That’s how it all started. The words my boyfriend uttered to me when I was having yet another tantrum about how little money I had to do things, to buy clothes, to go out drinking.
For once, it actually shocked me into silence.
To give you a bit of background, we had recently moved to Sydney. After 18 months spent living in London on the smell of an oily rag and a whole lot of pints and pies, we set up in Sydney with not much to spare in the bank account. It was Christmas time and needless to say, no one was interested in hiring. I got a job first while we held out for Olly to get his dream job and learnt the joys of sharing a bank account, bedroom and suitcase all at the same time (not recommended).
Anyway, piece by piece, it all came together. Olly had a great job, I got a great job, we found a house in the ridiculously competitive eastern suburbs, we were stoked! We sat on milk crates, we lived on toast, we slept on an airbed that sagged in the middle. And then somewhere in between then and the other night, I developed a monstrous attitude towards money.
We needed a lot, we had nothing. Furnishing the house has been an exhaustive task, filled with weekend spats in IKEA and interspersed with small joys – like baking my first cake, or sitting on our new couch. But somewhere along the way, I had forgotten to actually appreciate what we had. There are homeless people living just outside our door for goodness’ sake, and here I am complaining that when we can just get tickets to Florence and the Machine, then I will finally be happy.
I always fancied myself as a low maintenance kind of girl – all I need is the sun on my face and the wind in my hair – but it turns out, I’m not. That’s fine as well, but this overt materialism was dragging me down. While I don’t doubt I’ll be back complaining again some time, I’m going to try and balance my financial goals with a better understanding of what’s important to me.
Hopefully, by changing my attitude towards money and thinking a little less materially, this will help me make better decisions about how I can use money and even invest it. If I can learn to treat my money as a source of opportunity, rather than a constant headache, that will be a good first step in my 10thousandgirl journey.
And as for the house – it’s finally finished and we’re debt free!
Victoria Craw is a writer and contributor to the 10thousandgirl project. Described as a ‘jack of all trades, master of none’ she occupies her time reading, writing and thinking about how to finance the next trip overseas. Read her personal blog at http://www.victoriacraw.blogspot.com/
Here’s our quick checklist for you to increase your chances of approval:
- Lenders like to see that you’ve been employed for at least 6 months
- You will need a decent credit score. Get your free credit check here from CreditSavvy and start working on it if you need to
- The bigger the deposit the better – save save save! Aim for a 20% deposit.
- Make sure you have been in the habit of saving – lenders will want to know that you are in the habit of genuinely saving. Aim for 5% of your salary in a savings account.
- Make sure you have been paying off your credit cards and rent etc on time – lenders like to see good repayment practice before they take you on.
Want some advice with that? Check out our Lil Black Book of trusted advisors
I have always taken a conservative approach towards money. I was raised this way. Work hard, save money, live within my means, don’t take risks, don’t talk about money. It has some basic merit but wasn’t really working for me.
I became a mother in my early thirties and for 9 years I was at home with my sons. Only recently did I began consulting in my design business again, but having been an ‘unpaid’ SAHM for so long meant my superannuation was looking very lean. This began to really worry me and got me thinking how little I know about superannuation, investing principles and generally talking about money.
I was recommended the 6 week money makeover by a financially super savvy friend. I was nervous about starting the course as I felt like I would be the only person unable to speak the language. As soon as I heard Zoe’s enthusiastic and passionate voice over the webinar I was instantly interested and inspired to continue. We began by goal setting and it was a revelation of sorts. It became apparent that these things I thought were out of my reach or so far in the distant future were actually achievable. I began goal setting in detail. Renovating our home, building more super, improving my business and a dream family holiday. They are all possible. Break it down, planning is key. It doesn’t have to feel overwhelming.
I really enjoyed the practical exercises throughout the 6 weeks. The life audit, bucket list, goal planning, my personal risk profile, understanding how I am wired to plan, mapping my support network, all contributing to an understanding my own money mindset.
