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How much do you need to know about how your spouse spends money? Maybe less than you think

<div class="theconversation-article-body"> <p><em><a href="https://theconversation.com/profiles/scott-rick-1534612">Scott Rick</a>, <a href="https://theconversation.com/institutions/university-of-michigan-1290">University of Michigan</a></em></p> <p>Love is in the air, and wedding season is upon us.</p> <p>Like many elder millennials, I grew up watching sitcoms in the 1980s and ‘90s. Whenever those series needed a ratings boost, they would feature a wedding. Those special episodes taught me that weddings usually involve young lovebirds: think Elvin and Sondra from “The Cosby Show,” Cory and Topanga from “Boy Meets World,” or David and Darlene from “Roseanne.”</p> <p>But those were different times. People are getting married later in life than they used to: In the United States, <a href="https://www.census.gov/content/dam/Census/library/visualizations/time-series/demo/families-and-households/ms-2.pdf">the median age of newlyweds</a> has grown to 28 for women and 30 for men.</p> <p>This trend means that many Americans now enter marriage after being self-reliant for several years, including managing their own money. Will they be eager to change that once they get married? Don’t count on it. A 2017 <a href="https://bettermoneyhabits.bankofamerica.com/content/dam/bmh/pdf/ar6vnln9-boa-bmh-millennial-report-winter-2018-final2.pdf">Bank of America survey</a> suggests that millennial married couples are around 15 percentage points more likely than their predecessors to keep their finances separate.</p> <p>This is not necessarily a good development. As a behavioral scientist <a href="https://michiganross.umich.edu/faculty-research/faculty/scott-rick">who studies money and relationships</a>, I find that joint accounts <a href="https://doi.org/10.1093/jcr/ucad020">can bring partners closer</a>.</p> <p>There are some risks, however. Joint accounts create transparency, and intuitively, transparency feels like a good thing in relationships. But I argue that some privacy is important even for highly committed couples – <a href="https://us.macmillan.com/books/9781250280077/tightwadsandspendthrifts">and money is no exception</a>.</p> <h2>The newlywed game</h2> <p>Behavioral scientists <a href="https://kelley.iu.edu/faculty-research/faculty-directory/profile.html?id=jgolson">Jenny Olson</a>, <a href="https://som.yale.edu/faculty-research/faculty-directory/deborah-small">Deb Small</a>, <a href="https://www.kellogg.northwestern.edu/faculty/directory/finkel_eli.aspx">Eli Finkel</a> and I recently conducted <a href="https://academic.oup.com/jcr/article-abstract/50/4/704/7077142">an experiment with engaged and newlywed couples</a>. Each of the pairs had entirely separate accounts, but they were undecided about how they wanted to manage their money moving forward.</p> <p>We randomly assigned each of the 230 couples to one of three groups. One group kept their money in separate accounts; one merged their cash into a joint account and stopped using separate accounts; and one managed their money however they liked.</p> <p>We followed couples for two years, periodically asking them to complete surveys assessing their relationship dynamics and satisfaction. Our relationship quality measure included items such as “I cannot imagine another person making me as happy as my partner does” and “Within the last three months, I shouted or yelled at my partner.”</p> <p>Among the couples who could do whatever they wanted, most kept things separate. They and the couples assigned to keep separate accounts experienced a steady decline in relationship quality over time.</p> <p>This is a fairly typical pattern. For instance, in <a href="https://academic.oup.com/sf/article-abstract/79/4/1313/2234046">a large study that tracked U.S. couples’ marital happiness for 17 years</a>, <a href="https://www.unk.edu/academics/social-work/faculty_staff/van_laningham.php">sociologist Jody Van Laningham</a> and colleagues found that “marital happiness either declines continuously or flattens after a long period of decline.”</p> <p>Declines during the first two years of marriage are particularly important. Social scientist <a href="https://liberalarts.utexas.edu/prc/faculty/hustontl">Ted Huston</a> and colleagues call those first two years <a href="https://doi.org/10.1037/0022-3514.80.2.237">the “connubial crucible</a>.” They find that relationship dynamics that develop during that crucial period can foreshadow relationship quality for many years to come.</p> <p>Couples in our study who were prompted to take the plunge into a joint account, however, maintained their initial level of relationship satisfaction over the course of the two-year experiment.</p> <h2>Tit-for-tat</h2> <p>Our survey results suggest that, by turning “my money” and “your money” into “our money,” a joint account can help to reduce scorekeeping within a relationship. For example, we found that couples with joint accounts were more likely to agree with statements such as “When one person does something for the other, the other should not owe the giver anything.”</p> <p>Relationships usually don’t start with a scorekeeping orientation. In the 1980s and ‘90s, psychologist <a href="https://psychology.yale.edu/people/margaret-clark">Margaret Clark</a> and colleagues conducted experiments where partners had the option of keeping track of each other’s contributions to a shared task. <a href="https://clarkrelationshiplab.yale.edu/sites/default/files/files/Resource%20allocation%20in%20intimate%20relationships.pdf">They observed</a> that intimate relationships often begin with a “communal” orientation, where partners help one another without keeping careful track of who’s doing what.</p> <p>Eventually, however, they take on more of an “exchange” orientation – where inputs are tracked and timely reciprocity is expected. Couples that manage to stave off a tit-for-tat mindset <a href="https://doi.org/10.1177/0956797610373882">tend to be happier</a>.</p> <h2>Too much of a good thing?</h2> <p>The data from our experiment with young couples clearly suggests that using only a joint account is better than using only separate accounts. However, I argue in my new book, “<a href="https://us.macmillan.com/books/9781250280077/">Tightwads and Spendthrifts</a>,” that just a joint account is probably not optimal.</p> <p>When partners use only a joint account, they get an up-close-and-personal view of how the other person is spending money. This kind of transparency is <a href="https://www.businessinsider.com/money-habits-successful-married-couples-avoid-2016-11">normally viewed</a> as a good thing.</p> <p>Some commentators argue that a healthy marriage should have no secrets whatsoever. For example, Willard Harley, Jr., a clinical psychologist who primarily writes for Christian audiences, argues that you should “reveal to your spouse <a href="https://www.marriagebuilders.com/the-policy-of-radical-honesty.htm">as much information about yourself as you know</a>: your thoughts, feelings, habits, likes, dislikes, personal history, daily activities, and plans for the future.”</p> <p>In addition, if your goal is to minimize optional spending, <a href="https://doi.org/10.1002/jcpy.1083">research suggests</a> that the transparency that comes with a joint account can be helpful. We spend less when someone is looking over our shoulder.</p> <p>Still, there are reasons to believe that <a href="https://doi.org/10.1177/0265407500172005">complete transparency can be harmful for couples</a>.</p> <p>Many people have become convinced that if they could just stop buying lattes and avocado toast, they could invest that money and become rich. Unfortunately, the underlying math is highly dubious, as journalist Helaine Olen points out in <a href="https://www.penguinrandomhouse.com/books/308568/pound-foolish-by-helaine-olen/">her book “Pound Foolish</a>.” Still, many people view small indulgences as their primary obstacle to wealth. Complete transparency around these financially inconsequential “treats” <a href="https://slate.com/business/2021/09/partner-hates-retail-therapy-money-advice.html">can lead to unnecessary arguments</a>.</p> <p>Also, spouses may have different passions that their partner does not fully understand. Expenses that seem perfectly reasonable to another hobbyist may seem outrageous <a href="https://academic.oup.com/jcr/article-abstract/19/2/256/1929895">to someone without the proper context</a> – another source of <a href="https://www.sciencedirect.com/science/article/abs/pii/S2352250X21000750">avoidable disagreements</a>.</p> <h2>'Translucent,’ not transparent</h2> <p>I propose that many couples may benefit from a combination of joint and separate accounts.</p> <p>A joint account is essential for ensuring that both partners have immediate and equal access to “our money.” Ideally, all income would be direct-deposited into the joint account, which would help to blur the gap between partners’ earnings. Conspicuous income differences <a href="https://doi.org/10.1086/432228">can jeopardize relationship quality</a>.</p> <p>Separate accounts attached to the joint account can allow some privacy for individual purchases and help partners maintain a sense of autonomy and individuality. Each person gets to spend some of “our money” without their partner looking over their shoulder. Spouses would have a high-level understanding of how much their partner is spending per week or per month, but avoid the occasionally irritating details.</p> <p>This kind of partial financial transparency – <a href="https://us.macmillan.com/books/9781250280077/tightwadsandspendthrifts">what I call “financial translucency</a>” – could help couples strike the right balance between financial and psychological well-being.</p> <p>Of course, this approach requires a lot of trust. If the relationship is already on thin ice, complete financial transparency may be necessary. However, if the relationship is generally in the “good, but could be even better” category, I would argue that financial translucency is worth considering.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/230070/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><em><a href="https://theconversation.com/profiles/scott-rick-1534612">Scott Rick</a>, Associate Professor of Marketing, <a href="https://theconversation.com/institutions/university-of-michigan-1290">University of Michigan</a></em></p> <p><em>Image credits: Shutterstock </em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/how-much-do-you-need-to-know-about-how-your-spouse-spends-money-maybe-less-than-you-think-230070">original article</a>.</em></p> </div>

Money & Banking

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If you have money anxiety, knowing your financial attachment style can help

