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The financial reality check after a major diagnosis

Once you have received and processed your doctor’s diagnosis, take stock of the situation, because this will determine how you respond and what resources you have available to support you going forward. Who received the diagnosis – you or your spouse (if you have one)? Is it a terminal illness, chronic condition or treatable setback? If you are not yet retired, will you be able to keep working, need a period off work or will this bring forward your retirement? If leaving work temporarily, what are your prospects for re-entering the workforce? Will your partner need to leave their work to care for you (or vice versa)? Once you have clarified and considered this, spring into action as soon as possible. Revisit your spending Healthcare is expensive by any measure. Pensioners and healthcare card holders may get much or all of your treatment covered, but waiting times in the public system can be lengthy. For self-funded retirees, even with private health insurance, there can be considerable out-of-pocket costs: specialist visits, diagnostics, symptom management, physiotherapy and so on. Depending on the type of diagnosis, you may also need to modify your home (install ramps, railings etc.) and/or obtain specialist furniture and equipment. Then comes care requirements – private nurses, retirement living, hospice or palliative care. Your lifestyle may also change, and quickly. Your clothes and shoes may no longer fit if you lose weight rapidly. You may no longer be able to drive. You may need help with household chores – cleaning, cooking, gardening. Covering these requires money if you don’t have family and friends able to lend a helping hand. Carefully look at what supports your new reality demands and whether they will be one-off or ongoing expenses. Some things will need to be purchased, others could be hired to split the cost over the longer term. Secure your income Once you’ve established the impact on your ability to work and your spending needs, determine how you will pay for everything going forward. Your emergency fund can provide short-term cash if you need to stop working suddenly or fork out for large, unexpected bills. Depending on your age and circumstances, it may be worth bringing forward your retirement – allowing you to draw income from superannuation and focus more on your (or your partner’s) health. Check your insurances to see what claims you could make – having paid the premiums, now is the time make use of them. Relevant insurances include total permanent disability, income protection, trauma or critical illness cover. Meanwhile some life insurance policies may pay out based on a specialist’s diagnosis, unlocking much-needed funds sooner. Depending on your diagnosis, policy and the type of insurance, payouts may be a lump sum or smaller payments spaced out over time. Update your estate plans A major diagnosis typically elicits thoughts about mortality, legacy and how you want your loved ones to be provided for. Crucially, it may also influence factors such as guardianship of minors and pets while you are unwell/in hospital, Power of Attorney to cover important legal and financial decisions if you are incapacitated, and palliative care arrangements if required. Before heavy medications, surgeries or further deterioration of your health cloud your judgement, ensure your will and estate plans are updated to fully reflect your current needs and wishes. Look after yourself Stress, shock, anger and despair are common emotions to feel when faced with a major diagnosis. As such, it’s important you look after your mental and emotional wellbeing too. It needn’t cost a cent – you could look to free counselling services available such as Lifeline and Beyond Blue; a daily walk by the beach or through the local park; catching up with loved ones for support and companionship. Keeping your spirits up, as much as you can under the circumstances, can improve your quality of life while also helping you make clearer decisions about your health, finances and relationships – making it arguably the best investment of all. Back that up with sound legal, tax and financial advice. There is much to consider where insurance, superannuation, inheritances, Centrelink and more are involved, and you can’t know everything – especially when your focus is rightly elsewhere! Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754. Image credits: Shutterstock

Money & Banking

10 signs you’re not on the right financial path

Dreaming of owning a big house, nice car and a boat? Or just having enough cash to be comfortable? Here are 10 signs that you are not (yet) on the path to financial freedom. 1. You don't think about ways to make extra money If you are paid a salary and nothing more, you are limited in the ways you can get ahead. The only way to save is to spend less. But if you switch it up and start to look for ways to earn more, your horizons open up. Most of the world's super wealthy have more than one income stream – some of which are usually passive, requiring no regular input. This could be something such as rental income from an investment property or the sale of a product such as an ebook. Add in some sensible savings habits and you will be on your way. 2. You leave your savings in a savings account If you stick your cash in a savings account, it is basically doing nothing. You are better to look at ways to put that money to work. You could put it in a managed fund, buy shares or even lend it out via a peer-to-peer platform, to get a better return. Make sure you get good advice to understand what you are doing. 3. You borrow to buy Borrowing to buy a house is fine. Borrowing to buy a car is (generally) not. If you are putting all your purchases on finance or credit card and paying them off with high rates of interest, you are pouring money down the drain. Live within your means if you want to get rich. 4. You don't know where your money goes The first step to getting on the right track is to have a clear idea of what you're spending money on. If you don't know, chances are you're wasting it. Have a look through your recent bank statements, draw up a budget. Stamp out some discretionary spending and you'll have more of that money to put to work that we mentioned earlier. 5. You're putting off planning for your retirement If you think you are too young to have to worry about the future, you are doing yourself a huge disservice. When you are working towards a long-term financial goal, such as retirement, time is a huge asset to have on your side. The power of compounding means that any returns you make in a vehicle such as your KiwiSaver account then attract their own returns, over and over each year until you withdraw the money. The later you start saving, the more of that compounding power you miss. 6. You hate risk It is great to be careful with your money but if you never take a risk, you miss out on returns. Over the long term, the biggest gains are usually from riskier investments, such as equities. You may also find ways to wealth by getting out of your comfort zone. Quitting your job and starting a new business is risky and scary, but could pay off if you have planned it well and know your stuff. 7. You don't have a plan If you don't know how you're going to get rich, it probably isn't going to happen. Write down your goals. What do you want to achieve this week, month and year? What about in 10 years? If you can, identify someone who is in a position you'd like to get to and find out what they did to get there. Work out what you need to do to follow suit and break it down into small, achievable steps. 8. You don't pay yourself first If you have decided to save money and think you'll just put aside everything that is left in your account at the end of the month, you will be horribly disappointed. This method almost always fails because there is invariably nothing left. Pay yourself first. Using your budget and plan, put aside the amount that you have worked out you can afford to save as soon as you get paid, and then live off the rest. 9. You think you're bad with money It's a self-fulfilling prophecy. If you think you are bad with money, you won't pay any attention to your finances and they will get out of control. Stop thinking money is some sort of secret club that you could not possibly understand. Everyone can get a handle on it. 10. You don't know the basics But having said that, it's important to get a good knowledge of the basic stuff. If you are not clear how your credit card works, or how your mortgage interest is calculated, get someone to help you break it down and bust the jargon. Websites such as Sorted have good tools or you can seek financial advice from your bank or an adviser. Image credits: Shutterstock Written by Susan Edmonds. First appeared on <a href="http://www.stuff.co.nz/" target="_blank" rel="noopener">Stuff.co.nz</a>.

Money & Banking

Retirement doesn’t just raise financial concerns – it can also mean feeling unmoored and irrelevant

<a href="https://theconversation.com/profiles/marianne-janack-681018">Marianne Janack</a>, <a href="https://theconversation.com/institutions/hamilton-college-2966">Hamilton College</a> Most discussions of retirement focus on the financial aspects of leaving the workforce: “<a href="https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/publications/top-10-ways-to-prepare-for-retirement.pdf">How to save enough for retirement</a>” or “<a href="https://www.businessinsider.com/personal-finance/investing/when-can-i-retire">How do you know if you have enough money for retirement</a>?” But this might not be the biggest problem that potential retirees face. The deeper issues of meaning, relevance and identity that retirement can bring to the fore are more significant to some workers. Work has <a href="https://www.theatlantic.com/ideas/archive/2023/03/work-revolution-ai-wfh-new-book/673572/">become central to the modern American identity</a>, as <a href="https://www.theatlantic.com/atlantic-editions/">journalist Derek Thompson bemoans</a> in The Atlantic. And some theorists have argued that work shapes what we are. For most people, as business ethicist <a href="https://www.luc.edu/quinlan/faculty/algini.shtml#:%7E:text=About,the%20Society%20for%20Business%20Ethics.">Al Gini</a> argues, one’s work – which is usually also one’s job – <a href="https://doi.org/10.4324/9780203950555">means more than a paycheck</a>. Work can structure our friendships, our understandings of ourselves and others, our ideas about free time, our forms of entertainment – indeed our lives. I <a href="https://www.hamilton.edu/academics/our-faculty/directory/faculty-detail/marianne-janack">teach a philosophy course about the self</a>, and I find that most of my students think of the problems of identity without thinking about how a job will make them into a particular kind of person. They think mostly about the prestige and pay that come with certain jobs, or about where jobs are located. But when we get to <a href="https://plato.stanford.edu/entries/existentialism/">existentialist philosophers</a> such as <a href="https://plato.stanford.edu/entries/sartre/">Jean-Paul Sartre</a> and <a href="https://plato.stanford.edu/entries/beauvoir/">Simone de Beauvoir</a>, I often urge them to think about what it means to say, as the existentialists do, <a href="https://philosophynow.org/issues/115/On_Being_An_Existentialist">that “you are what you do</a>.” How you spend 40 years of your life, I tell them, for at least 40 hours each week – the time many people spend at their jobs – is not just a financial decision. And I have come to see that retirement isn’t just a financial decision, either, as I consider that next phase of my life. <h2>Usefulness, tools and freedom</h2> For Greek and Roman philosophers, <a href="https://search.worldcat.org/title/Work-what-it-has-meant-to-men-through-the-ages/oclc/780872063">leisure was more noble than work</a>. The life of the craftsperson, artisan – or even that of the university professor or the lawyer – was to be avoided if wealth made that possible. The good life was a life not driven by the necessity of producing goods or making money. Work, Aristotle thought, was an obstacle to the achievement of the particular forms of excellence characteristic of human life, like thought, contemplation and study – <a href="https://classics.mit.edu/Aristotle/nicomachaen.7.vii.html">activities that express</a> the <a href="https://classics.mit.edu/Aristotle/nicomachaen.8.viii.html">particular character of human beings</a> and are done for their own sake. And so, one might surmise, retirement would be something that would allow people the kind of leisure that is essential to human excellence. But contemporary retirement does not seem to encourage leisure devoted to developing human excellence, partly because it follows a long period of making oneself into an object – something that is not free. German philosopher Immanuel Kant distinguished between the value of objects and of subjects by the idea of “use.” Objects are not free: They are meant to be used, like tools – their value is tied to their usefulness. But rational beings like humans, who are subjects, are more than their use value – <a href="https://search.worldcat.org/title/5796114">they are valuable in their own right</a>, unlike tools. And yet, much of contemporary work culture encourages workers to think of themselves and their value <a href="https://www.simonandschuster.com/books/Bullshit-Jobs/David-Graeber/9781501143335">in terms of their use value</a>, a change that would have made both Kant and the ancient Greek and Roman philosophers wonder why people didn’t retire as soon as they could. <h2>‘What we do is what we are’</h2> But as one of my colleagues said when I asked him about retirement: “If I’m not a college professor, then what am I?” Another friend, who retired at 59, told me that she does not like to describe herself as retired, even though she is. “Retired implies useless,” she said. So retiring is not just giving up a way of making money; it is a deeply existential issue, one that challenges one’s idea of oneself, one’s place in the world, and one’s usefulness. One might want to say, with Kant and the ancients, that those of us who have tangled up our identities with our jobs have made ourselves into tools, and we should throw off our shackles by retiring as soon as possible. And perhaps from the outside perspective, that’s true. But from the participant perspective, it’s harder to resist the ways in which what we have done has made us what we are. Rather than worry about our finances, we should worry, as we think about retirement, more about what the good life for creatures like us – those who are now free from our jobs – should be.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/233963/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/marianne-janack-681018">Marianne Janack</a>, John Stewart Kennedy Professor of Philosophy, <a href="https://theconversation.com/institutions/hamilton-college-2966">Hamilton College</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/retirement-doesnt-just-raise-financial-concerns-it-can-also-mean-feeling-unmoored-and-irrelevant-233963">original article</a>.

