Season 3 Episode 3: Building Financial Resilience
IN THIS EPISODE
In this week’s episode we dive into one of the most important and often overlooked aspects of financial wellbeing: building financial resilience. Life throws curveballs—unexpected expenses, changes in income, or simply the rising cost of living—and your ability to weather these storms depends on how prepared you are. Mel Pearce and Darlene Neu share their expert insights, practical strategies, and relatable stories to help you build a financial safety net.
We explore the two pillars of financial wellbeing: financial capability and financial resilience. It’s not just about having a budget or knowing where your money goes; it’s about having the tools and confidence to bounce back when life doesn’t go as planned. From setting up emergency funds to leveraging your assets and liabilities wisely, this episode offers actionable steps to boost your financial confidence.
If you’ve ever wondered how to create a solid plan for the “what-ifs” in life or how to balance living in the moment with saving for the future, this episode is for you. Join us as we unpack how to turn uncertainty into opportunity and set yourself up for financial success, no matter what comes your way!
KEY QUESTION IN THIS EPISODE
How can fist home buyers prepare to afford their new home loan and the cost of living?
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Welcome to The Money Collective podcast. We're here to uplift your financial wellbeing. Your hosts are me, Mel Pearce and Darlene Neu. We are the co-founders of The Money Collective and together we have over 50 years of finance and banking experience. We provide the tools, information and guidance to better understand your money and feel confident making money decisions.
Hi Darlene, Yeah, We're The Money Collective.
0:30
So that's right, and thanks for listening.
0:33
Keep tuning in and if it's your first episode, welcome.
0:37
That's it.
0:38
Today, our topic of the day is building financial resilience.
0:42
But before we get to that, let's talk about truth.
0:45
OK, I'll go first.
0:47
I feel like I need a therapeutic session.
0:51
So I thought I would use this environment with some great feedback.
0:56
I know it's going to come my way around and it's about money story stuff and OK, it can go deep.
1:04
And so I and you, I may have mentioned this in past episodes, I have property in Tasmania that is farmland and the farmland is, I've purchased the farmland from family, but it's been in the family for generations.
1:27
And there might be some listeners out there that can relate to rural land and how connected it is to family stories and particularly farmers.
1:38
And land stays in the family for generations and generations, and you really don't sell it.
1:44
So I own a piece of that land and I'm selling it.
1:49
And this week has been really challenging because I've got all the guilt going on around doing that.
2:00
My dad actually this week is in hospital with pneumonia.
2:04
And so I know this might not be true, but I've been telling myself that maybe it's because of the stress that I've given him with selling this land.
2:17
And anyway, the deep stories go on around that.
2:21
And so the guilt I've got in actually selling the land and it's not staying in the family.
2:26
It also those other thoughts going through me is, yes, I'm, I'm female.
2:31
So normally girls obviously don't inherit land normally in families because of this reason.
2:39
So I feel like I've played out exactly why family doesn't get, you know, inherited through the female line because they might sell it.
2:53
And I'm doing just that and you're not working the land and I'm not working the land and I'm not creating more generations for the land.
3:00
So yeah, I've had that realisation this week.
3:05
Yep.
3:06
And if I look at my financial well being plan and coming back to, you know, money and goals and all the important things, it's definitely a line to selling the land.
3:18
But yeah.
3:20
So you have a brother as well?
3:22
I do.
3:23
Does he own any of this land?
3:24
No.
3:25
And part of the reason I've got some of the land is I purchased the land so he could pay out his ex partner and he moved away.
3:33
So I know it's in my head.
3:34
This has come to me too.
3:35
Well, he didn't stick around.
3:37
He's not working the land.
3:38
Neither of the children are working the land.
3:41
He, I don't know actually what Dad's Willy is.
3:43
And I suspect he'll inherit Dad's piece of land next door because he's the only boy.
3:50
You don't know that though.
3:51
I don't know that.
3:53
Would you ask your dad?
3:55
Good asking.
3:57
It doesn't matter.
3:58
It doesn't matter either.
3:59
Like, it's not even baked into your plant.
4:01
That's interesting.
4:02
No, I know.
4:04
But then your dad's in a very vulnerable spot right now.
4:07
So.
4:08
Not funny.
4:09
No, But how interesting.
4:10
Right?
4:10
All of these things for a reason right now.
4:13
And has your dad said anything to you at all about selling the land or being against it?
4:18
I know.
4:19
Like.
4:19
Yeah, No, no, not at all.
4:23
But underlying, whether for my take or so, there's things like, so my second cousin has been using the land and his family, right, He's got the same surname and there has been a little few issues now arising.