<div class="theconversation-article-body"><em><a href="https://theconversation.com/profiles/ylva-baeckstrom-1463175">Ylva Baeckstrom</a>, <a href="https://theconversation.com/institutions/kings-college-london-1196">King's College London</a></em></p> <p>The number of people struggling with money in Britain is at a <a href="https://www.theguardian.com/money/2024/mar/18/record-numbers-of-uk-people-in-debt-warns-charity">record high</a>. Financial charities say that people are contacting them for help with debt, paying bills and insolvency. The campaign group Debt Justice found in a <a href="https://debtjustice.org.uk/wp-content/uploads/2024/03/WalnutOmnibus-Debt-Justice-Policy-Development-Weighted.xlsx">survey</a> that 29% of 18- to 24-year-olds and 25% of 25- to 34-year-olds had missed three or more bill payments in the last six months.</p> <p>A majority (65%) of people don’t think they can survive on their savings for three months without <a href="https://www.money.co.uk/savings-accounts/savings-statistics">borrowing money</a>. Statistics from the UK’s financial markets regulator show that more than one-third of UK adults have less than £1,000 in savings. And a survey by Money.co.uk found that 30% of Brits aged 25-64 do not save at all <a href="https://www.pensionsage.com/pa/Nearly-one-third-of-Brits-are-not-saving-for-retirement.php">for retirement</a>.</p> <p>With figures like that, is it any wonder that 75% of people in the UK feel <a href="https://www.mentalhealth.org.uk/about-us/news/financial-strain-driving-uks-anxiety#:%7E:text=Almost%20three%2Dquarters%20of%20the,cited%20job%20insecurity%20or%20unemployment">anxious about money</a>?</p> <p>The current state of the economy is particularly scary for young people. Unless you were born with a trust fund (not most people), you are likely part of the first generation to be financially worse off than <a href="https://edition.cnn.com/2020/01/11/politics/millennials-income-stalled-upward-mobility-us/index.html">your parents</a>. Retirement seems like an impossibility, and you’re unlikely to own your own home. Eighty percent of people in their early 20s worry about <a href="https://www.youngminds.org.uk/parent/parents-a-z-mental-health-guide/money-and-mental-health/#Thelinksbetweenmoneyandmentalhealth">not earning enough</a>.</p> <p>It is important to start planning for your financial future early in your career, but you may find it overwhelming. The good news is, there are ways to overcome this.</p> <h2>Finding your financial attachment style</h2> <p>As a psychotherapist and finance researcher, I work with people to help them to increase their financial confidence and find the motivation to start planning. This often starts with understanding what influences their relationship with money.</p> <p><a href="https://www.cambridge.org/core/journals/behavioral-and-brain-sciences/article/bowlbyainsworth-attachment-theory/6D35C7A344107195D97FD7ADAE06C807">Attachment theory</a> is a psychological concept introduced in the late 1950s. Your attachment style – which can be, for example, secure, anxious or avoidant – explains how you approach creating emotionally intimate relationships with other people. Some people feel secure building relationships, while others are extremely anxious. Some avoid close relationships altogether.</p> <p>Attachment style can also apply to your finances. If you feel confident and safe when it comes to money, you are secure in your relationship to saving and spending. But if the thought of opening an ISA or filling out a tax return, let alone planning for retirement, fills you with dread and panic, you may be anxiously attached. And if you if you push money worries to the back of your mind, you are likely avoidant.</p> <p>Attachment theorists and psychotherapists like me think that attachment styles are shaped by childhood experiences – for example, how well you were looked after by your parents or carers, and how safe and loved you felt.</p> <p>The way money was handled in your family growing up is likely to have set the blueprint for your <a href="https://www.sciencedaily.com/releases/2020/02/200225114410.htm">financial attachment style</a>. Outside influences like education or work experiences may shape this too.</p> <p>Although financial education is part of the <a href="https://maps.org.uk/en/work-with-us/financial-education-in-schools">school curriculum</a> in the UK, 76% of children leave school without sufficient <a href="https://maps.org.uk/en/media-centre/press-releases/2024/hundreds-of-thousands-leaving-school-without-money-skills#:%7E:text=In%20its%20poll%20of%201%2C012,knowledge%20they%20need%20for%20adulthood">financial knowledge</a> to manage their lives. Similarly, financial services like banks have done a poor job helping people establish secure financial relationships. Complex and <a href="https://www.pwmnet.com/private-view-blog-time-for-the-financial-industry-to-jettison-the-jargon">off-putting language</a> has placed a barrier between those who know about money and those who need to learn.</p> <p>If you feel unable to keep up with financial terms, or that you don’t understand money, this is likely to hurt your confidence in your financial planning abilities and fuel a more avoidant attachment style.</p> <p>Identifying your attachment style can help you nurture a better relationship with money. You will be able to understand and predict how and why you react to finances in certain ways. And, it can provide confidence by reminding you that money struggles are not necessarily your fault.</p> <h2>Getting over financial anxiety</h2> <p>Some of the recent financial trends spreading on social media may give an insight into your attachment style. Are you <a href="https://www.cnbc.com/select/what-is-loud-budgeting-trend-can-it-work/">“loud budgeting”</a> (being vocal about why you aren’t spending money)? This could be a sign of financial confidence and that you have secure financial attachment. Or are you “doom spending” (spending money you don’t have instead of creating a <a href="https://www.theguardian.com/lifeandstyle/2024/jan/31/are-you-loud-budgeting-or-doom-spending-finance-according-to-gen-z">nest egg</a> for the future)? You may be avoidant.</p> <p>Healthy relationships with <a href="https://www.nhs.uk/every-mind-matters/lifes-challenges/maintaining-healthy-relationships-and-mental-wellbeing/#:%7E:text=People%20with%20healthy%2C%20positive%20and,such%20as%20stress%20and%20anxiety">people</a> and <a href="https://www.nhs.uk/every-mind-matters/lifes-challenges/money-worries-mental-health/#:%7E:text=Our%20mental%20health%20might%20be,earning%20enough%20or%20currently%20unemployed">money</a> are both critical for our survival and mental health. As an adult, you have the power to improve these relationships. But because attachment patterns were formed early on, they are difficult to change. Therapy and other support can help you adopt healthier habits, as can increasing your financial knowledge.</p> <p>If you want to change your relationship with money, you should try to be mindful of what may be influencing you. While financial advice on social media may be useful and help young people feel more empowered to <a href="https://www.forbes.com/advisor/investing/financial-advisor/adults-financial-advice-social-media/">talk about money</a>, it can also <a href="https://www.mcleanhospital.org/essential/it-or-not-social-medias-affecting-your-mental-health">increase anxiety further</a> and be <a href="https://theconversation.com/if-you-get-your-financial-advice-on-social-media-watch-out-for-misinformation-222196">full of misinformation</a>. A good place to start for accurate and helpful information is the government’s <a href="https://www.moneyhelper.org.uk/en">Money Helper website</a>.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/225243/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><em><a href="https://theconversation.com/profiles/ylva-baeckstrom-1463175">Ylva Baeckstrom</a>, Senior Lecturer in Finance, <a href="https://theconversation.com/institutions/kings-college-london-1196">King's College London</a></em></p> <p><em>Image credits: Getty Images </em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/if-you-have-money-anxiety-knowing-your-financial-attachment-style-can-help-225243">original article</a>.</em></p> </div>

Money & Banking

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14 personal finance tips you were never taught – but need to know

<p><strong>Take a day to think about large purchases to avoid impulse buys</strong></p> <p>“Delaying your purchases for a day gives you time to think about whether or not you really need the items, and it curbs regrettable impulse buys,” advises Marc Diana, CEO of MoneyTips.</p> <p>“Sale items may be an exception to this rule, but even then, question how badly you need the item compared to saving or investing the money you would use to purchase it. When times are tough, and you’re cutting expenses, would you rather have a rarely worn $300 pair of shoes or $300 cash?”</p> <p><strong>Budgets are freeing, not constricting</strong></p> <p>Says financial educator Tiffany Aliche, “Keeping a budget allows you to say yes to your goals in a strategic way. If you have a budget, you can save for the holiday, house or car you want to get. You can look at it as ‘No dining out,’ but I see it as ‘Yes to a trip to Paris.’ A budget is not a NO plan, but a YES plan with actual steps towards achieving your goals.”</p> <p><strong>Budget with the 50/20/30 rule</strong></p> <p>Lynn Toomey, co-founder of Your Retirement Advisor, suggests following this easy budgeting rule:</p> <p>Use 50 per cent of your income for non-discretionary necessities like food, rent/house payment, utilities, and transportation.</p> <p>Put aside 20 per cent of your income for an emergency fund (three to six months’ salary is a good target), retirement, savings, and to pay off any debts.</p> <p>Use 30 per cent of your income for discretionary (non-essential) spending such as entertainment, holidays and gifts.</p> <p><strong>Penny-pinching is not the road to wealth</strong></p> <p>Spending less doesn’t mean you’ll have more. Saving is a good way to stabilise your finances, but you still need to invest. “Pretend there are two islands,” advises Aliche, who is also known as The Budgetnista: “Financially Stuck Island and Wealthy Island.”</p> <p>She says that your savings can be like a car – you can’t drive off Financially Stuck Island without a bridge. Investing is the bridge to financial success. “To get from one island to another, you need to get in your savings car and drive it over your investment bridge.”</p> <p><strong>It’s OK to put yourself before your kids</strong></p> <p>Many people want their kids to go to university, says Aliche, “but it’s more important for you to save enough for retirement. Because the best gift you can give your child is not a free ride to school, but rather not to be a financial burden on them when it’s time to start their own family. Kids can get student loans; no one is going to lend you money without collateral when you’re retired.”</p> <p><strong>Financial advisors aren’t only for wealthy people</strong></p> <p>Millions of people have trillions invested in stocks, bonds, mutual funds and other stock exchange investments, but just because you can easily make trades yourself doesn’t mean you should. “Why not do what you do best to earn money and let a trained professional invest it for you?” asks Brian Saranovitz, president of Your Retirement Advisor. “A recent Vanguard Investments study indicated that integrating proper retirement strategies can add as much as 3 per cent efficient return to a retirement portfolio.”</p> <p>Adds Aliche, “You need to purposefully seek out knowledge. If you break a leg, you know that you need to go to a doctor. With personal finance, people have got the notion that they could just fix it themselves. When it comes to investing, don’t be afraid to seek professional help.”</p> <p><strong>Get a clear picture of yourself at 80</strong></p> <p>Barring tragedy, you will live to a ripe, old age. Aliche recommends naming your 80-year-old image of yourself. “Mine is Wanda. I imagine Wanda sitting on the front steps in her yard. People feel disconnected from their older self. The more you can picture her, the better. I don’t want to see her mopping floors at 80. When I’m making a decision, I think, ‘How will this affect Wanda?’ If I dip into my retirement funds to buy an expensive car, that’s going to hurt Wanda.”</p> <p>If it’s easier, pretend you’re living with your grandfather or grandmother. “You’re not going to tell Granny, ‘You have to go to work. We need the money,’” she says.</p> <p><strong>You can never have too much retirement savings</strong></p> <p>Says Lynn Toomey, co-founder of Your Retirement Advisor, “Life is good. Retirement is better, if you are prepared.” She points out that retirement is laden with potential costs, such as healthcare, longevity, market volatility and inflation.</p> <p>“Even if you think you’re saving enough and have assets, it still may not be enough. The earlier you start saving and investing, the longer compound interest can work its magic to help you achieve a successful retirement.”</p> <p><strong>Don’t blow your tax refund</strong></p> <p>“What are you planning on doing with your tax refund?” asks financial advisor Mike Zaino. “If you’re like most people, the world of instant gratification is beckoning. It could be extremely damaging to your retirement account, however, especially given the time value of money and what Albert Einstein called ‘The eighth wonder of the world” – compound interest.”</p> <p><strong>Ask current lenders for a better rate</strong></p> <p>“Banks, credit unions and other lenders are keenly aware of their competition,” says Diana of MoneyTips.com. “If your credit score qualifies you for a better rate from another credit card issuer or lender, ask them to match the rate. There’s no downside to asking; the worst they could do is refuse.”</p> <p><strong>Asking for your credit limit to be raised can improve your credit score</strong></p> <p>Keep your credit utilisation – the amount of credit you use compared to your credit limit – low to boost your all-important credit, advises Diana. “You can borrow less, or you can ask for a raise in your credit limit.”</p> <p>A recent study from CreditCards.com found that only 28 per cent of respondents have never asked for an increase in their credit limit. However, a whopping 89 per cent of those who asked for a credit limit increase received one.</p> <p><strong>Unless they have a high annual fee, don’t close your old credit cards</strong></p> <p>“The longer your stable credit history, the better it reflects on your credit score,” explains Diana. “The age of accounts is averaged over all of your credit accounts, so closing an older account that is infrequently used actually harms your credit score in two ways: it lowers your credit limit, which raises your credit utilisation; and it lowers your average account age. If you have an old card with a decent credit limit, use it at least annually to keep it open. But don’t forget to pay the bill on time!”</p> <p><strong>Don’t ever co-sign a loan</strong></p> <p>“Co-signing a loan isn’t just vouching for someone’s character,” explains Toomey. “Understand that if the borrower doesn’t pay, then you’re responsible for every single missed payment. If they don’t pay, it’s your credit that will be ruined.”</p> <p><strong>Being debt-free should not be your goal</strong></p> <p>Says Aliche, creator of the Live Richer Challenge, “People focus on getting out of debt. If they use that money to grow wealth instead of getting rid of debt, they could be debt-free faster. Do you pay off your student loans to get debt-free, or invest money in your business to grow and secure wealth for yourself? If you focus on being debt-free, that’s all you’ll be. If you focus on building wealth, then you can be wealthy and debt-free.”</p> <p><em>Image credits: Getty Images</em></p> <p><em>This article originally appeared on <a href="https://www.readersdigest.com.au/food-home-garden/money/14-personal-finance-tips-you-were-never-taught-but-need-to-know?pages=1" target="_blank" rel="noopener">Reader's Digest</a>. </em></p>

Money & Banking

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Know thyself, know thy finances: which of the 5 money personalities are you?

