Welcome to How Do They Afford That?

The podcast that peaks into the financial lives of everyday Australians.

I'm Michael Thompson.

I'm an author and the co host of the business news podcast Fear and Greed.

As always, I'm with Canna Campbell, financial plan app and founder of Sugar Mummer TV, which is the financial literacy platform that is on Instagram, YouTube, TikTok, podcasts, books, preynote, speeches, courses, courses.

Did you how to do a budget?

Just busted that one.

Now just keep adding to the list my money mindset.

It'll end up taking the entire show just to go through your credentials.

Hello, Canna, good morning.

So it is a new year.

Are you feeling fresh?

I am actually are you feeling motivated?

I'm always motivated, but I'm at least twenty percent more motivated now, good than I was at any other time for the year.

So let's look at goals, because now is the time to set financial goals.

Right.

We've got New years resolutions, a new approach to everything, to kind of fitness to work.

If you're going to make a change, now is the time that you're thinking about it.

Right.

Money, money, money, money.

This is the time to think about what you're going to do for money for the year ahead.

Let's make a list.

This is our first list of the new year.

I want please six financial goals for twenty twenty six.

Do you have six?

Yes?

Because in the past I've asked you for six and you're like, oh, I've actually done fourteen.

No, I say ten because I'm a bit OCD the number ten.

But that six is okay today.

Right, I'm well.

Part of my news resolutions is to try and get better management of MYOCB, to.

Be more easy going when it comes to list.

That's okay.

I don't want to say the word easy going.

You would never describe yourself as such.

Okay, I am easy home.

I'm just trying to just trying to.

Okay, that's good.

Let the OCD issue just dilute.

It, Okay.

Let's get into the goals.

These are just ideas, right, because your goals have to fit you.

They've got to be adapted to your own circumstances.

Right, They've got to light something up within.

You've got to be excited signing that you like that.

None of this like sheep mentality.

You know, goals where you think Oh, that's what.

Everyone has a goal.

I should prescribe to that.

No, like it should make you feel really good, like you want to achieve that goal.

You want that feeling in your life.

I like that because the thing is, if you're going to do this for the full year, it's got to be something that you're actually engaged with.

Something you go into value and you're going to enjoy.

Why do we why now?

I want to get into the list, but why is it?

Why is it now?

Why do we get this massive rush of enthusiasm.

Is it because we've finally through Christmas, where three New Year's we've got a little bit of time perhaps to reflect.

Is it just this is the time to do this.

It's psychological.

So you know we've got this sense of a clean slate that comes from them.

You know, early January, most of us have been able to have a few days off with the public holidays, or even maybe a week off if we're lucky.

So we've had that time, that moment, that opportunity to just press pause and actually reflect and refresh.

So naturally we are filled with optimism and the feeling that we get to have another chance to give it a good crack.

And I think it's a really powerful reset point, and I would really strike while the iron is hot.

Whilst we're feeling fabulous, we are excited, we're ready to embrace the year ahead.

Like, let's crystallize this moment.

Let's get on top of make the most of it, and set ourselves up to success with some really powerful goals that we know are going to make a massive impact and uplift in our lives.

Can you feel my motivation?

I feel like I'm a bit tony Robins speak at this time.

This is amazing And the fact that we're even doing it while seated.

If you were standing, you'd be jumping.

Oh yeah, it would be chaos in the studio right now.

Continue to inspire us, please with your first goal.

All right, it is to create a budget, a fresh new budget.

Let's start from scratch, you know, we want to just do it all from the very start.

But also get this, create a cash flow system.

The match is the budget, so it's really easy to stick to our budget.

And we love our budgets.

God, you really gave it everything I did.

But I don't think anyone can make budgets.

What happens to me as a financial planner at the beginning of the the calendar year, we are feeling amazing.

Look a lot of us have done budgets in the past.

I would say most people have had a crack at a budget.

It's very hard to stick to and often they're perhaps incomplete orally really old.

You might have done it five years ago, you might have done it a year ago, in which case things have already changed by then.

How important is it to just fully wipe it and just start fresh, to use the motivation of January to just go I'm going to do this again.

Well, if you can start again, if there's any errors or mistakes, you know, you're just getting rid of them, and you're looking at you know, a budget going forward, not looking in the rear vision mirror.

So print off those statements, jump online, open up your desktop, if your iPad, if you've got one, like, have everything in front of you so that you can see exactly what is going on today and going forward.

Yeah, and when you're doing this, were you've done episodes previously on budgeting and so it's worth probably going back and having a listen to those episodes on the budgeting Guide.

But this is not just a snapshot of your spending.

Right now, you are looking back, and you're also trying to look forward into the future, aren't you.

So you almost look back only to use it as a guide to look forward.

So you look at anniversaries, you know, important dates for example, like you know Valentine's Day, if you celebrate that, you know, putting you're calendar Mother's Day, Father's Day, things that you know that you're going to have to pay for in advance.

You know the car red.