4:41
So he's been using the land for free all this time and now I'm, you know, I, my dad had asked me to give him first offer on the land if I decide to sell until my word I've done that.
4:55
He says he's not in a position to buy it and he's not in a position to lease it, but he was happy to use it for nothing.
5:01
So that's sort of me a bit and he it's almost like an expectation.
5:10
So the little things that are making barriers like he's got some crops in the land and I've got a a person interested in buying it and they want after the crops come out.
5:22
So I've had to deal with that in the contract.
5:25
They want it re sewn down into grass for example, that he won't do that.
5:30
You know, just little things to make it annoying.
5:34
My daddy's got the sheds full of stuff, he's got to empty those and he's mentioned that to me a couple of times.
5:40
So it's just little bits to say he's not directly saying no, but it is.
5:48
Do you worry about the greater impact though?
5:51
Like let's just say like, because nobody is going to live forever and one day, let's say somebody's going to inherit the land that your dad owns right now, whether that's you and your brother or just your brother, what would happen then?
6:05
It let's say your brother did inherit that land.
6:07
That's a very good question.
6:08
Is he just going to sell it or is he going to work that land?
6:11
Then I can't think him work exactly right.
6:14
So and your dad is not a dumb person.
6:17
Like he's probably thought this through and he's probably got his whole, you know, I feel like you guys just talk.
6:23
Yeah, maybe.
6:25
And if he has not said it directly, then I doubt that he's got the biggest issue with you selling it in the first place.
6:31
And we just worry about all of these things.
6:33
I'm sure there's something there.
6:35
Because I'm sure, like, his intentions were that this would stay in the family forever.
6:39
But also, times change, like generations change.
6:42
What people do for work changes as well.
6:45
You know, so like, and this land is in Tasmania, like, you know, we've just come along, you know, like people aren't working the land the way that people used to.
6:54
No, no, it's, it's absolutely right.
6:58
And and he's known for a very long time that you're not a farmer.
7:02
He and your brother's not a farmer.
7:04
Yeah, right.
7:05
So I'm sure that he's got some fogly ideas around how he sees it playing out.
7:11
It's really interesting.
7:14
Unless he pays it to, you know, and this is the whole thing.
7:17
We all just start.
7:18
Oh, that's it.
7:19
Yeah.
7:19
So the second cousin.
7:21
But whether he gets questioned, that's right.
7:22
That is a question there as well.
7:25
Order that till now.
7:27
Well up you don't know, ask because what's the scariest thing that can happen?
7:32
Yeah, you get some answers or it might be some argy bargy, but yeah, it it is.
7:38
You already know.
7:39
You've already played out the worst case scenario in your mind anyway.
7:42
So you can go straight there and it probably really does.
7:45
It won't be you.
7:47
Yeah, I'm sure it's a lot of my belief and my money story and this inequity that I believe is there.
7:53
And yeah, I, I, I agree.
7:58
I think it's, yeah, his view could be quite different.
8:02
And sometimes once you hear the view, it will confirm or deny that whether that inequity is true or not.
8:08
That's right.
8:08
And I need to get rid of it because I need to deal with that.
8:11
I mean, because I remember when I bought, bought this and even years ago, you know, I've had this property for a long, long time.
8:20
I was, I think I used to say out loud, I can't sell it till Dad's passed away.
8:26
Like, yeah, because I didn't want to deal with it.
8:28
Yes, You know, really.
8:30
Yes, because I don't want to deal with it, but I have to.
8:33
You're right.
8:34
And now you put it on the market real life telling me just deal with it.
8:40
Have the conversation that I.
8:41
But maybe you have pushed it forward because it is something that you do want to deal with with your dad, maybe.
8:46
And how we think, you're probably right.
8:48
It's pushing me that little bit further to actually why do we really do all these things?
8:53
I know, I know because I don't.
8:56
I don't have to sell it.
8:58
So, so true.
9:00
I love this.
9:01
Well, I don't.
9:02
It's not great, but it's interesting.
9:04
So that's what's been consuming me over the last week, personally.
9:08
And those little bits are coming up or.
9:10
Yeah, Yes.
9:12
So yeah, I do feel like I.
9:15
And a good, honest conversation would be good.
9:17
But yeah, what's scaring me about that is, you know, I don't want any altercation.
9:23
But it's not like us anyway, and it's certainly not like him.
9:26
So yeah, it's a dumb force.
9:28
What you guys tend to do is, like, avoid all of those the conflict anyway.
9:31
So what's going to change you?
9:33
Probably.
9:34
Yeah, exactly.