<p><em><a href="https://theconversation.com/profiles/ayesha-scott-867030">Ayesha Scott</a>, <a href="https://theconversation.com/institutions/auckland-university-of-technology-1137">Auckland University of Technology</a> and <a href="https://theconversation.com/profiles/aaron-gilbert-867098">Aaron Gilbert</a>, <a href="https://theconversation.com/institutions/auckland-university-of-technology-1137">Auckland University of Technology</a></em></p> <p>When it comes to money, are you a big spender or a fearful saver? Do you give away all your money or ignore financial demands until they become urgent?</p> <p>After decades of focus on financial literacy, it has become clear there is more to how we manage our money than access to information. Now new research has identified five distinct money personalities that drive how we spend.</p> <p>Commissioned by Te Ara Ahunga Ora (Retirement Commission) for their free, independent personal finance site <a href="https://sorted.org.nz/">Sorted</a>, <a href="https://assets.retirement.govt.nz/public/Uploads/Financial-Capability-Research/Report-Money-Personality-Tool-Project-AUT-vFINAL.pdf">our study</a> included an extensive review of the research on personality traits, values and attitudes. We then created an online survey, completed by nearly 500 New Zealanders, exploring how people engaged with their money.</p> <p>The research findings form the backbone of a <a href="https://sorted.org.nz/tools/money-personality-quiz">new online money personality quiz</a> designed to help people understand their money personality and inform their financial decisions and behaviour.</p> <p>With New Zealand <a href="https://www.rnz.co.nz/news/business/492013/new-zealand-in-recession-as-gdp-falls-for-second-quarter">officially in a recession</a>, it has never been more important to understand money management. Despite our best intentions, we often struggle to make “good” financial decisions consistently – including saving enough, using debt wisely, and staying on top of insurance policies and KiwiSaver.</p> <h2>Doing better with our money</h2> <p>According to Te Ara Ahunga Ora, New Zealanders are <a href="https://assets.retirement.govt.nz/public/Uploads/Research/TAAO-RC-NZ-FinCap-Survey-Report.pdf">good with the basics of financial capability</a> – budgeting and keeping track of money. But we score lower than comparable countries like Canada, Norway, Australia and Ireland on more advanced financial capabilities like long-term savings. We also lack confidence when it comes to our cash.</p> <p>There is a growing body of evidence that personality traits, money values and attitudes each play a crucial part in either aiding or hindering us making those “smart” financial decisions.</p> <p>Attitudes towards saving, the degree to which we value material possessions, and how comfortable we are with risk, will all affect the financial decisions we make – and, as a result, our financial wellbeing.</p> <h2>The 5 money personalities</h2> <p>We identified five distinct money personalities, each with their own strengths and weaknesses: the enterpriser, socialite, minimalist, contemporary and realist.</p> <p><strong>An enterpriser</strong> is a financially confident, future-orientated planner who enjoys looking after their finances and is proud of being money savvy. Their strengths include self-control, financial knowledge and making their money work for them.</p> <p>An enterpriser is unlikely to make impulsive or emotional purchases. However, their aspirational approach – viewing money as a priority and a symbol of success – may pair badly with materialism, causing them to spend money to gain status rather than for value or utility. Enterprisers benefit from learning about investing and planning for the future.</p> <p><strong>The minimalist</strong> is frugal, confident with their saving ability, and on top of their financial situation. Minimalists value a simpler life, scoring low on materialism and are not prone to impulsive or emotional purchases.</p> <p>Their weakness is not always making their money work as hard for them as it could, as they are less likely to take financial risks – even where there is a potential for higher investment returns. Low-cost, passive investment strategies may appeal to minimalists.</p> <p><strong>A socialite</strong> is a joyful risk taker, outgoing, and confident with their money handling. A generous extrovert, they are more likely to be materialistic than other personality types and tend to live for today rather than plan for tomorrow.</p> <p>Their high tolerance for risk suggests some socialites may take on unwise levels of financial risk. Those in this group who are also impulsive or prone to emotional purchases may find themselves overspending or vulnerable to over-extending themselves with consumer debt.</p> <p>Socialites may like to explore active investment strategies and riskier investment classes, however. Taking calculated risks and building financial resilience is an important focus for them.</p> <p><strong>A contemporary</strong> doesn’t enjoy managing their money and they lack confidence when it comes to financial matters. They are likely to say they’re a spender despite being less materialistic than others; living for today, they tend to engage in impulsive emotional spending and are generous to a fault.</p> <p>For contemporaries, the focus is increasing financial resilience by paying down debt and building an emergency savings fund, enabling them to share their wealth with others without affecting their own financial well-being. Working on their money mindset and general financial knowledge may allow them to build confidence and savings, then take a passive or “set and forget” approach to their financial life.</p> <p><strong>A realist</strong> is future-focused, very conservative with risk, and values money highly. But they are not confident with their money handling, despite paying close attention to their financial situation.</p> <p>The most introverted personality type, a more aspirational realist may be materialistic but is unlikely to make impulsive or emotional purchases a habit. This suggests building confidence and encouragement to take appropriate investment risks is important. Given they do not like making money decisions, automation of bill payments and savings may appeal.</p> <h2>Know thy money self</h2> <p>Each money personality offers different challenges when it comes to making financial decisions.</p> <p>Taking Sorted’s money personality quiz is fun, but it’s also a useful financial decision you can make right now.</p> <p>It’s not just about the label. Knowing your money personality can help you understand your strengths and weaknesses when it comes to financial decision making, giving you tools to improve your financial resiliency and security.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/207621/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><a href="https://theconversation.com/profiles/ayesha-scott-867030">A<em>yesha Scott</em></a><em>, Senior Lecturer - Finance, <a href="https://theconversation.com/institutions/auckland-university-of-technology-1137">Auckland University of Technology</a> and <a href="https://theconversation.com/profiles/aaron-gilbert-867098">Aaron Gilbert</a>, Professor of Finance, <a href="https://theconversation.com/institutions/auckland-university-of-technology-1137">Auckland University of Technology</a></em></p> <p><em>Image credits: Getty Images</em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/know-thyself-know-thy-finances-which-of-the-5-money-personalities-are-you-207621">original article</a>.</em></p>

Retirement Income

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How financial stress can affect your mental health and 5 things that can help

<p>Financial stress is affecting us in many different ways. Some people are struggling to pay bills, feed the family, or maintain a place to live. Others are meeting their basic needs but are dipping into their savings for extras.</p> <p>Financial stress <a href="https://www.anu.edu.au/news/all-news/australians-under-increasing-financial-stress">is increasing</a> and, understandably, is causing some distress. In recent months, Lifeline has seen a <a href="https://www.lifeline.org.au/media/qhmfdsit/lifeline-is-here-to-support-people-struggling-with-the-mental-wellbeing-effects-of-cost-of-living-pressures.pdf">rise</a> in the number of calls about financial difficulties.</p> <p>But understanding and finding ways to reduce our financial stress – and its emotional impact on us – can help make this challenging time a bit easier.</p> <h2>What is financial stress?</h2> <p>If you’re finding it difficult to meet your current expenses or are worried about your current or future finances, you’re under <a href="https://onlinelibrary.wiley.com/doi/10.1002/smi.2688">financial stress</a>. Like other types of stress, financial stress has two components: </p> <ul> <li> <p><strong>objective</strong> financial difficulty, where you don’t have enough funds to cover necessary expenses or debts</p> </li> <li> <p><strong>subjective</strong> perceptions about your current or future finances, leading to worry and distress.</p> </li> </ul> <p>These two are related. But someone can have trouble meeting their expenses, view this as acceptable, and not be overly worried. Alternatively, someone may be reasonably financially secure but still feel quite stressed about their finances.</p> <h2>Why are we feeling it?</h2> <p>There is a <a href="https://www.sciencedirect.com/science/article/abs/pii/S0148296317301005?via%3Dihub">broad range</a> of factors that can influence your current level of financial stress. These include contextual and personal ones.</p> <p>Contextual factors are societal-level influences on the current financial landscape. These include rates of economic growth, market performance, governmental and political policy, and distribution of wealth. These factors may vary across cultures and countries.</p> <p>Personal factors contributing to stress are unique to each person. For example, demographic characteristics such as age, gender, education and ethnic group may influence someone’s access to financial resources. </p> <p>Other personal factors that can affect financial stress are financial literacy and practices, personality traits that influence behaviour and perceptions, and major life events with financial implications (such as marriage, having a child, or retiring).</p> <h2>The health impacts can be severe</h2> <p>High levels of financial stress can <a href="https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0264041">impact</a> people’s wellbeing, raising levels of psychological distress, anxiety and depression. </p> <p><a href="https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0264041">A review</a> found clear evidence for a link between financial stress and depression, and that the risk for depression was greatest for people on low incomes. </p> <p>A <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8806009/">large survey</a> of adults in the United States also found that greater financial worries were associated with more psychological distress. This was especially the case for people who were unmarried, unemployed, had lower income levels and who were renters.</p> <p>So people who are more vulnerable financially – in an objective sense – are also most likely to experience negative psychological effects from financial stress. </p> <p>However, the perception of your financial situation matters here too. In <a href="https://www.cambridge.org/core/journals/ageing-and-society/article/abs/crossnational-insights-into-the-relationship-between-wealth-and-wellbeing-a-comparison-between-australia-the-united-states-of-america-and-south-korea/AA524919C71EC125CFEA644CD209D3D5">one study</a> of older adults, including Australians, it was not just someone’s financial situation that was linked to their wellbeing, but also how satisfied people were with their wealth.</p> <p>Severe financial stressors, such as being forced to sell your home if unable to meet mortgage payments, can affect <a href="https://reader.elsevier.com/reader/sd/pii/S0277953616302957?token=F74F2A5518F51A8356DD0109748E1DD5633480DC58E2A77EF71BFE7ABAA503B61465634336A38BB9CC623E3872429D32&amp;originRegion=us-east-1&amp;originCreation=20230315042306">both</a>psychological and physical health.</p> <h2>What can I do about it?</h2> <p>While we can’t change the broader financial landscape or some aspects of our financial situation, there are some simple ways to help reduce financial stress and its impacts.</p> <p><strong>1. Take small steps</strong></p> <p>Try to identify elements of your finances you can improve and act on some of them, even if they are small steps. This may include creating and following a budget, cutting some extra costs, applying for available financial assistance, getting quotes for more affordable utilities or insurance, or contemplating a career change. Even little changes can improve your financial state over time. Taking action in a difficult situation can improve wellbeing by giving you a greater sense of agency.</p> <p><strong>2. Check your take on the situation</strong></p> <p>Examine your perspective. Are you often seeing the negative aspects of your situation but ignoring the positive ones? Are you worrying a lot about very unlikely catastrophes far off in the future? It’s worth checking whether your perceptions about your financial situation are accurate and balanced.</p> <p><strong>3. Don’t be too hard on yourself</strong></p> <p>Your financial state does not reflect your value as a person, and <a href="https://pubmed.ncbi.nlm.nih.gov/28903640/">over-identifying</a> with your financial status can lead to further stress. Financial difficulties are the result of many factors, only some of which are under your control. Reminding yourself that your finances do not define you as a person can reduce feelings of sadness, shame or guilt.</p> <p><strong>4. Take care of yourself</strong></p> <p>It’s draining dealing with ongoing financial stress. So focus on self-care and coping strategies that have helped you with past stressors. This may mean taking some time out to relax, deep breathing or meditation, <a href="https://theconversation.com/stress-is-a-health-hazard-but-a-supportive-circle-of-friends-can-help-undo-the-damaging-effects-on-your-dna-171607">talking with others</a> and doing some things for fun. Giving yourself permission to take this time can improve your mood, perspective and wellbeing.</p> <p><strong>5. Ask for help</strong></p> <p>If you are struggling financially or psychologically, seek help. This may take the form of financial advice or assistance to reduce financial difficulties. If you notice yourself feeling persistently down, anxious, or hopeless, reach out to friends or family and get help from a mental health professional.</p> <p><strong><em>If this article has raised issues for you, or if you’re concerned about someone you know, call Lifeline on 13 11 14.</em></strong></p> <p><em>Image credits: Getty Images</em></p> <p><em>This article originally appeared on <a href="https://theconversation.com/how-financial-stress-can-affect-your-mental-health-and-5-things-that-can-help-201557" target="_blank" rel="noopener">The Conversation</a>. </em></p>

Money & Banking

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Three common issues for retirees to watch out for

