Uncensored Money: Ask Mel Anything – Watching Your Investments & Financial Control
Melissa Browne: Ex-Accountant, Ex-Financial Advisor, Ex-Working Till I Drop, Now Serial Entrepreneur & Author, Financial Wellness Advocate, Living a Life by Design | 18/10/2023
In the ‘Ask Mel Anything’ series, Mel answers your questions in the hope you realise you are not alone and that it helps to increase your financial literacy and confidence.
In this Ask Mel Anything episode, Mel answers two questions. The first relates to mild anxiety experienced when watching share investments fluctuate and the second relates to reclaiming control over finances.
Resources mentioned in this episode:
- 50+ Ways to Find $10k in 12 Months
- Uncensored Monday: On Money and Relationships with Annabelle Daniel OAM
- Women’s Community Shelters
- Mel at the Mint: Investing is the New Black (Canberra)
- Investing in Shares Masterclass (coming soon)
If you know you need more help with your finances make sure you join the waitlist for the My Financial Adulting Plan.
If you're not already, come play over at insta at MelBrowne.Money and make sure you are signed up to Mel's Money Musings and Monday Money Moments (yep, we love us some alliteration) for more tips, tricks and ideas on how to best work with your money.
Finally, if you love this episode please make sure you subscribe and leave us a review.
Today I have two really different questions that I'm answering. One is all about investing and especially investing when you are a new investor and you're looking at the fluctuations and feeling a little bit nervous. And the second one is all around financial control. And it, If you're someone that suspects that you're experiencing that or I think it's good to understand what it means so that you can look for it and understand what's normal and what's not if you're hearing friends talking about their financial relationships, etc.
So the first question is from Melissa and she says 'when you finally set yourself as best as possible you're conscious investments take time. So what are the best way to keep a mindset after you've done the huge task of getting yourself in order?'
She wants to acknowledge that there's tweaking and feeling financially secure. But she says I'm watching my shares bounce knowing I'm in for the long term. I guess after doing so much over two years, I'm pulling the pedal back with mild anxiety. And I want to say Melissa, I absolutely get it. I get that when you have come back from a situation where maybe you've been in debt, or maybe you just haven't known what's going on, or maybe you've worked really hard to increase your income. So you've really come out of that position of financial stress. And you now started to invest and you're feeling like, wow, maybe I've, I'm able to do this thing that maybe I never thought that I'd be able to do. And I think with share investing particularly, it can feel really uncertain and it can feel like you're a little bit off-kilter because of the fluctuations in the share market. And that's exactly what Melissa is saying. She said she's watching her shares bounce around pulling back with mild anxiety. So I want to say that you feeling mild anxiety is so normal. I think even the most seasoned investor, no one likes to see the value of their investment go down. I mean, when they go up, we feel really good, right? We can even feel euphoric. So therefore, it makes sense that when they go down, we feel the opposite of that. We feel anxious. We might even feel, oh, so anxious, scared or fearful.
So it's really important to understand a few things. One, to understand your timeframe for investing and to understand that share investing is a long-term investment. And that over the years, yes, you'll see short-term fluctuations, but if I look at any graph, whether it's New Zealand, whether it's the S& P in the US, whether it's the FTSE in the UK, whether it's Australia over time, even with those drops, and some of them have been big drops, some of them have been 50 per cent drops that the share market will over time continue to rise. And if we look at the last 30 years, in Australia that's been a 9.8 percent rate of return. So understanding and knowing that is really helpful when we're looking at short-term valuations. So one is to understand it's a long-term play and that means with that comes short-term variations.