9:36
Yeah, All right, I'll take that on board.
9:41
I'm going over to Tasmania next week if he's well enough.
9:45
Yeah, well, that's good time.
9:46
If I can be brave enough to have the chat.
9:48
Yeah, I have a chat, some description.
9:51
Yeah, yeah, yeah.
9:53
Good.
9:54
All right, they posted so well, I don't know much about all of this inherited land stuff.
10:01
It's definitely not my jamming story.
10:04
Well, my, my dad came here to Australia with nothing because he's a migrant and they came for a better life.
10:11
So and then my mum, you know, they've never there was nothing ever, you know, they were lived in Melbourne City, you know, and nothing much to ever inherit there on that side of the family.
10:22
So like just hearing your story, it's really, I try to like, imagine what that is like for you, because it's a whole different perspective to like me.
10:33
And I think that's something like, we're all so different with our money stories.
10:39
But there's that space to understand each other if we give each other that time and space.
10:44
And in any relationship that you have.
10:46
Yeah, I think that's true.
10:48
I mean, even this I, I mean, I would have never been able to talk with about this with anyone else other than you.
10:56
Are you telling everybody I, I know.
10:58
Hey, everybody.
11:00
But, you know, really digging into your money story and understanding it and having those people around you that get it just really important.
11:09
It's really good.
11:10
And I suppose that's what this whole podcast is about, is breaking down all those taboos because like with a topic like that, people think, oh, I can't talk about it or who wants to hear this story about me?
11:20
You know, Like it could be ego driven or you're just talking about land your own or whatever.
11:24
But it's actually nothing to do with that.
11:28
It's like deeper all of that.
11:30
It's deeper.
11:30
It's about relationships.
11:32
It's about relationships or it's about relationships.
11:34
And it doesn't matter how much money or property you own, nothing to do with it.
11:38
It's not really about the money at all.
11:40
And sometimes it's about what you don't have instead of what you do have.
11:43
Anyway, so me, I haven't got anything particularly interesting going on this week.
11:49
We, I suppose wanted to book some tickets to go to Tasmania.
11:54
Oh yeah, because I'm Tasmanian as well.
11:56
Wanted to go down and see my mum and dad.
11:59
And then we're still getting on track with all of our finances and the tick.
12:02
I just left it too late and the tickets were just too expensive.
12:05
And I had and we had our bit life was too busy.
12:08
So I had all of this stuff and it was like going to be back to back to back, like flying in, flying there and then my son's 18th birthday party.
12:16
And then and the money did was a factor as well.
12:20
Like those tickets were just ridiculous.
12:22
He couldn't just fly in and out and have a good time and, and you go in for a few days, you're going to be rushed.
12:27
I, I, I know that feeling.
12:29
I am going to Tennessee next week.
12:30
But I, I had this like a couple of weeks ago as well.
12:35
And it just, we've just got lots going on in the business at the moment.
12:39
And yeah, it's really hard for priorities.
12:43
That's right.
12:43
And coughed.
12:44
And I think that's true with my mentality because we've just come through awful lot this year.
12:49
You know, if anyone's been following along, my husband had some surgery, which meant he needed significant time off, off work.
12:56
And then we also backed up and went out on overseas holidays.
12:59
So we've had to, we had to do like really ******** budgeting to get through that part of life.
13:05
And now that he's back at work, everything, he's kind of going back to that equilibrium space where we're like, oh, this is all feeling good.
13:15
I've got to be careful about that mentality and really stick clear about my goals.
13:20
I think that's what I need to revisit is like the goals that we're trying to reach.
13:25
I'm happy with my budget, but like be really dedicated.
13:28
I think I need it was so much easier when we, I knew he had to have three months off work and we were going on an overseas holiday.
13:34
It was very clear what has a reason.
13:37
It was very clear the time frame and the goals and how much money we needed.
13:41
And when it becomes much more open ended, I've been become a little bit more wishy washy.
13:46
So I think I need to sit down.
13:48
And I like hard and fast goals.
13:50
So you have to think of a goal.
13:53
I need something better than like, retirement.
13:56
Ain't that like, oh, let's put money soup.
13:58
Oh, my God, a little bit more inspiring.
14:01
Oh, no.
14:02
Well, maybe it's the holiday.
14:03
I know Percy, you're thinking about the next hip operation.
14:07
I know he's got to have it again next year.
14:09
I think that's probably a key one.
14:10
I probably need to.
14:11
And actually, this is so dumb.
14:12
I know that he's having, but that actually excites me a little bit excited.
14:15
I need to I like, love organising our money.