<p dir="ltr"> It can be hard to know what’s next around the bend of the road of life on a good day, and when it comes to retirement, uncertainty can rear its head faster than you can blink. </p> <p dir="ltr">Thankfully, there’s plenty of time to brace yourself, and prepare for what might be waiting. Understanding the most common problems people face is half the battle, and with these three quick explainers, you can take your new intel into your next planning session, and give yourself the head start of a lifetime. </p> <ol> <li dir="ltr" aria-level="1"> <p dir="ltr" role="presentation">New horizons </p> </li> </ol> <p dir="ltr">Change is hard, and the change of pace that comes with retirement can be a challenge to navigate. Many dream of holidaying during this time, buying that caravan they’ve talked about for years, doing those renovations to make home more comfortable or accessible, and spending more quality time with - as well as spoiling - loved ones. </p> <p dir="ltr">According to Senior Wealth Manager Clint McCalla, who spoke to <em>Forbes</em>, one of the biggest problems people face is not saving enough money to maintain the retirement lifestyle they’ve always dreamed of. Put simply, they “can’t afford to do the things they want to do.” </p> <p dir="ltr">“The other problem is boredom or a loss of purpose,” McCalla continued. “Also [we] see relationship issues emerge between significant others as you are now potentially spending more time together, which is an adjustment. </p> <p dir="ltr">“For anyone going through this transition, you need to be realistic about how quickly you adapt to a new lifestyle. It isn’t going to happen overnight. Take time to figure it out, and don’t pressure yourself to meet the expectations you had going into retirement.”</p> <ol start="2"> <li dir="ltr" aria-level="1"> <p dir="ltr" role="presentation">Money</p> </li> </ol> <p dir="ltr">Cash gets a mention in almost every discussion surrounding retirement, and this one is no different. Keeping your finances in order will not only give you peace of mind, but starting early will give you more opportunities moving forward, as you won’t be as limited when it comes to following your dreams.</p> <p dir="ltr">“The two cornerstone questions faced by those anticipating retirement are ‘am I going to be okay?’ and ‘can I afford to financially support the lifestyle I have worked all my life toward?’” Retirement Navigator’s Doug Dahmer explained. </p> <p dir="ltr">“People usually just don’t have enough to retire,” Bob Chitrathorn added, “they simply retire and will try to make do with what they have, without knowing how long the amount of money they have may or may not last.” </p> <p dir="ltr">And as Investment Adviser Derek Miser put it, “many people rely on their pension income to survive, and if this income is reduced due to higher retirement age, it can cause financial hardship. Health issues often become more prevalent in older age, and these may only be compounded by working longer.” </p> <ol start="3"> <li dir="ltr" aria-level="1"> <p dir="ltr" role="presentation">Thumb twiddling </p> </li> </ol> <p dir="ltr">Without a clear sense of purpose, many people spiral down the path of boredom. While having some disposable income to enjoy yourself can help, it doesn’t guarantee that you won’t one day find yourself sitting around and wondering what you want to do.</p> <p dir="ltr">So, it’s crucial to know what it is that makes you happy, what inspires you, and how to ensure you can keep on coming back to it - hobbies are a great example, whether they’re with others and something you can keep busy with on your own terms. </p> <p dir="ltr">“People need to contribute and have purpose in life,” explained Anna Rappaport, “if their main purpose was their job, they need to find a new passion and/or purpose.”</p> <p dir="ltr">“One of the main problems people face when they retire is a lack of purpose and meaning in their lives,” agreed Dennis Shirshikov. “Many retirees struggle with feelings of boredom, loneliness, and isolation, which can lead to depression and other mental health issues.”</p> <p dir="ltr"><em>Images: Getty </em></p>

Retirement Life

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Why does money cause anxiety? 5 finance habits to transform your peace of mind

<h2>Money and your mental health</h2> <p style="font-size: medium; font-weight: 400;">Money is the top source of stress among Australians, according to private health insurance provider, Medibank. And this pressure is taking a toll on our collective mental health. Another poll conducted in July revealed that almost 90 per cent of us are experiencing anxiety over our finances and the ever-rising cost of living.</p> <p style="font-size: medium; font-weight: 400;">Money can hold such power over mental health because it plays a big role in how we navigate our place in today’s world. Our financial perceptions and experiences closely overlap with our sense of self-worth, confidence, and personal power, explains clinical psychologist, Jonathan D. Friedman. That’s why “financial anxiety is a mix of material and psychological concerns,” he says, which can be based on both concrete and perceived realities. This means that freaking out about money may stem from a range and combination of situations, from the actual lack of funds to pay bills to social pressures and obligations.</p> <h2>Why does money cause anxiety?</h2> <p style="font-size: medium; font-weight: 400;">Your life experiences with money have a big effect on your current relationship with it, explains mental health counsellor, Aja Evans. At a base level, if you grew up in a financially insecure environment, many people will bring this anxiety-ridden scarcity mentality with them into adulthood – spending money feels wrong or dangerous, even if it doesn’t necessarily reflect their current reality. But other messages stick with us, too.</p> <p style="font-size: medium; font-weight: 400;">Maybe money was ignored or never discussed in your family, so dealing with finances as an adult makes you feel overwhelmed. Studies show that this type of anxiety often snowballs into to avoidance behaviours, like neglecting your finances. Whether that means you avoid checking bank statements, delay saving (or learning about money-saving methods), or don’t form a budget, “[this] can easily lead to a cycle of overspending and always trying to catch up with financial responsibilities,” says psychiatrist, Dr Jason Hunziker.</p> <p style="font-size: medium; font-weight: 400;">Or, if you grew up experiencing money as a way to deal with problems or your feelings, that can help explain your attitude toward “retail therapy” impulse buys today, Evans says. Similarly, society props up wealthier people as being smarter or happier, she says – cues we’re exposed to from a young age that are difficult to unlearn, even if we know better. And social media makes these messages stronger than ever. According to a survey from Allianz Insurance, 57 per cent of people spend money they hadn’t planned to because of what they see on social media.</p> <h2>Why do I keep overspending?</h2> <p style="font-size: medium; font-weight: 400;">“Our emotions or moods govern a lot of our actions,” Evans says. Often, she says, overspending and impulse-buying are coping mechanisms to deal with uncomfortable feelings. And research confirms that we’re more likely to spend money when we’re stressed out.</p> <p style="font-size: medium; font-weight: 400;">A major part of this tendency is that it works, in a sense. Spending money is a form of instant gratification, triggering a rush of dopamine through the body. But when this feel-good hormone wears off, we’re left back at where we started – and potentially with some added guilt or stress about that spending. That’s why overspending can be a vicious cycle.</p> <p style="font-size: medium; font-weight: 400;">Now, find out how to build better money habits.</p> <p style="font-size: medium; font-weight: 400;">“Looking for a quick fix to a problem, a temporary solution is extremely appealing when you just want to feel better,” Evans says. “At some point, the overspending and impulse buying becomes the go-to problem solver” – whether the problem you face is boredom, a bad day at work, or something deeper.</p> <p style="font-size: medium; font-weight: 400;">Plus, advertisers and marketers know this human tendency inside and out – and they’re good at using it to their advantage. “Our email inbox, home mailbox, ads on television, and social media are full of advertisements telling us that our life is incomplete unless we have the item that they are trying to sell,” Dr Hunziker adds. “Because this information is present in all aspects of our lives, it makes it easier for us to impulsively make purchases, even when it falls outside of our financial budget.”</p> <h2>Tap into your feelings</h2> <p style="font-size: medium; font-weight: 400;">Before heading into a store or opening a shopping app, take a pause, Evans urges. “What are you feeling? Are you upset, hungry, angry, lonely, tired? Recognising that you are trying to deal with discomfort through spending helps you to shift the behaviour.”</p> <h2>Find other ways to get that feel-good hit</h2> <p style="font-size: medium; font-weight: 400;">It will be hard to break an impulse-buying habit at first. But Evans recommends that once you realise that you’re shopping to mask a bad mood or emotion, be deliberate about getting gratification from another source. “Talking to a friend, taking a class, exercising, journaling, cleaning your home – literally anything that will take you out of the desire to shop,” she says. “You won’t get it right every time, but slowly you will begin to learn that you can shift your mood without spending money, and your brain will adjust to getting that rush from something other than spending.”</p> <p style="font-size: medium; font-weight: 400;">Just like with fad diets, totally depriving yourself isn’t sustainable – and trying to justify every single dollar you spend can create more anxiety. That’s why as you work on your spending habits, leave some room in there for the occasional indulgence. Just make sure that you’re spending with intention and in a way that aligns with your values.</p> <h2>Allow permission to treat yourself</h2> <p style="font-size: medium; font-weight: 400;">For example, ask yourself: will spending this money save you time, make your job easier, bring you relaxation or genuine connection with a friend? “You can make it a personal rule to never purchase anything impulsively,” Dr Hunziker offers. “Wait at least one night to ‘sleep on it’ before making a purchase.”</p> <h2>Reframe your shame</h2> <p style="font-size: medium; font-weight: 400;">Whether it’s the holiday you’ve always wanted, a new laptop for work, or a morning latte, if intentionally spending money still brings you feelings like shame and guilt, try this science-approved trick. Researchers found that shame around spending money creates a self-reinforcing cycle of financial anxiety. But their review of studies, published in Organizational Behaviour and Human Decision Processes, found that you can counter this feeling by ‘reaffirming valued aspects’ of yourself, like your kindness or your hard work.</p> <p style="font-size: medium; font-weight: 400;">Over time, this process retrains your brain not to associate all spending with shame – but removing this barrier doesn’t mean you’ll just start spending frivolously. The study shows that taking shame out of the equation eases money anxiety while reducing poor or counterproductive financial decisions.</p> <h2>Understand your finances</h2> <p style="font-size: medium; font-weight: 400;"><span style="color: #444444; font-family: Raleway, sans-serif, 'Helvetica Neue', Helvetica, Arial; font-size: 16px; background-color: #ffffff;">Avoidance behaviours work to keep you stuck in a cycle of money anxiety – so the experts say it’s important to take an honest look at your finances and spending habits for lasting peace of mind. “Start learning about the different aspects about money you don’t understand,” Evans says. Tackling your avoidance behaviours head-on is an important part of stopping the financial anxiety cycle. But “building comfort in navigating your money gives you a sense of control that reduces stress,” too, so you’re more resilient if something unexpected happens financially.</span></p> <p>This article originally appeared on <a href="https://www.readersdigest.com.au/food-home-garden/money/why-does-money-cause-anxiety-5-finance-habits-to-transform-your-peace-of-mind">Reader's Digest</a>.</p> <p><em>Image credit: Getty</em></p>

Money & Banking

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“I’m meant to be an expert”: David Koch reveals unexpected info about finances

<p>Sunrise host and financial guru David ‘Kochie’ Koch spilt some unexpected information about his own finances recently. </p> <p>Sunrise had Sally Tindall on as a guest, and Kochie spoke to her about how Australian mortgage holders can protect themselves against the Reserve Bank’s continued interest rate rises.</p> <p>RateCity research director Ms Tindall advised anyone with stress surrounding their mortgage to speak to their bank first to discuss all their options, allowing them to “make an informed decision.”</p> <p>“That word, ‘informed’. I reckon the first step is to go and check how much you’re paying on your loan,” Kochie said.</p> <p>“I’m meant to be an expert… Two weeks ago, I went and checked mine. I was paying 6% per cent!”</p> <p>“Kochie, you can do better than that,” Ms Tindall joked.</p> <p>“I went to the bank and said, ‘I need a discount.’ Three-quarters of a per cent, they cut. In one go! And I’ve asked for a discount before and thought, ‘Oh, I must still be on a great rate.’ But go and check what you’re paying.”</p> <p>Kochie has had a long public career as a financial expert, so this confession came as a surprise to viewers. Before becoming a host on Sunrise, he created financial titles, including Business Magazine, New Accountant and Money Management magazine.</p> <p>Kochie is also a published author, writing multiple books on finance, including Kochie’s 11-Step Money Plan For A Better Life, Money Basics For Tough Times and Financial Survival For Australians.</p> <p>Ms Tindall called any interest rate that mortgage holders can secure from their bank “the gift that keeps on giving.”</p> <p>“Not only does it drop your repayments in the next instalment, but it also does that for the life of your loan, provided you keep that discount,” she told Kochie.</p> <p>The on-air chat comes in the wake of the RBA lifting interest rates to 3.35% last week from a record low of 0.1% back in April 2022.</p> <p>Kochie had also recently warned viewers that scammers have been using his images on social media to lure unsuspecting users into clicking on risky links.</p> <p>“Beware… 2023 and the financial scams keep on coming more than ever,” Koch wrote on Instagram, sharing multiple images of dodgy ads that purported to reveal “how he makes his money” and other financial tips but instead led those who click on them to scam websites.”</p> <p>Photo credit: Getty</p>

Money & Banking

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3 ways to save money without sacrificing your social life

<p><span>It’s hard to stay social when you’re trying to curb expenses. However, there are tricks that will allow you to spend some quality time with friends and loved ones without having to feel like you’re throwing money down the drain.</span></p> <p><strong><span>1. Be honest, be positive</span></strong></p> <p><span>You don’t have to make flimsy excuses to avoid going out – be open about your intentions, but frame it positively. Instead of saying “these events are too expensive”, you can tell them, “I’m trying to be really good at saving and staying home these days”. While it may be uncomfortable to say no to invites outright, your friends may turn out to be more supportive to your goals than you expected.</span></p> <p><strong>2. Provide alternatives</strong></p> <p><span>Fill your social calendar with free or cheap activities. This could be a visit to the new art exhibition in your city, a potluck picnic at the park, a hike by the mountains, a game night at your home, and more. Don’t forget to look out for special promos and discounts on popular websites like Groupon or Scoopon for more affordable options.</span></p> <p><strong>3. Put it in the budget</strong></p> <p><span>Don’t want to skimp on your bar outings or group classes? It’s time to look at your budget. Once you determine the amount you need to save every month, set aside some of the rest for fun-related expenses. Budgeting allows you to figure out your priorities and stay within the limits. Stick to your allocated budget well – once it’s out, do not extend it any further!</span></p>

Retirement Income

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Should I or should I not merge my finances with my partner?

