that's when you need to start thinking about what you 0:13:59.840 --> 0:14:03.620 can do to change your life or change aspects of 0:14:03.620 --> 0:14:06.080 your life to to sort of get to that goal. 0:14:06.530 --> 0:14:09.650 Yeah, because here's here's a spoiler alert. Achieving any money 0:14:09.650 --> 0:14:12.290 related goal is probably going to involve spending less than 0:14:12.290 --> 0:14:13.790 you earn and saving some money. 0:14:14.150 --> 0:14:17.390 Then that sucks. We change that. 0:14:17.750 --> 0:14:22.610 So I do like free money for everyone. Yeah. So 0:14:22.610 --> 0:14:25.370 getting back to basics, you know, And then. And then 0:14:25.370 --> 0:14:27.140 it's a good thing, you know, If you do know 0:14:27.140 --> 0:14:29.450 that you're living within your means, you do get to 0:14:29.450 --> 0:14:31.100 spend some of your money and you can take the 0:14:31.100 --> 0:14:33.320 holiday and you can, you know, you can do nice 0:14:33.320 --> 0:14:36.260 things now and in the future and look after future. 0:14:36.260 --> 0:14:36.500 You as. 0:14:36.500 --> 0:14:38.840 Well. Yeah. And I think like even the things that 0:14:38.840 --> 0:14:41.210 you do don't have to be massive lifestyle changes or 0:14:41.210 --> 0:14:44.600 anything like that. Like if your goal is retirement focused 0:14:44.600 --> 0:14:46.610 and you're looking at how much money you'll have at the, 0:14:46.610 --> 0:14:48.640 you know, towards the end of your life then. Look, 0:14:48.640 --> 0:14:50.470 it's your super fund. Is your super fund giving you 0:14:50.470 --> 0:14:53.110 decent returns? That's where you're going to have the majority 0:14:53.110 --> 0:14:54.430 of your money at the end of your life. So 0:14:54.670 --> 0:14:57.010 think about putting your money into a different or better 0:14:57.010 --> 0:14:59.470 performing fund. There's all these sort of things you can 0:14:59.470 --> 0:15:03.700 do to to sort of help the process without having 0:15:03.700 --> 0:15:06.190 to do sort of a major sort of life changing 0:15:06.190 --> 0:15:06.760 sort of event. 0:15:07.450 --> 0:15:10.000 Yeah, I've been meaning to look into my super account 0:15:10.030 --> 0:15:12.910 and use that new government website comparison tool to that 0:15:12.910 --> 0:15:16.180 is a huge issue as to whether your super is 0:15:16.180 --> 0:15:18.310 performing well for you. Let's do it. Let's do another 0:15:18.310 --> 0:15:19.090 podcast on that. 0:15:19.180 --> 0:15:20.650 Yeah, please do that. We can manage that. 0:15:21.130 --> 0:15:23.890 Okay, good. If anyone does come up with some audacious 0:15:23.890 --> 0:15:25.960 money goals, we'd love to hear what they are. You 0:15:25.960 --> 0:15:28.850 can email us at it all. Adds up at nine.com.au 0:15:28.850 --> 0:15:32.290 dot EU. Now we have lots of listener questions coming 0:15:32.290 --> 0:15:36.100 in which I love. This week's question comes from Shaun 0:15:36.400 --> 0:15:39.640 and he's asking if he's better off. I'm going to 0:15:39.640 --> 0:15:42.850 paraphrase If it's better to pay more off his mortgage 0:15:43.150 --> 0:15:47.200 or put more money into his super via salary sacrifice. 0:15:47.200 --> 0:15:49.960 And he's shared with us that he is currently doing 0:15:49.960 --> 0:15:53.010 the latter and he's getting the nice big tax breaks 0:15:53.020 --> 0:15:56.200 on super and he thinks he would prefer to have 0:15:56.200 --> 0:15:59.410 that nice super income when he's 60, even if he 0:15:59.410 --> 0:16:01.990 does have a small mortgage left. But he is worried 0:16:01.990 --> 0:16:05.950 about rising interest rates. So Dom, what do you reckon? 0:16:05.960 --> 0:16:07.690 Paying off the mortgage or super. 0:16:08.630 --> 0:16:10.730 I think he's on the right track here. I think 0:16:11.000 --> 0:16:13.700 if you've got a mortgage that's that's manageable at the 0:16:13.700 --> 0:16:16.640 current point and you're in a decent right, you may 0:16:16.640 --> 0:16:19.460 as well put more of your savings into into super 0:16:19.460 --> 0:16:22.220 if you can manage it. But I think it's obviously 0:16:22.220 --> 0:16:24.080 this comes with the number of caveats. We don't know 0:16:24.680 --> 0:16:28.100 the exact sort of scenario that Shaun's in. But I 0:16:28.100 --> 0:16:30.890 think what's worth mentioning is if you're going to be 0:16:30.890 --> 0:16:32.390 doing this and you're going to be putting more money 0:16:32.390 --> 0:16:34.340 into your super, it would be good to make sure 0:16:34.340 --> 0:16:36.830 that first you have a decent pile of of savings 0:16:36.830 --> 0:16:39.020 set aside to sort of for any sort of rainy 0:16:39.020 --> 0:16:42.410 days for if interest rates start to get really high 0:16:42.410 --> 0:16:43.940 and you have to start falling back on that to 0:16:43.940 --> 0:16:45.980 pay off that mortgage, you know, it's it would be 0:16:45.980 --> 0:16:48.050 good to just make sure you've got a nice stack 0:16:48.050 --> 0:16:50.180 of cash as a bit of a back up. But 0:16:50.420 --> 0:16:52.490 by and large, I think that's that's not a bad strategy. 