Other important administration tasks I’d stalled for years I finally felt motivated to accomplish. Estate planning, health and insurance audit, rolling over my super into one account. My husband and I sat down and created a money-flow system redirecting where some of our income goes to make our money work better for us. I was beginning to feel empowered by our finances!
The 6 week money makeover was a significant exercise for me. I gained valuable insight to my own financial management, knowledge of general financial principals and I have ongoing access to the forum and so many nuggets of wisdom! Zoe is very generous with her knowledge and so encouraging. I felt that no matter how late in age I was beginning my ‘financial education’ it is ok. My anxiety began to fall away because I was taking control. My conservative money mindset found some balance as I am exploring property investing and I am openly talking about money with friends and family. I am once again contributing to my superfund too! I have to say our savings/6 month buffer unfortunately came into play recently and I cannot stress how important this is to have. I still have a way to go but I often look back on my goals for inspiration.
Thank you Zoe and the 10thousand girl team!
Today, women are still paid less (around 18%) than men for working equal roles (some more info here). It’s never easy asking for more anything; least of all more money from your employer. For many people it is a situation that brings about great nerves, discomfort and anxiety which may lead to avoiding the situation altogether.
Because unequal pay is still an issue today it is important that you ensure you are getting paid what you are worth. Here are some helpful tips to help you seek that pay rise without all the anxiety and nerves that can go with it.
Do your research
Be familiar with the pay process within your company/organisation – research the policies around pay rises and salary reviews.
Research your market value – what do others in your field at your level receive?
Is the company performing well at the moment? If you know that things are tough it might not be a good time to ask. However, if things seem to be going well – go for it.
Be clear about what you want
Be clear about your goal – how much extra would you like? Interestingly, research has shown that rather than going for straight zeros e.g. $90,000 shoot for $94,500 instead – replacing the zeros with more precise other numbers yields more successful results in pay rise requests.
Pitch and back yourself
It’s not easy going in asking for more money but reframe the situation from you going for more money to someone who is of great value to the organisation. List all the ways that you have added value, improved a process, improved the workplace/working culture, increased the value of a product etc in some way. Start to view yourself as someone who deserves this amount.
Send your boss an email requesting a meeting for a salary review (we suggest a review rather than ‘pay rise’ as these words can give employers the jitters). In that email outline your case listing your strengths, achievements and where you’ve gone above and beyond. Take the pitch further buy outlining what the company will get in return should the raise be granted.
Timing is everything
Is this the right time of the year to be requesting a salary raise? Get in before the budgets have been allocated so there is ample time to have your request processed and actioned.
Regarding your meeting, request a time that will ensure your boss has time to consider your case – first thing Monday morning or last thing on a Friday afternoon ain’t gonna be it.
Before you go in to the meeting, have a coffee! Research from the European Journal of Social Psychology shows that coffee will help you stick to your guns more and show greater resistance to any pushback.
Make sure you are well prepared and clear about your value before you go in. Take with you your notes around the initial pitch email – s/he will probably want you to talk through each point with you and you’ll want to be across every detail.
Now that you’ve sent in the email outlining your case, the meeting should be at more of a negotiation stage.
Remember, they’re not going to be throwing a pay rise at you – you’re going to have to convince them and be prepared to push for your goal amount.
When it comes to showing your hand around the key question of how much; go ahead and put the amount you are seeking on the table first. Research shows that folk who go in first with a higher amount do better than those who allow the employer to go first with a lower amount.
She said NO. Now what?
If your employer says nope, don’t burst into tears and walk out (though go ahead and express disappointment)! Calmly find out why and what you can do to get that pay rise in the future. Ask if you could have your pay reviewed again in 3 or 6 months time, ask what you could do differently, is there anything else the company can offer in the meantime e.g. flexible hours etc?
Have you ever initiated a pay rise conversation? How did you do it? Were you successful?