<div title="Page 1"> <div> <div> <p>Congratulations on finding love a second time round! Now focus on getting your money matters right to help ensure you and your family get your happily ever after.</p> <p>ABS figures show the divorce rate is highest for people in their 40s. And with life expectancy in Australia in our 80s, odds are most of these people will settle down with a new partner, and even remarry. While it may be a win for love, merging finances a second time round can be complex. Hence, it pays to be diligent to avoid a mountain of headaches later on.</p> <p><strong>Cut the chord </strong></p> <p><strong> </strong></p> <p>The first step is to ensure you have fully cut the chord with your former partner.</p> <p>Close joint bank accounts. Ensure utilities, subscriptions and mobile phone plans are no longer in joint names. Pay off and cancel joint credit cards, store cards and other debts.</p> <p>Update your Will, as you likely won’t want your ex to benefit should something happen to you. Get your financial adviser and estate planning team together on how best to structure your Will and superannuation beneficiaries to ensure it fully reflects your wishes.</p> <p>Your superannuation and any trusts or other structures you have are treated separately from your Will, so don’t automatically change with it.</p> <p><strong>Somewhere to call home </strong></p> <p><strong> </strong></p> <p>Where you call home is a more complex decision with any subsequent partner.</p> <p>Initially, you may not be able to afford to buy, especially if one or both of you are still in limbo with ongoing divorce proceedings.</p> <p>Once you can purchase a home together, weigh up whether to do so as joint tenants or tenants in common. This is crucial because, should one of you die, it can determine whether the surviving partner automatically inherits the property and can keep living there.</p> <p>Joint tenants have automatic right of survivorship. Tenants in common, however, means your partner could leave their share of the property to their children or someone else instead of to you. In this instance, you could be left homeless if the beneficiaries force a sale.</p> <p>If you have to sell and only walk away with your share (a lesser value than the current property), you may have to compromise where or what you buy next.</p> <p>Take Fred and Wilma (names changed for privacy) for example, they both have adult children from previous marriages and wanted their wealth to go to their children if they passed away. They have decided to move out of their townhouses worth $900,000 and $800,000 and buy a bigger home together, near the beach worth $2.3million. Both will have to take on a mortgage each to cover the gap. So, if Fred passes away, and he has left his share of the house to his children, then Wilma is either in sharing the house with his children, or having his children as landlords, or forced to sell and buy something much smaller because Wilma doesn’t have enough to buy them out and have enough for retirement.</p> <p><strong>Protect the kids </strong></p> <p><strong> </strong></p> <p>Second marriages or relationships often mean children are involved, from one or both partners.</p> </div> </div> </div> <div title="Page 2"> <div> <div> <p>Building good relationships between children and step-parents not only makes everyday life easier for everyone, it also minimises the chances of disputes between them over your assets once you are gone.</p> <p>Children should be supported financially and, if they are under 18, custodially should you suffer serious illness, injury or premature death. Where will they live – with your current partner, their other parent/your ex, their grandparents, or someone else?</p> <p>How will they be provided for and what assets can you leave to them that isn’t tied up with your new partner? Is that enough? This is where superannuation, for example, can be beneficial – you can nominate your kids as sole beneficiaries, while the family home remains with your partner but who is managing that inheritance?</p> <p>If you have children from both relationships, they may need to be treated differently in your estate planning to ensure they are all looked after.</p> <p><strong>Safeguard your new partner/spouse </strong></p> <p><strong> </strong></p> <p>Of course, the other person to consider in is your new partner.</p> <p>Be clear about what you will merge and what stays separate. A pre-nuptial agreement may be needed for things you bring into the relationship.</p> <p>Draw up a household savings and investments plan – who pays for what, from what account/credit card, where do your incomes go, what is owned jointly.</p> <p>Consider retaining personal bank accounts and transfer money into a joint account to pay for joint bills.</p> <p>Consider the future – do you get life insurance? What if one of you needs aged care? Will you both work or will one of you stay home to care for both partner’s children?</p> <p><strong>Look after yourself </strong></p> <p><strong> </strong></p> <p>You may have already been burnt in your past relationship. Self-care is really important. Allow yourself time to grieve that loss and the loss of your past life.</p> <p>Take care of your health – physical and mental – which has a direct influence on your new relationship and your ability to make wise decisions.</p> <p>Ensure everything you do, including about money, is in your own best interests too, not just everyone else’s.</p> <p>I also recommend keeping a personal emergency fund – money that only you can access – should the relationship breakdown or other crisis arise.</p> <p>A happy future together means not just getting the everyday finances in check, but peace of mind for the future too!</p> <p><strong>Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press, </strong><strong>$32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au" target="_blank" rel="noopener">www.onyourowntwofeet.com.au </a></strong></p> <p><a href="http://www.onyourowntwofeet.com.au" target="_blank" rel="noopener"> </a></div> <p><a href="http://www.onyourowntwofeet.com.au" target="_blank" rel="noopener"> </a></div> <p><em>Image: Shutterstock</em></div>

Relationships

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The concerning reality of Aussie’s retirement finances

<p dir="ltr">It’s no secret that the cost of living crisis has hit the pockets of many Australians, jeopardising the chances of a comfortable retirement. </p> <p dir="ltr">Now, a concerning new survey has highlighted the financial concerns of many Aussies when it comes to retiring, with 60 percent of people admitting they won’t have enough cash and superannuation money to fund their retirement. </p> <p dir="ltr">In addition to this, 31 percent of respondents expect to carry debts into their retirement, with 73 percent of people expecting to receive pension payments at some point.</p> <p dir="ltr">The survey was commissioned by <a href="https://www.money.com.au/research/savings-and-assets">money.com.au</a>, and questioned an independent panel of 573 Australians aged 35-60 years about their financial concerns. </p> <p dir="ltr">The survey also asked how much money respondents think they need to get through their retirement years. </p> <p dir="ltr">More than half (57 percent) believe they will need more than $60,000 per year, while a third (35 percent) expect to need more than $80,000 per year. </p> <p dir="ltr">These income expectations are well above The Association of Superannuation Funds of Australia’s (ASFA) Retirement Standard, which estimated for the June quarter that singles living a comfortable retirement will spend $47,383 per year, while retired couples will spend $66,725 per year.</p> <p dir="ltr">Licensed financial adviser and Money.com.au spokesperson Helen Baker says, “While the Retirement Standard increased these figures by around 2 percent in the June quarter, the income levels that more than half of retirees expect to live on are still at least 27 percent higher. The Retirement Standard also assumes people don’t carry debts into their retirement, which many survey respondents have likely considered when answering this survey question.”</p> <p dir="ltr">“Respondents have lived through several months of fast-rising inflation and interest rates, which is forcing them to factor price and loan repayment increases into their retirement preparedness and income expectations.”</p> <p dir="ltr">She went on to say, “I urge individuals to implement a financial plan as soon as possible to manage debts, savings and super. Some individuals may plan to sell their property once they exhaust their funds, with the view to downsizing or renting and using the cash to live out the rest of their retirement.”</p> <p dir="ltr"><em>Image credits: Getty Images</em></p>

Retirement Income

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How do I find out what my superannuation fund invests in? A finance expert explains

<p>You want your superannuation savings to be invested in things that also serve the planet’s long-term interests. But how can you be sure your fund’s values align with yours – or even its own claims?</p> <p>This question has become increasingly pertinent as demand for environmentally and socially sustainable investments <a href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2022-releases/22-141mr-how-to-avoid-greenwashing-for-superannuation-and-managed-funds/">grows</a> – and with it incentives for financial institutions to put the best spin on their offerings. </p> <p>One consultancy specialising in “responsible investment” reckons <a href="https://thenewdaily.com.au/finance/superannuation/2021/08/16/greenwashing-super-funds/">10% of the funds</a> it has examined do not have the sustainability orientation they claim.</p> <p>Among those <a href="https://www.edo.org.au/2022/08/10/hestas-fossil-fuel-investments-may-amount-to-a-breach-of-the-law/">accused of greenwashing</a> in recent months is one of Australia’s biggest super funds, HESTA (the industry fund for health and community service workers), which has promoting its “clean energy” credentials while still holding shares in fossil-fuel companies <a href="https://www.ai-cio.com/news/australias-hesta-accused-of-greenwashing/">Woodside and Santos</a>.</p> <p>So how can you check what your superannuation fund invests in? </p> <p>Super funds are legally obliged to disclose how they invest your money in two different disclosure documents – a Product Disclosure Statement and a Portfolio Holdings Disclosure. </p> <p>Both will be available on a super fund’s website, though how easily you can find them will vary.</p> <p>The rest of this article is going to explain what information these documents provide, how useful this information is likely to be, and your best bet to ensure your super fund reflects your values.</p> <h2>The Product Disclosure Statement</h2> <p>Product disclosure statements are required by the financial regulator (the Australian Securities and Investments Commission) for all financial products. </p> <p>This document outlines the most basic but important information of an investment product’s features, benefits, risks and costs, including fees and taxes. The format is standardised, with one section (Section 5) covering with “How we invest your money”. </p> <p>The information it contains is broad. At best you’ll learn how the fund splits its investments between safe and riskier assets, and between different asset classes – Australian shares, international shares, property trusts, infrastructure trust, cash and so on.</p> <h2>Portfolio Holding Disclosure</h2> <p>For a comprehensive look at where your money is invested in, you can consider the Portfolio Holdings Disclosure. </p> <p>This document lists a fund’s complete holdings – including the percentage and value of every single company stock held.</p> <p>Portfolio holdings disclosures are relatively new, being obligatory only since March 2022 under <a href="https://www.legislation.gov.au/Details/F2021L01531">legislation</a> meant to improve transparency in the sector.</p> <p>However, super funds aren’t obliged to provide this information in a consistent, easily understandable way. </p> <p>For a non-expert who doesn’t know what to look for, the level of detail can be mind-boggling. You may find yourself scrutinising a spreadsheet listing thousands of items.</p> <p>The Australian Retirement Trust’s Portfolio Holdings Disclosure for its “Lifecycle Balanced Pool”, for example, has more than <a href="https://www.australianretirementtrust.com.au/investments/what-we-invest-in/superannuation-investments">8,000</a> line items.</p> <p>Some super funds have made the effort to provide this information in a more user-friendly format. An example is Future Super, which allows you to <a href="https://www.futuresuper.com.au/everything-we-invest-in/?utm_source=google&amp;utm_medium=cpc&amp;utm_campaign=1757241588&amp;utm_content=68234193065&amp;utm_term=future%20super&amp;campaigntype=SearchNetwork-1757241588&amp;device=c&amp;campaignid=1757241588&amp;adgroup=68234193065&amp;keyword=future%20super&amp;matchtype=p&amp;placement=&amp;adposition=&amp;location=9069039&amp;gclid=CjwKCAjwmJeYBhAwEiwAXlg0AYOEe2tJViZiZBgUk3bt1h9LNuHx1jWnGy6VzqGaNjBzOEi60852JRoCel8QAvD_BwE">search and filter</a> portfolio holdings by asset class and country of origin. </p> <p>But if your concern is to avoid investing in some specific activity such as in mining fossil fuels or gambling, you’ll need to know the companies and other assets you want to avoid for this to be helpful.</p> <h2>Your best options</h2> <p>This is not to say portfolio holding disclosure obligations are useless. They are incredibly useful – a huge leap forward in the sector’s accountability. They just aren’t designed for consumers. </p> <p>So there is still much work to be done to make the sector truly transparent. </p> <p>What would really help is independent certification and ratings of super products, similar to government websites and programs that certify energy efficiency and allow comparison of electricity plans. </p> <p>In the meantime, I can offer you one big tip.</p> <p>Choose a specific superannuation product that markets itself on its environmental or social sustainability credentials. Most super funds now provide these choices alongside their more traditional investment options.</p> <p>There is a variety of “screening” approaches to ethical investments. Some exclude entire sectors. Others include the best environmental and social performers even among “sinful” industries such as tobacco or weapons.</p> <p>So just because a super product is marketed as “ethical” or “sustainable” doesn’t guarantee you will agree with all its investments. </p> <p>But there is a much higher likelihood of it living up to its claims due to greater scrutiny by third parties such as environmental groups as well as the financial regulator. </p> <p>The Australian Securities and Investments Commission put super funds on notice earlier this year with a “<a href="https://asic.gov.au/regulatory-resources/financial-services/how-to-avoid-greenwashing-when-offering-or-promoting-sustainability-related-products/">guidance note</a>” about the growing risk of greenwashing in sustainability-related financial products. </p> <p>It reminded funds that “making statements (or disseminating information) that are false or misleading, or engaging in dishonest, misleading or deceptive conduct in relation to a financial product or financial service” is against the law.</p> <p>So super funds know their portfolios are being scrutinised.</p> <p>Switching your investment option or fund is simpler than you think. You only need to fill out and lodge a form. Just be sure to compare fees and performance, and seek a second opinion from trustworthy adviser before “voting with your wallet”.</p> <p><em>Image credits: Getty Images</em></p> <p><em>This article originally appeared on <a href="https://theconversation.com/how-do-i-find-out-what-my-superannuation-fund-invests-in-a-finance-expert-explains-188802" target="_blank" rel="noopener">The Conversation</a>. </em></p>

