Australian Finance Podcast
Spending vs saving: finding the balance between YOLO and future you
27 Oct 2022
Transcript generated automatically by AI and may contain errors.
Chapter 1: What is the balance between spending and saving?
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Hello, I'm Kate Campbell. And I'm Owen Rask. And you're listening to the Australian Finance Podcast.
A podcast where we talk about money, finance, investing and all that good stuff.
We're helping you invest your time and money better one podcast episode at a time.
Yes, so please subscribe if you like the series. And don't forget you can find us on social media. We're on all the platforms. Kate, where can people go?
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Chapter 2: What are the reasons behind our spending habits?
It's the five love languages. And there's all these kind of tests that we do on ourselves to figure out not just who we are compatible with or whatever, but we try and assess ourselves. And whenever I do them, I always think to myself, this is good, but it's not me. And a lot of people subscribe to this idea that that is who I am. And they can give you a guide to...
what relationship you might have with money or just in general. But at the end of the day, they do have limitations. So just use them as a basis for just kind of self-reflection. But at the end of the day, just remember that particularly in finance, there are no right or wrong answers. And you're going to be, you're going to go on your own journey. Yeah.
And that's something that we kind of champion because we get a lot of, especially in finance, we hear a lot of like polarizing debates. It's either you're a saver, you're a spender, you're an investor, you're not.
Property or shares.
Property or shares.
Super or not super.
Yep. Growth investor, dividend investor. Like there's all these labels that we give. And I think that's one of the things that we're trying to do is trying to break down those barriers and just say, you can do it all if you want to, or you can do none of it.
And everyone's finances look completely different. If we got all of our listeners across the two podcasts and we lined all of their portfolios up and their entire financial situation side by side, I can almost guarantee that no one's finances will look the same. Just like when you walk down Swanston Street in Melbourne CBD, you won't see anyone wearing the exact same combination of
clothes and shoes and hats. Everyone will have a different combination. They've got the same tools, but they're going to use them differently.
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Chapter 3: How can understanding needs vs. wants improve spending?
And these are the things I think you need to be a bit more mindful about because they probably weren't in your mind at the start of the day.
Yep. Okay. So a lot of people, when they get bored – They get spendy.
Yeah.
Yeah. When people get lonely, they try and get some retail therapy.
Yeah.
This might not be physical loneliness. It might just be in your head.
Guilt spending as well.
Guilt spending. Yep. Absolutely.
And also, yeah, I've experienced like sad spending, just like some joy in your life. Just on a moment where I was feeling sorry for myself.
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Chapter 4: What emotional factors influence our spending decisions?
Because Keep spending the money, but just be mindful of why am I doing this? Is it because I'm bored right now? Is it because this is a bill and I have to pay it? And just being a little bit more mindful before you tap that card.
And I would just say don't beat yourself up. As you do this, if you beat yourself up about spending something on something, you're going to be miserable. It's okay. We're saying it's okay to spend money. Go and spend. It's good for the businesses around you. It's good for the economy. Go and spend. Just spend mindfully. That's what we're trying to do.
So don't think that just because you do this activity with your money and your finances or you check in with yourself that... That's a bad thing and you need to be punished because there is a balance. And if you don't find that balance, it's not going to be sustainable.
Yeah. So when you're about to spend money, like these three questions help me and I just run through why am I really spending this money? Is it based on the emotion, need, want or environment that I'm in? Just having that trigger there. Number two, what value do I place on this purchase? Is it aligning with what I want to do with my money? And is it worth the time I spent earning this money?
Sometimes that's a good way to think about it. Sometimes it's not as helpful. And the third one, if I left the store or the website or wherever you are, if I left this transaction right now, would I still want to make this purchase in a day, a week, a month, a year's time? Yep. So just being a little bit more thoughtful about how I spend money. And that's just something that's worked for me.
And you're going to have different questions that work for you.
Yep.
I like it. So why am I really spending this money? What value do I place on this purchase? And will I still be happy with this purchase in an hour, three days, a month, a year? I think the bigger your purchase, the bigger that timeframe should become. If you're buying a new car, will I still be happy with this in two years? Maybe you will.
And I think one of the things you can do if you do start to go down that path is When you do try and justify it to yourself is actually be realistic about the benefits of things. So I've actually... This is a bit of a separate preparation here, okay? I've come up with seven things I would spend money on and you could consider spending money on before you save. Yeah. Okay, here we go.
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Chapter 5: How does environment affect our spending behavior?
spend more on things that you value. So this is actually telling you to go and spend more. So things that I value are my mattress. I've got to have a good mattress. If I don't have a good night's sleep, I'm like, oh, I know sometimes I fall asleep on the couch, but that's a separate story altogether. But mattresses, like I recently bought a Makota mattress, which is one of those ones in a box.
Really good. But there are heap of good ones like Koala does it in four hours as well. Shoes, pillows, all these types of things. I think one thing that people tend to do is even once they've saved up for something, they struggle to spend money. This is not really something for me, but for the savers in the room.
When you save, say $5,000 to do something or to buy something, some people still have friction even at that point. Once they know they've done everything that they quote unquote should do, they still struggle. This one's going to be more of a finance-y one.
If insurance is really important, and I feel like more people should have it than they do, and the people that have it often have too much of it. It's a bit of a weird thing, but things like life, income protection, health insurance, car insurance, spend money on them if it's going to bring you peace of mind. A lot of people don't. High quality foods. We talked about this on the show.
Tomorrow's day starts today, if you want to wake up feeling good. And finally, investing. I think these are things that, this is by way of example, that would fall into categories where I think these are good spending habits. So these are good things to spend money on. It's just my list, but that's how I was thinking about it in reflection for today's episode.
Yeah. I like that.
So, Kate, where can people find the 10 things activity that you put together?
Well, if I remember, I'll put it in the show notes. So, it'll be there. Otherwise, it's also in the FIRE course on RASC education and many other places on the internet.
Yeah. Okay. So, FIRE course, there'll be a link in the show notes. I'm just popping it down now. If you haven't already taken Kate's course, go and give it a crack. If you are a RASC core member, you do get access to all beginner level courses for free on RASC education. It's an easy way. Don't pay the full price for any of the courses on there.
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