“Shared joy is a double joy; shared sorrow is half a sorrow.”
— Swedish Proverb
Yes, and that includes the joy of a personal financial plan! Hmmm, joy and financial plan in the same sentence? Oh yes, it can happen!
So you’re in a relationship and your finances are maybe a bit week-to-week, or they’re relatively in order but not really getting you to where you’d like to be. Thing is though, it’s not just you, you have a partner too who has his/her own financial weaknesses for mohair socks and motorbikes. You want to take control of your money by having a financial plan and of course, you need him/her to be in on it too; otherwise you’ll be doomed to failure.
So, how to get your partner on board with your plan so you can both not only stick to it but feel excited by what it will bring you both further down the track?
Start with fun
Let your partner know you’d like to activate your finances and get on an exciting life adventure together. Start out by talking about where you’d both love to be in, say, 10 years from now. What are each of your biggest dreams in terms of how your lives might play out? Is it to work less and travel more together? Is it to be able to retire at 50? Is it to be able to take one big fat fancy holiday every year? Whatever it is, get each other frothed up over it!
Okay so now you’re both excited! What now? And how do you maintain the froth?
So, you’ve both talked (excitedly) about life dreams and some (maybe even all) you share. Here’s where the focal point of your planning will need to be. And please note: it is now no longer a dream but a goal (suddenly, that sounds way more achievable than a dream, huh?). Take one or two of those big life goals that you both share and stick a date on it. Yep. Stick a date on that shizzle. As soon as you have a deadline you can start planning, set your sights and take bold strides in that direction. This is where the magic starts to happen.
Okay, so it’s less magic than sitting down and looking at what you’re going to need, financially, within your timeframe to be able to make this goal happen. Together, you make a decision that you’re going to shoot for that goal and if it means changing some daily money habits then that’s okay because, gosh darn it, those goals are so very exciting!
Okay you have your date/timeframe and you’ve figured out what your goal will require in terms of money. You might find you will need to save x thousand dollars each year to be able to achieve your goal. The next thing you both will need to do is to sit down together and look at your incomings and outgoings. And, as we all know, the only way to save is to spend less than you earn. Are you doing that now? If not, what can each of you cut back on? Still need more to make this goal happen? How could you increase your income in the timeframe? We have some fun ideas for you here.
Keep the momentum going
There will be days of weakness when those mohair socks look ultimate and that GORGEOUS Spell dress going for a song at $300 belongs in your wardrobe and nothing else will do. We know, we know. It is at these times that you might consider interrupting that old thought. Just stopping for a second and looking at it square on: ” Do I really need that pair of Jimmy Choos? Do I?” Even just thinking like this will cut right back on the spontaneous spending many of us do out of habit to fulfil some kind of emotional need at that time. And of course, you shouldn’t deny yourself things that you love either – but it’s about mindfulness in your purchases. It is a good idea to pre-empt these days for the both of you. They will happen, you’re human after all! We suggest a little visual cue that represents your short/mid/long term goal you both set and shared and made a plan for. Keep it in your wallet, on your fridge or anywhere you will be able to see it or reach for it if and when you need it. Here are some other fab Jedhi money mindset tricks you might consider.
Putting the plan into action is a really motivating, powerful stage of achieving dreams, goals and aspirations. You start to see results from your actions and feel like that dream you once had is now actually becoming a reality! Stick with it. Be mindful with your purchases and spendings. Keep checking in with each other to see how you’re both feeling about the plan. Not working for one of you? Tweak it as you go but stay on course for that ultimate goal, whatever it is. If one of you slips up, forgive, remind one another of why you’re doing what you’re doing, get those excitement juices flowing again and away you go.
Let us know how you go!