Retirement Income

Financial hardship is the biggest driver of loneliness. Here’s why – and how to tackle it

<a href="https://theconversation.com/profiles/michelle-h-lim-176472">Michelle H Lim</a>, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a> One in four Australians <a href="https://lonelinessawarenessweek.com.au/wp-content/uploads/2024/08/why-we-feel-lonely.pdf">report</a> feeling lonely, according to our new report released this week from our research collaboration. The data builds on a large <a href="https://endingloneliness.com.au/wp-content/uploads/2023/10/ELT_LNA_Report_Digital.pdf">study we conducted last year</a> on social connection. Together, the data show that once someone <a href="https://endingloneliness.com.au/wp-content/uploads/2023/10/ELT_LNA_Report_Digital.pdf">becomes lonely</a>, they’re likely to stay lonely. Feeling lonely can have a <a href="https://endingloneliness.com.au/wp-content/uploads/2023/10/ELT_LNA_Report_Digital.pdf">negative impact on your health</a>. It increases the chance of having <a href="https://pubmed.ncbi.nlm.nih.gov/27124713/">social anxiety and depression</a>, and impacts the <a href="http://dx.doi.org/10.1037/0022-3514.85.1.105">health of your heart</a>, your <a href="http://pss.sagepub.com/content/13/4/384.full.pdf">sleep</a> and levels of <a href="https://pubmed.ncbi.nlm.nih.gov/15041083/">inflammation</a>. It also increases the likelihood of an <a href="https://www.ncbi.nlm.nih.gov/pubmed/?term=Loneliness+and+Social+Isolation+as+Risk+Factors+for+Mortality%3A+A+Meta-Analytic+Review">earlier death</a>. Staying lonely can accelerate these <a href="https://pubmed.ncbi.nlm.nih.gov/31237442/">negative impacts</a>. As more Australians grapple with a cost-of-living crisis, a key driver of loneliness is financial hardship. <h2>Am I lonely?</h2> Loneliness is a negative feeling that arises when your <a href="https://www.gilc.global/_files/ugd/410bdf_62e236db3a7146cd9f2654877a87dbc6.pdf">social needs are not met</a> by the relationships you hold. So you can feel alone, even if you’re surrounded by others, if you’re not getting the right kind of company and support. This might mean you feel, to a certain extent, that: <ul> <li>you are not “in tune” with others</li> <li>your relationships are not meaningful</li> <li>you do not belong</li> <li>you do not have a group of friends</li> <li>no one understands you</li> <li>you do not have shared interests with others</li> <li>there is no one you can turn to.</li> </ul> Not all of these may relate to you and you may experience these in varying degrees. <h2>What drives loneliness?</h2> We <a href="https://endingloneliness.com.au/wp-content/uploads/2023/10/ELT_LNA_Report_Digital.pdf">found</a> particular communities were more at risk of persistent loneliness: <ul> <li>those aged 18 to 24</li> <li>people from culturally and linguistically diverse backgrounds</li> <li>people who were single or divorced</li> <li>those with a chronic disease</li> <li>those with mental ill health.</li> </ul> But the largest effect we found, even after we accounted for all other possible contributing factors, is the impact of financial hardship. People who face financial hardship were almost seven times more likely to report persistent loneliness, and almost five times more likely to report persistent social isolation, compared with people who did not face financial hardship. This aligns with other studies that link economic hardships to <a href="https://pubmed.ncbi.nlm.nih.gov/33241698/">poor health</a>. In <a href="https://pubmed.ncbi.nlm.nih.gov/37761396/">children from low-income backgrounds</a>, for example, their family’s economic hardship is one of the main factors that negatively impacts their physical and psychological health. In a large <a href="https://www.sciencedirect.com/science/article/pii/S0277953622004282?via%3Dihub">study</a> using the UK Biobank, people who are from a lower economic background had a higher probability of reporting loneliness. In <a href="https://pubmed.ncbi.nlm.nih.gov/37528108/">Australia</a>, when compared with people on incomes more than A$150,000, those with incomes under $80,000 were 49% more likely to experience loneliness in one year and 66% more likely to report loneliness in at least two consecutive years. <h2>Being poor affects how we interact with others</h2> Factors such as income and your living environment are some of the <a href="https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1">social determinants of health</a>, which influence our health outcomes. However, to date, little has been done to examine exactly how the lack of financial resources negatively affects the way we interact with others. There are two plausible scenarios. First, having financial pressures may change the way we feel and relate to others due to higher stress levels. Second, financial pressures may stop us from socialising because we have to take on more work to earn more money or we try to cut costs to save money. Socialising can be free in some circumstances, but most of the time, there is a cost to getting to places, or doing an activity together. <h2>What can we do as a society?</h2> The <a href="https://news.gallup.com/opinion/gallup/512618/almost-quarter-world-feels-lonely.aspx">high prevalence of loneliness across the world</a> – and the growing scientific evidence of the negative impact on our health, wellbeing and productivity, and subsequently the economy – can no longer be ignored. The World Health Organization is repositioning loneliness as a global public health priority and has established a <a href="https://www.who.int/groups/commission-on-social-connection">Commission on Social Connection</a>. This commission aims to set the global agenda for social connection, work with high-level commissioners to make the case for global action, scale up proven solutions and measure progress. We need to start by building a <a href="https://lonelinessawarenessweek.com.au/wp-content/uploads/2024/08/How-can-we-create-a-culture-of-connection.pdf">culture of connection</a> in Australia. This means changing the way we make decisions on how we relate to each other, promoting social connection within our schools, workplaces and communities. And to modify policies to allow us to start and maintain healthy social connections. Health and social policies to address loneliness and social isolation have to consider the impact of low incomes and increased financial pressures as barriers to building and maintaining meaningful social connection. Related to this is urban planning. People require safe and no- or low-cost spaces to interact in and to start and maintain relationships. This includes parks, libraries, public squares, community gardens and neighbourhood houses. Cuts to building or maintaining these spaces will stop people from interacting, gathering, or socialising within their community. Not addressing loneliness effectively or quickly will lead us to persistent loneliness and to potentially more distress. <h2>How to connect if you’re financially pressured</h2> Don’t feel alone in this experience. Let your family or friends know that you are financially pressured. Chances are, they are experiencing the same pressures because of the rise in the cost of living. Select no- or low-cost activities such as walking in the park with a friend, or connecting on the phone. Look for free events offered in your local area and city. Consider having meals at home as opposed to going out, or low-cost food options. Find some digital spaces which can allow you to interact with others in shared interest topics. If someone shares they are feeling lonely, asking “is there anything I can do to help?” facilitates the conversation and lets others know you are there without judgement. <hr /> If this article has raised issues for you, or if you’re concerned about someone you know, you can call Lifeline on 13 11 14.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/236135/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/michelle-h-lim-176472">Michelle H Lim</a>, Associate Professor of Psychology, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/financial-hardship-is-the-biggest-driver-of-loneliness-heres-why-and-how-to-tackle-it-236135">original article</a>.

Money & Banking

Been scammed? Here's how to financially recover

Many people feel shame and embarrassment after realising they have been scammed. But you shouldn’t. You did nothing wrong; you are the victim of a crime. Not only are such feelings bad for your mental wellbeing, but they also often stop people reporting the scam or taking action to avoid further losses. Remember too that you’re not alone: victims reported more than 601,000 scams to the ACCC in 2023, together losing a staggering $2.74 billion. People of all ages, professions, and backgrounds have been affected. As hard as it may be, try to leave emotion aside and approach this like any other money matter – logically and methodically. Doing so will help you act faster and more decisively, which is crucial to your financial recovery. The following checklist will help you through this process: <ul> <li>Step 1 – Try to recoup your stolen money</li> </ul> Report the scam immediately. Contact your bank or card provider to stop the transaction being processed. Notify the company or marketplace where it occurred – they may have options to reverse the payment or for you to claim compensation for fraud. Also inform the ACCC’s Scamwatch and police if relevant, which may aid in tracking down the scammer and will help them alert the wider public on what to look out for. Unfortunately, the money is likely gone for good, but prompt action may just help you get some or all of it back. <ul> <li>Step 2 – Secure your accounts from further thefts</li> </ul> Once scammers have found a way to steal money, they often go back to try for more. Don’t let them! Freeze or cancel affected debit and credit cards, accounts etc. Change and strengthen all your passwords. Set up two-factor authentication if you haven’t already. Remove any suspicious applications on electronic devices. Double check the registrations of any business, adviser or tradesperson before engaging their services. Regularly check your superannuation, investments etc. to monitor for any inconsistencies. <ul> <li>Step 3 – Safeguard your cash flow</li> </ul> Don’t multiplying your losses by racking up new debts to cover the stolen money. That means limiting the use of credit cards, payday lenders and Buy Now, Pay Later schemes. Consider paying with cash instead to help you stick to a budget. If you have lost everything, register with Centrelink for income support. You may also be able to apply for hardship provisions with your bank, phone and energy providers and other essential services. <ul> <li>Step 4 – Get reputable advice</li> </ul> Legal advice may be able to get you out of bogus contracts, like loans or phone plans, and help you in the event your personal information has been stolen (which can be used in various ways to steal money). If you can’t afford a lawyer, there are free alternatives such as Legal Aid or Community Legal Centres. Specialist services such as the Women’s Legal Service may offer support where partner coercion or domestic abuse is involved. Accounting and financial advice may also help you navigate assistance options and longer term recovery efforts. <ul> <li>Step 5 – Rebuild your finances</li> </ul> Your ability to rebuild your finances after a scam will depend on a range of factors, including how much was lost plus your age and circumstances. You could seek to increase your earnings and/or cut your spending by tweaking your household budget, delaying retirement, or temporarily taking a second job to boost your income. Another option is to make your remaining finances work harder than before, such as adjusting your investment strategies (e.g. changing your risk weightings or selling assets) including within your superannuation or accessing equity in your home. If you’re a self-funded retiree, you may now qualify for a part or full pension if your scam losses push your total assets below the means test threshold. Ultimately, the most important things when dealing with the fallout from a scam is to look after yourself and protect what you have left. Scammers have already taken off with your dollars. Don’t let them steal your sense too! Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754. Image credits: Shutterstock

Money & Banking

What are financial years – and why are they different from calendar years?

<a href="https://theconversation.com/profiles/michaela-rankin-1544784">Michaela Rankin</a>, <a href="https://theconversation.com/institutions/monash-university-1065">Monash University</a> Yesterday was July 1, the first day of the new financial year in Australia. Also called fiscal years, financial years are often abbreviated in print. The one that’s just begun in Australia – July 1 2024 to June 30 2025 – will typically be denoted by FY24/25 or FY25. As the name suggests, financial years are used for financial reporting, tax and budgeting purposes. Whether you are preparing an individual tax return or financial statements for a business, it is important to understand the difference between financial and calendar years. Both have 365 days. But the calendar year, based on the <a href="https://www.timeanddate.com/calendar/gregorian-calendar.html">Gregorian calendar</a>, runs from New Years’ Day on January 1 through to December 31. Australian financial years on the other hand run from July 1 of one year to June 30 the next. But this July to June financial year <a href="https://web.archive.org/web/20200430054150/https:/www.cia.gov/library/publications/the-world-factbook/fields/228.html">does not apply</a> in all countries. Many align their financial year with the calendar year, but others have further variations still. So why are they different, and what does that mean for businesses operating across borders? <h2>Different around the world</h2> In contrast to our own, the United Kingdom’s financial year starts on April 6 each year and runs to April 5 the next. The English and Irish New Year traditionally fell on March 25, when taxes and other accounts were due. But in the 18th century, the British empire switched from the Roman Julian calendar to the Gregorian calendar, and had to <a href="https://www.bowesbrooks.co.uk/why-does-the-tax-year-start-on-6th-april/">adjust the start date</a> to avoid losing tax revenue. India’s fiscal year runs from April 1 until March 31, for a <a href="https://www.idfcfirstbank.com/finfirst-blogs/finance/reasons-why-the-financial-year-starts-from-april">number of reasons</a>. Historically a country that was heavily focused on agriculture, this timeframe aligned with the crop cycle and allowed the government to develop financial plans for the sector. The British empire also influenced the April reporting schedule in India, as prior to independence many financial policies were based on the British system. <h2>Government budgets play a role</h2> In the United States, fiscal years once ran from July 1 to June 30, like Australia’s do now. But in 1974 this was <a href="https://www.federaltimes.com/management/budget/2022/09/20/why-the-us-federal-fiscal-year-2023-starts-in-october/">changed</a> to instead span October 1 to September 30, giving Congress more time to agree on a budget each year. In the US, however, companies can also <a href="https://www.business.com/articles/how-to-decide-on-fiscal-year/">choose their own</a> fiscal years. Some choose a calendar year, but others elect dates that better align with their business cycle. Walmart’s, for example, ends on January 31 each year to reflect its typically strong financial performance over the holiday period at the end of the year. In Australia, the financial year matches government reporting cycles. Unlike the northern hemisphere, our parliamentarians typically take holidays over summer in December and January, which makes meeting over November and December to approve government budgets difficult. The federal budget is issued in May for the following financial year, giving parliament time to consider it before the new fiscal year begins. <h2>Comparing (and taxing) performance</h2> Regardless of the time period over which a financial year operates, its primary purpose is to provide a standardised time frame for financial reporting. Financial years allow income and expenses to be tracked and compared over the same timeframe each year. This allows investors to compare business performance across consistent periods. They are also used to determine the collection of personal income tax. Our government uses this information to calculate the amount of tax it will collect through the Australian Taxation Office each year. Businesses with operations spanning multiple countries may have to contend with fiscal years that do not align. Where this is the case, they may need to choose one financial year for the whole company, typically that used by the parent company. Keeping track of the financial year is helpful for individuals, in knowing when tax returns need to be prepared (and when to expect end-of-financial-year sales). It is also important for businesses to consider the financial year in making budgeting, business and tax planning decisions. <img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/233655/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/michaela-rankin-1544784">Michaela Rankin</a>, Professor and Head, Department of Accounting, <a href="https://theconversation.com/institutions/monash-university-1065">Monash University</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/what-are-financial-years-and-why-are-they-different-from-calendar-years-233655">original article</a>.

