Uncensored Money Season Four: Your Half-Way Pep Talk

Melissa Browne: Ex-Accountant, Ex-Financial Advisor, Ex-Working Till I Drop, Now Serial Entrepreneur & Author, Financial Wellness Advocate, Living a Life by Design | 05/07/2023

Show Notes

We’re halfway through the year and whether you’re on track for the goals you set at the start of the year, you’ve lost momentum or you didn’t set any goals and have been winging it, today’s episode is your financial reset. In this episode, Mel and Lawsie discuss what has happened so far and what is still to come and then help you set some intentions for the second half of the year. 

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Transcript

Mel: We're halfway through the year, which is absolute madness. It means I should be overseas enjoying a European summer instead of our freezing winter, like half of Australia, but I digress. I know if you're listening, you are gonna fall into one of three camps when it comes to halfway a halfway point in the year.

The first group is you've set goals for the year, you've been tracking them regularly, and you're satisfied with what you've done so far and what you have to do for the rest of the year. I'm gonna call that first group 'Lawsie'.

The second group is you've kind of set goals for the year and you lost momentum or resolve with the cost of living and interest rate hikes or life just got in the way.

And then the third group is you didn't set goals.

Lawsie: You didn't want to give that second category a name. I'm so sad.

Mel: I didn't have someone for that.

Lawsie: The Floaters, they can be the ‘floaters’.

Mel: It's beautiful. And the third group is you didn't set goals and you've been winging it. So they're our three groups, like three the three bears.

What we wanna do with you today is we wanna do a financial reset. So I want to look at what's happened during the year so far, what's happening now and what's coming, and help you set some intentions for the second half of the year. Cause what I wanna do is strengthen the resolve of the ‘Lawsies', the first group, and then with a second group, reinvigorate you and go, yes, great, I wanna do it.

And the third group, vigorate you. I don't know if that's a word, but I wanna vigorate you. Give you at least a 'let's do, we can do this'.

So let's start with what's happened during the year so far, and I'm talking financially, and I think it's pretty obvious what is the big thing. So the total rate increase for 2023 for interest has been one full per cent with the RBA, the Reserve Bank of Australia deciding to increase the cash rate by 0.25% in Feb, March, May and June. No changes were announced in Jan, April, or July. So that's what's happened so far. We've had four rate increases totalling in 1%.

Those rate increases have started to bite. So inflation has dropped from 8% in December, or over 8% to 5.6% last month. So we are seeing a contraction of the economy and that simply means that the economy's not growing as fast as it has. Property and share markets have been a little bit all over the shop. I think people have expected property to drop off faster than it has, and certainly in some places, it has gone stagnant. In some places where we've had massive increases during Covid, they have dropped and sometimes significantly, but the top end of the market for a lot of reasons has also just not changed. And I think we've seen that down the bottom end of the market too. Investors are still in there, first-time buyers are still in there. So we haven't seen the drop in property that perhaps experts might have thought that we'd see. Certainly, there was a lot of talk about negative equity and prices going down, and I just don't think we've seen that.

And still wages have not risen in line with inflation. So we have seen this galloping where inflation has overtaken wages growth, but the jobs market is still incredibly tight where really it is still an employee market where the number of people going for jobs. I know we are hiring at the moment. It's just tough. Like it's tough finding the right person and then you are having to pay them a considerable amount of money. So that's what has happened.

What's happening now is very much a wait and see with interest rates. I personally, and a lot of economists are saying this, I think we've got at least one more in us before the end of the year.

But certainly what we're seeing now is the cost of living. So many people are seeing that are really noticing the cost of living, whether that's food, whether that's electricity, fuel, and I think that's the thing we're seeing. It's not just one area, it's all of the areas. It's rent. And we are seeing this cost of living increase across the board.

And as a result, we're changing our behaviour, which is what the Reserve Bank wanted us to do. So the stats that the National Australia Bank put out last month are that 45% of Aussies, and this is global trends, so if you are not in Australia, we are seeing this across the Western world. 45% of Aussies are cutting back or stopping all together their purchases of treats such as coffees, snacks, or lunches. That really surprised me that half of Aussies are looking at that. 42% are cutting back on car journeys to save petrol. 41% are cutting back on entertainment like movies, which will be interesting seeing August data with school holidays in Australia. 35% have cancelled, delayed, or made a more modest holiday plan. 34% are switching to less expensive products to save money. And people are still spending, but 22% are researching brands and products and before buying.

