The 5 year test: Where you and your money will be
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What does the five-year test reveal about my financial future?
Welcome to How Do They Afford That, the podcast that peeks into the financial lives of everyday Australians. I'm Michael Thompson. I'm an author and the co-host of the business news podcast, Fear and Greed. As always, I'm with Canna Campbell, financial planner, founder of Sugar Mama TV, the financial literacy platform covering YouTube, podcasts, Instagram, threads, TikTok, and of course, my co-author on our upcoming book, 12 Months to Financial Freedom, available for pre-order now. Hello, Canna. How are you? Apprehensive. Why? Because this is one that looks to the future, today's episode. Basically, we're looking ahead. We're looking specifically five years ahead.
Yes.
Right? We're gazing into the financial crystal ball, if such a thing exists, and asking three questions, right? If nothing changed in your circumstances and in the way that you manage your money and all of those kind of things, where would you be? If you made small changes to your money, where would you be? And then if you made some big changes, some big overhauls, some big moves, where would you be in five years? What would your money look like? What would your lifestyle look like? How much better, without meaning to kind of cast a judgment on this prematurely, how much better would your life be if you took control of your money now and did something better? Let us jump straight into it. If you did nothing, right, in five years, where would you expect to be?
My default kind of assumption on this would be to say that you'd be in the same position as you are right now, but could you actually go backwards because of inflation and everything?
Well, assuming nothing's changing and that's because you're doing nothing and you're continuing to bury your head in the sand, you're quite right. You know, you could be going backwards. Yeah. You know, you look at inflation, think about the cost of living, the rising cost of living, thinking about the lifestyle creep and also all of those missed opportunities. Yeah. So even if your income stays the same, your money still buys less. So you could very easily be going backwards, and a lot of people are experiencing that right now, to be honest.
I'm so scared to ask you this because I'm worried that it will actually cause you to have a medical episode. But doesn't your super kind of just help you out a little bit here because you don't need to do anything. It's just sitting there in the background interacting you don't need to do anything. You will be in a better off position in five years, even without any action.
I am very proud of your positive attitude about superannuation, so I'd like to acknowledge that. But as I have said in the past, superannuation is not going to necessarily completely fix all of your financial problems. It may not be enough. You've also got to remember you can't access your superannuation until you've met a condition of release, which depending on how old you are right now, you're not going to be able to access your super for at least probably 20 years or so. under current legislation, which could change.
You took that very well.
Yes, thank you. I was sensitive to your sensitivities. Excellent.
We're becoming very nice to each other on this show. Give it a minute, we'll be back to the old ways. Indeed. I think the point of bringing that up is that, okay, your superannuation will hopefully, if market conditions are okay, then you'll continue to grow in the background. But the whole point of this is that, really, if you get involved and you start making some changes and you start doing some things, then your position in five years' time could be a whole lot better. Which leads us into... Small changes. All right. So we've established a baseline position of if you do nothing to your money right now.
Assuming that you're doing nothing. Because some people doing the same could actually still be working really hard and being responsible.
Yeah, indeed. But okay. So without being kind of proactive and making some changes to your money, you could either be in the same position that you are now or slightly worse off.
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Chapters
4 chapters
1
What does the five-year test reveal about my financial future?
0:01–5:53
2
If I do nothing with my money, where will I be in five years?
5:53–15:39
3
How can small changes improve my financial situation in five years?
15:39–17:49
4
What are the most effective small changes I can make to my finances?
17:49–23:38