Money & Banking

Battling to make ends meet? Financial planning expert offers 5 tips on how to build your budget

<a href="https://theconversation.com/profiles/bomikazi-zeka-680577">Bomikazi Zeka</a>, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a> Every day seems to bring new headlines about rising costs. <a href="https://www.news24.com/news24/africa/news/nigerias-big-unions-call-indefinite-strike-over-fuel-prices-and-the-cost-of-living-20230926">In Nigeria</a>, unions are threatening to strike amid soaring fuel prices; the country’s inflation rate <a href="https://www.cbn.gov.ng/rates/inflrates.asp">hit 25%</a> in August. The amount it costs to fill a food basket in South Africa <a href="https://pmbejd.org.za/wp-content/uploads/2023/09/PMBEJD_Key-Data_September-2023_27092023.pdf">keeps climbing</a>. Ghanaians <a href="https://www.reuters.com/world/africa/multi-day-protests-over-economic-crisis-grip-ghanas-capital-2023-09-23/">took to the streets</a> of Accra in late September to protest about the cost of living. A <a href="https://www2.deloitte.com/us/en/insights/industry/retail-distribution/consumer-behavior-trends-state-of-the-consumer-tracker.html">recent study by the audit and consulting firm Deloitte</a> found that 75% of South Africans were concerned that the prices for everyday purchases would continue to increase, while 80% of consumers across all income groups expected the prices of groceries, household utilities and fuel to rise. This stark reality means budgeting may be more necessary than ever. If you don’t know how to create a budget, then you shouldn’t feel bad – most adults aren’t taught how to create one. And most people don’t budget, because they see it as restrictive or unsustainable. But it need not be: once you appreciate that a budget can work for you, it can be a financially empowering exercise. It’s a cornerstone of financial planning because it ensures you are living within your means and helps you remain in financial control. As a financial planning academic, I focus in <a href="https://researchprofiles.canberra.edu.au/en/persons/bomikazi-zeka/publications/">my research</a> on improving financial wellbeing and promoting savings behaviours through interventions such as budgeting. Here are five guidelines for creating a budget. <h2>1. Apps vs spreadsheet</h2> A good place to start is to choose the format of how you’re going to budget. There are several <a href="https://www.sanlamreality.co.za/wealth-sense/setting-up-a-family-budget-that-works/">online templates</a> and apps you can use for budgeting. For instance, <a href="https://www.22seven.com/">22Seven</a> has gained popularity in South Africa due to its compatibility with several financial institutions, including the country’s big five banks. Similarly, <a href="https://www.the-star.co.ke/business/kenya/2021-01-25-budgeting-using-mint-app/">Mint</a> is a popular budgeting tool that is used in Kenya and Nigeria. If you prefer to put pen to paper, some online templates come with <a href="https://www.wonga.co.za/blog/free-budget-template">free printable budgets</a>. Creating your own <a href="https://create.microsoft.com/en-us/learn/articles/how-to-make-excel-budget">Excel spreadsheet</a> is an equally good approach. What matters most is using a tool that you can commit to. <h2>2. Itemising your income and expenses</h2> A budget essentially shows how much you’re spending in relation to how much you’re earning. So once you have selected your budgeting tool, you need to fill in your income and itemise how much you’re spending on each expense in a month. A budget can be considered a cashflow statement because it allows you to track money coming in (income) and money going out (expenses). If you are living within your means, your budget should indicate a surplus – more cash inflows than cash outflows. So budgeting provides an accurate account of your short-term financial position. <h2>3. A realistic account of expenses</h2> When you look at your financial statements, fill your expenses into your budget honestly and accurately. Don’t cheat! Since everyone’s financial situation is different, your budget will also be unique. Even though there is no one-size-fits-all approach to budgeting, it should still consider all of your expenses (both regular and intermittent). A general rule of thumb is that if it’s deducted from your account then you should treat it as an expense. This includes payments for housing, medical insurance, fuel, dining out, credit card repayments and even bank fees. <h2>4. Save first, spend later</h2> Now you’ve seen how much you’re spending. Either it’s too much – and you can plan where to cut back – or you have savings at the end of the month. When compiling your budget it’s important to demarcate how much will be in the form of savings. What’s more important is getting into the habit of saving before you spend instead of saving after spending. If you spend first then you’ve deprived yourself of the opportunity to save for a rainy day. Furthermore, <a href="https://eprints.hud.ac.uk/id/eprint/10231/1/Microsoft_Word_-_submitted_version_3rd_June_201.pdf">research</a> has shown that getting into the habit of saving has a transgenerational effect: it can be considered a cultural value that is passed on from one generation to another. So think of saving as paying yourself first. Once you have done so, you won’t feel guilty for treating yourself because you’ve already done the financially responsible thing by putting your savings aside. <h2>5. Considering assets and liabilities</h2> Once you’ve become comfortable with consistently budgeting, you can take it up a notch by including your assets (everything you own with an economic value) and liabilities (everything you owe) to determine your overall financial position. You can get a clearer picture of your overall financial wellbeing by compiling a list of all your assets, for example your savings and <a href="https://www.investopedia.com/terms/h/home_equity.asp">home equity</a>, in relation to liabilities (such as bank loans). Knowing your long-term financial position can indicate how financially resilient or vulnerable you are. In the event of a financial emergency, you will know which resources you can draw upon to meet an unexpected expense. By creating a budget (and sticking to it), you can protect yourself and your household from financial shocks. Consider the alternative. Imagine you haven’t budgeted and set savings aside. If a financial emergency were to arise, your next best bet would be to borrow the funds you need. You’d have to come up with a plan to repay what you’d borrowed while also building your savings. <h2>A healthy habit</h2> Getting into the habit of budgeting isn’t easy, especially if you haven’t done it before or you’re intimidated by the process. But, as the expression goes, “a journey of a thousand miles begins with a single step”. Think of budgeting as taking a small but important step towards reclaiming control over your finances and improving your financial well-being.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/214861/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/bomikazi-zeka-680577">Bomikazi Zeka</a>, Assistant Professor in Finance and Financial Planning, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/battling-to-make-ends-meet-financial-planning-expert-offers-5-tips-on-how-to-build-your-budget-214861">original article</a>.

Money & Banking

If you have money anxiety, knowing your financial attachment style can help

<a href="https://theconversation.com/profiles/ylva-baeckstrom-1463175">Ylva Baeckstrom</a>, <a href="https://theconversation.com/institutions/kings-college-london-1196">King's College London</a> The number of people struggling with money in Britain is at a <a href="https://www.theguardian.com/money/2024/mar/18/record-numbers-of-uk-people-in-debt-warns-charity">record high</a>. Financial charities say that people are contacting them for help with debt, paying bills and insolvency. The campaign group Debt Justice found in a <a href="https://debtjustice.org.uk/wp-content/uploads/2024/03/WalnutOmnibus-Debt-Justice-Policy-Development-Weighted.xlsx">survey</a> that 29% of 18- to 24-year-olds and 25% of 25- to 34-year-olds had missed three or more bill payments in the last six months. A majority (65%) of people don’t think they can survive on their savings for three months without <a href="https://www.money.co.uk/savings-accounts/savings-statistics">borrowing money</a>. Statistics from the UK’s financial markets regulator show that more than one-third of UK adults have less than £1,000 in savings. And a survey by Money.co.uk found that 30% of Brits aged 25-64 do not save at all <a href="https://www.pensionsage.com/pa/Nearly-one-third-of-Brits-are-not-saving-for-retirement.php">for retirement</a>. With figures like that, is it any wonder that 75% of people in the UK feel <a href="https://www.mentalhealth.org.uk/about-us/news/financial-strain-driving-uks-anxiety#:%7E:text=Almost%20three%2Dquarters%20of%20the,cited%20job%20insecurity%20or%20unemployment">anxious about money</a>? The current state of the economy is particularly scary for young people. Unless you were born with a trust fund (not most people), you are likely part of the first generation to be financially worse off than <a href="https://edition.cnn.com/2020/01/11/politics/millennials-income-stalled-upward-mobility-us/index.html">your parents</a>. Retirement seems like an impossibility, and you’re unlikely to own your own home. Eighty percent of people in their early 20s worry about <a href="https://www.youngminds.org.uk/parent/parents-a-z-mental-health-guide/money-and-mental-health/#Thelinksbetweenmoneyandmentalhealth">not earning enough</a>. It is important to start planning for your financial future early in your career, but you may find it overwhelming. The good news is, there are ways to overcome this. <h2>Finding your financial attachment style</h2> As a psychotherapist and finance researcher, I work with people to help them to increase their financial confidence and find the motivation to start planning. This often starts with understanding what influences their relationship with money. <a href="https://www.cambridge.org/core/journals/behavioral-and-brain-sciences/article/bowlbyainsworth-attachment-theory/6D35C7A344107195D97FD7ADAE06C807">Attachment theory</a> is a psychological concept introduced in the late 1950s. Your attachment style – which can be, for example, secure, anxious or avoidant – explains how you approach creating emotionally intimate relationships with other people. Some people feel secure building relationships, while others are extremely anxious. Some avoid close relationships altogether. Attachment style can also apply to your finances. If you feel confident and safe when it comes to money, you are secure in your relationship to saving and spending. But if the thought of opening an ISA or filling out a tax return, let alone planning for retirement, fills you with dread and panic, you may be anxiously attached. And if you if you push money worries to the back of your mind, you are likely avoidant. Attachment theorists and psychotherapists like me think that attachment styles are shaped by childhood experiences – for example, how well you were looked after by your parents or carers, and how safe and loved you felt. The way money was handled in your family growing up is likely to have set the blueprint for your <a href="https://www.sciencedaily.com/releases/2020/02/200225114410.htm">financial attachment style</a>. Outside influences like education or work experiences may shape this too. Although financial education is part of the <a href="https://maps.org.uk/en/work-with-us/financial-education-in-schools">school curriculum</a> in the UK, 76% of children leave school without sufficient <a href="https://maps.org.uk/en/media-centre/press-releases/2024/hundreds-of-thousands-leaving-school-without-money-skills#:%7E:text=In%20its%20poll%20of%201%2C012,knowledge%20they%20need%20for%20adulthood">financial knowledge</a> to manage their lives. Similarly, financial services like banks have done a poor job helping people establish secure financial relationships. Complex and <a href="https://www.pwmnet.com/private-view-blog-time-for-the-financial-industry-to-jettison-the-jargon">off-putting language</a> has placed a barrier between those who know about money and those who need to learn. If you feel unable to keep up with financial terms, or that you don’t understand money, this is likely to hurt your confidence in your financial planning abilities and fuel a more avoidant attachment style. Identifying your attachment style can help you nurture a better relationship with money. You will be able to understand and predict how and why you react to finances in certain ways. And, it can provide confidence by reminding you that money struggles are not necessarily your fault. <h2>Getting over financial anxiety</h2> Some of the recent financial trends spreading on social media may give an insight into your attachment style. Are you <a href="https://www.cnbc.com/select/what-is-loud-budgeting-trend-can-it-work/">“loud budgeting”</a> (being vocal about why you aren’t spending money)? This could be a sign of financial confidence and that you have secure financial attachment. Or are you “doom spending” (spending money you don’t have instead of creating a <a href="https://www.theguardian.com/lifeandstyle/2024/jan/31/are-you-loud-budgeting-or-doom-spending-finance-according-to-gen-z">nest egg</a> for the future)? You may be avoidant. Healthy relationships with <a href="https://www.nhs.uk/every-mind-matters/lifes-challenges/maintaining-healthy-relationships-and-mental-wellbeing/#:%7E:text=People%20with%20healthy%2C%20positive%20and,such%20as%20stress%20and%20anxiety">people</a> and <a href="https://www.nhs.uk/every-mind-matters/lifes-challenges/money-worries-mental-health/#:%7E:text=Our%20mental%20health%20might%20be,earning%20enough%20or%20currently%20unemployed">money</a> are both critical for our survival and mental health. As an adult, you have the power to improve these relationships. But because attachment patterns were formed early on, they are difficult to change. Therapy and other support can help you adopt healthier habits, as can increasing your financial knowledge. If you want to change your relationship with money, you should try to be mindful of what may be influencing you. While financial advice on social media may be useful and help young people feel more empowered to <a href="https://www.forbes.com/advisor/investing/financial-advisor/adults-financial-advice-social-media/">talk about money</a>, it can also <a href="https://www.mcleanhospital.org/essential/it-or-not-social-medias-affecting-your-mental-health">increase anxiety further</a> and be <a href="https://theconversation.com/if-you-get-your-financial-advice-on-social-media-watch-out-for-misinformation-222196">full of misinformation</a>. A good place to start for accurate and helpful information is the government’s <a href="https://www.moneyhelper.org.uk/en">Money Helper website</a>.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/225243/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/ylva-baeckstrom-1463175">Ylva Baeckstrom</a>, Senior Lecturer in Finance, <a href="https://theconversation.com/institutions/kings-college-london-1196">King's College London</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/if-you-have-money-anxiety-knowing-your-financial-attachment-style-can-help-225243">original article</a>.

