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Chapter 1: How did the hosts' financial goals for 2020 perform?
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Please remember that all of the information in this podcast episode is limited to general information only. That means the information is not specific to you, your needs, goals, or objectives. So you should seek the advice of a licensed and trusted financial professional before acting on the information.
And before you acquire or apply for a financial product, please read the PDS or product disclosure statement, which should be available on the issuer's website. Lastly, please keep in mind that past performance is not indicative of future performance. Kate, welcome to this episode of the Australian Finance Podcast.
It's good to be back and we're just a few days before the end of the year. So it's quite exciting to be hitting the airwaves now and just making sure you're on track for setting your financial goals for next year and putting as much in as possible to actually achieving them because it's very easy to write a few things down and shove it in the back of the drawer.
So yeah, this is what we're going to try and have a short and sweet episode today just to help you set your goals and get ready for the new year.
Cool. Okay. So first of all, how did your goals for 2020 go?
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Chapter 2: What are effective strategies for setting financial goals for 2021?
Well done.
What about you?
Well, I said, this was in 2019, I said develop a budget and never forget to pay ourselves for the future and save for experiences like holidays. Well, obviously we couldn't do too much holidaying. Even though we did do a bit of like before COVID, we did I think a couple of weekends away, but that was good. Our budget actually got looser this year.
So we had a much more strict budget in 2019 than we did in 2020. We still had that kind of that pay ourselves first mentality. So with the mortgage now and all the essentials, we now also have – we typically invest $1,000 a month at minimum. which is great to be able to do that. But, you know, that's a simple thing that we've been doing for years.
I noticed though I did actually turn off the calendar reminder for that about a month ago. So we've been just, I guess it hasn't been as, like normally we have everything really structured in that regard, but this year was probably a bit looser. So probably didn't really hit on all of those.
One of my other, which is more like a professional thing, was return to study and do some more accounting and software engineering.
learning yeah did definitely did more software engineering this year um didn't do as much accounting work i don't really need to do that nowadays but um yeah so i kind of nailed the professional one there but um for the budget it kind of got a bit looser than normal we still managed to save but probably not as much as we thought um we obviously bought a house this year so that kind of put a dent in things but
overall pretty good so pretty happy with that um okay so i think you've got some really good exercises for us and when i say us i mean me and the listeners to go through yeah absolutely so there's this great um it's a non-profit i mean they don't charge anything but it's called year compass and i'll put it in the show notes but i've done it the last few years and they produce this booklet that has all these questions and prompts to think about at the end of each year and then sort of
in planning for next year and it really covers a whole range of things and it does get you thinking. So I'll put that in the show notes, it's worth doing but some of their, I have some questions to sort of prompt yourself and think about your year and I thought I'd include them here and I've sort of pivoted them towards being about finances.
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Chapter 3: How can you evaluate your financial journey effectively?
Everyone, you're listening to this, you want to do the right thing. But there are so many people out there who just don't even think about it until it's too late. So that's a big lesson learned. Not necessarily for me personally, but just kind of thinking about that broadly.
The biggest risk I took
Oh, that's a good one. You just said, you know, what risk? Getting comfortable with risk. What's the biggest risk you took this year?
I think quitting a job in the pandemic. I don't think I've spoken about this on the podcast. No. After I wasn't going on my trip and then I was made redundant, I took a job at quite a large global financial firm and I was there for three months and it was just – not the right environment for me. I felt like a robot and it just, it wasn't the right place for me to grow and develop.
It wasn't going to challenge me. So after three months, I surprised them all and I handed in my resignation. And that was definitely a risk, but I think it has worked out.
Yep. Well, now you're part of the furniture here at Rask. It's very good. It's a great risk to take. But it is. Swapping jobs at any time is a risk. Sometimes the best decisions are made when things do seem like the most dark out.
And I think, you know, a lot of this is a business analogy, but the anecdote, a lot of the best businesses, Microsoft, Okta, which is another software company in the US, started during the depths of depressions, you know, when it was totally against the grain to do it. And they did it.
And I think from a personal perspective, too, sometimes it does take something like we've just been through to realize that it's OK to take risk. but I mean your I think yeah credit to you you took a risk I hope it pays off I think it will so the next one is the biggest surprise of the year dot dot dot what was the biggest surprise of the year
I think the whole, like COVID, I mean, didn't see that happening. That was a complete surprise. It took everyone's plans and sort of smushed them into a little ball and threw them away and everyone had to sort of figure out everything again. That was probably the biggest surprise. And I guess the market crashed that went with that. And then the very quick recovery, that was quite a surprise.
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Chapter 4: What are the essential steps to prioritize multiple financial goals?