So the upshot of that also is that businesses are hurting because the Reserve Bank are wanting people to spend less. And on the whole, they are. So small businesses are really starting to feel this bite. Certainly, I saw online Shelly Horton and Nikki Parkinson and different ones have come out and said this has been their hardest year in business to date. And these are people that have been in business for 10 and 20 years. So we are kind of looking at GFC style conditions for businesses.

What is coming? As I said, there's potentially one more interest rate rise. The cost of living is still high. Yes, it's reducing, but it's still gonna be high. We’re not gonna see 2% before the end of the year. That might happen next year. Hopefully, we'll see 4% by the end of the year, and that means that the Reserve Bank's going to be happy. We wanna see a 3 to 4% on it, and we are gonna continue to see that contraction, which will hurt small businesses. There are some businesses that survived Covid that will not survive the contraction that we have got coming.

So what Lawsie and I wanna talk to you today is to say in amongst that, what can be really tempting to do, especially when it's just been so hard for so long.

You know, we had Covid and then we had inflation. And interest rate rises a lot. I know a lot of people are feeling enough already, but we don't just wanna hit pause. We actually wanna make sure that we are moving forward, cause if we're stagnating and hitting pause, we're actually going backwards. We wanna make sure we are continuing forward. So what we wanna do is just give you three different questions to answer. This is not gonna be a long podcast. Lawsie and I have been sick. Our voices won't hold out. But we wanna take you through three different exercises to get you thinking differently and set you up with some great intentions so that you have some momentum as we hit the end of the year.

So, three questions, and we're gonna answer these as well. So Lawsie, the first one is, what are your top three aspirations for the rest of the year? So what are your top three aspirations for the rest of the year?

Lawsie: You know, I love a good aspirational question. Yeah. I think this is a really interesting one for me because, as you said, I’m the one that's already set my goals and I'm tracking them regularly and I'm satisfied with what I have done so far and what I plan to do for the rest of the year. I don't lean so heavily into the aspirations because I'm like, well, I've got my plan and I'm sticking to that and that's that. But I think if I had to sort of name them, it would be just to continue doing what I have been doing and to make sure that's all working. Cause I think the flip side of being that like is that you can also become a bit complacent with it. And particularly, we've highlighted that we're still gonna see this increased cost of living. Like we're not seeing any reprieve from any of that. So it is about coming back to some of the basics, I think, and just being like, okay, where can we save some dollars that we need to? Rather than just going, oh, I've got that money and that pot, and I'll just spend it. Like, there's gonna be a limit to what has happened before I have to actually adjust how we do our finances and make sure that everything still tallies up and my little ledger balances. So definitely I need to just make sure that we are just staying, being conscious around what we are spending on. And that happy with what we are doing. I think we're pretty conscious of how we spend our money anyway, but just being a bit more mindful with that. And then just to keep doing what I've been doing, like it works for us. And so just maintaining that discipline of always checking finances on a monthly basis and being on top of all of those things that it is so routine to me, but you and I are both going overseas later this year and all those things, and so it's just making sure that even if you're doing those fun things and they're not so normal things, that you still keep those great practices in place. Even if I might not do it on the last Friday of every month like I like to do. Just being flexible with making sure that we keep doing that.

Mel: Yeah, I like that.

Lawsie: What about you? What would be your top three aspirations?

Mel: For the rest of the year. Cause I tend to think in financial years, so I don't think in calendar years. I'm such an accountant! So in Australia, we've just started a new financial year. So for me, the new financial year, so one top aspiration is we're working with a consultant at the moment for the business. So it's really making sure that we make the most use of that. So that's all about making sure that this year, the business increases by 50%. So I wanna see some of that happen before the end of the year. Personally, our home, and this is a home that it's not been renovated despite the fact that I've been talking about it for three years, and so I really wanna get it so that by the end of the year, I enjoy being in it. And we've started to do that with some changes last year. And now I’ve engaged another interior designer and we're just gonna paint it. You know that we talk a lot here about movement and momentum, even though it's not the wisest financial decision just to paint it. I just need to have it looking like it’s not going to pot, which I really feel like it has. And even outside, Tony and I were looking and we've got wood windows and they're really looking scuffed and terrible. So for me, that aspiration Is to have that home starting to feel good being in it, which I think will feed into the first business goal. Cause if I'm gonna be here, I wanna enjoy it.

And then the third one is last year Tony went away and I really struggled and we really struggled as a couple. My health sucked. I got Covid twice. I had two serious bouts of the flu, one that lasted a month. Actually three serious bouts of the flu if I think back to a full 12 months.