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For each woman who joins the 6 Week Money Makeover Program and learns to manage and invest their income wisely, $10 of their program fees are contributed to microloans for women in a neighbouring country who don’t have access to traditional lending institutes. The loan is provided along with business training until she can set up an income stream supporting herself, her family and in some cases employing others in the community. 10thousandgirl is partnering with Good Return and Opportunity International to provide microloans.
Here’s one story:
At only 24 years of age Alaseini has been singled out for her entrepreneurial skills as a finalist for SPBD’s Businesswoman of the Year Award.
Ala joined SPBD after hearing about it through a friend two years ago. She already had an established kava business that she ran from home, selling kava her husband grows on his small farm. With the knowledge she gained through SPBD, she learned how to improve her business profit, and with her loan Ala diversified her efforts by setting up a small home-run canteen selling basic necessities to villagers.
Through keeping track of her finances, she realised that while her canteen was a stable business, the profit margins were low due to competition. With her second loan, she launched both her 3rd and 4th businesses; frozen fish and billiards.
Read more here.
Typically, more than eight million Australians claim over $20 billion in work-related expenses on their tax return. That’s a lot of receipts to keep track of throughout the financial year.
At the same time, the ATO estimates that the average worker could be missing out on claiming some work-related expenses that they’re entitled to, due to lost or damaged receipts, or from a lack of understanding of what they’re entitled to claim.
To help make the process easier for individuals to keep a record of their work-related expenses in one place, the ATO recommends using the new myDeductions tool (which can be accessed through the ATO app).
Using myDeductions is an easy and convenient way for people to keep track of their expenses on the go. Individuals can keep track of all their work-related expenses throughout the year by simply inputting the information into the app and taking a photo of the receipt, which is stored on their phone.
Tax time 2016 is the first year individuals can upload their completed deductions from myDeductions directly to the ATO, allowing them to pre-fill their tax return. These deductions can also be shared by individuals with their tax agents and accountants via email.
For more information about what can or can’t be claimed, visit the myDeductions page on the ATO website.
We’ve all been told it’s important to have a good credit rating. It’s true, it can set you up for a good financial future. So what determines your credit rating? Your credit rating reflects your financial history – if you pay your bills, if you’re current on loans and how often you’ve applied for credit.
Having a healthy financial history means a better credit rating, and makes you a much more attractive customer for banks. This means more options for you in planning your financial future. If you establish a good credit rating, you’ll have a much easier time obtaining a loan or credit card when you need one. And you may be able to access a much more favourable interest rate.
So how can you start building a good credit rating? Steps that you can take include:
- Pay your bills and make your loan payments on time – always
- Start small if you need to. Mobile phone plans, electricity accounts or internet service can be a place to start proving your reliability.
- If you will be responsible with managing expenses, consider getting a credit card to build up even more of a track record. Always pay the bill each month on time.
- Don’t take on more debt than you need. The number of loans and total borrowed can have a negative impact.
- Limit how often you apply for credit. Only do so when you truly need it. Too many applications make you look unreliable and can damage a credit rating.
- Avoid defaults and long-overdue accounts at all cost.
- Check your credit file regularly and address any errors quickly.
- Be patient. Creating a credit rating, or improving a poor one takes time.
A first step can be checking your current credit rating. CreditSavvy has one you can do for free on our website. If it looks good, give yourself a pat on the back. If not, make it a priority to change your money habits to get back on track!
We know women generally live longer than men, but new research shows the majority of Australian women are unlikely to work past the age of 65, making it more important than ever for them to take control of their finances early and plan appropriately for life after work.
The latest AMP.NATSEM Report ‘Going the Distance: Working Longer, Living Healthier’, has revealed the gender gap in the Australian workforce widens with age, with women experiencing increasing barriers to work in their sixties.
Future modelling in the report shows that even 20 years from now, when the pension age is proposed to rise to 70, significantly more women than men will be forced to give up work by the age of 65, mostly because of family or health reasons.