14:19
Like you said, it gets really purposeful, doesn't it?
14:22
And then like, and it makes me feel really good when I know, oh, something like we we're ready for it.
14:29
Well, I feel really wishy washy at the moment and I'm not feeling good about it either because I'm waiting on these sort of things with, you know, some sales and things to drop.
14:36
And because I don't know what's going to happen, I feel like it's a waste of time doing too much until that happens.
14:41
And you know, like, you know, well, I don't think that can happen.
14:44
So I can get back to it.
14:45
I know because just making a Clarion makes moves you on.
14:49
It's hard being in that.
14:50
Yeah, that space of yeah, unknowing.
14:53
But I think most people want, you know, that clarity.
14:58
You feel like you're you know, you've got it, you know where you're going.
15:02
I hate using the control word, but yeah, I think, I think it does make us feel good.
15:10
Well, the thing about control is that we want to feel in control of our finances.
15:15
And when we have a plan, that does make us feel in control.
15:18
But the problem is that we're never actually in control.
15:21
No.
15:21
Do you know what I mean?
15:22
We cannot control the things that life is going to throw at it.
15:24
You can't control what your dad's going to say to you.
15:27
You we can't control.
15:29
We're not actually in control.
15:31
No.
15:31
Even when we think we are, we are.
15:34
So we can have systems in place or whatever.
15:37
So we have an element of control over what we can, but it doesn't really.
15:42
And this is what we want to talk about.
15:44
Is that resilience?
15:44
Yes, or whatever, because resilience in our world is like, what do you do?
15:50
What is your plan when maybe something doesn't go to plan?
15:54
That's right.
15:56
And financial resilience is in, in simple terms, financial well being is how you feel.
16:02
So coming back to just a definition and maybe it's good just to revisit that for a minute.
16:06
And the two things you can actually move how you feel about your money is financial capability, which is, you know, the stuff we talk about budgeting systems and goals and understanding the finance system, all the accounts you have and stuff like that.
16:17
But then there's financial resilience.
16:19
And financial resilience is how can you weather a storm like Mel said?
16:25
And it's also about putting stuff away for the future to buy you more choice, more ability to weather a storm, you know, and the big one that people think about, do I have enough money to retire, you know, so when don't I have to work anymore, for example?
16:44
And for some people, that's way off.
16:45
And you might not think about it, but we've got superannuation.
16:48
Or you may have or you may not have.
16:50
But we all think about, you know, what are those other things in our life?
16:56
If anything happened, what would we do?
16:58
What are we going to do?
16:59
That's right.
17:03
So, yeah, resilience plans are really different for everybody, and it really depends on your personality, who you are, like, what your risk appetite really is, You know?
17:15
So some people are very much like what you're saying, like, well, they work their whole life, make sure that they've got a corporate job with great, you know, incentives and things that is going to give them a great retirement package.
17:26
And that's going to make that somebody like that feel safe.
17:29
And there's so many people like that.
17:31
My brain doesn't even work like that, you know, because that is actually what makes them feel good in it every day whereas I'll be like, I don't want to do that in my everyday what are like I can't live my actual life like that for the few casting your life away if you don't love it and so I am much more in the moment right now and that's why I'm saying I need a big inspirational goal right now and I might and so I probably am the given I know I'm going to be the person who spends more during my immediate lifetime like rather than save it for the end that good.
18:01
Well, I'm OK with the balance.
18:02
We can be OK with that.
18:04
We do.
18:05
And there's no right or wrong.
18:06
Yeah, like we and I'm sure there'd be people listening to this thinking that they'd be worried for me or whatever.
18:14
And I get worried about myself too or whatever.
18:15
So you need some sort of balance to go.
18:17
Well, what is that big plan?
18:18
What is my what?
18:19
How am I going to hit it?
18:20
Am I OK with it?
18:21
Like that personal sanity check.
18:23
And you need to be on the same page as the other people in your life as well, so that they kind of know what we're shooting for.
18:29
Are we on the same page?
18:30
I think it's really important.
18:32
I I'm just, I was thinking of a conversation I had yesterday with a person very dear to us and she actually is a single person trying to make ends of me got a home loan and she's actually trying to do everything for the future and to get through.
18:53
But what it's doing is she's not having any fun.
18:57
So what's life, you know, this is about resilience, but you need, you need to have good mental health and you need to have.
19:05
So you need to live a bit for today or if you value connection, but you know, like the balance between.
19:10
So that's somebody who's got like, I am worried about my future, like, but then I don't have the means in my everyday to sort that out.
19:19
Do you know what I mean?