Money & Banking

Independent you: preventing, and recovering from, elder abuse

From implementing safeguards to stop it from beginning to taking back control if it does, there is a lot of power in your hands to avoid elder abuse. Previously, we explored the warning signs of elder abuse and how <a href="https://www.oversixty.com.au/finance/retirement-income/are-you-a-victim-of-elder-abuse-without-even-realising-it">it is possible to be a victim without even realising it</a>. And with more wealth owned by people over 60 now than ever before, the potential for abuse only continues to grow. So, how can you prevent elder abuse happening to you? And if you are already experiencing it, what can you do to regain control over your finances, independence and wellbeing? Prevention better than cure The best way to avoid the impacts of elder abuse is to protect yourself against it beginning in the first place. Awareness is the first step, so having <a href="https://www.oversixty.com.au/finance/retirement-income/are-you-a-victim-of-elder-abuse-without-even-realising-it">read this article and knowing the warning signs</a>, you’re already ahead of the game! Other preventative actions include: <ul> <li>Maintaining contact: social interactions are important not just for warding off loneliness but providing access to other points of view and avenues for support. </li> <li>External advisers: engage your own advisers – don’t simply employ who someone tells you to. They should be an impartial, qualified set of eyes to monitor things for you and point out anything that doesn’t seem right. This includes a financial advisor, lawyer, accountant, doctor and so on. A support person attending appointments with you may give you extra assurance.</li> <li>Power of attorney/guardianship: nominate multiple people, so that no one individual has all the say. It can be useful to include someone who is not a relative for impartiality, such as a trusted friend or your lawyer. </li> <li>Superannuation beneficiaries: super is separate from your will, but beneficiary nominations can only be spouse, child, dependent or interdependent otherwise it will go to you Will. In your Will you can direct to other people or charities. Some beneficiaries lapse, so will need to be renewed.</li> <li>Wills: review your will to ensure it reflects YOUR wishes, not someone else’s. People can jostle over not only their own inheritance but may try to influence you to leave others out. </li> <li>Documenting everything: keep a written record, especially where money is concerned – such as acting as Bank of Mum and Dad for adult kids to purchase property. Outline how much is given, what if any interest/repayments are expected and when, and what happens if their relationship subsequently breaks down.</li> <li>Encouraging independence: people who have come to expect handouts can become abusive if those handouts stop or requests for more are denied. Support and encourage others, especially your kids, to be financially independent and self-sufficient.</li> </ul> Taking back control Sadly, prevention is no longer an option for an <a href="https://www.aihw.gov.au/family-domestic-and-sexual-violence/population-groups/older-people?xd_co_f=YjAzZDU4YTUtYzA5YS00YTNkLWJkNDQtNjdiZTM5ZmY5ZjQx#abuse">estimated 598,000 Australians</a> already experiencing elder abuse. However, it is still possible to break the cycle. Don’t be embarrassed or stick your head in the sand hoping things will improve. You have done nothing wrong. You are entitled to enjoy your retirement years. To take back control over your affairs, your wellbeing and your independence: <ul> <li>Ensure your physical safety first and foremost.</li> <li>Seek medical attention for your physical and mental health (the latter is crucial for making good decisions around the other points on this list).</li> <li>Get support from another relative, close friend, neighbour, or other trusted person. Don’t be alone.</li> <li>Secure a roof over your head. Having a stable place to live gives you the security and focus to tackle other concerns.</li> <li>Freeze access to your money – bank accounts, credit cards etc. This will stop (further) unauthorised withdrawals or purchases being charged to you.</li> <li>Seek professional advice. Your financial adviser, tax accountant and lawyer will be able to guide you through protecting your home, money, guardianship and estate planning matters.</li> <li>Make informed changes. Don’t do anything rashly – make necessary changes once you have sought independent advice and considered your options. This may involve making changes to your power of attorney, will, superannuation, bank accounts, even your phone number in extreme cases.</li> <li>Consider counselling. Your abuser may not realise the severity of their actions. An independent counsellor may be able to help them see this and change their ways, and ultimately salvage your relationship.</li> </ul> If you or someone you know is experiencing elder abuse, seek help straight away. Speak to a trusted relative or friend. Seek independent legal and financial advice about your affairs. Or call the government’s free elder abuse line on 1800 353 374. And if your life is in danger, call triple zero (000) immediately. Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754. Image credits: Getty Images

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‘Girl math’ may not be smart financial advice, but it could help women feel more empowered with money

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/ylva-baeckstrom-1463175">Ylva Baeckstrom</a>, <a href="https://theconversation.com/institutions/kings-college-london-1196">King's College London</a> If you’ve ever calculated cost per wear to justify the price of an expensive dress, or felt like you’ve made a profit after returning an ill-fitting pair of jeans, you might be an expert in <a href="https://www.standard.co.uk/news/world/girl-maths-tiktok-trend-its-basically-free-b1100504.html">“girl math”</a>. With videos about the topic going viral on social media, girl math might seem like a silly (<a href="https://www.glamourmagazine.co.uk/article/girl-math-womens-spending-taken-seriously">or even sexist</a>) trend, but it actually tells us a lot about the relationship between gender, money and emotions. Girl math introduces a spend classification system: purchases below a certain value, or made in cash, don’t “count”. Psychologically, this makes low-value spending feel safe and emphasises the importance of the long-term value derived from more expensive items. For example, girl math tells us that buying an expensive dress is only “worth it” if you can wear it to multiple events. This approach has similarities to <a href="https://www.investopedia.com/terms/m/modernportfoliotheory.asp">portfolio theory</a> – a method of choosing investments to maximise expected returns and minimise risk. By evaluating how each purchase contributes to the shopping portfolio, girl math shoppers essentially become shopping portfolio managers. <h2>Money and emotions</h2> People of all genders, rich or poor, feel anxious when dealing with their personal finances. Many people in the UK do not understand pensions or saving enough to <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/workplacepensions/articles/pensionparticipationatrecordhighbutcontributionsclusteratminimumlevels/2018-05-04">afford their retirement</a>. Without motivation to learn, people avoid dealing with money altogether. One way to find this motivation, as girl math shows, is by having an emotional and tangible connection to our finances. On the surface, it may seem that women are being ridiculed and encouraged to overspend by using girl math. From a different perspective, it hints at something critical: for a person to really care about something as seemingly abstract as personal finance, they need to feel that they can relate to it. Thinking about money in terms of the value of purchases can help create an <a href="https://www.thetimes.co.uk/article/every-time-i-use-my-card-my-phone-buzzes-and-that-stops-me-shopping-ps0fjx6nj">emotional relationship</a> to finance, making it something people want to look after. <figure><iframe src="https://www.youtube.com/embed/GPzA7B6dcxc?wmode=transparent&start=0" width="440" height="260" frameborder="0" allowfullscreen="allowfullscreen"></iframe></figure> <h2>The girl math we need</h2> Women are a consumer force to be reckoned with, controlling <a href="https://www.forbes.com/sites/bridgetbrennan/2015/01/21/top-10-things-everyone-should-know-about-women-consumers/#7679f9d6a8b4">up to 80%</a> of consumer spending globally. The girl math trend is a demonstration of women’s mastery at applying portfolio theory to their shopping, making them investment powerhouses whose potential is overlooked by the financial services industry. <a href="https://www.theguardian.com/world/2019/oct/28/women-paid-less-than-men-over-careers-gender-pay-gap-report">Women are disadvantaged</a> when it comes to money and finance. Women in the UK earn on average £260,000 less than men during their careers and the retirement income of men is twice as high as women’s. As I’ve found in <a href="https://www.routledge.com/Gender-and-Finance-Addressing-Inequality-in-the-Financial-Services-Industry/Baeckstrom/p/book/9781032055572">my research</a> on gender and finance, women have lower financial self-efficacy (belief in their own abilities) compared to men. This is not helped by women feeling patronised when seeking financial advice. Because the world of finance was created by men for men, its language and culture are <a href="https://www.routledge.com/Gender-and-Finance-Addressing-Inequality-in-the-Financial-Services-Industry/Baeckstrom/p/book/9781032055572">intrinsically male</a>. Only in the mid-1970s did women in the UK gain the legal right to open a bank account without a male signature and it was not until 1980 that they could apply for credit independently. With the law now more (<a href="https://www.worldbank.org/en/news/press-release/2023/03/02/pace-of-reform-toward-equal-rights-for-women-falls-to-20-year-low">but not fully</a>) gender equal, the financial services industry has failed to connect with women. Studies show that 49% of women are <a href="https://www.ellevest.com/magazine/disrupt-money/ellevest-financial-wellness-survey">anxious about their finances</a>. However they have not bought into patronising offers and <a href="https://www.fa-mag.com/news/gender-roles-block-female-financial-experience--ubs-says-73531.html">mansplaining by financial advisers</a>. This outdated approach suggests that it is women, rather than the malfunctioning financial system, <a href="https://www.theguardian.com/commentisfree/2020/sep/16/women-are-not-financially-illiterate-they-need-more-than-condescending-advice">who need fixing</a>. Women continue to feel that they do not belong to or are able to trust the world of finance. And why would women trust an industry with a <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/genderpaygapintheuk/2019">gender pay gap</a> of up to 59% and a severe lack of women in senior positions? Girl math on its own isn’t necessarily good financial advice, but if it helps even a handful of women feel more empowered to manage and understand their finances, it should not be dismissed.  <a href="https://theconversation.com/profiles/ylva-baeckstrom-1463175">Ylva Baeckstrom</a>, Senior Lecturer in Finance, <a href="https://theconversation.com/institutions/kings-college-london-1196">King's College London</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/girl-math-may-not-be-smart-financial-advice-but-it-could-help-women-feel-more-empowered-with-money-211780">original article</a>. </div>

Money & Banking

Monty Python star's candid financial admission

Monty Python star Eric Idle has made a candid admission about the state of his finances, revealing why he still has to work at the age of 80. The comic legend admitted he receives only a fraction of the millions the Python team have made in the past because the finances are a “disaster”. In messages on X, formerly Twitter, Idle wrote: “I don’t know why people always assume we’re loaded”. “I have to work for my living. I never dreamed that at this age the income streams would tail off so disastrously." “I have been working and earning for Pythons since 1995. And now no more.” Idle also took aim at TV lawyer Holly Gilliam, the daughter of fellow Python member Terry Gilliam, who took over the Python brand in 2013 as part of HDG Projects Ltd. He said, “I guess if you put a Gilliam child in as your manager you should not be so surprised”. “One Gilliam is bad enough. Two can take out any company.” Daughter Lily Idle backed him, writing online, “I’m so proud of my dad for finally finally finally starting to share the truth.” The Pythons, who also included John Cleese, 84, Michael Palin, 80, and the late Terry Jones — made a fortune thanks to their iconic cult films, including Life of Brian, hit stage show Spamalot, which Idle co-wrote, and the original Flying Circus BBC TV series. They were back in the limelight in 2014 with Monty Python Live (Mostly) — One Down, Five to Go: a reference to former member Graham Chapman who died in 1989 aged just 48. It featured interpretations of some of their famous sketches, and reportedly earned the surviving members at least £2 million ($3.87m AUD) each. Image credits: Getty Images