Retirement Income

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5 ways to Spring clean your finances

<p>Running a stocktake of your personal finances is a worthwhile process to go through on a regular basis. Reviewing the numbers is good for both your pocket and your peace of mind, ensuring your nest egg is not only protected but also working effectively for you.</p> <p><strong>1. Budget and financial planning</strong></p> <p>Review your budget and spending. It’s a valuable exercise to break out the highlighters particularly on your savings and credit card statements. You might be surprised at your spending patterns. Identify necessary and discretional costs and get ruthless on reducing unnecessary spending.</p> <p>Also look at updating your financial calendar and plan. If you don’t already have them, think about talking to a financial planner or accountant to assist on these to put you on top of future spending income and costs. If you haven’t got a budget, create one and ensure you stick to it!</p> <p><strong>2. Debt</strong></p> <p>It’s always worth reviewing your personal debt to shrink and shave wherever you can. Ensure you’re paying off the highest interest non-tax deductible debt first, consolidate your debt where possible, reduce non essential spending and pay off as much interest as you can on the credit cards.</p> <p><strong>3. Housekeeping</strong></p> <p>Having all your financial records organised in an orderly, accessible way can do wonders for getting on top of your finances and feeling in control.</p> <p>Create an ICE (in case of emergency) folder to centralise and consolidate all your key documents and accounts so they can be easily located by a trusted person such as a spouse, the executor of your will or a trustee if required.</p> <p>Update and streamline your accounts where possible, and look at automating your payments for a more time and cost-effective approach to bills. If you’re comfortable with it, go paperless. Pretty much all financial documentation these days can be provided online, giving you the benefit of less paperwork, more convenience and simpler record-keeping. Not to mention being better for the planet!</p> <p><strong>4. Getting the best deal</strong></p> <p>Take a fresh look at how much you’re spending on services like mortgages and insurance policies, as well as telco, internet and utility plans. Plus the interest rates you’re getting on your savings and investment accounts. As products get more and more competitive and it becomes easier to compare different services, this should be a regular exercise to ensure you’re always getting the best deals available.</p> <p><strong>5. Estate planning</strong></p> <p>As your circumstances change, make sure you check whether you need to update your estate planning or review your will including your beneficiaries. Ensure you’ve got an executor organised and your assets allocated through a trust or will.</p>

Money & Banking

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14 personal finance tips you were never taught

<p>1. Take a day to think about large purchases to avoid impulse buys</p> <p>“Delaying your purchases for a day gives you time to think about whether or not you really need the items, and it curbs regrettable impulse buys,” advises Marc Diana, CEO of MoneyTips. “Sale items may be an exception to this rule, but even then, question how badly you need the item compared to saving or investing the money you would use to purchase it. When times are tough, and you’re cutting expenses, would you rather have a rarely worn $300 pair of shoes or $300 cash?”</p> <p>2. Budgets are freeing, not constricting</p> <p>Says financial educator Tiffany Aliche, “Keeping a budget allows you to say yes to your goals in a strategic way. If you have a budget, you can save for the holiday, house or car you want to get. You can look at it as ‘No dining out,’ but I see it as ‘Yes to a trip to Paris.’ A budget is not a NO plan, but a YES plan with actual steps towards achieving your goals.”</p> <p>3. Budget with the 50/20/30 rule</p> <p>Lynn Toomey, co-founder of Your Retirement Advisor, suggests following this easy budgeting rule:</p> <p>Use 50 per cent of your income for non-discretionary necessities like food, rent/house payment, utilities, and transportation.</p> <p>Put aside 20 per cent of your income for an emergency fund (three to six months’ salary is a good target), retirement, savings, and to pay off any debts.</p> <p>Use 30 per cent of your income for discretionary (non-essential) spending such as entertainment, holidays and gifts.</p> <p>4. Penny pinching is not the road to wealth</p> <p>Spending less doesn’t mean you’ll have more. Saving is a good way to stabilise your finances, but you still need to invest. “Pretend there are two islands,” advises Aliche, who is also known as The Budgetnista: “Financially Stuck Island and Wealthy Island.” She says that your savings can be like a car – you can’t drive off Financially Stuck Island without a bridge. Investing is the bridge to financial success. “To get from one island to another, you need to get in your savings car and drive it over your investment bridge.”</p> <p>5. It's okay to put yourself over your kids</p> <p>Many people want their kids to go to university, says Aliche, “but it’s more important for you to save enough for retirement. Because the best gift you can give your child is not a free ride to school, but rather not to be a financial burden on them when it’s time to start their own family. Kids can get student loans; no one is going to lend you money without collateral when you’re retired.”</p> <p>6. Financial advisors aren't only for wealthy people</p> <p>Millions of people have trillions invested in stocks, bonds, mutual funds and other stock exchange investments, but just because you can easily make trades yourself doesn’t mean you should. “Why not do what you do best to earn money and let a trained professional invest it for you?” asks Brian Saranovitz, president of Your Retirement Advisor. “A recent Vanguard Investments study indicated that integrating proper retirement strategies can add as much as 3 per cent efficient return to a retirement portfolio.”</p> <p>Adds Aliche, “You need to purposefully seek out knowledge. If you break a leg, you know that you need to go to a doctor. With personal finance, people have got the notion that they could just fix it themselves. When it comes to investing, don’t be afraid to seek professional help.”</p> <p>7. Get a clear picture of yourself at 80</p> <p>Barring tragedy, you will live to a ripe, old age. Aliche recommends naming your 80-year-old image of yourself. “Mine is Wanda. I imagine Wanda sitting on the front steps in her yard. People feel disconnected from their older self. The more you can picture her, the better. I don’t want to see her mopping floors at 80. When I’m making a decision, I think, ‘How will this affect Wanda?’ If I dip into my retirement funds to buy an expensive car, that’s going to hurt Wanda.” If it’s easier, pretend you’re living with your grandfather or grandmother. “You’re not going to tell Granny, ‘You have to go to work. We need the money,’” she says.</p> <p>8. You can never have too much retirement savings</p> <p>Says Lynn Toomey, co-founder of Your Retirement Advisor, “Life is good. Retirement is better, if you are prepared.” She points out that retirement is laden with potential costs, such as healthcare, longevity, market volatility and inflation. “Even if you think you’re saving enough and have assets, it still may not be enough. The earlier you start saving and investing, the longer compound interest can work its magic to help you achieve a successful retirement.”</p> <p>9. Don't blow your tax refund</p> <p>“What are you planning on doing with your tax refund?” asks financial advisor Mike Zaino. “If you’re like most people, the world of instant gratification is beckoning. It could be extremely damaging to your retirement account, however, especially given the time value of money and what Albert Einstein called ‘The eighth wonder of the world” – compound interest.”</p> <p>10. Ask current lenders for a better rate</p> <p>“Banks, credit unions and other lenders are keenly aware of their competition,” says Diana of MoneyTips.com. “If your credit score qualifies you for a better rate from another credit card issuer or lender, ask them to match the rate. There’s no downside to asking; the worst they could do is refuse.”</p> <p>11. Asking for your credit limit to be raised can improve your credit score</p> <p>Keep your credit utilisation – the amount of credit you use compared to your credit limit – low to boost your all-important credit, advises Diana. “You can borrow less, or you can ask for a raise in your credit limit.” A recent study from CreditCards.com found that only 28 per cent of respondents have never asked for an increase in their credit limit. However, a whopping 89 per cent of those who asked for a credit limit increase received one.</p> <p>12. Unless they have a high annual fee, don't close old credit cards</p> <p>“The longer your stable credit history, the better it reflects on your credit score,” explains Diana. “The age of accounts is averaged over all of your credit accounts, so closing an older account that is infrequently used actually harms your credit score in two ways: it lowers your credit limit, which raises your credit utilisation; and it lowers your average account age. If you have an old card with a decent credit limit, use it at least annually to keep it open. But don’t forget to pay the bill on time!”</p> <p>13. Don't ever co-sign a loan</p> <p>“Co-signing a loan isn’t just vouching for someone’s character,” explains Toomey. “Understand that if the borrower doesn’t pay, then you’re responsible for every single missed payment. If they don’t pay, it’s your credit that will be ruined.”</p> <p>14. Being debt free should not be your goal</p> <p>Says Aliche, creator of the Live Richer Challenge, “People focus on getting out of debt. If they use that money to grow wealth instead of getting rid of debt, they could be debt-free faster. Do you pay off your student loans to get debt-free, or invest money in your business to grow and secure wealth for yourself? If you focus on being debt-free, that’s all you’ll be. If you focus on building wealth, then you can be wealthy and debt-free.”</p> <p>This article originally appeared on <a href="https://www.readersdigest.com.au/food-home-garden/money/14-personal-finance-tips-you-were-never-taught-but-need-to-know">Reader's Digest</a>. </p> <h2 class="slide-title" style="box-sizing: border-box; overflow-wrap: break-word; border: 0px; font-family: Georgia, 'Times New Roman', serif; font-size: 24px; margin: 0px 0px 15px; outline: 0px; padding: 15px 0px 0px 20px; vertical-align: baseline; clear: both; line-height: 1.3; color: #444444;"> </h2> <p> </p> <div class="slide-image" style="box-sizing: border-box; border: 0px; font-family: Raleway, sans-serif, Arial; font-size: 16px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline; color: #444444;"> </div>

Retirement Income

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Woman shares the extraordinary cost of living with OCD

<p dir="ltr">Kalista Dwyer’s life has been ravaged by her obsessive compulsive disorder - both emotionally and financially. </p> <p dir="ltr">The 22-year-old has shared an insight to her OCD by telling her followers on TikTok how much she spends to cater to the demands of her illness. </p> <p dir="ltr">While walking through a Target in the US, Kalista says she has experienced the disorder to such an extreme degree that it has left her with crushing debt, while treatment has set her back almost $60,000 in one year alone.</p> <p dir="ltr">“OCD has devastated me financially. It’s what I spend most of my paychecks on, it’s left me without savings and, in the past, a job,” she revealed. </p> <p dir="ltr">A particularly pricey element of her condition comes with the unavoidable compulsion to buy clothes in accordance with her frequently changing “safe” colours. </p> <p dir="ltr">“I’m constantly changing my safe colour, therefore I have to replace any clothes that are not that colour,” she explained. </p> <p dir="ltr">She is also forced to replace any clothing that she has had a bad experience or “intrusive thought” while wearing them. </p> <p dir="ltr">Kalista’s OCD has also given her the false belief that if she sees something on sale in a shop that there is “something wrong with it”, making her always buy products at full price. </p> <p dir="ltr">Her household purchases often outnumber that of a typical home, given her compulsion to maintain certain quantities of things at any given time. </p> <p dir="ltr">Another huge expense she faces is with food, as she is constantly under the belief that her food has expired and gone rotten, causing her to “spend upwards of $700 a month on groceries.”</p> <p dir="ltr">Kalista’s extensive list of expenses has drained her bank account, as she admits “I should have more money than I do.”</p> <p dir="ltr">She says her spending to appease her compulsions is an additional stress on top of the already complicated medical system in the US. </p> <p dir="ltr">“So yeah, being mentall ill is really f***ing expensive and it furthers the conversation on why mental health care is a privilege in America.”</p> <p dir="ltr"><em>Image credits: TikTok @kalistadwyer</em></p>

