The One Thing You Must Do Before 2018!

When we are young we get taught how to identify numbers and count. As we progress through primary school we learn how to add, subtract, multiply and divide. When we reach high school we are taught algebra, geometry and calculus.

Typically, we are not taught about the power of compound interest in school. We don’t learn about the difference between good and bad debt. We are not given examples about the dangers of excess credit.

The lessons you learn about money will come from your parents, your siblings, your friends or your own experiences in earning, receiving, saving or spending money.

As an adult, you have a responsibility to educate yourself about how to manage your money. Just like you learnt to read (became literate) as a child, you need to make yourself financially literate as an adult.

A recent study from Standard & Poor’s found 36 per cent of Australians were not financially literate. Another survey from ME Bank found that 42 per cent of us do not understand compound interest and another 38 per cent have no understanding of how an interest-only mortgage works.

So ladies – get educated

Watch a TED Talk on money.

Read a personal finance book.

Google a finance topic you have never really understood or bothered learning about, and read up (try ‘how to start investing’, ‘how to buy shares’, ‘how does compound interest work’).

Start a conversation with your friends or family about how they manage their money.

Do one of these things right now, so you can go into 2018 knowing more about your money and how to manage it than you did in 2017.

All the best, have a safe and happy New Year.


Her Money Matters.


That Time I Bought a Sports Car…

Ladies, I am not one of those people who dishes out advice on female finance but also says things like ‘I’ve never had a credit card!’ (yay me!).

Or ‘I paid off my home loan by the time I turned 28!’ (yay me again!).

I have made every single financial mistake in the book. Some of them I have made more than once. As my mother likes to say, I do learn from my mistakes, but sometimes it takes more than one lesson.

I have had many, many credit cards. And I maxed out EVERY SINGLE ONE.

I haven’t paid off my home loan.

And – my favourite financial lesson – when I was 26 I decided to go out and buy myself a sports car.

Like all bad financial decisions, it was a spur-of-the-moment, impulse, ‘I deserve this’ purchase.

I had graduated from Uni and was finally working in an adult-job with an adult-wage. I had minimal savings but managed to go and get a car loan from the bank for an Audi TT. It was the cutest car ever, it even had personalised ‘TT’ number plates.

Screen Shot 2017-11-16 at 10.10.41 pm
My Biggest Financial Lesson

In fact, it was so adorable that after taking it for a test drive, I offered to buy it immediately. I didn’t organise a road worthy test.

I didn’t have my dad look at it (I knew he would tell me not to buy it).

I didn’t do any due diligence at all.


When the car got signed over into my name, I was so excited. I felt like I had made it.

I can remember driving around, listening to Just Dance by Lady Gaga on loud and thinking I was the hottest thing in town.

But then the repayments started. I can’t remember exactly how much they were, but I didn’t negotiate my rate or shop around. I just went to the bank I had always been with and asked for a car loan.

This was at the beginning of 2008, so we’ll say 15% but they were probably higher. Over a five year term, that is $274 per fortnight. At that time, I was on about $50,000 gross (before tax) per year or $1,500 net (after tax) per fortnight.

I was spending nearly 20% of my net wage on this car!

Just in case you don’t think this sounds like a lot, you shouldn’t be spending more than 10% of your gross pay (before tax) on vehicle expenses – and that’s everything. Car loan repayments, insurance and registration.


The Flowers That Cost More Than Houses…

Today I want to tell you a story about Holland in the 17th century.

Yes, you read that right.

I realise you are probably thinking: woman, I came here to read about finance, not get a bloody history lesson.

But stick with me, we are going to revisit history to see if we can learn a lesson about the present.

During the 1600s, tulips were the hottest thing to hit Holland since designer clogs.

People were going crazy for them.

This was a prosperous period in Holland’s history, so it wasn’t just the super wealthy who were trading. Merchants, middle-class artisans and tradesmen suddenly found that they had spare cash to blow on pretty flowers.

Everyone wanted a piece of the action. And this drove up the price of tulips.

In 1623, one guy offered 12,000 guilders (this was more than the value of a house in Amsterdam) for 10 bulbs of the beautiful, and extremely rare, Semper Augustus – the most coveted tulip variety. Apparently, it was not enough to secure a deal.

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The very beautiful, very rare and bloody expensive Semper Augustus.

So, by the 1630s (I guess after word got out that people were trying to buy 10 tulips for the price of a house), more and more speculators had piled in to the market. As people heard stories of friends or family making unheard-of profits simply by buying and selling tulip bulbs, they decided to get in on the act – and prices skyrocketed.

‘Get rich quick’ really is a tale as old as time.

Tulip mania hit its peak in 1636. By then, thousands of middle-class people, including cobblers, carpenters, bricklayers and woodcutters, were involved in the frenzied trading.

And then, pretty much overnight, the trading stopped. The market for tulips collapsed. This was because most speculators could no longer afford to purchase even the cheapest bulbs. Demand disappeared, and flowers tumbled to a tenth of their former values. The result was financial catastrophe for many.