The only way that you lock in those short-term variations is if you sell. So I'm a fan of, and I coined this term during COVID, I want you to apply 'social distance' from your investment. So I want you to socially distance from your investment. And what I mean by that is if you have looked at your time frame, if you've researched your investments, if you have diversification, if you know that yes, this bag of ETFs or this, this group of investing is the one I feel comfortable with, it ticks diversification, it ticks my risk profile, you might then do two things. One is automate that investment so that it just happens. You don't have to look at it. You don't have to make that decision because often it's the doing that brings that anxiousness, right? So we pause or we freeze or we suffer that paralysis by analysis. But if it just happens in the background, then there's less pull on our emotions and it's less us having to pull the trigger. So one, we're going to automate it, but then we're going to socially distance from it. Meaning we're not going to sit there and watch it. Because if I watched my investments every single day, they're absolutely going to bounce around every single day. And for most of us, we're not share trading. So it doesn't help us to watch them every single day. So what you might do is if you've chosen a basket of ETFs, for example, you might simply look at them once a quarter or even once every six months to decide are the fundamentals of that investment still right? Meaning has the situation changed in such a way that I would want to change the investment? So that might be for example, that you've invested in a particular sector and you no longer believe in the long-term efficacy or views around that particular sector. So you might decide to pause your investing in that. But if it's just say it's broad-based ETF, like the ASX 300 or the S&P500, et cetera, then really the fundamentals aren't necessarily going to change. It's simply a long-term investment. So in that case, you really can socially distance from that investment. And certainly from new investors and to be honest, for most investors, Warren Buffett, one of the greatest investors of all time has said publicly that if something was to happen to him, he would want his wife to sell up and invest it all in the S&P500. And my thoughts are what he's saying for that is not that he believes that's, the best investment around because obviously he's not investing in it. But what he's saying is she's not going to have the expertise or even maybe even the care factor and that's going to give her diversification and it's going to be a great investment potentially for the long term. So apply social distance to the investment would be my suggestion to that. And then really keep learning because how we feel more comfortable with our investing is to increase our knowledge, to increase our understanding. And as we learn more, as we realise, ah, when there are dips and I'm automating my investment, that means that when I purchase during those times, I'm getting more bang for my buck. And if I've got a long-term timeframe, that's great. That means I'm able to buy out more because they're cheaper. So you can actually change your perspective because you've deepened that understanding around what that means for you.
So Melissa, I hope that has really helped you settle into that investment is understanding your risk profile, understanding your timeframe, automating your investment, making sure it's diversified and you've got all those great things ticked off, making sure you're socially distancing from your investment and then increasing that knowledge.
And to help you increase that knowledge, we've got a couple of events coming up in November that could really help you. One's an in-person workshop that I'm running at the Mint in Canberra, which I'm super excited about in November. Fly in. Let's spend the night with me. It's going to be so much fun. So that's happening in November when I'm giving a talk on how investing is the new black. And I'm also running an online shares lesson to teach you the basics of share investing. And you might've already started investing which Melissa has done. But as I said, sometimes deepening that knowledge, hearing something, the first time you hear something, it might hit one way or you might pick a little thing from it. But every time you hear something, you can pull more and more from it, which can make you feel more and more confident as you increase that financial literacy. So we'll put the links for those both in the show notes.
The second question is a really very different question. So it's from C, and she goes, 'Hi Mel, complex question. Looking for tips about how to reclaim control over finances in circumstances where someone else controls them. This would be a huge thing with many people. Unable to publicly explain the circumstances. However, can a strategy be implemented in situations where access to funds is controlled or monitored, or a scenario where independence has recently been obtained and how to start again?'
And I want to just say how hard this situation can be and C, thank you so much for this question because you are so not alone in this.
So many women and men experience this. Just to give you some stats, and this is from Australia, but when I've done my research, this tracks across the Western world. So 15.7 percent of women have experienced financial abuse. Financial abuse costs the economy $15.6 billion every year. Two thirds of women affected by family violence are working and some recent stats show that when your income increases by more than a dollar over your partner's income, your risk of domestic violence increases which just absolutely scared the bejesus out of me when I realised that with the minute you start to earn more than your partner, your risk of DV increases. It's just wild to me.
So just to be really clear coercive control or financial control is when someone tries to limit that financial freedom and independence. And there are so many different versions of it, but essentially it can be when one person tries to control another person's access to money. And it is a form of abuse. I really want to be really clear.
Now, some forms of financial abuse may even seem like displays of affection. Where one family member or your partner offers to take control of the finances to take the pressure off. But really they're an attempt to control your access to money.
It can take loads of different forms such as controlling the money, stopping you from being financially independent, or even stopping you from earning your own money. So it's really important to understand that this is a really common thing. Some examples of financially abusive behaviours are not limited to this, but might include, taking control of someone else's finance, so being in charge of all the household income and paying the other person an allowance. Controlling how all of the household income is spent. Forcing a family member to claim social security benefits. Making a family member go guarantee on a loan or take out a loan in their name. Making you take out a second credit card, forcing you to work in the family business without being paid. Filing fraudulent claims. Stopping you from getting a job or going to work. Stopping you from studying. Not giving you access to bank accounts. Denying you access to money so you can't afford basic expenses. Destroying, damaging or stealing property. Racking up debt on shared accounts or joint credit cards. Withholding financial support. Refusing to work or contribute anything to the household income. Gambling away family members or shared money.