Mind

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The better you are at math, the more money seems to influence your satisfaction

<p>Your grade school math teacher probably told you that being good at math would be very important to your grownup self. But maybe the younger you didn’t believe that at the time. A lot of research, though, has shown that <a rel="noopener" href="https://theconversation.com/people-who-are-bad-with-numbers-often-find-it-harder-to-make-ends-meet-even-if-they-are-not-poor-172272" target="_blank">your teacher was right</a>.</p> <p>We are two researchers who study decision-making and how it relates to wealth and happiness. In a study published in November 2021, we found that, in general, people who are better at math <a rel="noopener" href="https://doi.org/10.1371/journal.pone.0259331" target="_blank">make more money and are more satisfied with their lives</a> than people who aren’t as mathematically talented. But being good at math seems to be a double-edged sword. Although math-proficient people are very satisfied when they have high incomes, they are more dissatisfied, compared to those who aren’t as good at math, when they don’t make a lot of money.</p> <p>Many researchers have suggested that more money only increases <a rel="noopener" href="https://qz.com/1503207/a-nobel-prize-winning-psychologist-defines-happiness-versus-satisfaction/" target="_blank">life satisfaction and happiness</a> up to a certain point. Our research modifies this idea by showing that satisfaction derived from income relates strongly to how good a person is at math.</p> <p><a href="https://images.theconversation.com/files/441600/original/file-20220119-27-1kh4idi.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/441600/original/file-20220119-27-1kh4idi.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="A person holding a pencil above a sheet of paper." /></a> <em><span class="caption">Nearly 6,000 people responded to a survey that asked about math skills, income and life satisfaction.</span> <span class="attribution"><a rel="noopener" href="https://www.gettyimages.com/detail/photo/student-taking-math-quiz-cropped-royalty-free-image/97612935?adppopup=true" target="_blank" class="source">PhotoAlto/Odilon Dimier via Getty Images</a></span></em></p> <p><strong>A math and happiness test</strong></p> <p>We investigated the relationship between math ability, income and life satisfaction, using surveys sent to 5,748 diverse Americans as part of the <a rel="noopener" href="https://uasdata.usc.edu/index.php" target="_blank">Understanding America Study</a>.</p> <p>The study included two questions and one test relevant to our research. One question asked participants about their household yearly income. Another one asked respondents to rate how satisfied they are with their lives on a scale of zero to 10.</p> <p>Finally, people answered eight math questions that varied in difficulty to get a sense of their math skills. For example, one of the moderately difficult questions was: “Jerry received both the 15th highest and the 15th lowest mark in the class. How many students are in the class?” The correct answer is 29 students.</p> <p>We then combined the results to see how they all related to one another.</p> <p>Math skills and income also are tied to <a rel="noopener" href="https://theconversation.com/money-buys-even-more-happiness-than-it-used-to-141766" target="_blank">level of education,</a> so, in our analyses, we controlled for education, verbal intelligence, personality traits and other demographics.</p> <p><strong>Connecting math skills to income and satisfaction</strong></p> <p>On average, the better a person was at math, the <a rel="noopener" href="https://doi.org/10.1371/journal.pone.0259331" target="_blank">more money they made</a>. For every one additional right answer on the eight-question math test, people reported an average of $4,062 more in annual income.</p> <p>Imagine you have two people with the same level of education, one of whom answered none of the math questions correctly and the other answered all of them correctly. Our research predicts that the person who answered all of the questions correctly will earn about $30,000 more each year.</p> <p>The survey also showed that people who are better at math were, on average, also more satisfied with their lives than those with lower math ability. This finding agrees with <a rel="noopener" href="https://doi.org/10.1257/0002828041464551" target="_blank">a lot of other research</a> and suggests that income influences life satisfaction.</p> <p>But prior research has shown that the relationship between income and satisfaction is not as straightforward as “more money equals greater happiness.” It turns out that how satisfied a person is with their income often depends on how they feel it <a rel="noopener" href="https://doi.org/10.1177/0956797610362671" target="_blank">compares to other people’s incomes</a>.</p> <p>Other research has also shown that people who are better at math tend to make <a rel="noopener" href="https://doi.org/10.1093/oso/9780190861094.001.0001" target="_blank">more numerical comparisons</a> in general than those who are worse at math. This led our team to suspect that math-proficient people would compare incomes more, too. Our results seem to show just that.</p> <p><a href="https://images.theconversation.com/files/439268/original/file-20220104-15-15r038f.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/439268/original/file-20220104-15-15r038f.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="A graph correlating math skills to life satisfaction and income." /></a><em> <span class="caption">This chart shows that people who scored highest on the math test (red line) appear to be happiest when they make a lot of money (top right of graph), but also the least satisfied when they make less money (bottom left of graph). Different color lines correspond to the number of math questions answered correctly.</span> <span class="attribution"><span class="source">Ellen Peters, Pär Bjälkebring</span>, <a rel="noopener" href="http://creativecommons.org/licenses/by-nd/4.0/" target="_blank" class="license">CC BY-ND</a></span></em></p> <p>Simply put, the better a person was at math, the <a rel="noopener" href="https://doi.org/10.1371/journal.pone.0259331" target="_blank">more they cared about how much money they make</a>. People who are better at math had the highest life satisfaction when they had high incomes. But deriving satisfaction from income goes both ways. These people also had the lowest life satisfaction when they had lower incomes. Among people who aren’t as good at math, income didn’t relate to satisfaction nearly as much. Thus, the same income was valued differently depending on a person’s math skills.</p> <p><strong>Money does buy happiness for some</strong></p> <p>An often-quoted fact – backed up by research – says that once a person makes around $95,000 a year, <a rel="noopener" href="https://doi.org/10.1038/s41562-017-0277-0" target="_blank">earning more money doesn’t dramatically increase satisfaction</a>. This concept is called <a rel="noopener" href="https://www.nature.com/articles/s41562-017-0277-0?mod=article_inline" target="_blank">income satiation</a>. Our research challenges that blanket statement.</p> <p>Interestingly, the people who are best at math did not seem to show income satiation. They were more and more satisfied with more income, and there didn’t appear to be an upper limit. This did not hold true for people who weren’t as talented at math. The least math-proficient group gained more satisfaction from income only until about $50,000. After that, earning more money made little difference.</p> <p>For some, money does seem to buy happiness. While more work needs to be done to really understand why, we think it may be because math-oriented people compare numbers – including incomes – to make sense of the world. And maybe that’s not always a great thing. In comparison, those who are worse at math appear to derive life satisfaction from sources other than income. So if you are feeling dissatisfied with your income, maybe seeing beyond the numbers will be a winning strategy for you.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/173720/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><em><a rel="noopener" href="https://theconversation.com/profiles/par-bjalkebring-1289840" target="_blank">Pär Bjälkebring</a>, Assistant Professor of Psychology, <a rel="noopener" href="https://theconversation.com/institutions/university-of-gothenburg-1351" target="_blank">University of Gothenburg</a> and <a rel="noopener" href="https://theconversation.com/profiles/ellen-peters-812268" target="_blank">Ellen Peters</a>, Director, Center for Science Communication Research, <a rel="noopener" href="https://theconversation.com/institutions/university-of-oregon-811" target="_blank">University of Oregon</a></em></p> <p><em>This article is republished from <a rel="noopener" href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a rel="noopener" href="https://theconversation.com/the-better-you-are-at-math-the-more-money-seems-to-influence-your-satisfaction-173720" target="_blank">original article</a>.</em></p> <p><em>Image: Getty Images</em></p>

Money & Banking

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More personal finance tips you were never taught

<p><span>We asked half a dozen personal finance experts money-saving and wealth-creating tips that most people are never taught.</span></p> <p><strong>Get a clear picture of yourself at 80</strong></p> <p><span>Barring tragedy, you will live to a ripe, old age. Aliche recommends naming your 80-year-old image of yourself. “Mine is Wanda. I imagine Wanda sitting on the front steps in her yard. People feel disconnected from their older self. The more you can picture her, the better. I don’t want to see her mopping floors at 80. When I’m making a decision, I think, ‘How will this affect Wanda?’ If I dip into my retirement funds to buy an expensive car, that’s going to hurt Wanda.” If it’s easier, pretend you’re living with your grandfather or grandmother. “You’re not going to tell Granny, ‘You have to go to work. We need the money,’” she says.</span></p> <p><strong>You can never have too much retirement savings</strong></p> <p><span>Says Lynn Toomey, co-founder of Your Retirement Advisor, “Life is good. Retirement is better, if you are prepared.” She points out that retirement is laden with potential costs, such as healthcare, longevity, market volatility and inflation. “Even if you think you’re saving enough and have assets, it still may not be enough. The earlier you start saving and investing, the longer compound interest can work its magic to help you achieve a successful retirement.”</span></p> <p><strong>Don’t blow your tax refund</strong></p> <p><span>“What are you planning on doing with your tax refund?” asks financial advisor Mike Zaino. “If you’re like most people, the world of instant gratification is beckoning. It could be extremely damaging to your retirement account, however, especially given the time value of money and what Albert Einstein called ‘The eighth wonder of the world” – compound interest.”</span></p> <p><strong>Ask current lenders for a better rate</strong></p> <p><span>“Banks, credit unions and other lenders are keenly aware of their competition,” says Diana of MoneyTips.com. “If your credit score qualifies you for a better rate from another credit card issuer or lender, ask them to match the rate. There’s no downside to asking; the worst they could do is refuse.”</span></p> <p><strong>Asking for your credit limit to be raised can improve your credit score</strong></p> <p><span>Keep your credit utilisation – the amount of credit you use compared to your credit limit – low to boost your all-important credit, advises Diana. “You can borrow less, or you can ask for a raise in your credit limit.” A recent study from CreditCards.com found that only 28 per cent of respondents have never asked for an increase in their credit limit. However, a whopping 89 per cent of those who asked for a credit limit increase received one.</span></p> <p><em><span>Written by Jeff Hoyt. This article first appeared in <a rel="noopener" href="https://www.readersdigest.com.au/food-home-garden/money/14-personal-finance-tips-you-were-never-taught-but-need-to-know" target="_blank">Reader’s Digest</a>. For more of what you love from the world’s best-loved magazine, <a rel="noopener" href="http://readersdigest.innovations.com.au/c/readersdigestemailsubscribe?utm_source=over60&amp;utm_medium=articles&amp;utm_campaign=RDSUB&amp;keycode=WRA87V" target="_blank">here’s our best subscription offer.</a></span></em></p> <p><em><span>Image: Getty Images</span></em></p> <p><img style="width: 100px !important; height: 100px !important;" src="https://oversixtydev.blob.core.windows.net/media/7820640/1.png" alt="" data-udi="umb://media/f30947086c8e47b89cb076eb5bb9b3e2" /></p>

Money & Banking

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The majority of Australians are not saving enough for retirement

