How do I save money?

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How to save money is a popular question, and it’s sad that most answers leave people rolling their eyes and changing nothing.

The problem with most saving strategies is they’re hard work.

You have to think a lot.

You have to change habits.

Far better to have a saving strategy that doesn’t require you to think about it once it’s in place.

Here’s how to do it:

  1. Set your end Goal – why are you saving?
  2. Set your Rate – how much will you save?
  3. Automate paying yourself first – schedule bank transfers
  4. Isolate your savings – make the saving account hard to get to
  5. Celebrate – when you reach a goal, reward yourself! Read more

What is financial independence and why is it so important?

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We bang on about financial independence a lot at Money School. It features heavily in our blogs, and it appears in our education for kids.

But what does it actually mean, and why should you care?

What does financial independence mean?

We define financial independence as being able to support your lifestyle without having to work.

In money terms: you don’t need a wage to meet your costs. You’ve got enough income (rent, dividends, interest etc) coming in from your assets (cash, shares, bonds, property etc) that you can feed, clothe and house yourself in the style to which you have become accustomed.

These are technical definitions and can seem a bit nebulous. Here’s what financial independence really means (in my personal experience): Read more

Which comes first: giving as a business strategy, or giving as a way of life?

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It’s a chicken-and-egg type of conundrum.

Do the people who found businesses that ‘do good’ as a key purpose of that business – rather than simply to comply with a perceived Corporate Social Responsibility (CSR) image – start with people who learned about giving through the example of their families and community? Or, does having a business that gives back once it reaches a sustainable level of profit turn someone into a philanthropist?

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Why is school banking risky?

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Parents and educators:

  • Would you let McDonald’s teach your children about nutrition?
  • Would you let Monsanto teach your kids about farming?
  • Would you let Rolf Harris teach your children about consent?

Of course you wouldn’t. You may even be aghast that I suggest such a thing.

…but what if McDonald’s paid you a commission on each item sold in the school canteen?

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Misconduct in Australia’s financial industry: a risk management view

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The Australian taxpayer is currently funding the Royal Commission into Misconduct in the financial industry (or in more detail: Banking, Superannuation and Financial Services Industry). Lucky us.

We got screwed by these guys. Now we get to pay millions to find out what we already know:

This is not a ‘few bad apples’ problem.

This is a structural problem.

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Money won’t fix your problems

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It’s a common misconception that money will fix all problems. If only it were that simple.

If you’re comfortable (i.e. earning around $50k a year or more) and you’ve been waiting for a windfall thinking it will be the answer to your worries, it might be time to think again.

What I’d like you to take away from this article is:

  1. Money will not solve much by itself.
  2. If you have any of the following problems, stop waiting for money to do something about them.

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Should I pay down my mortgage or use an offset account?

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Once every six months or so, my husband brings up paying off a chunk of our mortgage in a lump sum and I argue in favour of the offset account. The discussion that ensues is a well-rehearsed dance:

Me: “But if we pay off a lump sum, if we need that cash we’ll have to redraw, and maybe the bank won’t let us.”

Hubby: “But if we pay it down, we can drop our mortgage repayments.”

Me: “What’s the point in that? You’ll be charged the same amount of interest either way.”

Hubby: “How can that be? Surely I’ll be charged less interest if I pay it off?”

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The gender pay gap: is your Lisa Wilkinson moment here?

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Lisa Wilkinson’s refusal to accept a pay packet half the size of her male co-host’s was a laudable moment. I hope I will describe it to my daughter as the point at which the tide turned and the gender pay gap began to close.

Right now, it raises several questions:

Why hasn’t Karl – a man who wore the same suit for a year to demonstrate how much abuse his co-host got for her appearance – resigned in solidarity? Does he condone Channel 9 paying Lisa less? Or does he think he’s worth twice as much as she is, or does twice as much work? Does he just really, really need that pay packet after his divorce settlement? Read more

Bitcoin/ Blockchain Banking | %%sitename%%

Bitcoin, Blockchain and Banking

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David Yermack is a Professor of Finance at NYU Stern. He teaches Bitcoin and Cryptocurrencies, including the concept of Blockchain Banking. When the opportunity arose to hear him speak at UWA recently, I leapt. Now, after years of saying ‘it’s just another currency’ and ignoring it,
 

I understand what all the fuss is about.

I learned a lot from this session, and below are my main takeaways. If I’ve gotten any of this wrong, it’s my fault, not the Professor’s. Apologies for Professor Yermack in advance if I’ve butchered his eloquent explanations.

  1. Cryptocurrency is coming, regardless of whether we want it or not. Possibly, sooner than you think. It seems unlikely there will be an ‘opt out’ available. You’ll have an online cryptocurrency account or you won’t have money.
  2. Employment prospects for future lawyers, accountants, and those considering banking look grim.