19:19
Sometimes it doesn't match like our risk appetite doesn't match the actual financial position that we're in.
19:25
And then it's hard to change our got mindset around our goals to just adjust.
19:31
Like that hurts sometimes and you feel like a failure.
19:34
Yeah, like or this is what have I done wrong?
19:38
You know, because sometimes a financial position and expectations on life, because that's what we talked about last week, is like our life costs a certain amount and we can't avoid the unless we are willing to make significant changes to our current life, I suppose in this example.
19:56
So this person has a little bit of money in the bank, right?
19:58
So she has a little bit of choice.
20:02
So she wants to keep some of that for.
20:04
So she's got it sort of earmarked for some future costs and some emergency money, you know, so in case emergencies happen that she can deal with those.
20:15
But what can tend to happen I think is if you, and this is about optimism.
20:20
So optimism is very linked to financial resilience if you're in a more positive mindset.
20:27
Then what you can do is weather a storm better.
20:30
You know you're going to deal with problems better as they come.
20:33
But if you go down and you're getting quite low and you're feeling not great, then it's very it's harder to deal with those things and be creative because you got more of a fixed mindset.
20:43
It's like, well, these were my expectations based on this.
20:47
And for that person, it might be that I'm not willing to use that those backup resources right now, not willing to wither down my savings or backup because that feels really hopeful because once that goes, where is my resilience?
20:59
That's right.
21:00
But if you're happy or an optimistic, you might actually see different ways to build resilience.
21:05
So, yeah, it's different for everybody.
21:08
But sometimes you can put too much emphasis on the future and not enough on the now, on today, right now.
21:15
We just sometimes need to do what we need to to do.
21:17
And yeah, be OK with it.
21:19
That's right.
21:20
And you would think so.
21:21
Coming back to though, the other side of, you know, the scale is it is a balance like putting think about tomorrow and think about today And it I think it's a continual adjustment depending on where you are in your life and what's going on.
21:37
But you do need to keep yourself, I mean, gosh, happy and enjoying life.
21:42
You know, we don't want to be too old and can't enjoy it.
21:44
That's yeah, that's got to be important.
21:46
And we also need to chip away and building financial resilience and yeah, we need to match it.
21:54
No, like what levers we can pull at any time, you know what I mean?
21:59
So at any time, what we can work with is our income, our expenses, our assets and our liabilities.
22:06
They are the four levers.
22:08
They are the only things that we can really work with.
22:11
Well, other than social capital, yeah, that's probably the fifth thing.
22:17
So if your income can't move, then I like, can your expenses change?
22:23
If they are like fixed and you can't move those easily or you can't see a way around that, then we need to look at what assets we have because that means we need to start drawing on the assets that we have to like fill the gap that we might have to meet our everyday needs.
22:42
And then we have our liability position to like, is there some debt that we can get rid of?
22:47
Is there something that we could do, maybe sell an asset to remove a debt?
22:52
These are the levers that we can pull and the decisions that we need to make.
22:56
And like a huge one would be, do I have to sell my house at the end of the day?
23:00
Do I have to sell my house to clear that liability?
23:03
But it's a logical decision.
23:05
Like this is like an informed decision and you actually need to have that road.
23:09
You need to like that might not ever happen to you, but you need to kind of be forward thinking and go, if this happened, what would I do?
23:17
If this happened, what would I do at different varying degrees of that?
23:22
And I know that we've been through that.
23:23
There's been a few times we're like, oh, should we just sell them down, downsize our house, you know, would that fix something?
23:29
And that usually for us, it's come in times where there's been an income problem, like to maintain what we have, you know, So we need to be realistic with ourselves and also we need to be careful about not over committing in that liability space because our incomes can be vulnerable.
23:47
And our expenses, as we know over the last year or so have grown extremely, you know, and, and the liability, if you've got a home loan, you know, rates have gone up, the cost of living has gone up huge and your income may not have moved at all, you know, So how do we navigate that time?
24:03
Because it feels stressful.
24:04
It does.
24:05
And although those four that assets, liabilities and income and expenses really put yours down on paper and understand what leave if you, you change something in one, what does it do to one of those other buckets?
24:20
Because if you constantly think on those and where you can move things.
24:24
So it might be, I don't know, really basic.
24:27
Maybe when you've done your income minus expenses, you've optimised all your expenses, you've got a little bit of money leftover.
24:33
And that's why we talk about being really deliberate with that money because in life things chop and change.
24:40
Like, like I said, cost of living has gone up now.
24:42
But if you'd have put that money away in in the past, then you would have that money to call on with these high interest rate and cost of living environment.