<p>Only 53% of couples and 22% of single people are on track to achieve a comfortable level of retirement income, according to an in-depth study of the adequacy of retirement savings.</p> <p>The outcome of a collaboration between researchers at the University of Melbourne and Towers Watson, the <a href="http://www.melbourneinstitute.com/downloads/working_paper_series/wp2014n05.pdf">study</a> has found a significant number of Australians are not likely to achieve adequate retirement incomes, even when all sources of savings are considered.</p> <p>The research sought to address the considerable uncertainty among policy makers and the broader community about the extent and nature of retirement savings deficiencies in Australia. To do so, we developed a set of metrics indicating the adequacy of retirement savings and applied those metrics to a large representative sample of the Australian population.</p> <p>The clear finding is that most Australians are still not on track towards reaching a comfortable income during retirement, and will continue to draw a large part of retirement income from the age pension. The implication is that, despite superannuation reforms dating back over 20 years, the problem of inadequate retirement savings remains a significant public policy issue for Australia.</p> <p>An important innovation of our study is that the metrics we developed take into account not only superannuation holdings (and projected growth in superannuation holdings through investment returns and future contributions) and the projected age pension entitlement, but also a variety of other household assets that could be used to fund retirement, including various financial assets and property.</p> <p>Using this information, we are able to forecast a person’s expected income throughout retirement. We then compare this income to a “target” income, which is provided by the <a href="http://www.superannuation.asn.au/resources/retirement-standard">Association of Superannuation Funds in Australia (ASFA) Retirement Standard</a> for a “comfortable” lifestyle. The ASFA standard for a comfortable lifestyle is a widely used benchmark, and specifies a minimum income of A$57,665 for couples and $42,158 for single people.</p> <p>The ASFA benchmarks are very close to both current average income levels of retirees in Australia and the income levels that pre-retirement Australians on average believe they will need for a satisfactory lifestyle in retirement. While this concordance may seem reassuring, our findings for the projected retirement incomes of pre-retirement Australians were not.</p> <p>We projected retirement income levels for a large, representative sample of Australians aged 40 to 64 ­– drawn from the nationally representative <a href="http://www.melbourneinstitute.com/hilda/">Household, Income and Labour Dynamics in Australia (HILDA) Survey</a> – and compared our projections to the income required to sustain a comfortable lifestyle.</p> <p>Based on our calculations, only 53% of couples and 22% of singles are on track to achieve a comfortable level of retirement income.</p> <p>Our study also shows the relative importance of different sources of retirement income. If we ignore all sources of retirement income other than superannuation, only 15% of couples and 5% of singles are projected to achieve the target. Indeed, applying the <a href="http://www.oecd-ilibrary.org/sites/factbook-2010-en/11/02/02/index.html?itemId=/content/chapter/factbook-2010-89-en">OECD poverty benchmark</a> of half median income, most retirees would be living in poverty.</p> <p>Factoring in the age pension improves projected retirement incomes for many people, but still only 32% of couples and 11% of singles are on track to have a comfortable retirement income.</p> <p>Our calculations have several implications. First, they show that, for most people, superannuation is not sufficient to fund a comfortable retirement, even if they have contributed to superannuation for most of their working lives.</p> <p>Second, it is important to take into account all potential sources of retirement income, including non-superannuation assets, when computing the adequacy of retirement savings. Omitting any of these sources will likely lead to substantial under-estimation of adequacy.</p> <p>Third, single people are particularly under-prepared for retirement, being three times more likely than couples to have severely inadequate projected retirement incomes.</p> <p>Fourth, there is a gap between expectations about the importance of the different sources of retirement income and the likely reality. <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features50March%202009">Data from the Australian Bureau of Statistics</a> show that over half of men and two-fifths of women expect superannuation to be the main source of retirement income. However, our projections show that the age pension will provide 61% of the retirement income of single people, and 39% of the retirement income of couples. Moreover, 96% of single people and 89% of couples aged 40 to 64 today are expected to receive at least a partial age pension at some stage during retirement.</p> <p>Our analyses show that most people need to think ahead to their financial situation in retirement and, if possible, make some changes – the sooner, the better. The first step is to find out whether your savings are likely to be adequate – and you can now do this easily on the <a href="https://www.moneysmart.gov.au/tools-and-resources/calculators-and-tools/retirement-planner">ASIC MoneySmart web site</a>.</p> <p>The site offers a calculator based on a simplified version of the algorithm we used in our study. It takes less than 10 minutes to enter the required information and obtain an estimate of the adequacy of your retirement savings.</p> <p>Knowing now whether you need to save more towards your retirement is an essential first step towards a retirement in which you don’t have to fear running out of money.</p> <p><em>Professor Kevin Davis contributed to this study, which began prior to his appointment as a panel member of the Financial System Inquiry.</em><!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/24957/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><span><a href="https://theconversation.com/profiles/roger-wilkins-95906">Roger Wilkins</a>, Principal Research Fellow and Deputy Director (Research), HILDA Survey, Melbourne Institute of Applied Economic and Social Research, <em><a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a></em> and <a href="https://theconversation.com/profiles/carsten-murawski-3627">Carsten Murawski</a>, Senior Lecturer in the Department of Finance and co-head of the Decision Neuroscience Lab, <em><a href="https://theconversation.com/institutions/the-university-of-melbourne-722">The University of Melbourne</a></em></span></p> <p>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/the-majority-of-australians-are-not-saving-enough-for-retirement-24957">original article</a>.</p> <p><em>Image: Shutterstock</em></p>

Retirement Income

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Finance drives everything — including your insecurity at work

<p>There’s a common link between the many things that have promoted insecurity at work: the growth of franchising; labour hire; contracting out; spin-off firms; outsourcing; global supply chains; the gig economy; and so on. It’s money.</p> <p>At first, that seems too obvious to say. But I’m talking about the way financial concerns have taken control of seemingly every aspect of organisational decision-making.</p> <p>And behind that lies the rise and rise of finance capital.</p> <p>Over the past three decades there has been a <a href="https://d3n8a8pro7vhmx.cloudfront.net/theausinstitute/pages/2838/attachments/original/1532441299/Labour_Share_Symposium_Peetz.pdf?1532441299">shift in resources from the rest of the economy to finance</a>. Specifically, to finance <em>capital</em>.</p> <p>One way to see this is in the chart below. It shows the income shares of labour and capital, and the breakdown for each between the finance and non-finance (“industrial”) sectors, in two four-year periods. They were 1990-91 to 1993-94 (when the ABS started publishing income by industry) and, most recently, 2013-14 to 2016-17. (I use four-year periods to reduce annual fluctuations and show the longer-term trends. <a href="https://d3n8a8pro7vhmx.cloudfront.net/theausinstitute/pages/2838/attachments/original/1532441299/Labour_Share_Symposium_Peetz.pdf?1532441299">Here</a> is more detail and explanation of methods.)</p> <h2>Income shares of labour and capital</h2> <p><img src="https://images.theconversation.com/files/231263/original/file-20180809-30464-pr7pkc.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="" /> <span class="caption">Factor shares by industry, 1990-94 and 2013-17.</span> <span class="attribution"><span class="source">Source: ABS Cat No 5206.0</span></span></p> <p>The key thing to notice in the chart is that finance capital’s share of national income doubled (it’s the dark red boxes in the lower right-hand side of the chart), while everyone else’s went down.</p> <p>So, over that quarter-century, <a href="http://www.abs.gov.au/AUSSTATS/ABS@Archive.nsf/log?openagent&amp;5204046_factor_income_by_industry.xls&amp;5204.0&amp;Time%20Series%20Spreadsheet&amp;0B9214F6B9273E85CA2581C50014A63A&amp;0&amp;2016-17&amp;27.10.2017&amp;Latest">the share of labour income (wages, salaries and supplements) in national income fell</a>. In the early 1990s it totalled 55.02% — that’s what you get when you add labour income in finance, 3.21%, to labour income in “industrial” sectors, 51.81%. In recent years this fell to 53.58%. There were falls in both finance labour income (from 3.81 to 2.83% of national income) and industrial labour income.</p> <p>The total share of profits and “mixed income” accordingly rose from 44.99% to 46.42%. The thing is, all of that increase (and a bit more) went to finance capital. Profits in finance went from 3.16% to 6.16% of the economy.</p> <p>At the same time there has been a large increase in the share of national income going to the very wealthy — the top 0.1% — in <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1631072">Australia</a> and many <a href="https://www.parisschoolofeconomics.eu/en/news/the-top-incomes-database-new-website/">other countries</a>.</p> <p>This shift in resources does not reflect more people being needed to do important finance jobs. Nor is it higher rewards for workers in finance. The portion of national income, and for that matter <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/ProductsbyCatalogue/5F60A449AE6DE5F6CA258090000ED52A?OpenDocument">employment</a>, devoted to labour in the financial sector actually fell from 3.21% to 2.83%.</p> <p>The economy devotes proportionately no more labour time now to financial services than it did a quarter century ago. Yet rewards to finance have increased immensely. The share of national income going to “industrial” sector profits and “mixed income” has declined.</p> <p>In short, the <a href="https://books.google.com.au/books/about/The_End_of_Laissez_Faire.html?id=GKAiBAAAQBAJ&amp;redir_esc=y">widely recognised</a> <a href="https://www.bis.org/publ/work231.htm">shift in income</a> from <a href="http://eprints.lse.ac.uk/83616/1/dp1482.pdf">labour to capital</a> is really a net shift in income from labour, and from capital (including unincorporated enterprises) in other industries, to finance capital.</p> <h2>Finance matters</h2> <p>You may have heard about “<a href="http://www.levyinstitute.org/publications/financialization">financialisation</a>”. It’s not really about more financial activity. It is about the growth of finance capital and its impact on the behaviour of other actors.</p> <p>Financialisation has led to finance capital taking the <a href="https://theconversation.com/who-owns-the-world-tracing-half-the-corporate-giants-shares-to-30-owners-59963">lead shareholdings in most large corporations</a>, not just in Australia but in other major countries (to varying degrees) as well.</p> <p>This role as main shareholder and, of course, chief lender to industrial capital has driven the corporate restructuring over the past three decades that has led to greater worker insecurity and low wages growth (as I recently discussed <a href="https://theconversation.com/self-employment-and-casual-work-arent-increasing-but-so-many-jobs-are-insecure-whats-going-on-100668">here</a>).</p> <p>When “industrial capital” has been restructured over recent decades — to promote franchising, labour hire, contracting out, spin-off firms, outsourcing, global supply chains, and even the emergence of the gig economy — it has been driven by the demands of finance capital. Casualisation is just one manifestation of this.</p> <h2>Short-term logic</h2> <p>Now there’s no conspiracy here (or, at least, the system doesn’t rely on one). There is actually a lot of competitive mindset in the financial sector. This is just the logic of how the system increasingly has come to work. Financial returns, particularly over the short term, have become the principal (really, the only) fact driving corporate behaviour.</p> <p>This has come at the expense of human considerations.</p> <p>That same logic is behind resistance to action on climate change. Continuing carbon emissions are the perfect, and deadly, example of short-term profits overriding longer-term interests.</p> <p>Yet even finance capital is not monolithic. There are <a href="https://theconversation.com/class-and-climate-how-financial-warfare-affects-the-air-23019">parts of finance capital</a> that have a longer-term perspective (“<a href="https://www.forbes.com/sites/85broads/2012/12/19/theres-no-business-on-a-dead-planet-green-business-is-good-business-the-necessity-of-paradigm-changes/#54d71e737547">there’s no business on a dead planet</a>”). So they are effectively in battle with those parts of finance capital for which the short term is everything. The former <em>want</em> governments to intervene in, for example, carbon pricing.</p> <h2>Policy questions</h2> <p>All this leaves some big questions for policymakers about how to redress the new imbalance of power.</p> <p>In part, it requires changing institutional arrangements (including industrial relations laws) that in recent years have made it much harder for workers to obtain a fair share of increases in national income. It requires rethinking of how we regulate work.</p> <p>But it also requires rethinking of how we regulate product markets and financial markets.</p> <p>The almost <a href="http://documents.worldbank.org/curated/en/235201468764398871/Financial-deregulation-and-the-globalization-of-capital-markets">global reduction in regulation</a> <a href="http://www.slate.com/articles/business/project_syndicate/2011/05/listen_to_the_imf_america.html">of the financial sector</a> over three decades ago has ultimately led to this imbalance. It is time to rethink all of that.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/101107/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><span><a href="https://theconversation.com/profiles/david-peetz-4004">David Peetz</a>, Professor of Employment Relations, Centre for Work, Organisation and Wellbeing, <em><a href="https://theconversation.com/institutions/griffith-university-828">Griffith University</a></em></span></p> <p>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/finance-drives-everything-including-your-insecurity-at-work-101107">original article</a>.</p> <p><em>Image: jijomathaidesigners</em></p>

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