More than 64 per cent of men currently aged 40-44 years and who have excellent health are expected to still be working in 2035 when they are 60-64 years of age. In stark contrast, as few as 5.6 per cent of women who are aged 50-54 years today and consider themselves in poor health would be expected to be able to remain in the workforce in 2035.
Here’s what women should start thinking about if they want to defy the odds and enjoy the fruits of their labor with an enjoyable, self-funded retirement:
Take super seriously
A comfortable retirement isn’t about fancy cars and expensive meals out every night of the week, it is simply about maintaining the lifestyle you are working hard for now. It’s estimated a comfortable retirement costs around $58,326 a year for a couple.
Salary sacrifice is one of the most tax-effective ways to boost your super. Most people can pay up to $30,000 into super (or $35,000 if you’re 50 or over) from their pre-tax salary at the concessional 15 per cent rate of tax. Even if you are self-employed, you can make personal contributions into super up to this cap for which you claim a tax deduction.
Start saving and investing
Think about how you can make your money start working harder for you. The earlier you start putting money away into investing, the more time your investments have to grow. And the more regularly you add to your investments, the quicker they can grow. You might even be able to use equity you already have in your home to buy another investment property. Down the track, good investments can add up to a comfortable retirement.
As all investments carry some level of risk, it’s important not to put all your eggs in one basket. Having a diverse range of investments helps prevent losses during market downturns. These different types of investments are less likely to be adversely affected by the same market developments.
Protect your future
What underpins all your investments is the ability to earn an income that pays for investment strategies and lifestyle. Being adequately insured is extremely important for women and gives both financial security and peace of mind. The key personal insurances to consider are life, total and permanent disability (TPD) and trauma insurance.
Seek financial advice
Planning early and seeking professional advice can go a long way. A financial adviser can offer knowledge, expertise and guidance to help you to define your goals and work out a plan to achieve them.
More about Justine
Justine Back is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706. Justine is also one of 10thousandgirl’s Trusted Advisors and you can make contact with her and find out more, here.
Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.
Each time a woman completes our 6 Step Money Makeover, $10 of her program fees go toward providing a microloan for a women to start or grow her small business. Find out more about our micro loan program, here.
Mary Ann Arevalo is a Good Return borrower and has been taking out microfinance loans since 2006. She has started several small businesses and her increased income has allowed her to send her daughter to university — the first in the family to go!
Watch her story below:
Chopping years off your home loan should be on the to-do list for anyone with a long-term financial plan.
That’s because an extra five or 10 years mortgage-free will mean you’ll be able to put more energy (and funds) into other financial goals such as building up your superannuation.
While we all have to accept that a home loan is more like a marathon, than a sprint, there are some relatively simple ways to make sure you’re shortening the course as much as possible.
Here are some of the five easiest tips for reducing your home loan:
Go above and beyond
Making regular additional repayments over the course of your loan is one of the fastest ways to chip your mortgage down to that much dreamed about statement that says: ‘you owe: $0.00’. And the earlier you start the chipping, the less you’ll hand over to your bank because each payment will reduce the amount of interest you have to fork out.
The best way to make additional repayments is to formalise them through a direct debit. That way it happens every month, without you having to do anything except calculate the savings – and the years saved.
For example, putting $100 extra a month into a $300,000 home loan will save you a massive $36,829 and knock off almost 4 years from a 30-year mortgage.
Forking out extra might seem like a monthly punishment, but trust me, you’ll be congratulating yourself when you get that final letter from your bank confirming you actually own your own home outright.
Have an offset account
An offset account is an increasingly popular way to reduce the amount of interest your bank charges you on your loan. Simply put, an offset account is a savings account linked to your mortgage where the money in the savings account ‘offsets’ the balance of the loan.
The attractiveness of these products is that, unlike additional repayments, you can easily access the money in your account without having to re-mortgage your house. The downside? They’re not great for anyone who lacks financial willpower. If you’re likely to dip into the account on a shopping whim, best to stick with making additional repayments which are far harder to undo.