So I'm wanting to do something different with my health. So at the moment, I'm reading a lot. And there's Joe, and I’m gonna stuff up his surname, Bezania or something and Dr. Amen. So one's a neurologist. And one is also like research-based and neurologist but coming at it from a very different like quantum physics point of view. So I'm wanting to biohack myself. And I love philosophy. I love that way of thinking. So I wanna biohack starting with the brain. I've got two books that I'm reading at the moment and my top aspiration is to start to see some change with that. Cause I'm just really tired of it. And there is going to be decisions around relationships, decisions around all sorts of stuff being made. But it's gonna start for me, I think with some brain health stuff.

Lawsie: Yeah. Look at you steering away just from the finances.

Mel: Well, I think for me, the aspirations for me, if my health isn't great, everything I wanna do is not gonna work. And we saw that last year. We saw that with Tone's health and we saw that with my health and I'm just so done with that.

Lawsie: Oh, no, I think that's really important. Of course, I just strayed straight to the practical and the numbers, but I think it's a good reminder to obviously for you and I, but also for everyone else listening, that money's gonna feed into whatever those aspirations are, whether it's money to buy the books so you can be doing those things. So when answering that question, don't just do a Lawsie and do the practical, oh, this is the financial side. To actually look at it from a holistic point of view I think is a really good way to take it.

Mel: And definitely like the 50% business goal and the reno goal, once this our house is done we have more choice than around 1) enjoying it, but also potentially renting it out. If we decide to go overseas for longer periods of time, or Airbnb it or just enjoy it. Or even sell it. Who knows? We're at the 'throw everything up in the air' that stage.

Number two, what are you gonna do differently to get a different result?

Lawsie: Well, I've got my goals and my plans and I don't plan on changing them. That's not quite the answer you're looking for, is it?

Mel: That's so you!

Lawsie: It is so me. And I don't advise everyone to follow that advice. No, I think it's interesting. I think for me, again, just from a financial point of view, if I was to answer it from that perspective is I would actually say consider doing some of the things that we get the people in My Financial Adulting Plan to do. Again, because everything of mine is just on such autopilot. At the moment, they're doing a challenge of finding $833 in a month and that's gotta be outside of their normal income. We weren't suggesting that they've all gotta go and get second jobs for a month or anything like that. And it was about being creative with that. And I'm like, oh, I don't need to do that. But if I actually look at it and go, there is a lot of stuff around our house, it still actually needs to get sold. And some of that is...

Mel: Gumtree says most of us have got six to $7,000 worth of stuff.

Lawsie: I know like we've got a car sitting in there that needs to be sold. We've got, I say we, that's more my husband, but I'll use the royal collective 'we'. Like, it just needs to go 1) cause I want the space back in the garage, but also like it just has to happen and different things like that.

So like I said before, the risk is that when you just follow the process that you can become complacent with stuff. Cause I know exactly how much I love invested by the end of the year and I'll know how much is in all of my accounts, so I don't look at it and go, oh, I need the money.

But it's also just a waste of time, space, money and energy having this crap sitting there. So I think for me it's about just doing some of those things as I think it's just getting to that point that I think for us, we need to go, you know what, let's just clear the stuff out and sell it and get rid of it and make the space and all of those things so then we can actually use the funds that we get for whatever we like. That's fine. But yeah, I think the thing that we have to do differently is actually do some different stuff rather than just following on autopilot.

Mel: You're about to see a whole lot of stuff on Depop over the next couple of months for me, cause exactly that. I don't wanna just save stuff and not do it.

Lawsie: Yeah. Yeah. And so I just think that's gotta be the thing that we do differently. And I think that then just sort of challenging ourselves in different other ways to go, all right, if we can make an extra amount, then that brings forward that timeframe for being financially independent. So I just need to get off my little straighty 180 consistent process following and branch out and do a little bit more of what we tell us to do.

Mel: I love that. No, that's good.

Lawsie: What about you?

Mel: Well, part of it is engaging consultants and other experts, so I am really wanting to I'm wanting to look outside for inspiration, for motivation and the rest of it. So part of that...

Lawsie: And expertise.

Mel: And expertise. So part of it is reading as many fiction books as non-fiction. So I've got the two ones that I mentioned, two non-fiction books on the go. So Dr. Amen is one of them. I think the one I'm reading at the moment is, Heal Your Brain, Heal Your Life, or something like that, which is really good. Super practical. And then I've also enrolled on a short course in Oxford Uni.

Lawsie: You’re such a nerd.