0:16:52.500 --> 0:16:53.930 What's your what's your take, Jess? 0:16:54.170 --> 0:16:57.110 Yeah. Look, there are benefits to owning your home outright 0:16:57.290 --> 0:16:59.930 by retirement. But I mean, it is possible when you 0:16:59.930 --> 0:17:01.790 get to the 60 to use some of the super 0:17:01.790 --> 0:17:05.600 to pay off the mortgage, at least that is possible today. 0:17:05.600 --> 0:17:09.170 You never know how things change in super. And with super, 0:17:09.170 --> 0:17:12.229 there are such incredible tax breaks, you know, paying the 0:17:12.230 --> 0:17:15.889 low 15 cent rate for money that you put in 0:17:15.890 --> 0:17:19.699 up to 27,500, I think it is each year you 0:17:19.700 --> 0:17:23.060 can get that low tax rate. I'm all about minimising taxes, 0:17:23.750 --> 0:17:26.210 but though if you do pay off the mortgage, you 0:17:26.210 --> 0:17:29.260 are also, you know, increasing your ownership stake in, you know, 0:17:29.660 --> 0:17:32.060 your principal place of residence, which of course is totally 0:17:32.060 --> 0:17:34.820 capital gains tax free. So, you know, I think they're 0:17:34.820 --> 0:17:37.639 both very good options and people sometimes get stuck in 0:17:37.640 --> 0:17:40.280 should I do this or that? And I say, I'm 0:17:40.280 --> 0:17:42.920 with the Techo kid. Okay, no, Los Dos. 0:17:43.310 --> 0:17:46.399 That's impeccable. Okay. I was so. 0:17:46.550 --> 0:17:49.940 Personal, as does my not both don't fit it both. 0:17:50.359 --> 0:17:52.220 And you can you can shift and play with it. 0:17:52.220 --> 0:17:53.720 But I think if he's in a position where you're 0:17:53.720 --> 0:17:55.310 doing either good on you. 0:17:55.940 --> 0:17:57.950 Or just and just take us home with your budget 0:17:57.950 --> 0:17:58.490 tip of the week. 0:17:58.970 --> 0:18:02.730 So this is going to all my money nerd and 0:18:02.810 --> 0:18:06.590 book loving friends out there. You can read books for free. 0:18:06.859 --> 0:18:08.390 This is a big part of my budget. I spend 0:18:08.390 --> 0:18:10.970 a lot of money on books, but a new thing 0:18:10.970 --> 0:18:13.160 that has happened in recent years is there are these 0:18:13.160 --> 0:18:16.700 new apps that connect you to your local library. And 0:18:16.700 --> 0:18:19.100 the two apps I want people to download and to 0:18:19.100 --> 0:18:24.020 mention are Borrow Box and Libby as in the female 0:18:24.020 --> 0:18:27.860 name Libby And you download them, they'll search. What is 0:18:27.859 --> 0:18:30.500 the local library in your area? If you haven't got 0:18:30.500 --> 0:18:32.960 a membership card with your local library, you do have 0:18:32.960 --> 0:18:35.390 to go and set that up. But then once you do, 0:18:35.390 --> 0:18:40.040 you get free access to the library's entire online archive 0:18:40.040 --> 0:18:44.149 of audiobooks and, you know, e-reader books and you can 0:18:44.150 --> 0:18:47.030 read stuff for free. So if you're sitting there with 0:18:47.030 --> 0:18:50.510 your audible subscription, you know, question whether you need that 0:18:50.810 --> 0:18:53.480 you can you can now read online for free. 0:18:53.880 --> 0:18:55.760 Hmm. What a concept. I mean, I'm an A-rated guy, 0:18:55.760 --> 0:18:57.710 so it might be a little bit more difficult, but, 0:18:57.830 --> 0:18:58.190 you know. 0:18:58.650 --> 0:19:00.080 You can still download the app. 0:19:00.080 --> 0:19:00.920 You can still download them. 0:19:00.980 --> 0:19:02.570 All right. Let me know. Let me know what you think. 0:19:03.140 --> 0:19:04.840 I'll read ten books by the next podcast. 0:19:05.030 --> 0:19:08.330 Excellent. You'll be very. You are already very knowledgeable. You'll 0:19:08.330 --> 0:19:09.590 be even more knowledgeable. 0:19:10.640 --> 0:19:12.680 Well, I think that's all we have time for this week. 0:19:12.680 --> 0:19:15.500 And as always, keep those listener questions coming in. The 0:19:15.500 --> 0:19:18.240 email address is it all adds up at nine.com.au today. 0:19:18.570 --> 0:19:20.869 We'd love to hear from you and we'll see you 0:19:20.869 --> 0:19:21.320 next week. 0:19:21.650 --> 0:19:28.410 See you next week. This episode of It All Adds 0:19:28.410 --> 0:19:31.590 Up was produced by Chee Wong. The information discussed is 0:19:31.590 --> 0:19:33.900 general in nature and does not take into account your 0:19:33.900 --> 0:19:37.709 personal financial situation, goals or objectives. You should always do 0:19:37.710 --> 0:19:40.740 your own research or get professional advice before making any 0:19:40.740 --> 0:19:44.550 major financial decisions. If you like today's episode, follow in 0:19:44.550 --> 0:19:47.280 your podcast app. Leave us a review and recommend it 0:19:47.280 --> 0:19:50.070 to all your friends. You can submit your listener questions 0:19:50.070 --> 0:19:53.040 in text or audio format too. It all adds up 0:19:53.040 --> 0:19:56.160 at nine.com.au. Thanks for listening.