Retirement Income

Could you cope with a shock to your bank balance? 5 ways to check you are financially resilient

<a href="https://theconversation.com/profiles/bomikazi-zeka-680577">Bomikazi Zeka</a>, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a> Imagine the dentist has just said you urgently need a A$2,000 dental crown. A week later, a pipe in your bathroom bursts, causing $8,000 worth of damage. Suddenly, you’ve been hit with a $10,000 financial shock. As the cost-of-living crisis plunges more households into financial uncertainty and at least <a href="https://melbourneinstitute.unimelb.edu.au/data/taking-the-pulse-of-the-nation-2022/2023/australians-face-challenging-budgetary-constraints#:%7E:text=Over%20the%20past%20six%20months,has%20increased%20to%2060%20percent.">one-third</a> of Australians struggle to make ends meet, it’s more important than ever to ask yourself: how financially resilient am I? Being financially resilient means you aren’t left financially devastated when an expensive emergency creeps up on you. Here are five key signs of financial resilience. <h2>1. You have a plan for what you’d do if you suddenly lost your salary</h2> Financial resilience means having a plan to fall back on during tough times. This extends to how you’d make money if you lost your job. In practice, that means things like making sure your skills and contacts are kept up to date so you can more easily find a new job. You might also consider whether a “side hustle” job such as tutoring could work for you in the short term, and how you’d put that plan into practice if needed. Perhaps you have a spare room in your home you could rent out for a period of time if you lost your salary. Those examples won’t work for everyone, of course, but it’s still worth asking yourself the question: what would I do if I lost my salary tomorrow? <h2>2. You have enough liquid assets to meet an unexpected financial expense</h2> Liquid assets means money that can be accessed quickly and easily to overcome an unplanned financial expense. Savings are a good example. They provide a buffer so you can cope in the short term if a financial shock strikes. The federal government’s Moneysmart website suggests you aim to have enough in your emergency savings fund to cover <a href="https://moneysmart.gov.au/saving/save-for-an-emergency-fund">three months of expenses</a>. Having an <a href="https://moneysmart.gov.au/glossary/offset-account">offset account</a> as part of a mortgage is another option that provides a buffer. Putting money in an offset account helps you save while reducing the amount of interest on a home loan. You can still access the money in an offset account at any time. <h2>3. You have bought the right financial products, such as insurance</h2> Financial products, such as insurance, hedge against potential losses. Personal insurance is important because it provides income in the event of death, illness or injury. Examples include: <ul> <li> life insurance (which pays out to your beneficiaries, such as your partner or children, when you die) </li> <li> total and permanent disability insurance (which means you may get some money if you acquire a disability that prevents you from working) </li> <li> income protection (which provides you with an income if you can no longer work) </li> <li> trauma cover (which covers a life-changing illness or injury, such as cancer or a stroke). </li> </ul> Check if your superannuation has any of these insurances included in it. <a href="https://www.griffith.edu.au/__data/assets/pdf_file/0030/295770/FPRJ-V4-ISS1-pp-53-75-insurance-literacy-in-australia.pdf">Research</a> has found that many Australians are underinsured. <h2>4. You can still pay your debts when times are tough</h2> Being able to borrow money can help when you’re in a tight spot. But knowing where to borrow from, how much to borrow and how to manage debt repayments is crucial. Financially resilient people use debt responsibly. That means: <ul> <li> not using debt for frivolous expenses like after-work drinks </li> <li> staying away from private money lenders </li> <li> being cautious about buy-now-pay-later services </li> <li> watching out for debts with high interest rates, such as payday loans and credit card debt </li> <li> maintaining debt repayments consistently. </li> </ul> If you’re having debt problems, talk to your lender about renegotiating your repayment arrangements, or contact the <a href="https://ndh.org.au/">National Debt Helpline</a> on 1800 007 007. <h2>5. You are financially literate</h2> Being financially literate means you can assess the benefits and risks of using savings or taking out debt to meet an unplanned financial need. As I have <a href="https://theconversation.com/are-you-financially-literate-here-are-7-signs-youre-on-the-right-track-202331">written</a> before on The Conversation, key signs of financial literacy include tracking your cashflow, building a budget, as well as understanding what debts you have and which to pay first. It also means storing your money across different places (such as superannuation, savings accounts, property and the share market) and understanding how financial assets like cash, shares and bonds work. Being aware of your financial strengths and weaknesses, and having financial goals is also important. Nobody is born knowing how to make sound financial decisions; it’s a skill that must be learned. It’s good to think about the resources you would draw upon to help get yourself out of a difficult financial situation – well before disaster strikes.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/218126/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/bomikazi-zeka-680577">Bomikazi Zeka</a>, Assistant Professor in Finance and Financial Planning, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/could-you-cope-with-a-shock-to-your-bank-balance-5-ways-to-check-you-are-financially-resilient-218126">original article</a>.

Money & Banking

5 financial lessons you should impart to your adult children

Ultimately, we want our kids to live long, happy, healthy lives. Financial security is central to achieving this dream. So it may be time to have a chat about matters of money and ensure they are well set up for a prosperous future! While there are many important things to instil in future generations, the five below are perhaps the most crucial current-day issues for your adult children to master. <ol> <li>Avoid BNPL</li> </ol> Buy now, pay later (BNPL) schemes have taken off in popularity in recent years, allowing shoppers to purchase and use goods straight away yet pay for them over time in instalments. Sound too good to be true? Indeed. Most schemes attach hefty penalties and interest for missed or late repayments – much the same as credit cards. The debt quickly balloons, and can become unsustainable. The best approach to instil in your children is to always live within their means. <ol start="2"> <li>Avoid sexually transmitted debt</li> </ol> Joint finances, loans, credit cards, utilities, subscriptions, vehicles, businesses, property… all of these and more are shared liabilities. Even if a partner is the one who racks up the debts, your child is equally responsible for repaying them. This is what I call sexually transmitted debt. It could be inadvertent (such as having a partner who, despite their best intentions, is simply bad with money); hidden (like gambling addiction), deliberate (financial abuse), lose their job, have an accident, get seriously unwell. Either way, sexually transmitted debts can create long-term and even life-long problems, regardless of whether the relationship that created those debts survives: repayment struggles, credit constraints, bankruptcy, legal woes. When it comes to money, your children (and yourself) need to think with their head, not their heart. <ol start="3"> <li>Start investing </li> </ol> The number one thing financial advisers hear most is “I wish I started years ago”. Investments typically grow over time. The more time you allow, the bigger their value. Younger adults have big demands on their hip pocket. However, even starting with small investments allows compound growth to work its magic. Plus, given the housing affordability constraints facing younger generations, investments that can be sold or leveraged could better help them onto the housing ladder in future. Superannuation is another investment to pay attention to from a young age: managing investments, ensuring they are in a cost-effective fund, and avoiding mistakes – like consolidating funds without getting advice, which can inadvertently see them consolidate into a poorer performing fund or cancel attached insurances that had preferential terms. <ol start="4"> <li>Get a will</li> </ol> While young people may feel invincible, untimely deaths or disablement claims sadly can and do happen. And often unexpectedly: land transport accidents and accidental poisoning, together with suicide, make up <a href="https://www.aihw.gov.au/reports/life-expectancy-deaths/deaths-in-australia/contents/leading-causes-of-death">the biggest causes of death for under 44s</a> in Australia. Not having a will and a nominated executor complicates matters for grieving family and can delay all-important access to finances. How would your child’s partner and kids (if they have them) survive if their super, insurances and other payouts are delayed through probate? Remember to point out that superannuation (and other structures like companies and trusts) are treated separately from a will, and so need beneficiaries nominated within them. Younger people are also less likely to have discussed their final wishes with loved ones – funeral arrangements, burial vs cremation, organ donation, inheritances etc. This is where a separate statement of wishes can be useful. <ol start="5"> <li>Get insured</li> </ol> Insurances – save perhaps vehicle and house/contents – are rarely on the minds of younger people. But they should be. That is because many insurances are cheaper and offer better coverage when people are younger and free of any health complications. That includes private health, life and permanent disability, and income protection cover. Other insurances, like asset protection, can also be more lucrative to lock-in early. Just think about how the Ts and Cs on insurances have changed (become more restrictive) since you were their age! So encourage your adult children to scrutinise their insurance coverage. (And keep them away from drugs and smoking to stay healthier for longer!) Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press, $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au">www.onyourowntwofeet.com.au</a> Image credits: Getty Images

Money & Banking

7 ways to create realistic financial goals that you'll actually stick to

Establishing robust financial habits not only fosters comfort but also alleviates anxieties about the road ahead. A positive change in our financial circumstances commences with a shift in our money mindset. When you shift to creating lasting change, you can achieve more than you believe is possible. When creating financial goals that you’ll actually stick to, parallels can be drawn between achieving physical and financial fitness. Let’s take a look. <ol> <li>Precision in Goal Setting</li> </ol> Just like any other endeavour, the path to financial well-being requires setting clear objectives that are both quantifiable and feasible. Whether it's building an emergency fund or saving for a major purchase, your goals need to be well-defined and measurable. Just as a fitness regimen consists of various exercises targeting different muscle groups, your financial goals should cover different aspects of your financial life. <ol start="2"> <li>The Inaugural Step</li> </ol> The hardest part is starting – there will always be competing priorities. Think of it as taking one step at a time. Starting your financial goals might feel overwhelming due to competing priorities and uncertainties. Start small and build momentum gradually. Establish a budget, track your expenses, and save a modest amount regularly. <ol start="3"> <li>Avoiding Extreme Measures</li> </ol> Remember, lasting change comes from sustainable actions. Financial quick fixes like waiting for bonuses or tax returns won't foster healthy habits and can lead to financial fatigue. Instead, embrace gradual progress; small efforts compound over time. The allure of crash diets can be tempting, but they rarely yield lasting results. Instead, opt for consistent, manageable actions. Focus on building sustainable habits, like making regular contributions to savings or investments. <ol start="4"> <li>The Power of Knowledge</li> </ol> Equip yourself with information. Education is a powerful tool in achieving financial well-being. Understanding the options available is pivotal to making informed financial decisions. Gain a comprehensive understanding of your financial options. Research investment opportunities and strategies that align with your goals. Knowledge empowers you to navigate the complex landscape of personal finance confidently. <ol start="5"> <li>Exploration of Strategies</li> </ol> Just as someone might prefer running over cycling, finding financial strategies that resonate with you enhances your chances of long-term success. Experiment with diverse approaches to identify what resonates best, reducing stress and enhancing commitment. Opt for strategies that resonate with your values, minimise stress and amplifying commitment. <ol start="6"> <li>Consistency </li> </ol> Success lies in cultivating steady habits over time, ensuring enduring benefits. Just as regular workouts lead to improved physical health, cultivating small, consistent financial habits over time leads to enhanced financial well-being. Set up automated transfers to savings accounts, make incremental increases in contributions, and avoid overspending. <ol start="7"> <li>Intermittent Rewards</li> </ol> Occasionally treat yourself. Sporadic indulgences can enhance well-being and acknowledge hard-earned victories. Rewarding yourself for achieving financial milestones enhances your commitment and prevents financial fatigue. It's essential to strike a balance between frugality and enjoyment. By embracing these principles, we not only engineer realistic financial objectives but also cement a commitment to achieving them. That’s the key to lasting financial prosperity. Amanda Thompson, author of Financially Fit Women, is a sought-after speaker and qualified financial adviser. As the founder of Endurance Financial, Amanda is driven to support women to have a great relationship with money and own their own financial success. For more information visit <a href="http://www.endurancefinancial.com.au">www.endurancefinancial.com.au</a> Image credits: Getty Images

Money & Banking

What does financial abuse really look like?