24:54
So that's where thinking in the future can help.
24:58
It's the balance between not only will I what, what do I do when bad things happen or we need to call on the resiliency, but we need to build resiliency when we can.
25:07
We need to acknowledge that, hey, there's money leftover.
25:10
Where is it going?
25:11
I'm building an asset or I'm reducing a liability and what do my expenses look like?
25:17
Because if we really know what the cost of our living is, it will maximise how much money we have leftover to increase those assets, to reduce those liabilities.
25:27
And what order are you going to do it with?
25:29
You know, we have to be really strategic about this.
25:31
What is our goal around paying off if, especially if you've got short term debt like credit card or pay off your credit card, like you're better off.
25:39
And look, this is not personal financial advice, but if you've got money sitting in your savings account, pay off your credit card, for example, you know, exactly.
25:49
And then what is your longer term strategy around paying off something bigger like your home loan?
25:54
Yes, because that's going to build the deal in a freeze cash flow up.
25:57
So by paying off the credit card, even though you, you know, we have like safety, we are, you know, having money in the bank.
26:05
But if you actually map, you know, the money out, you know, month on month, and if you're not paying the credit card bill for three months, you actually save that money up back in your savings account a bit faster and you're not paying interest back to the bank.
26:21
So definitely, if you've got savings, look at your situation and actually see if that would be worthwhile.
26:28
But I'll come back to my dad.
26:32
And these are the things that the beliefs stick in our heads on the farm, we it was always safe for a rainy day.
26:38
And that's where that comes.
26:39
So when times are good, you know, you save because, you know, on the farm, you know, whether there's so many things outside your control that's so interesting that then you use that when times are hard.
26:51
So I don't, I never grew up with that belief.
26:54
Or I never had that said to me.
26:56
What I was told is money, like if you can't take it with you is what I heard about.
27:01
And I thought, yeah, you spend it.
27:03
So I don't have that natural skill or it wasn't like ingrained into my belief system that in the good times you save it.
27:11
Do you know what I mean?
27:11
Like that is a real habit that I've had to be like, oh, OK, I need to do something there.
27:17
Because it might feel like, like you were saying before, it might feel like, well, you know, things are pretty good right now.
27:22
I don't have a deliberate goal.
27:24
You know, I'll just spend it.
27:26
But they're actually the times you should be putting something deliberate and decide on what the goal is, even if it's a really strong emergency fund.
27:36
I think I do that.
27:37
Like, I get the basics good, you know, like the resilience, like, you know, if something happened, I know that, you know, we can kind of, and we always have made our way through it.
27:45
But like the bigger goals, like, am I like myself worth linked to?
27:48
Like, can I hit some really big financial goals?
27:51
You know what I mean?
27:53
That's interesting.
27:55
And the other thing that just comes to mind is around emergency fund.
27:58
We were at a workshop a couple of weeks ago and somebody asked the question is how much should I have an emergency fund?
28:05
And the answer is there's no right answer or wrong answer.
28:08
So it depends on you and all those things.
28:12
So if you work through your financial resilience and those worst scenario, what if scenarios that happen, how much do you need if that scenario what happened life cost you per month?
28:24
Like what happens if you had no income for six months, for example?
28:27
Yeah, that's did you have enough in reserve or or you know not or could did you have enough assets that you could call on?
28:34
Like, what would you do, as Mel said, in that order if something happened, what would be your plan now, if you actually write that out?
28:41
If I lost my job, if I got sick, this is the order.
28:45
Like in different severities, then look, 99%, they're never going to happen.
28:52
And you put it to rest.
28:53
So you're not living your life on fear.
28:55
What if, I don't know, it's actually quite deliberate.
28:59
And then you can make some really deliberate decisions about how much in a backup fund, how much for goals if you work through those scenarios.
29:08
The other thing I just wanted to say is we work with quite a lot of single women and single women are potentially are a vulnerable group in building financial resilience.
29:22
If, if they've come through separation or if they might not have superannuation because they've been the primary caregiver so that, you know, where they're, then super money is less.
29:34
And they're earning capacity because they've been out of the workforce.
29:37
So it's a double whammy.
29:38
It really is like on a a very big, big picture scale.
29:41
I think policies need to change around how we support single women in our society.
29:47
But if that's you, not just single women, all women, like, yeah.
29:53
Particularly if women again, continue being the caregivers, Yeah.
29:56
And they have time out of work.
29:58
You know, it's got to be a different population policy or something.
30:02
That's that's building.
30:04
Because like it builds a gap between men and women when women have time out of the workforce and it builds a gap in relationships.