Now, some of those seem really innocuous, right? But it paints a picture and it's more for me that some of them are red flags and some of them are yellow or orange flags. Where it's like this is borderline and maybe you just want a question for you whether this is okay or not.
So, the thing that I want to say with this is can a strategy be implemented in situations? It absolutely can be. But it's really, I want to acknowledge that it's really hard when access to those funds is controlled or monitored. So what you may need to do is figure out how you can open another bank account or how you can have another set of funds that your partner doesn't know about and that your partner cannot control.
So it's really important to start your own financial independence. Now, that might be really hard if you don't have access to things like ID documents, etc. But if you can, then that would be a way that you can start to regain that financial independence. And then you might be able to start earning money through doing things that your partner may not be aware of, like doing surveys online. And I'll drop a link to 50+ Ways to Earn More Cash. For you, it might be a strategy of building up some cash yourself so that you've got choice.
But also that scenario where independence has recently been obtained and how to start again, then that is really about developing your financial literacy. That's really about understanding how to control your money, how to set up different bank accounts, how to pay bills. And sometimes it's really understanding how to do those basic things because potentially you've never done them before if your partner has controlled all of that. So that might be where you go and speak to a financial counsellor which there's free help that exists where you might go and talk to them and say, this is what's happened to me. And I'd really like help setting up a great financial base for myself. And that financial counsellor will help you with that. You might also do some free training. You might listen to free podcasts. You might read some books that you borrow from libraries about how to have great financial literacy, including my own Unf*ck Your Finances. You might also eventually pay to do courses such as my own, but there are so many different ways that you can start again. And I've met so many women, so many women, who have been able to start again.
In Australia, certainly, there is money available if you are fleeing a partner and you don't have anything. So make sure there are women's shelters that exist, and I'm going to put in the show notes a whole bunch of resources, certainly in Australia, that you can access.
But things like 1800RESPECT, and they'll be able to suggest to you what are some women's shelters in your local area that you can go to, how to access domestic violence payments so that you can afford to leave because too many women are in these circumstances where they feel like they can't leave. But actually you have more choice than you realise.
I actually did a podcast episode with Annabelle who looks after a whole bunch of women's shelters. So I highly recommend that you go and listen to that as well. She's a really great resource. And that was a great conversation around what's acceptable and what's not acceptable as well.
But I want to suggest that if you're able to, if some of the things that I've spoken of a yellow or orange flags for you and you're able to, I would have a conversation with your partner to say, you know what? I know that you think that you're helping by taking this on. However I'm no longer comfortable with that. So I want to have a conversation because I want to talk to you about re-engaging with our finances. Can you share with me what we've done to date? Can you share with me what we have and what we owe? Can you share with me what I can take back? And I'd like to have regular chats maybe every month or every week where we start to discuss the finances.
If your partner says no to that, then I would ask them can you talk to me about why you don't think that's appropriate? Because if we're in an equal relationship, then this should be something.
If they continue to insist on not, that's simply unacceptable. If your partner won't engage in those conversations, again, that for me is a red flag and that is a form of financial control by refusing to engage in those conversations. So it's having that curious conversation around, can you talk to me about why that is?
So just to recap, there are helplines available, and there are financial counsellors available, but I want to suggest that you speak to a family lawyer. A great family lawyer can help you understand what's acceptable and what's not acceptable. What rights you have and what rights you don't have. But certainly access to joint funds should be a right that you have. And then once you understand what your rights are, It's realising, okay, if this is not a right that I have, or that I'm going to be able to have with the partner that I have, then how do I either extract myself from that relationship, or how do I start again, or build, or rebuild from having been in that position?
But I really want to give you hope that I have met so many people either when they were clients of me as a financial advisor or that have joined or been part of My Financial Adulting Plan where they've left relationships of DV or relationships where they had no control whatsoever with their finances and they absofreakinglutely have been able to start again. And not just start again where there was only ever just okay, but they are thriving and I want you to hear that you can to. Help is available for you. And we'll make sure we put some of that in the show notes.