Sally is in her 20s, lives in a dilapidated rental home and works three jobs. Fifty-something Sarah owns a large home, drives a Mercedes and is a corporate executive. Pensioner Scott, in his mid-70s, still lives in the home in which he and his late wife raised their children. Who would you say is more vulnerable to financial abuse? The answer, you may be surprised to learn, is all three. Financial abuse, according to the government’s <a href="https://moneysmart.gov.au/living-in-retirement/financial-abuse">MoneySmart</a>, is a type of family and domestic violence: “It often happens alongside other types of violence, such as physical or emotional abuse. It can leave you feeling vulnerable, isolated, depressed and anxious. It can also take away your independence.” Commonly a spouse or partner is the perpetrator, but it can come from any relative or friend. A <a href="https://www.commbank.com.au/content/dam/caas/newsroom/docs/Cost%2520of%2520financial%2520abuse%2520in%2520Australia.pdf">2022 Commonwealth Bank report</a> suggests over 623,000 Australians experienced financial abuse in 2020 alone – roughly one in 30 women and one in 50 men. Anyone – regardless of age, wealth etc. – can be a victim. Financial abuse has many faces Just as finances are complex, so too is financial abuse, which can be viewed from many angles: <ul> <li>Couples: One partner controls everything money related. I know of one instance where a woman’s partner went so far as counting coffee pods; another checked car mileage to stop his partner driving further than school drop-offs.</li> <li>Exes: Not working specifically to avoid paying child support; withholding information to delay settlement; bullying into a menial settlement.</li> <li>Multi-generations: Children or grandchildren milking elderly relatives; seizing control over their finances and living arrangements.</li> <li>Non-relatives: Such as friends buying property together without properly documenting everything, then fighting come sale time.</li> <li>Business relationships: Duped signatures on trust and business documents; hiding debts; impeding or undervaluing someone’s exit.</li> </ul> Warning signs There are common warning signs that you, or someone you know, is suffering financial abuse: <ul> <li>Pressure to make decisions: to invest your money or superannuation in crazy things that go bust, or to do nothing and not keep up with inflation (let alone grow your wealth), go guarantor on a loan, or sign power of attorney.</li> <li>Draining money: using your money to fund their business or investment on the promise a return is coming that never does (which could be poor management or deliberate deceit). This could continue for years until you’re left homeless and bankrupt.</li> <li>Unfair claims: your partner came into the relationship with nothing and stays just long enough to make a claim on your home.</li> <li>Controlled spending: this may start small (‘Don’t spend so much on clothes!’) but can become extreme. </li> <li>Blackmail: I’ve heard of people denied access to their grandkids unless they gave their son/daughter money or amended their will.</li> <li>Restricted access: you’re denied access to your own or joint finances, from having your own accounts, or are banned from working to earn your own income and superannuation.</li> <li>Tracking: sharing your location by smartphone may sound practical or safe but is open to abuse.</li> <li>Social isolation: cutting you off from friends and family; pressing for an interstate move.</li> <li>Reckless spending: your money is spent haphazardly – you may be kept in the dark or pressured not to ask questions.</li> <li>Tying down: trapping you into a big mortgage to crimp your freedom.</li> <li>Guilting: I have seen wealthy adults guilt their less fortunate parents into paying their bills, and gambling addicts guilt partners into paying their debts (with no intention to address their addiction or plan to pay it back).</li> </ul> Protecting yourself The best prevention of all is to avoid thinking ‘it won’t happen to me’. So many victims of financial abuse once thought exactly the same. Other tips include: <ul> <li>Speak up: Sometimes, starting a conversation can be enough to deliver positive change and even save a relationship (avoiding divorce is cheaper for everyone!)</li> <li>Have an emergency fund – cash only you can access, easily, in a crisis.</li> <li>Keep separate bank accounts – deposit your income here, then transfer money for joint bills into a joint account. </li> <li>Make decisions together – don’t leave money matters to your partner/children. It’s your money too.</li> <li>Get outside perspective: financial advisers are accountable to you as their client and help provide visibility over your assets, liabilities and risks. Ensure they are qualified and currently practicing.</li> </ul> If you think you may be a victim of financial abuse, I beg you – seek help immediately. Suffering in silence and letting the situation snowball is the costliest thing you can do. Both financially and emotionally! <a href="http://www.lifeline.org.au/">Lifeline - </a>13 11 14 <a href="https://www.1800respect.org.au/">1800RESPECT - </a>1800 737 732 <a href="https://www.familyrelationships.gov.au/talk-someone/advice-line">Family Relationship Advice Line - </a>1800 050 32 <a href="https://goodshep.org.au/">Good Shepherd Australia Financial Independence Hub - </a>1300 050 150 <a href="http://www.ndh.org.au/">National Debt Helpline - </a>1800 007 007 Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press, $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au">www.onyourowntwofeet.com.au</a> Image credits: Getty Images

Money & Banking

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#GirlMaths: a seemingly innocent and fun way to justify expenses that can have serious financial consequences

<a href="https://theconversation.com/profiles/janneke-blijlevens-150258">Janneke Blijlevens</a>, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a>; <a href="https://theconversation.com/profiles/angel-zhong-1204643">Angel Zhong</a>, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a>, and <a href="https://theconversation.com/profiles/lauren-gurrieri-5402">Lauren Gurrieri</a>, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a> These shoes are perfect, made for me! I have to get them! But really, I should be paying off my car loan instead. I can’t justify this purchase. Or can I …? We all know this feeling, this tension between what you really want to do and what you really should, or shouldn’t, do. What you are experiencing is <a href="https://www.britannica.com/biography/Leon-Festinger/Cognitive-dissonance">cognitive dissonance</a>. It’s a psychological discomfort we feel when our behaviours and our values or beliefs do not match. Not to worry, we can make that discomfort simply disappear with a good dose of #GirlMaths! <h2>So what is #GirlMaths?</h2> GirlMaths recently became a viral phenomenon on TikTok after New Zealand FVHZM radio hosts Fletch, Vaughan and Hayley used #GirlMaths to justify one host’s mother’s expensive dress purchase as basically free because the dress was going to be worn at least four times. <iframe id="tc-infographic-904" class="tc-infographic" style="border: none;" src="https://cdn.theconversation.com/infographics/904/f0b5e215a804bb450e609c397b96c7fcbf46172f/site/index.html" width="100%" height="400px" frameborder="0"></iframe> Since then, influencers have added to the #GirlMaths trend with gems such as “If I buy it for $100, wear it, and then resell it for $80 then I basically wore it for free”, “If I pay with cash, it means it’s free”, and “If I just returned something, then purchase something new for the same amount of money, then it’s free”. The reason #GirlMaths resonates so well with everyone and allows it to go viral is that we are very familiar with this type of thinking. The mental gymnastics of #GirlMaths needed to justify cost-per-wear or cash-is-free is a perfect display of behavioural biases and heuristics, such as confirmation bias and denomination bias, being applied to everyday consumption decisions. <h2>The psychology of decision-making</h2> Behavioural biases and heuristics are shortcuts in our thinking that help us make decisions quicker and easier, and are great for reducing the cognitive dissonance we sometimes experience. Our brain has a lot of decisions to make in a day and simply doesn’t have the power to scrutinise every little detail of every <a href="https://theconversation.com/what-shall-we-have-for-dinner-choice-overload-is-a-real-problem-but-these-tips-will-make-your-life-easier-193317">decision</a>. These shortcuts in our thinking may facilitate the decision making process, but they don’t always mean we make the most optimal decisions. Confirmation bias is a bias where you justify your decisions by considering only the evidence that supports what you want and ignore the evidence that would mean you’d have to make a different decision. Cost-per-wear does sound quite financially savvy. It is just like bulk-buying pantry essentials, right? The issue is you are ignoring the facts such as: 1) your disposable income does not match this expense in light of your utility bills, 2) you could rewear a cheaper dress all the same, and 3) by spending money on a fancy dress, you lose the opportunity to spend the money on other better investments for wealth accumulation, or to pay off your car loan. <h2>The financial and social costs</h2> But it’s all a bit of innocent fun, right? Surely people won’t take #GirlMaths that seriously? We beg to differ. First, the term is unnecessarily gendered. Gendered language operates to reinforce societal expectations with a particular gender and can promote stereotypes, biases and binary categories. In this case, the term “girl maths” reinforces problematic stereotypes that equate women with consumption, frivolity and extravagant spending. When stereotypes are reinforced within our own social circles, we are more likely to <a href="https://journals.sagepub.com/doi/abs/10.1177/0146167299025007004?casa_token=dOhnQVtFwPsAAAAA:XSBdix5AB6bDfGjNgfbX9OIjstw4KE071GP0l60mAxvHJMaEwkyPERqHXf3z9PhctWJUl6h7TgTHg_U">internalise these as part of our identity</a>. By representing women in a less favourable way, the term operates to both demean and discriminate on a gendered basis. This is heightened by the use of “girl” as opposed to “woman”, which implies someone is childlike or lacking in knowledge or experience. It also begs the question what “boy maths” - set up as something opposing and different - might connote. Second, the #GirlMaths trend reminds us of the power of “<a href="https://theconversation.com/fintok-and-finfluencers-are-on-the-rise-3-tips-to-assess-if-their-advice-has-value-161406">finfluencers</a>” – social media content creators amassing huge online followings by sharing advice on anything from budgeting to buying a house, to investing. These online gurus appeal to Gen Z and millennials, simplifying complex financial concepts into digestible nuggets, much like #GirlMaths simplifies purchases based on cost-per-wear or cash-as-free. Just as regulators such as <a href="https://moneysmart.gov.au/other-ways-to-borrow/buy-now-pay-later-services">ASIC</a> repeatedly warn us of the dangers of buy-now-pay-later services, we must caution the #GirlMaths trend as a dangerous cocktail for young women who are susceptible to the “advice” of finfluencers. The trend resembles BNPL by breaking down expenses into smaller, more palatable portions, making purchases seem justifiable and affordable at the moment. Denomination bias describes this tendency to spend more money when it is denominated in small amounts rather than large amounts. We find it much easier to spend $50 four times than $200 all at once. However, the convenience of these shortcuts in our thinking can obscure the hidden financial risks. You may overlook the bigger picture of your financial health, and spend more than what you can afford. That’s why a large number of BNPL users find themselves ending up in a <a href="https://www.choice.com.au/money/credit-cards-and-loans/personal-loans/articles/bnpl-submission-to-treasury">modern debt trap</a>. <h2>The perils of #GirlMaths</h2> The danger of #GirlMaths to young women lies in the cocktail of feeling oddly familiar and reinforced in this biased thinking, the problematic stereotypes that shape identities, and the power of finfluencers, who wield increasing influence over the financial choices and decision-making of young women. While the term may initially come across as innocent fun, it’s crucial not to underestimate its potential harms. Instead, let’s champion the use of inclusive language in finance that doesn’t perpetuate gender biases. And if you’re a staunch supporter of #GirlMaths, we strongly urge you to take into account the possible adverse financial consequences of these quick-fix spending habits.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/211903/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/janneke-blijlevens-150258">Janneke Blijlevens</a>, Senior Lecturer in Marketing, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a>; <a href="https://theconversation.com/profiles/angel-zhong-1204643">Angel Zhong</a>, Associate Professor of Finance, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a>, and <a href="https://theconversation.com/profiles/lauren-gurrieri-5402">Lauren Gurrieri</a>, Associate Professor in Marketing, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/girlmaths-a-seemingly-innocent-and-fun-way-to-justify-expenses-that-can-have-serious-financial-consequences-211903">original article</a>.