Mel: I'm such a nerd. So it's learning and inspiration and motivation. Cause that will definitely give me a different result and I know that it does if I put myself in those sort of environments, but also get that motivation. And that's the thing. Sometimes something doesn't necessarily make financial sense, but it will get you a different result. For example, we found someone to paint the house. It is not expensive. So this guy will do it incredibly cheaply, but he will still do a good job. It's gonna get an incredible result. Yes, we will end up doing a reno probably May next year and we'll have to redo some of the paintings. But also there'll be a lot we won't have to redo and just the difference it is going to make and how it’s gonna make us feel. And that way if the reno gets delayed, I'm not going to care because at least, I mean, we've lived in this house for 15 years and it's an old house before that. So yeah, there's a lot of wear and tear, so I'm unreasonably excited about it.

The next one I think is really important cause some of it is aspirational. Some of it's what are you going to do differently to get a different result? And I think that's a really important question. But the third one is, what small critical choices do you need to make?

And I always like to tell the story of Netflix. When Covid hit, when Netflix made the decision to turn off their high definition, to drop down the resolution of their streaming, cause they knew that yes, the quality is gonna drop, so people might complain, but the number of people that were jumping on, if it was to buffer and it wasn't going to stream, that would be much worse of a problem.

And them making that decision really early on,  basically when Covid looked like it was hitting, meant that they went gangbusters. And they were able to cope with the ridiculous amount of people that jumped onto their service.

So it's asking the same thing for your personal finances. It's saying what small, tiny decision, like Netflix’s decision to drop that down was inconsequential potentially, but it made a huge difference. But what small critical choices do you need to make?

Lawsie: That's a good question. And I don't actually have an answer for that off straight, off the top of my head. Like I said before, it’s just approaching things differently and selling our stuff, but I don't think they're small critical choices.

And I feel like I've made a lot of those small critical decisions. Other examples I can think of for people with their finances is, don't be complacent with just the bank accounts that you've got and you've got money in there. There are some banks that are now paying quite decent interest rates, so that could be a small change which could actually make you several hundred dollars more a year. But I've done that. I think that’s just how I'm wired, that I don't have those smaller things. So I think for me it still has to be leaning into just challenging and finding just different ways to do things because like we've said a thousand times a day, everything's on autopilot.

Mel: So I guess your small critical choice is how could you push yourself off autopilot?

Lawsie: Yeah. Or I think add stuff to my autopilot. I don't wanna be off my autopilot, but how can you add in extra bits and pieces that then will make a difference in the long term.

Mel: And for me it would be, I'm gonna get really ruthless on my Mondays and I already did it this week. So we had a meeting on a Monday and I moved it to Wednesday. Cause I think sometimes it's really important to look at, just because something works doesn't mean that's what you should be doing.

So I know for my business a lot of the time, it just makes sense that you would have a meeting of all the staff on a Monday afternoon, cause that's when everyone starts. And it kind of sets the tone for a week. But for me, I wanna make sure that on a Monday I am setting things in place for me and setting myself up and for the week in a way that the week actually flows smoothly.

So my small critical choice is no meetings on Monday. And just to be really ruthless about that, but also to make sure that I'm reading a chapter of my nonfiction books a day so that I'm not just binging it and not doing anything with it, but actually strategically reading that, knowing that's gonna be part of that top three aspirations.

And then the Monday, instead of doing meetings is when I will be able to do my coursework for my uni, et cetera. And it will actually means I've got time to get it done. And I can then attack my week without thinking crap, I haven't done that

Lawsie: Yep.

Mel: So that small decision around when a meeting's gonna be held is actually gonna be monumental. And just to be really ruthless with that. No meetings, no anything in there.

Lawsie: Yeah. It's like Mel Monday.

Mel: Yeah, totally. And I'll still not work in the morning and then just really binge that time in the afternoon, cause that works beautifully for me.

So the danger is that you just do nothing, even if things are doing well, that you just keep moving it along without actually looking at it and saying, but what else do I wanna add in? Or what am I gonna do differently? Or what other small critical choices?

If you're in that second group, if you've lost that resolve, I want you to answer these three questions. If you're in the last group and you didn't set goals, those top three aspirations can become your goals. And then think about what actions do I need to start doing this week so that you can start to move towards it. But the danger is that you'll just lean into credit to keep up. These are the dangers that I see. Lean into credit to keep up. You press pause because everything's uncertain or you ignore what's happening. And what we don't want is for that to happen for you.

So answer those three questions and maybe DM me on Insta at MelBrowne.Money. I'm a fancy Browne so there’s an ‘e’ on the end of Browne or flick an [email protected] au and keep yourself accountable and let us know how you went.

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