30:13
Like it creates problems when there's not equity with money.
30:17
Yeah, yeah, a big issue, definitely.
30:21
I mean, and financial well being and understanding it and doing, you know, the steps and all the things that we talk about is important for absolutely everybody.
30:30
But if you're a single woman out there and you're really feeling vulnerable with your fine, you know, your, your resilience planning, then even just starting to sit down, look at goals, looking at the gap, and then starting to, you know, get really deliberate in your thinking, in your planning about what's possible and don't be kind.
30:53
You know, you can really do what you can do.
30:55
Circumstances are going to sometimes be lower, you know, because you've got less reason sources.
31:01
You're really making do with what you've got and making ends meet.
31:04
And sometimes that's where social capital does come in.
31:07
You know, we that's, I mean, what I mean is like, we need to rely on friends and family to help us sometimes if there is no backup resilience plan.
31:15
That's right.
31:15
And periods of time change.
31:17
So even looking a little bit into the future about what things might change if I've got kids at home and I'm looking after those children, at some point they might, you know, not be dependent anymore.
31:28
So, you know, and that's going to change the assets, liabilities, income and expenses.
31:32
So start to look at those areas exactly the same and think about what things are going to change.
31:37
And, you know, it might be that you're parking, you know, you're just going to make ends meet.
31:42
Making now meet is fine.
31:44
That can be your resilience plan.
31:46
It's like all I'm doing is making ends meet.
31:49
Absolutely.
31:50
And then you can work on some of the future later.
31:56
All right.
31:57
And we are up to a question.
32:00
So what's the question of the day?
32:03
So I had some home loan clients and they had a pre approval to a comfortable level and they've been having lots and lots of trouble finding a house in that price range and the houses they want are a bit more expensive, which is a common problem.
32:25
So one of the applicants got a small pay increase and some more overtime and it's seasonal.
32:33
So we re looked at how much they could borrow and based on that new income, they could can borrow a bit more, which has pushed their purchase price up.
32:42
So initially that sounded wonderful.
32:44
That's great, you know, and then they haven't purchased yet.
32:47
They're in that pre approval stage and they've got the old **** moment.
32:54
What what can we can we actually afford this?
32:57
What could the rain pay?
32:58
A lifestyle?
32:59
Yeah, you know so and I'm sure so, so you know, this question is like really for first home buyers, right.
33:06
So people out there that might be living at home, saving money and that feeling of actually having lots of money, lots of money to splash and still saving a lot.
33:18
So these people have been living with family for quite a long time.
33:21
They've got a quite a great deposit, but they haven't been living out on their own.
33:27
Yeah, so that's a very a new plug a mortgage repayment in there of four and a half, $1000.
33:32
Yes.
33:33
And it's like Oh my gosh.
33:34
So anyway, so they came and they asked some support and so they've gone away and did their past spending and then they added in, did some research about what cost of living things around houses and that might cost.
33:49
So I think that is great for any first home buyers out there, you know, what do council rates cost?
33:54
What are other costs?
33:54
What are electricity bills, what are utility bills?
33:57
And started to plug those in.
33:59
So they started to get a picture of what it, what their life is going to look like.
34:03
And instead of right now saving, you know, $50,000 a year, it's gone down to three, yes.
34:09
And they got, my God, they've looked at it and thought, geez, I don't know about that.
34:15
Yeah, look, they have.
34:16
I think they've done their budget really well.
34:18
There's quite a lot of fat and living and lifestyle and, you know, brunches and so good on them.
34:23
You know, And then again, it was really that financial resilience.
34:29
It's like sometimes we can't maintain that same exact lifestyle.
34:32
Things need to change.
34:33
What are our decisions?
34:34
If we want to have the house and we want to have that house, then what does that mean?
34:38
That means that maybe things are going to be really tight.
34:41
We're going to have to learn how to say no to some brunches or what does that mean to our backup resilience if I'm saving $3000 a year, but then that's really going to get eaten up by some **** that happened, you know, like, am I OK with that?
34:58
And it was So initially, what?
35:00
Yeah.
35:00
What are their plans?
35:01
Well, initially it's been so good for their relationship because they're talking about this stuff, number one, like how good is that?
35:10
And even for first time buyers out there or, you know, parents of potential first time buyers having.
35:16
I love that these young people are really having great money conversations before they go in.
35:22
Loving, loving, loving that.
35:24
Yeah, actually it was a reverse.
35:26
I've been working with these people quite a while and it was a reverse of what I expected.
35:30
So you never know.