This tale of tulip mania is often cited as the earliest example of an economic bubble. And as we all know, at some point, bubbles burst.

Now let’s fast forward to our present-day example.


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The rise and rise of Bitcoin. Chart from The Australian.

Alan Kohler has written an excellent article on cryptocurrencies such as Bitcoin called Cryptothings are a big bet on our digital future, as buyers predict a brave new world ahead.

It’s a great read if you are interested.


I won’t recap it here, with this exception – in the article, Alan questions the question ‘does Bitcoin mirror that of tulip mania?‘.

I will leave that with you to decide.

Earning · Investing · Saving · Spending

Why You Need to Stop Say This Phrase…

Once you have set your Financial Destination and you start driving towards it, slowly but surely, using your Financial Roadmap you will inevitably hit some roadblocks, or maybe miss a turn on your Financial Journey.

That’s okay, because if you are really committed to reaching your Financial Destination you will get back on track.

After all, you have decided that your Financial Destination is your priority and you have committed to getting there. That is a choice you have made.

If you wanted to, you could stop saving and instead spend your money on whatever else you want to. Splurge on that bag you have been eyeing off. Take that holiday. Have more nights out.

That is your business. It is your money and your life. It is your choice.

But you haven’t chosen to do these things. You have chosen to travel to your Financial Destination.

So I don’t want to hear you using the words ‘I can’t afford that’. You could afford it. But that is not how you are choosing to spend your money.

Stop saying ‘I can’t afford it’.

Start saying ‘I have other financial priorities right now’.

It seems simple, but it is a huge shift in your mindset. It will empower you, because you are making the choice on how you spend (or save) your money.

You are in control of your Financial Journey, so own it!


Do You Have FAANGs?

Don’t you love a good acronym? Can you guess what FAANG stands for?

And it’s not what you grow when you are hangry.

I will give you one clue.

They are all American technology companies that have had a huge impact on the way that we communicate, shop and enjoy entertainment.

Still haven’t guessed?

F = Facebook.
A = Amazon.
A = Apple.
N = Netflix.
G = Google.

These five companies have had a huge impact in the way we live our lives. I would struggle to find someone who has never engaged with at least one of these brands.

This year, the value of these companies has been calculated as $2.415 trillion.

Not billion. Trillion.

That amount of money is almost inconceivable, but to give you a comparison, that is about the same size of the entire economy of France.

In other words it would buy enough cheese, wine and croissants for 67 million people.

With the benefit of hindsight, it is always easy to look back and think ‘if only’ I had bought shares in these companies years ago.

And even though these FAANGs are already worth lots of money, they continue to increase their earnings year on year.

Because of this amazing growth, some analysts are speculating that the valuation and performance of these companies can’t continue. They are saying that the FAANGs have grown so big and so expensive, that these companies may have been overvalued and are predicting a bubble.

And we all know that bubbles burst at some point.

But others point out that the field of technology still has so much growth.

If you think about it, Google was created 19 years ago. Facebook was invented 13 years ago. The iPhone has only existed for ten years. Can you imagine what type of technology we will be using ten or even twenty years from now?

Fields like social media, e-commerce, artificial intelligence (AI), cloud computing, machine learning and big data are still being explored and developed.

We can’t predict the future, but we can use lessons from the past to make a good guess. The FAANGs may have some bite for years to come.

Do you have FAANGs?

Earning · Investing · Spending

Do You Know Your Net Worth?

Have you ever read those articles about people who have lots of investment properties? You know the ones, where the headline screams ‘How I bought $4 million worth of property in 2 years’ or something equally click-baity.

The focus of these types of articles is usually the asset value (the value of the houses) rather than the investor’s net worth.

They may have $4 million worth of property, but often they also have $3.8 million in debt. If they had to sell all that property tomorrow, they would be left with $200,000 – less once you include selling costs.

This difference between the value of their assets and the cost of their debt is their net worth.

Net worth

How to Calculate Your Net Worth

There is nothing complicated about calculating your net worth — it’s a simple equation. You add up your assets and subtract your liabilities (your debts).

Money Smart has a great net worth calculator to make it really simple for you.

What Does My Net Worth Mean?

If the figure is negative, it means you owe more than you own. If the number is positive, you own more than you owe.

Why Your Net Worth is Important

Focusing on the value of assets is not an accurate measure of wealth. The true measure of your wealth is your net worth.

Many people never bother to calculate their net worth, but it is important because it allows you to measure your financial progress from one month or year to the next. If your net worth grows over time, it shows you are moving forward financially. If it is declining, you have some work to do.

How Do I Improve My Net Worth?

Calculating your net worth can be an intimidating experience, particularly if the net worth number is either low or negative. But net worth is simply a number that exists today, and you can change it in the future.

In fact, the whole idea of calculating your net worth is to establish a baseline from which you can improve your financial position.

There are two ways to improve your net worth:

  1. Increase your assets, and/or
  2. Decrease your debts

You can do this in any combination you choose — building up your assets while keeping your debts level, paying down your debts while keeping your assets level, or a combination of both.

Always remember: your plans for your net worth are more important than where your net worth is at right now.