Money & Banking

Four myths about the financial side of divorce

<a href="https://theconversation.com/profiles/emma-hitchings-388514">Emma Hitchings</a>, <a href="https://theconversation.com/institutions/university-of-bristol-1211">University of Bristol</a> and <a href="https://theconversation.com/profiles/gillian-douglas-1428314">Gillian Douglas</a>, <a href="https://theconversation.com/institutions/kings-college-london-1196">King's College London</a> It’s no wonder many people think divorce involves going to court, huge legal fees and decades of spousal payments, considering these are the cases that dominate our headlines. However, the kinds of divorce cases reported in the news involve the very rich, and are far removed from the reality for most couples. The Law Commission of England and Wales, the body responsible for law reform, <a href="https://www.lawcom.gov.uk/project/financial-remedies-on-divorce/">recently announced a review</a> of the law of finances on divorce, with a scoping report due in September 2024. Review of this law is much needed, given the legislation governing how couples in England and Wales sort out their financial affairs upon marriage breakdown mainly dates back to the 1970s (the <a href="https://www.legislation.gov.uk/ukpga/1973/18">Matrimonial Causes Act 1973</a>). The problem is that key politicians <a href="https://hansard.parliament.uk/lords/2023-03-08/debates/3AB3D708-24E5-4FF2-8481-05EFA27E2593/DivorceFinancialProvision">who have been calling for change</a> still rely on the issues raised in these <a href="https://hansard.parliament.uk/lords/2018-05-11/debates/89A33706-7DCD-4FA0-AE0D-B06E11FAF264/Divorce(FinancialProvision)Bill(HL)">exceptional, “big money” divorce cases</a>. We need to correct the misleading narrative about divorce if reform is to address the needs of the 110,000 couples <a href="https://www.gov.uk/government/statistics/family-court-statistics-quarterly-july-to-september-2022">who get divorced in England and Wales each year</a>. Although there is limited research about this issue, we do know enough to challenge the following myths. <h2>1. Spouses are often forced to fund costly legal battles</h2> Family courts grant divorces and the fee is currently £593. However, it is not mandatory for a divorcing couple to get an additional order regarding their finances, and there is no need for expensive court hearings. In fact, <a href="https://www.gov.uk/government/statistics/family-court-statistics-quarterly-july-to-september-2022">fewer than 40%</a> of those divorcing each year do so. While there is no authoritative data on average legal costs incurred in these cases, it seems that, for many couples, the costs of sorting out their financial arrangements need not be high because the courts are not involved. And even those couples who do use the courts for their financial matters overwhelmingly settle rather than fight their case, which limits their legal costs. Only <a href="https://www.gov.uk/government/statistics/family-court-statistics-quarterly-july-to-september-2022">13% of financial orders</a> made in a divorce are actually decided by a judge after contested litigation. The rest are consent orders: orders finalised by the judge on terms that have already been agreed by the divorcing couple. <h2>2. Everything is split 50/50</h2> The law does not lay down a principle of equal sharing of the marital assets on divorce. However, the courts <a href="https://www.lawteacher.net/cases/miller-v-miller-mcfarlane-v-mcfarlane.php">do accept this is a desirable goal</a> if this can be done while meeting both parties’ needs – and those of their children. Research suggests that, rather than rigidly applying a 50/50 split, couples focus on their needs first and <a href="https://research-information.bris.ac.uk/en/publications/financial-remedies-on-divorce-the-need-for-evidence-based-reform">particularly those of their children</a>. This can result in an unequal split of the value of the main asset most couples have – the former marital home. <h2>3. Men have to pay lifelong maintenance</h2> Some news media object to the current law as they claim it allows an ex-wife to be supported <a href="https://www.dailymail.co.uk/news/article-5965629/Surveyor-marriage-ended-16-years-ago-WINS-Supreme-Court-battle.html">for the rest of her life</a> by her former husband (or vice versa). The argument is that this casts ex-wives as dependants who cannot look after themselves, and prevents husbands from moving on after their divorce. In reality, lifelong maintenance is rare, and even limited ongoing financial support is uncommon. The most recent data found that only 16% of court orders involved any kind of ongoing spousal support – of which, two-thirds were for a fixed term. Nearly all such orders involved <a href="http://www.nuffieldfoundation.org/sites/default/files/files/briefing%20paper%20Jun%202018%20FINAL.pdf">dependant children</a>, with the order terminating when the youngest child reaches a certain age or stage of education. <h2>4. London is the divorce capital of the world</h2> Some news media <a href="https://www.theguardian.com/lifeandstyle/shortcuts/2015/feb/24/divorce-rich-husband-london-english-law">report</a> that the courts’ endorsement of the principle of equal sharing has led to some wives, married to oligarchs, sheikhs and tycoons, seeking divorce through an English court due to its “generous” treatment of them. For example in 2021, a High Court judge ordered Sheikh Mohammed bin Rashid al-Maktoum, the emir of Dubai, to pay a <a href="https://www.businessinsider.com/why-london-divorce-capital-world-for-mega-rich-2019-7?r=US&IR=T">£554 million divorce settlement</a> to his former wife, Princess Haya. By their nature, these cases are atypical – that’s why they make headlines. But why should the fact that English law takes spousal equality seriously be a matter for regret? The 1970s legislation aimed to ensure the non-financial contributions of spouses, such as home-making and caring, should be recognised. Judges have been clear <a href="https://uk.practicallaw.thomsonreuters.com/3-503-7596?transitionType=Default&contextData=(sc.Default)&firstPage=true">it is discriminatory to assume</a> the breadwinner spouse is making a greater contribution to the relationship and should keep a larger part of the wealth than the other who takes on the role of carer. Surely this is an enlightened position. That doesn’t mean we shouldn’t update the law, though. Working patterns have changed but women still earn, on average, <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/genderpaygapintheuk/2022#:%7E:text=Image%20.csv%20.xls-,The%20gender%20pay%20gap%20has%20been%20declining%20slowly%20over%20time,up%20from%207.7%25%20in%202021.">less than men</a>. They are still more likely to assume the bulk of <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/familiesandthelabourmarketengland/2021">child care</a>, <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/familiesandthelabourmarketengland/2021">work part-time </a>, and, in consequence, have <a href="https://adviser.scottishwidows.co.uk/assets/literature/docs/women-retirement-report-2022-press-release.pdf">smaller pensions compared with men</a>. The result is that, far from being treated generously, women still come out of divorce <a href="https://ses.library.usyd.edu.au/bitstream/handle/2123/26207/Fisher_2018_AJFL_Final.pdf?sequence=1">financially worse off than men</a>. But there is still so much we don’t know about how divorced couples divide their assets. Since the norm is for couples to stay out of the courts, there is no official record of how the majority of the divorcing population arranges their finances. That’s why <a href="https://research-information.bris.ac.uk/en/persons/emma-hitchings">one of us</a> (Emma) is leading the Fair Shares Study, expected to publish in autumn 2023. This will provide the <a href="https://www.bristol.ac.uk/law/fair-shares-project/">first nationally representative picture</a> of couples’ finances on divorce. We need a law that meets the needs of all divorcing couples rather than the few wealthy exceptions, and a major corrective to the myths that abound in this area of family law.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/202975/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/emma-hitchings-388514">Emma Hitchings</a>, Professor of Family Law, <a href="https://theconversation.com/institutions/university-of-bristol-1211">University of Bristol</a> and <a href="https://theconversation.com/profiles/gillian-douglas-1428314">Gillian Douglas</a>, Professor Emerita of Law, <a href="https://theconversation.com/institutions/kings-college-london-1196">King's College London</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/four-myths-about-the-financial-side-of-divorce-202975">original article</a>.

Money & Banking

How your favourite things can boost your financial wellbeing

<a href="https://theconversation.com/profiles/jingshi-joyce-liu-1424398">Jingshi (Joyce) Liu</a>, <a href="https://theconversation.com/institutions/city-university-of-london-1047">City, University of London</a>; <a href="https://theconversation.com/profiles/amy-dalton-1425283">Amy Dalton</a>, <a href="https://theconversation.com/institutions/hong-kong-university-of-science-and-technology-1153">Hong Kong University of Science and Technology</a>, and <a href="https://theconversation.com/profiles/anirban-mukhopadhyay-1425284">Anirban Mukhopadhyay</a>, <a href="https://theconversation.com/institutions/hong-kong-university-of-science-and-technology-1153">Hong Kong University of Science and Technology</a> The cost of living crisis has left many people struggling to afford basic necessities such as food and heating for their homes. On the other hand, the top ten richest men in the world <a href="https://www.weforum.org/agenda/2022/04/economic-inequality-wealth-gap-pandemic/">doubled their wealth</a> during the COVID pandemic while 99% of people became worse off. While this is a comparison of two extremes, many people attempt to “keep up with the Joneses” – looking at what the people around them own and striving to afford the same things. Comparing material wealth and resources to those around you is even more common when others are better off. It’s hard not to wonder why someone else has a nicer car or better clothes. Lots of <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/jasp.12631">research supports</a> this tendency, <a href="https://journals.sagepub.com/doi/full/10.1177/00222437221141053">including our own</a>. For example, when we asked American people to watch a video about research on income inequality in their own country, unsurprisingly, it made them think about their own wealth and how it compares to those around them. And we found that it doesn’t matter how wealthy a person is. Relatively well-off people still tend to look upwards in this way. There is nearly always someone who has more money or owns a better car, a bigger house or the latest gadgets. But while money may not buy you happiness, <a href="https://journals.sagepub.com/doi/full/10.1177/00222437221141053">our research shows</a> that a favourite possession can actually help to make you feel happier when facing income inequality. Thinking about a single treasured possession – even something small like a favourite book gifted by a friend or a keepsake from a trip – can help prevent these feelings of deprivation and actually boost your wellbeing. We used the <a href="https://www.investopedia.com/terms/g/gini-index.asp">Gini coefficient</a> – a common measure of income inequality – to analyse more than 31,000 Instagram posts from 138 countries. We found that posts tend to convey less happiness in places with more income inequality (i.e., when the Gini coefficient of the location of the post increases). We focused on posts that were about favourite possessions (that used hashtags such as #favouritething, #favthing), comparing these with posts about favourite things in general, that is things that aren’t “owned”. The latter posts used hashtags such as #fashion or #favoritepeople. Posts that used hashtags about general consumption and favourite things that aren’t “owned”, such as music or friends, were typically less happy and posted in areas with more income inequality. But when we looked at posts that used hashtags about favourite possessions, such as #favouritething or #favthing, we found there was a weaker relationship with income inequality. So whether a post was happy or not wasn’t linked to the equality of the area it was posted in. These posts about favourite possessions were therefore less affected by income inequality. This means that encouraging people to think differently about things they already own could help some cope better with inequality. Rather than focusing on how much you own, which tends to exacerbate social comparison and undermine happiness, focus instead on your favourite possessions. Our research indicates that people who do this tend to make fewer material comparisons, and are happier as a result. <h2>Simply remember your favourite things</h2> A treasured possession doesn’t even have to be particularly expensive. From a memento purchased on a trip abroad, to your grandmother’s embroidered cushion, a football jersey that reminds you of your old school teammates, or even that tattered t-shirt of your favourite band, such items can feel priceless to their owners because they are unique and their value transcends any kind of price. In a separate multi-country study using an online questionnaire, we asked 1,370 participants from China, India, Pakistan, the UK, Spain, Russia, Chile and Mexico to describe either every item of clothing they had recently purchased, or a single favourite item of clothing. After participants described these things, we asked them about their wellbeing, as well as their perception of income inequality in their country. Those who thought about recent clothing purchases reported lower wellbeing when thinking about income inequality in their country. In comparison, those who talked about a single favourite piece of clothing were not as affected by the income inequality they perceived around them. Three more online experiments with over 2,000 participants <a href="https://journals.sagepub.com/doi/full/10.1177/00222437221141053">revealed that</a> when people are reminded of their favourite possessions they feel less affected by income inequality because they are making fewer material comparisons. In one of these studies, we found that merely describing a favourite possession made people less likely to compare their wealth to that of others. When people stopped making these comparisons they were happier – even those living in places with more income inequality. <h2>#FavouriteThing</h2> Our research shows the benefits of focusing on a few favourite things that we own, rather than thinking about the amount of possessions we have and what else we need to “keep up with the Joneses”. Hashtag trends like #ThrowbackThursday encourage people to post photos on certain themes. In a similar vein, encouraging more people to post photos of their favourite possessions using hashtags like #FavouriteThing could do a lot to help boost happiness during the cost of living crisis. Income inequality is rampant and the cost of living crisis has only made its effects worse. But we all possess something dear to us that can keep us from comparing ourselves to others and help protect our wellbeing in this difficult economic environment.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/201997/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/jingshi-joyce-liu-1424398">Jingshi (Joyce) Liu</a>, Lecturer in Marketing, <a href="https://theconversation.com/institutions/city-university-of-london-1047">City, University of London</a>; <a href="https://theconversation.com/profiles/amy-dalton-1425283">Amy Dalton</a>, Associate Professor of Marketing, <a href="https://theconversation.com/institutions/hong-kong-university-of-science-and-technology-1153">Hong Kong University of Science and Technology</a>, and <a href="https://theconversation.com/profiles/anirban-mukhopadhyay-1425284">Anirban Mukhopadhyay</a>, Lifestyle International Professor of Business and Chair Professor of Marketing, <a href="https://theconversation.com/institutions/hong-kong-university-of-science-and-technology-1153">Hong Kong University of Science and Technology</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/how-your-favourite-things-can-boost-your-financial-wellbeing-201997">original article</a>.