Almost half of all home loan products now offer offset facilities but a few do still charge a monthly account fee, so avoid those products if possible. Also, be aware that some offset accounts offer slightly higher interest rates, so compare what’s on offer and use the competition in the market to negotiate directly with your bank.
Shop around for a cheaper rate
With the cash rate at record lows, competition in the home loan market is ripe for borrowers. In 2016 alone we’ve seen over 20 lenders now offer rates under 4 per cent for owner occupiers, so if you are paying more than 4.5 per cent, it’s worth thinking about switching.
Half a percent might not sound like much, but the difference between a rate of 4 and 4.5 per cent on a $400,000 home loan is over $100 a month. And if you invest that money back in your mortgage than we already know you’ll be ahead on your loan by thousands of dollars and at least a couple of years.
A number of lenders are also favouring borrowers with sizeable amount of equity already invested in their home, so if you’ve had your mortgage for a while, make sure you take this bargaining chip to the negotiating table.
Pay more often
Paying off your home loan more frequently is another simple tip that won’t necessarily cost you any money but can save you thousands. While the savings might not seem obvious at first the genius of this tip lies in the fact that some banks calculate your fortnightly repayments as half of the monthly repayments. Because there’s 26 fortnights in a year, you actually trick yourself into paying an extra month of repayments. Even though you’re technically forking out a little more you will be reducing the life of your loan by three to five years and saving thousands on interest.
As an example, if you have a loan of $500,000 to be paid over 30 years with an interest rate of 4.5 percent it can be paid off four years and five months sooner if you opt for fortnightly payments. Not only will it be paid off in a shorter amount of time but the interest you will save on the loan amounts to $70,084.20.
Deposit lump sums
Slashing the length of your home loan can be as easy as committing to putting any unexpected windfalls back in to your mortgage. Things like your tax return, bonuses from work, Medicare rebates and gifts can contribute significantly to reducing your loan when stacked up over the years.
If you can’t bring yourself to forgo the money completely consider splitting it between your home loan and buying something for yourself now. Better yet, split it 50/50 with your superannuation account and you’ll really be thanking yourself in the future.
Another hot tip is searching to see if you have any unclaimed money sitting in a bank account or unused life insurance policy. With millions of dollars unclaimed around Australia you may just be lucky enough to have a couple of hundred that you forgot existed. If you are one of the lucky ones, while it will be tempting to celebrate your good fortune with a purchase, it’s a great chance to put some money you won’t miss towards your loan.
By Sally Tindall
RateCity.com.au Money Editor
With the property market still relatively high, it’s a common question – if I buy, should I live the home, or should I rent it out? It depends entirely on personal circumstances and there’s no perfect answer.
If you are going to live in the unit or house you purchase, there may be first time home buyers grants that make it more affordable. It’s worth researching this in your state. It may also be easier to get a mortgage as the bank might see you as less risky. And of course you have the satisfaction and security that comes from being your own landlord.
But renting also has its upsides. You’ll be creating a future income stream and building up your personal assets. And you may be able to benefit from negative gearing, depending on the rental income, total costs and your personal situation. But there are also costs involved. You may end up paying more to prepare the property and handle basic repairs. A tenant usually won’t put up with leaky plumbing or old gray curtains. Finding and manging a tenant can also cost money, and you may have some ongoing expenses like garden care. You should also make sure any potentially risky features such as stairs, pools or fences are property dealt with.
There’s also the financial planning angle to consider. Before you decide, evaluate how much of your wealth and savings will be tied up in one property and one type of asset. It may be worth talking to an advisor to understand what this means for you. For more on the pros and cons, and lots of other great advice about all the financial and legal considerations, check out this from Moneysmart.
And don’t forget there may be compromise options. Plenty of buyers choose to live in their first home or unit for a year or two, and then decide to rent it out. This could get you the best of both worlds.
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