So, what did I hear that lead me to these conclusions?

What I learned in prison

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Before you start worrying about the validity of my ‘Working with Children’ card… I’m part of the ‘Women in Leadership Driving Change’ group that visits women in prison. We deliver training on re-entering the workforce. The program is called ‘Tall Poppies’. It’s a name the residents (the preferred term for prisoners) selected. We cover all sorts: social media, interview prep, what to wear, mindset and, of course, personal finance. Which is where I come in.

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Should you make more than the minimum repayment on your debts?

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Short answer: yes.
 
This raises a few questions:
  • Which debts should you pay first?
  • How much more should you pay?
  • What if you are having trouble finding any extra cash?
Let’s examine some possibilities.

Short-term share trading: for when you don’t like traditional gambling

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I have a confession: I indulge in a form of gambling. It’s called short-term share trading.
 
It’s akin to a bout of binge drinking after nine months of abstinence while pregnant. Ill advised, and I like it.

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Money and Your Mind: Interview with David Levin, author

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If you’ve ever said the following out loud or in your head:

“I am terrible with money.”

“I spend too much.”

“I don’t have control over my money.”

“I just can’t seem to break the habit of <insert annoying/destructive/wasteful financial action>.”

…this post is for you! You can skip to the interview at the end or read on for some background.

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Introducing Rebbecca Devitt, author and homeschool advocate

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I grew up in the mainstream education system, attending the local public primary school and later a private high school, then onto one of the ‘sandstone’ universities. I didn’t encounter any homeschoolers growing up, so the whole concept seemed rather mysterious to me.

Through my work with Money School and Maker Kids, I encounter a number of homeschool families, many of whom have become my clients – so the mystery has somewhat dissipated, but it has been replaced with respect. I find it refreshing that these families actively pursue teaching their children about entrepreneurship and money, and I was keen to learn more.

Enter Rebbecca Devitt. Read more

Should I pay off my mortgage or make extra superannuation contributions?

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Hands down the most common question asked in our recent ‘Women and Superannuation’ seminars for Department of Local Government and Communities is:

“I have some extra income at the moment.
Should I use it to pay off my mortgage
or put it into superannuation?”

Spoiler alert: the mathematics is crystal clear on this one, which is why most financial advisors won’t hesitate to reply: “Put it in superannuation”. This fails to account for your emotions and stress levels, which aren’t nearly so clear-cut. Read more

Real lost super: could 93% of your superannuation disappear?

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When we hear ‘lost super’, we imagine lots of funds that we don’t know about. This story is about another kind of lost super. It’s the money you had in your super account, but it’s disappeared.
 
So, could 93% of your superannuation disappear?
 
Very short answer: yes.
 
Longer answer: if you stop contributing, and you’re paying fees and premiums, it can happen. Do that for over a decade, and you could have next-to-nothing left.
 
My statements come from a real-life example, not a hypothetical one.

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Can you learn about share trading by playing the ASX Sharemarket Game?

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Twice a year, the Australian Stock Exchange (ASX) runs a Sharemarket Game (I’ll call it ‘The Game’ from here on in). There’s a public version for any adult and a school version for students. I’ve played it several times and I’ve sucked at it. The photo at the top of this post is how my portfolio performed the last time I played.

This has been a conundrum for me, given my real life experience with shares has mostly been successful.

I have gone back to my engineering training and done a root cause analysis (RCA) on why I can’t seem to do well at this game. I won’t bore you with the RCA diagram. I’ll skip straight to the bottom line, the root cause of my problem, and it is this:

I am lazy. Read more

Free and cheap financial education resources

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Want to learn how to manage your money wisely? Good news! There are truckloads of solid financial education materials available – for free – to help you get up to speed.

Unfortunately, sometimes you’ll come across a financial product dressed up as education – a wolf in sheep’s clothing. It can be hard to tell the difference. To help you avoid the wolves, we’ve curated our favourite resources into this list.

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Kidpreneurs on show at book launch

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Feeling low? Get yourself around young people starting businesses. Their enthusiasm is contagious.

The 12 kidpreneurs selling their wares on Sunday 13 November at East Fremantle Yacht Club have given me enough good vibes to handle whatever life cares to throw my way for the rest of 2016.

Here’s the wrap up from the Showcase – who was there, how they went, and contact details in case you’d like to order some of their products or feature them in a media article. Read more

Bunny Money Book Launch & Kidpreneur Showcase: pre-event information

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This post contains important information for event attendees including parking, opening and closing times, what you’ll find for sale from our kidpreneurs and Money School, and other activities you can do to make an afternoon of it with your kids.

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