Money & Banking

Don’t let financial shame be your ruin: open conversations can help ease the burden of personal deb

Nearly <a href="https://www.ipsos.com/en-nz/19th-ipsos-new-zealand-issues-monitor">two-thirds of New Zealanders</a> are worried about the cost of living, and a quarter are worried about <a href="https://www.canstar.co.nz/wp-content/uploads/2023/03/Consumer-Pulse-Report-NZ-2023-Final-4.pdf">putting food on the table</a>. But the <a href="https://visionwest.org.nz/food-hardship-part-one/">shame</a> that can come with financial stress is preventing some people from seeking help. According to a recent survey, a third of New Zealanders were not completely truthful with their family or partners about the state of their finances, and 12% <a href="https://www.stuff.co.nz/business/money/129477493/financial-infidelity-research-finds-kiwis-hiding-debts-from-their-partners">actively hid their debt</a>. This shame and worry about money can spill over into <a href="https://www.nzherald.co.nz/bay-of-plenty-times/news/concerns-buy-now-pay-later-schemes-could-fuel-addiction-as-kiwis-spend-17b-last-year/VOV3VIDIG2MZBGJEGPMLGWDMJI/">addiction</a>, <a href="https://www.newsroom.co.nz/i-had-serious-concussion-bad-credit-and-15000-debt-abuse-survivor">violence</a> and <a href="https://corporate.dukehealth.org/news/financial-strains-significantly-raise-risk-suicide-attempts">suicide</a>. Considering the effect of financial stress on our wellbeing, it is clear we need to overcome the financial stigma that prevents us from getting help. We also <a href="https://www.apa.org/topics/money/family-financial-strain">owe it to our kids</a> to break the taboo around money by communicating our worries and educating them on how to manage finances better. <h2>The burden of growing debt</h2> <a href="https://www.stuff.co.nz/business/money/300817697/mortgage-pain-homeowners-facing-repayment-hikes-of-up-to-900-a-fortnight">Ballooning mortgage repayments</a> are compounding the financial distress of many New Zealanders. At the beginning of 2023, an estimated 11.9% of home owners were behind on loan payments, with more than <a href="https://www.rnz.co.nz/news/business/485045/data-shows-430-000-new-zealanders-behind-in-credit-repayments-in-january">18,400 mortgagees in arrears</a>. <div data-id="17"> </div> Given the <a href="https://www.treasury.govt.nz/publications/an/an-21-01-html">majority of household wealth</a> in New Zealand is in property, our financial vulnerability is closely linked to the ebbs and flows of the <a href="https://content.knightfrank.com/research/84/documents/en/global-house-price-index-q2-2021-8422.pdf">second most overinflated property market</a> in the world. There are also cultural reasons for growing financial distress. Many households have taken on significant debt to “<a href="https://www.stuff.co.nz/business/7616361/Keeping-up-with-the-Joneses">keep up with the Joneses</a>” and to pursue the quintessential <a href="https://www.interest.co.nz/property/99890/westpac-commissioned-survey-suggests-many-new-zealanders-still-pine-quarter-acre">quarter-acre dream</a>. Social comparison and peer pressure act as powerful levers contributing to problem debt and over-indebtedness. The average household debt in New Zealand is more than <a href="https://tradingeconomics.com/new-zealand/households-debt-to-income">170% of gross household income</a>. That is higher than the United Kingdom (133%), Australia (113%) or Ireland (96%). <h2>The rise of problem debt</h2> And we are digging a deeper hole. Over the past year, <a href="https://www.rnz.co.nz/news/business/485045/data-shows-430-000-new-zealanders-behind-in-credit-repayments-in-january">demand for credit cards increased by 21.7%</a>. The use of personal debt such as personal loans and deferred payment schemes <a href="https://www.nzherald.co.nz/business/demand-for-personal-credit-rises-arrears-also-up-as-cost-of-living-bites/YCEM74CII5FQBPJXO3UOG4Y3GY/">is also climbing</a>. There is a real risk this debt could become problem debt. Problem debt can have severe and wide-reaching consequences, including <a href="https://theconversation.com/over-300-000-new-zealanders-owe-more-than-they-own-is-this-a-problem-173497">housing insecurity</a>, <a href="http://www.socialinclusion.ie/publications/documents/2011_03_07_FinancialExclusionPublication.pdf">financial exclusion</a> (the inability to access debt at affordable interest rates), <a href="https://www.tandfonline.com/doi/full/10.1080/07409710.2012.652016?journalCode=gfof20">poor food choices</a> and a plethora of <a href="https://bmcpublichealth.biomedcentral.com/articles/10.1186/1471-2458-14-489">health problems</a>. Yet, the hidden <a href="https://spssi.onlinelibrary.wiley.com/doi/10.1111/sipr.12074">psychological</a> and <a href="https://link.springer.com/article/10.1007/s11205-008-9286-8">social cost of financial distress</a>remains often unspoken, overlooked and underestimated. Even before the pandemic, <a href="https://www.scoop.co.nz/stories/BU1909/S00616/research-shows-financial-stress-impacts-mental-wellbeing.htm">69% of New Zealanders were worried</a>about money. The share of people worrying about their financial situation was higher for women (74%), and particularly women aged 18-34 (82%). It is no coincidence that the latter are particularly at risk of problem debt through so-called <a href="https://acfr.aut.ac.nz/__data/assets/pdf_file/0008/691577/Gilbert-and-Scott-Study-2-Draft-v10Sept2022.pdf">“buy now, pay later” schemes</a>. The stigma of financial distress extends beyond the vulnerable and the marginalised in our society. A growing number of <a href="https://www.rnz.co.nz/news/political/467417/middle-income-families-hoping-for-help-in-budget-as-rising-costs-sting">middle-class New Zealanders </a> are quietly suffering financial distress, isolated by financial stigma and the taboos around discussing money. When pressed, one in two New Zealanders would rather <a href="https://www.scoop.co.nz/stories/BU2203/S00384/research-shows-wed-rather-talk-about-politics-than-our-finances.htm">talk politics over money</a>. <h2>Time to talk about money</h2> Navigating financial distress and <a href="https://digitalcommons.law.seattleu.edu/cgi/viewcontent.cgi?article=2526&context=sulr">stigma</a> can feel overwhelming. Where money is a taboo subject, it may feel safer to withdraw, maintain false appearances, be secretive or shun social support. This tendency to avoid open discussions and suffer in silence can lead to <a href="https://loneliness.org.nz/lonely/at-home/financially-struggling/">feelings of isolation</a> and contribute to <a href="https://theconversation.com/how-financial-stress-can-affect-your-mental-health-and-5-things-that-can-help-201557">poor mental health</a>, such as depression, anxiety and emotional distress. Sadly, the trauma of living in financial distress can also <a href="http://irep.ntu.ac.uk/id/eprint/39442/1/1307565_Wakefield.pdf">break up families</a>. Losing the symbols of hard-gained success and facing the prospect of a reduced lifestyle can be tough. It often triggers feelings of personal failure and self doubt that deter us from taking proactive steps to talk openly and seek help. But what can families do to alleviate some of this distress? <h2>Seek help</h2> First, understand that <a href="https://www.ft.com/content/86767aac-98e0-4dae-8c5a-d3301b030703">you are not alone</a>. Over 300,000 New Zealanders <a href="https://theconversation.com/over-300-000-new-zealanders-owe-more-than-they-own-is-this-a-problem-173497">owe more than they earn</a>. Second, seek help. There are many services that help people work through their financial situation and formulate a plan. In the case of excessive debts, debt consolidation or <a href="https://goodshepherd.org.nz/debtsolve/">debt solution loans</a> may help reduce the overall burden and simplify your financial situation. For those struggling with increasing interest on their mortgages, reaching out to your bank early is critical. During the 2008 recession, banks in New Zealand <a href="https://www.beehive.govt.nz/release/banks-exchange-letters-crown-support-distressed-mortgage-borrowers">worked with customers</a> to avoid defaulting on mortgages, including reducing servicing costs, capitalising interest and moving households to interest-only loans. It is essential to understand that the <a href="https://www.stuff.co.nz/life-style/homed/real-estate/130677426/are-we-on-the-brink-of-a-wave-of-mortgagee-sales">banks do not want mortgagees to fail</a>, and that options exist. To help future generations avoid debt traps, we need open communication about money – also known as “<a href="https://link.springer.com/article/10.1007/s10834-020-09736-2">financial socialisation</a>”. This includes developing values, sharing knowledge and promoting behaviours that help build <a href="https://files.eric.ed.gov/fulltext/EJ1241099.pdf">financial viability and contribute to financial wellbeing</a>. The lessons about handling money from family and friends are crucial for <a href="https://www.frontiersin.org/articles/10.3389/fpsyg.2020.02162/full">improving our children’s financial capability</a>, helping them be <a href="https://www.fsc.org.nz/it-starts-with-action-theme/growing-financially-resilient-kids">more financially resilient</a> and better able to survive the stresses we are experiencing now – and those <a href="https://www.stuff.co.nz/business/money/300836616/heres-how-much-household-costs-are-expected-to-increase">yet to come</a>. Image credits: Getty Images This article originally appeared on <a href="https://theconversation.com/dont-let-financial-shame-be-your-ruin-open-conversations-can-help-ease-the-burden-of-personal-debt-202496" target="_blank" rel="noopener">The Conversation</a>.

Retirement Income

Are you financially literate? Here are 7 signs you’re on the right track

With the cost of living and interest rates rising, a growing number of Australians are struggling to manage their <a href="https://www.smh.com.au/money/planning-and-budgeting/almost-half-of-australia-is-financially-stressed-here-s-one-way-to-fix-it-20221011-p5bowq.html">finances</a>. Many are experiencing real <a href="https://www.anu.edu.au/news/all-news/australians-under-increasing-financial-stress#:%7E:text=The%2520level%2520of%2520financial%2520stress,say%2520they%2520are%2520struggling%2520financially">financial stress</a>. But even in the best of times, managing your finances is hard. Every day, you’re making complex financial decisions (some of which carry huge ramifications) and there are more financial products and services available than ever before. Navigating this minefield can be overwhelming and lead to financial anxiety. Being financially literate helps. But what does “financial literacy” mean in practice? Here are seven signs you’ve got the basics covered. <h2>1. You track your cashflow</h2> By tracking your cashflow on a regular basis, you’re ensuring your expenses don’t exceed your income. In other words, you make sure you’re earning more than you spend. A good sign you’ve successfully managed your cashflow is that you have a surplus or a buffer. These left-over funds can be used to boost savings, pay off debt or meet other financial commitments. Cashflow management allows you to assess whether there are opportunities to increase your savings and/or reduce spending. Being able to manage your earnings and spending is a key financial skill. <h2>2. You have a budget – and you follow it</h2> Setting and following a budget requires financial discipline, which is a key part of financial literacy. By following a budget, you’re putting a measure in place to live within your means and reduce the risk of overspending. With all the competing demands that come with managing money, your budget can be a tool to keep you on track. And developing this habit over time can empower you to make wise financial decisions. <h2>3. You understand the difference between good debt and bad debt</h2> Love it or hate it, debt forms part of our financial portfolios and sustains the financial institutions we interact with. Knowing how to make debt work for you is a skill and a sign of good financial knowledge. It is crucial to understand the difference between good debt and bad debt. Good debt is debt used to improve your long-term financial position or net worth, such as a home loan. Bad debt tends to be consumption-driven and doesn’t have lasting value. Examples include payday loans or retail accounts. <h2>4. You have your money in various places</h2> One of the key concepts of financially literacy is understanding the importance of diversification. By having your money spread across various places (such as a savings account, property, the share market, superannuation and so on), you’ve reduced the concentration of risk. This helps protect your wealth in tough economic times. <h2>5. You understand how financial assets work, along with their pros and cons</h2> Financial assets refers to things like cash, shares and bonds. It’s important to understand how financial assets work and how they can either help or hurt your financial position. For instance, savings accounts are a safe financial instrument that earn interest on the amount accumulated within the account. But the fact they’re so safe also means that they won’t outperform inflation. This type of knowledge is an imperative part of financial literacy. <h2>6. You’re aware of your financial strengths and weaknesses</h2> Financially literate people reflect on their capabilities. When you can appreciate where your financial strengths and weaknesses lie, you can make better financial decisions and prioritise your needs. On the other hand, being oblivious to your strengths and weaknesses means you miss opportunities to improve your financial health. For example, perhaps you buy unnecessary stuff when you feel sad. Or maybe you panic when faced with tough financial choices and make quick decisions just to make the problem go away. Neglecting to reflect on patterns of behaviour can lead to serious and possibly irreversible financial mistakes. <h2>7. You set financial goals and put measures in place to meet them</h2> Financially literate people plan for their finances. This involves setting goals for either earnings, savings, investments, and debt management or putting measures in place to protect wealth (via, for example, insurance to protect your wealth against loss). Setting goals is one thing, but it’s also important to have a system and habits in place to achieve them. Make sure you understand what you’re trying to achieve with your goals, why the goals are important and how you’ll achieve them. Boosting your financial literacy can feel tough at first. But tackling your finances head on, controlling spending, participating in financial markets, handling debt, being able to understand financial assets and working towards financial goals can help you feel in control of your financial situation. This article originally appeared on <a href="https://theconversation.com/are-you-financially-literate-here-are-7-signs-youre-on-the-right-track-202331" target="_blank" rel="noopener">The Conversation</a>. Images: Getty

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Are you financially literate? Here are 7 signs you’re on the right track