I think, I mean, I spent quite a bit of the year, like this isn't a financial thing, it probably just sort of takes time, but helping my nan out quite a bit this year, sort of caring for her because she was all alone during COVID and I was sort of the nearest family member, so just sort of like me and my sort of mum doing a lot of stuff like that.
But maybe if we bring it back to the world of finance, probably hopefully making this fire course that, yeah,
should have come out by now as we're recording this yep by the time we record this it should be out if it's not out it'll be out very soon so that's a great one the most important thing I did for others Wow Maybe I'm so vain I didn't do anything for others. I honestly don't know. That's a really good question.
You employed people during a pandemic. I mean, you created jobs.
Yeah, well, we've taken on, yeah, another probably three to five people in the last few months. So that's great. That's an important thing. I think maybe if I could be so vain, I would say that I hope that during coronavirus and when that fallout was happening, I told people not to panic and I said to people, don't worry about the forecast for property markets.
Everyone was preaching doom and gloom and I was saying how important it was to still be invested and call out people that were advocating for everyone else to get out of the market because it was so easy to play on that fear trigger. So maybe that's something important I did for others from a financial perspective. The biggest thing I completed.
Well, Kate, what is the biggest thing that you've completed?
Oh, I mean, I had so many plans for this year, but I was hoping I'll finish my road trip around Europe by now. But I think maybe I went back and did some tertiary study this year. And that was a pretty big step for me doing a five hour exam. And I hadn't done an exam really since high school. So that was a pretty big step for me. What about you, Owen?
The biggest thing I completed this year, I mean, from a financial perspective, it would have been like from an all in all finance perspective would have been turning around the business. That was close to impossible, but we did it. But the next best thing, the biggest thing from a financial perspective is obviously buying a house. That was a big event. There was a good event.
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Chapter 5: How can automation enhance your financial planning?
This is how much I'm going to invest each month. So I think that's a really good exercise to do before you start setting your goals for the next year. But now we'll run through some sort of some tips for creating your goals and an action plan to achieving them for 2021. Cool.
So, I mean, everyone has different goals. So it might be paying down debt. Others might be investing for the first time, might be buying a house. It might be convincing your partner to do something. How do you prioritize when you have multiple goals?
I think, I mean, we're both used to having multiple short, medium, long-term goals, but write down everything you want to achieve and then sort of categorize it into the short, sort of up to a year, medium slash intermediate, sort of maybe that one to three, four, five years, depending on sort of how you're thinking about it.
And long-term, for some people that's five years plus, others take an even longer view and maybe think of their long-term goals as that 10-year plus timeframe. So really depending, I think as a young person, long-term goals –
more maybe that five-year plus category um but maybe uh for you it's sort of starting to become a more 10-year plus time frame it's a little bit easier to have a longer time frame once you've got a bit of perspective i think yeah so short term up to a year might be say paying down a two thousand dollar credit card yeah intermediate might be like buying a house if you're a first-time buyer
A long-term might be like, I don't know, if you're a couple, you're in your 50s, having a million dollars in retirement by the time you hit 65, something like that. So that's three easy ways or three groups or buckets that you can put things into to try and categorize what's important and then prioritize from there. But, I mean, it's easy to listen to this podcast, Kate.
If people have these goals, are there any steps people can take to just maybe crystallize them a bit more?
Yeah, so I think once you write them down and you've worked out what the categories are and then you've actually prioritised what's most important, I think you've kind of got to pick one of them in each category to be your overall priority. I think too many short-term savings goals and too many medium, like it gets too cluttered and confused.
Like saving for a house plus maybe like a big overseas holiday plus something maybe saving for a baby at the same time. That's a lot. So like you can have different savings accounts or investing accounts and keep them going. But I think you have to choose one overall priority for each category. For sure.
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Chapter 6: What role does accountability play in achieving financial goals?
now at the Melbourne 20 percent that's at least like 100 grand what are we talking about and so that's a massive goal saving that much money so that's going to that might be a five year goal between one or two people and you're going to have to change a lot more things to get towards that goal and the plan's got to be
much bigger and it's got to be sustainable over a longer period of time because you might be able to sacrifice a lot to pay off a quick goal or save five grand in a year but if you're trying to save a hundred grand over three to five years it's got to have a different approach yeah totally so and I do like this I think the most important thing for you to do if you're listening to this is just use Kate's strategy go away maybe sit down with your partner if you have one if you don't do it by yourself that's totally cool too
Have your three categories or like lists, put the goals in there. Maybe have like a time around that as well. And then prioritize one. So pick one, particularly those intermediate to long-term goals. How about, Kate, I know you're a fan of, I know you do this in your own financial life, particularly with your investing, so how you invest.