35:30
So the lady, she was the one that thought, Oh my gosh, wow, that's not very much.
35:41
And he was much more settled and he's normally the saver and she, he perceives her as the spender, which is probably not quite right.
35:49
So that was really fascinating to see, but where they got comfortable, So they did get comfortable with this, accepting that they were still in the black.
35:59
But then they looked at their budget and thought, well, what is actually going to change over the next couple of years?
36:04
So there's a pre ***** like a salary sacrifice car loan.
36:09
So that's going to finish in two years and that's going to give them quite 10 grand back in the bank.
36:12
You know, we talked about interest rates, you know, interest rates coming down, going up, you know, and I said, well, they're probably at the peak.
36:20
You might not get a lot of relief there, but you might get up to half a percent.
36:23
So we tested that, put the money in, put the money out, that gave them an extra 6 grand, right.
36:28
So and then we talked about possible pay rises in the future, you know, because mostly these are professionals.
36:38
So mostly incomes will go up a little bit over time, but it's having a plan and going right.
36:44
Well, actually I used to do that.
36:45
I'm not just being complacent.
36:46
It's like, no, this is, these are my goals.
36:48
I want this, these are my priorities that I need to do XYZ, right?
36:52
And we talked about there's no travel in there.
36:53
How they feel about that.
36:54
The bit of a travel is you're going to get comfortable with that.
36:57
And so we talked about the other side of, you know, the scale as well.
37:00
What if do you want family?
37:02
Are you planning to get married?
37:03
You know so we could actually talk about those things, but the real comfort for them was they're holding $30,000 back yes.
37:11
So we talked about emergency fund, yes, they've got back up, yes and they plan to keep make it feel safe, right, So they can get through the next couple of years and then you know build their little bit until some other money free makes a lot of sense anyway.
37:26
So it is really good to do that assets, liabilities, income and expenses go through that build your resilience, get comfortable or not yeah, yeah.
37:32
So I think that this listening to that, I can think of three other samples where this doesn't relate to 1st home buyers, because I feel like I did exactly the same when I we upgraded our house, you know, so we went from like we had our home loan paid off and we, I think we had a tiny little home loan and then we went to this big home loan, you know, so I knew how much things, but like, I was like, Oh my God, I am going to be eating canned food for the rest of my life like that fear not even on the other, not even realistic, you know, like it was so dumb.
38:05
We were fine.
38:05
We didn't eat canned food, but sometimes you just more scared.
38:08
And then I had another client this week who wanted they own their house.
38:13
They want to keep it as an investment property and they want to buy a lifestyle property.
38:17
Like they going, well, their income's really good.
38:20
And then, and then they asked me at the end, So what will the repayments be on that new loan?
38:26
And I said $7000 a month.
38:29
You know, so like we have these ideas, we can do it and we can get this like feeling in our lifestyle that things are easy.
38:35
Oh, I can do these things and I, I could, I, I'm one of those people who can have one of those big properties and all my dreams can come true.
38:42
But when you do something, it has a consequence or there's, and we have to be really aware of that and are we prepared for that?
38:51
That's, but that's such a good decision making tool because once you know, you can say, well, can I cut back some of my discretionary, how am I going to feel about that?
38:59
Or, you know, if that's the situation or, you know, if there's a shortfall, where's it coming from?
39:04
Or it, it'll help you make decisions and, and you'll know in your gut even how comfortable you are or not and work through then practically some of those things to see if things get you more comfortable or not.
39:15
And I did say I thought of three things, but I can't think of the other two.
39:17
The other one, we do that.
39:22
That's all I have.
39:23
All right, cool.
39:25
Thank you for listening again.
39:26
I love it when we get to the end and whoever's still here with us, you love you and you do.
39:31
Please come back again.
39:33
We'll see you next time.
39:36
At The Money Collective we provide financial wellbeing, premium coaching, mortgage broking and workplace financial wellbeing programs, which we couldn't do without the seamless support of our fabulous team. If you'd like to find out more, head to themoneycollective.com.au or our socials to take action and engage our services. In our Facebook group, join the conversation and help us break down the taboo around money. All content in this podcast is for educational purposes only and is general in nature. For tailored personal advice please seek out a professional.
This podcast provides general advice only. It does not take into account your objectives, financial situation or needs. Before acting on any information provided, you should consider the appropriateness of the information and the nature of the financial product in regards to your objectives, financial situation and needs. We recommend discussing your personal situation with a financial professional.
Podcast by:
MEL PEARCE & DARLENE NEU
Co-Founders, Financial Wellbeing Coaches and Mortgage Brokers
The Money Collective
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