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Chapter 1: What emotional spending habits are discussed in this episode?
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This podcast contains general financial advice only. That means it's not specific to you, your needs, goals, or objectives, so don't act on the information until you've spoken with your financial advisor. You'll find our full disclosure, disclaimer, and link to our financial services guide in the show notes. G'day, Kate. Welcome to this episode of the Australian Finance Podcast.
It is good to be back, Owen, and recording an episode in person, which is fantastic.
Yes, yes. Not quite free of COVID in Melbourne, but we're doing a pretty good job, so we can be back in the office. Today, we're joined by a very special guest, Emma from The Broke Generation. How are you going?
Hey, I'm great. Thanks for having me.
Yeah, it's wonderful to have you in person, as Kate said. It is. Because you're new to the show, maybe you can introduce yourself and what you do for our listeners.
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Chapter 2: How can you balance present needs versus future financial goals?
It's because I live in London or I live in Melbourne or I live in Sydney. And we kind of have these explanations, not excuses, but explanations for why our money is the way it is. And we don't ever connect it to anything else. So I think firstly, making that link and looking at where your money is and where your money is going, how much is coming in and how much is going out.
Sounds basic, but not just how much you're spending, but where it's actually going and going a bit deeper and, you know, okay, you bought a top. Okay, was it just a top or were you trying to achieve something or feel a certain way? Or are you always spending at five o'clock on a Friday because you hate your job and you're drinking yourself into oblivion to forget about it?
Like it's common for a lot of people. And doing that when you live in a capital city is really expensive. And I mean, I had this experience. I had a job that made me quite unhappy. All my jobs have made me quite unhappy at some point. But, yeah. I was, you get into the culture.
If you're in an environment where there's a culture of drinking and it is the type of drinking where you're funding it yourself rather than office drinking, which is slightly more common in some industries. But I was out there drinking with like the CFO. I was on like equivalent $32,000 in London when it was like 12 pounds for a glass of wine.
But when you are sort of in those environments, you know, sometimes it could be a symptom of being unhappy about something or sometimes it can be a symptom of just the contextual life that you are living where your finances just don't match.
And sometimes it can be, you know, a bit more logical and maybe there are less feelings, but it's just that you're in an environment where your spending habits can't coexist with your finances. It can happen in friendship groups when, you know, you've got doctors, lawyers, and then little old you on an advertising apprenticeship.
You know, it's not, we behave the same way and we keep up with our peers and friends. I do think the keeping up with the Joneses' behaviour is a little bit more of our parents' generation. I don't personally feel like I've ever consciously done that. But the environments that we exist in mean that we...
not actively keep up, but just feel compelled to participate in the same types of hobbies, holidays, hen do's.
So how do you find the balance then? Because that's like the key point. So you've recognized, you drew a line between kind of a symptom and spending. Then how do you find the balance? Like people like say, want to go for drinks on Friday night, Thursday night, whatever, whatever the thing might be.
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Chapter 3: What strategies can improve your relationship with money?
we're naturally very defiant to things like that. So one minute we're going, nothing will change. It won't make any difference. I may as well just have this, dare I say it, latte or this top or go on that trip or nothing will ever change. Okay, no, it won't. You happy with that? Like nothing is ever gonna change. Okay.
And see how you actually buck up against that because we, yeah, we're more defiant than we think we are and we can kind of leverage that to make change.
How about then, so we talk about budgeting and spending a lot and it always seems very negative. So it's always, I have to give up this. I have to do that. You mentioned about seeing your bank balance go up, which is for a lot of people, very motivating. How else can we make things, you know, how can it be a good thing to budget, get happiness from that process as well?
I tend and I try to look at all stages of budgeting. You know, sometimes I'm in more of a everyday budget flow. You know, I'm not working towards any specific goal. I'm just sort of, you know, some's going towards this, some's going towards that, some's going towards savings and investing or whatever. Other times I might be in a bit more of a push focus.
Um, so first of all, having various different types of budgeting where you do take the pedal off the gas a little bit can give you a bit of a break. Um, but regardless of, of how hard you're going and how much capacity you actually have thinking about making it something of, of opportunity and more organizing your money rather than like being on a budget.
Cause the word budget doesn't mean there's always the word budget is so
commonly misused because like travel on a budget everybody should be traveling on some sort of budget even if it's a million dollar budget you still got a budget um and everybody even the richest people in the world or you know your friends that have got more income than you or whatever everybody's on some sort of budget so don't sort of put yourself on one like it's a diet more just consider it organizing your money and that might be organizing your money to go towards
or clothes or travel. And then you might, you know, don't forget that you don't just set it once and stick to it forever. Cause if it's making you miserable, it's probably not a very good one.
How can you cut down the things that you don't like and allocate more to the things that you do like, even if that's really small, you know, a lot of people kind of go, there's not enough for that, but in some small way, like what can you do to make it enjoyable in some way? Because it is seen as a diet and it is seen as cutting stuff out, but it's, it's really just organizing your money.
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Chapter 4: How does self-awareness impact financial decision-making?
It also helps you kind of remember your life at the same time as well because the weeks pass by and we don't know the difference between each one. But then sort of context and giving them a ranking out of either how necessary they were if we're working with more needs or if they are
discretionary spends how much value you got out of them how aligned are they to your goals how joyful were they and you know rank them on a scale of one to ten or color them in with highlighters if that's your vibe um and that gives you a heat map really of how much mileage you are getting out of your money
And it can be quite confronting, I think, especially if you, it's really helpful if you are one of those people that feels like they earn good money and have nothing to show for it, because it will be those, you know, wines you didn't really want. And two identical transactions can have completely different backstories.
And if we're not looking at the context and we're not thinking about whether we enjoyed it or whether we really needed it or whether it was bringing any value to our lives, things can slip under the radar because we go, oh, $21 for two Pinot Noirs. You know, they're two identical transactions.
But one, you're catching up with a colleague you haven't seen since pre-COVID and you're having the best time. And one, you just kind of got stuck there because you don't have any boundaries and you're a people pleaser and you couldn't leave.
me sounds specific could I be talking about myself um or you know you could have you know there was just an alternative available to you um and so I think that that helps you discern the difference between spending that should stay in your budget if it can and spending that can come out.
And that's when you get the most value out of reviewing your spending because you literally free up money that you didn't want to spend in the first place. So you're not giving anything up. You're just reallocating money to somewhere else.
Yeah, that's such great advice. I think that's the big thing for optimizing a budget. It's like you don't need to necessarily sacrifice on happiness, right? So this is a very simple question. Well, I say it's simple. It's simple to ask. What's your number one tip for people improving their relationship with money?
It's going to be review your spending because, and review it in detail as well. You know, you might want to add things into what I've said or take things out if they don't resonate with you, but just get really clear on where your money is going because I think that, you know, even me who reviews my spending most weeks and publishes it online, I still learn something new every week.
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