What's one strategy that people can use to make, to do the heavy lifting for them?
Yeah, I think I'll bang on about this point until the cows come home, but automate as much as you can of your goals and your financial plan. Anything that's going to help you end up in a more positive place, automate. If it's something that's going to leave you worse off like Apple Pay and being able to spend really easily, I would make that harder. So...
positive end result automate negative end result uh don't automate and put some put some friction in there so um whether that is for you you've worked out that debt payment can you automate that direct debit each month to pay off that credit card or can you automate a b pay transfer or if you're saving the money in for in your travel funds i mean it's a bit weird to talk about travel right now but maybe you want to go to tasmania
So you want $1,000 by next Christmas. Can you automate that? So each time your paycheck comes in, a set amount goes straight into that and you don't even have to look at it over the year. It just slowly accumulates and you get to the end of next year and boom, you've got your $1,000.
Yeah, it's so good. Automating your finances and even your investing to some extent, automating it is kind of one of the keys to compounding in the 21st century, I think. Yeah, and you don't even notice it.
Like I've had an automated investment going for... since 2017 of $300 a month. And it's just slowly sort of snowballed. And I looked at it the other day and I was quite amazed at how far I'd come compared to where I started with just a thousand dollars. So that was quite like amazing to see the reality of that over a few years, because it does take time to see the effects of automation.
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Chapter 7: What are the top financial goals to consider for 2021?
Yeah, cool. That's great advice. Wonderful, wonderful. Okay, can you, I'm guessing a few of these are still forming for you, but do you have any money goals for 2021 that you've already laid out?
Yeah, I think I probably will go through this whole exercise that I mentioned, the year compass booklet, closer to the end of the year and actually work out. I mean, at the start of this year, my financial goals were quite specific. They were like, this automation will happen each month and therefore this account should end up with this much money.
So that quite helped me because I could see a very specific target and overall end result. I think for me, my money goals next year, I want to keep learning more about share investing, a less random approach maybe.
Yeah, the dartboard approach.
Yeah, yeah. And I think I just like trying lots of new things and trying all the new apps. Yeah. that sometimes gets me distracted from the overall point. So I think a little bit more focus would probably be my main word for 2021.
And, yeah, I just think investing, I'm going to keep going with my ETF robo-advisor, keep adding money in a quarterly basis there, still putting money into my managed fund each month, investing in some direct shares. I like investing. I like the idea of getting an apartment but, I mean, I think that's more of a like.
I just got carried along with all of Owen's excitement this year so maybe I'll put some more money away for a potential apartment. future house deposit, but I still think that's a while away.
Let's talk about that before we get to that big one. Cool. For me, it's probably just going to be more accountable with actually making the investments at a set time.
Yeah.
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Chapter 8: How can you leverage community support for your financial journey?
And they're not just from us, not from me, not just from you. There's others in the team who are contributing to them. But then there's also experts from other, you know, I guess sectors or other fields of finance that are coming to the platform to give their wisdom. Yeah.
one of the big ones being in property obviously we don't talk about it that much on the show um so we'll be having some more content around that so please keep an eye on for that and that could be an excellent goal for you when you're setting your 2021 goals um adding some financial education maybe you want to read one financial education book um during 2021 or complete one of our free courses i mean there's a lot of resources out there and i think education is just an important money goal as the actual saving itself
You know what could be a really cool little goal for people is trying to ask us or get us to answer one question on air. So if you're the type of person that's a passive listener to this, ask a question because it might just give you the buy-in you need to get things rolling. No question is silly. So ask us and we'll help you out with that. And it might be reaching out to other people.
It might be just talking to someone about your finances, asking someone, hey, do you want to do this together? Do you want to learn about this? Do you want to come to an event?
that can be a very easy win for you and those things snowball because that feedback loop from like that positive reinforcement gets shorter and the shorter it is the easier it is to build a habit around that so yeah and once you start talking to people who are comfortable talking about money you realize it's not actually that scary to talk about and it can be fun totally yeah it can be and it's good if you you know if you want to have a family if you want to do whatever you want to do if you want to help your friends or your family members or your children
Come and learn this stuff. You know, the basics you can pick up pretty quick and then you can move on with. Speaking of, I'm talking about like how we're going to help you a bit more in 2021. Send us your recommendations of books. Send us your ideas for episodes, for guests.
You can reach us, podcast.ras.com.au, but you can just find us with any of the contact forms on our websites or on the Facebook group that we've got going on. So, yeah.
Maybe even ask a question there.
Yeah.
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