Do you know your net worth?

Her Money Matters tips:

  1. Knowledge is power. Calculate your net worth using the Money Smart net worth calculator Make a note of your net worth, as at October 2017.
  2. If you have significant liabilities, get laser-focused on reducing them.
  3. In April 2018 (six months from now) we are going to do this again to see how your net worth has improved.  

Her Money Matters Fundamentals: What are Shares?

A key reason I started Her Money Matters is to educate women on investing.

I want to explain investing concepts in simple, easy to understand language.  Today we are going to look at what shares are.

Let’s get started.

What are shares?

Imagine you are driving home after work. You are low on petrol, so you pull into Caltex to fill up your car.

You briefly consider ordering some KFC or maybe a pizza from Dominoes and a cold Coca Cola, but instead you drop into your local Coles to buy a bottle of a2 milk, an Ingham’s roast chicken and some Bega cheese. Then you drop into Pet Barn to buy a new toy for your pet.

Once you get home, you settle down with a glass of Wolf Blass shiraz and jump online to check your bank balance with ANZ bank, but end up being distracted on carsales.com.au searching for your dream car and then on Flight Centre’s website search for your dream holiday.

You need a new TV so you look online to see whether Harvey Norman, JB Hifi or Kogan.com have the best deal.

What do all of these products have in common? The companies that produce them are all listed on the Australian Stock Exchange. And this means that you can buy shares in them.

Shares are sometimes called equities, securities or stocks, but I prefer to call them shares – because you are buying a share in that company.

Even though it may only be a small share, when you buy shares in a company, you are buying a stake in that business and the opportunity to make a profit when the company does well.

You become a shareholder in that company.

Okay, that makes sense, but how do you make a profit from shares?

When you buy an investment property, you can make a profit two ways – from the capital growth (how much the property increases in value over time) and/or the rent you receive from the property.

Shares are the same – there are two ways you can make a profit.

  1. Instead of getting rent, you receive dividends. Dividends are a payment from the company you have invested in. When a company makes a profit, it may choose to distribute a portion to its shareholders through dividend payments. Not all companies pay dividends nor are they required to. If a company does decide to pay a dividend, they will typically make a public announcement the size of the dividend so you know how much you will receive.
  2. Just like a house, shares can rise in value over time. You may be able to sell them for more than you bought them, with the difference in those prices known as your capital growth. For example, if you had bought 20 shares in Flight Centre this time last year, you would have paid $687.80, but today they are worth $929.20. This increase in value is called capital growth.

As a rule, the larger, well-established companies (think big banks, insurance providers, supermarkets and telecommunications) are generally more likely to pay dividends than smaller, newer companies.

You also need to remember that just like share price growth, past dividend payments are no guarantee of future ones.

Hmm, this all sounds a bit risky to me…

All investing is a trade-off between risk and reward.

Buying shares has historically given a better chance of making your money grow over a long period than other investments, but with that potential higher return comes a higher risk. Shares are considered to be the most risky of the asset classes.

If you want risk-free or very low risk investing, you should put your money into a bank account. But your returns (particularly with the record low interest rates) will also be low.

Let’s look at what you would have earned if you had invested $1,000 this time last year.

Initial investment (as at 24 October 2016)

Investment vehicle Value one year later (as at 24 October 2017)


$1,000 High interest savings account at 2.60% for one year $1,014 $14
$1,000 Shares in the ASX $1,242 $242

As you can see, shares have provided a higher profit over the last year.

You do need to remember that the price of shares can fall as well as rise, which means you could lose money especially in the short term. The price of shares can go up and down each day – this is called volatility.

But if you are a longer term investor, and you hold your shares for a number of years, the market should continue to trend up.

But what if the share market crashes?

It will.

The share market will crash or correct at some point. But then it recovers and continues the upwards trend.

You need to think about this as an investment over the longer term. Any crashes or corrections will even out over time.


But I am not an investing expert. I have never done this before and I’m not sure I would be good at it.

That’s okay.

You weren’t an expert the first time you rode a bike or drove a car either. But you had to start somewhere and you learnt over time.

Even just reading this post is increasing your investment knowledge.

I have two pieces of good news for you.

First up, small investors (like you!) have an advantage over professional money managers. Small investors invest in companies they believe in and deal with every day.

I did this with The a2 Milk Company earlier this year. I found a2 milk as it made me feel less bloated that normal milk.  I became interested in the company and read more about their history and their research in developing the milk.

In total, I have bought 415 shares in a2 milk which cost me $1,601.50 (including purchase fees).

As of today, these 415 shares are worth $3,050.25.

There is no fancy investment technique. I just bought shares in a company whose product I believed in.

And the second bit of good news?

Research shows that women tend to make better investors than men. We are more likely to hold shares over the longer term, and we make less trades. We also save more before investing. Which brings me to my last point.

Under no circumstances should you consider investing in shares until you have:

  1. Paid off your bad debt (such as your store or credit cards, and your car loan) AND
  2. Saved three months’ worth of your salary in savings as your Safety Net.