Joe, the one that bites me every April.

I know, I'm a December end of December.

It is such an expensive.

Time that you pick, yes, the cheapest time of the year to do this.

That's great, okay, And so yeah, looking back to give you an indication of what those forward expenses are going to.

Be, so you almost have like it's like shining a torch on the next three hundred and sixty five days of the year.

It's important, though, right and correct me if I'm wrong that you are not putting this budget in place to put kind of restrictions to shackle yourself.

No, really, that this is meant to be your roadmap for a year, rather than just.

To slash exactly and it's about learning how to wrap because you have this foresight.

Now you can actually ration out your income throughout the year, knowing what expenses you've got, particularly big ones coming up, and to be aware of those traps where expenses you know you might go through a month for example, well there aren't any big expenses, and you get this false sense of security, but we have all extra cash that you wouldn't normally have.

It allows you to go, oh, hang on, I've got extra cash, but that's okay, I've got to put that aside because I've got these other expenses coming up.

It really does allow you to see into the future of what your cash flow requirements are, which means because you have this information, sticking to your budget is actually a lot easier.

So I just want to give a little peek behind the curtain here of the way we make this podcast, so that I have a I take notes while you're talking, because I always write down everything that you're saying is we're going because I find it really interesting and it helps me to kind of take it all on board.

And so I don't know what the six goals are that you're going to tell me because I find it so interesting for you to surprise me.

I have written down on my sheet goal one, goal two, goal three, goal four, golfer, and I'm going to write but the goal next to each one.

Do you want to see what all I've written down next to goal number one?

Right?

Read it aloud?

Budget and then sexy?

Is that is?

All I wrote was sexy next to the budget Because of your efforts to make budgeting sexy.

That failed dismally because you even then tried to put the same passion into cash flow, which is the least sexy topic and the least.

I think cash flow is extremely sexy.

It's sexy than budgets because without the cash flow you can't possibly stick to a budget.

Do we need to work on your twenty twenty six money mindset?

Yes, clearly we do.

Let's move on to goal number two.

Is it something about my mindset?

Well, it could be if a seventh goal here.

It's about tackling that toxic debt first, Yeah, okay, So toxic debt is the debt that obviously drains you financially and energetically.

Is the credit card after pay overdrafts, personal loans, Carl, It's that really expensive interest.

It's stressful, and it compounds against you.

And when you're looking at those big exciting goals that you think, you know what, I really want to start getting into investing, or I really want to put more money into Super, or I really want to save up and pay you know, get a deposit together for my first time or pay off my home.

It is that toxic debt that actually gets is the biggest obstacle between you and getting started with those big, exciting, sexy goals.

So it is really important that you prioritize clearing that toxic debt first before you jump in and start the investing, saving up for a first home, it's putting more money into super.

And it's not something that you're going to be able to do right now right This is just this is setting up your goals for the year or to get done as quickly as you can this year.

It's not as though we're saying get rid of your toxic debt in January.

No, it is just putting it at the top of the prior or lists so that when you do have that money coming in, or when you are working, or when you are kind of setting up a side hustle or something that you are you know, where that money needs to go.

Yep.

First you have a strategy in place, because you've got that sense of clarity that comes from having the goals and also understanding why this is so important to have this as a goal.

Okay, toxic debt first, that is goal number two.

Give us goal number.

Three having the right amount of emergency money.

Because we're not invincible.

How much is the right amount of emergency money?

Can I There is no magical formula.

I don't care who you are, what you think.

Will you say like that?

Everyone is in a different situation, with different levels of protection, with different responsibilities, and also with different different sleep sensitivities.

Isn't two months just enough?

Well?

I shared on a very special episode when we first started recording about my disastrous frugal February, where it was I think we had I think seventy thousand dollars with emergency money, which I thought as a financial planner, that was more than enough emergency money.

We blew all of that within the space of a month and we had three even four major things happened.

So we discovered we had major damage to our house that was ensurable.

Both our dogs got sick for different reasons.

And yes we had pet insurance, but we still had the excess to pay on each of those.

Then our garage door broke, which was about I think five or six thousand dollars, and then our fridge freezer also broke.

So you know, things happen at the same time.

And you know, for example, Tom and I we're both self employed, like a lot of Australians out there, small business owners.

You don't have annual leave, you don't have sick leave, you don't have long service leave to fall back on.

And yes Tom and I both have income protection as well to protect ourselves, but like my situation is very different, for example, from your situation as to what you may have as a protection in place, all the size of your mortgage or passive income that you might have coming in.

So there is like you are fooling yourself if you think it's just a magical format by all means, use it as a guide, but know that that guide is very very loose, and you don't want to find out the wrong way that it's not right for you, it's not enough.

Okay, So this actually requires you to be a bit pessimistic and really kind of look at what could go wrong in order to make sure that you can sleep well at night.

It's not about being pessimistic at all.

Sorry, no, no, I've got to shut this down like that's just like that is just ignorant, Like that's a really pathetic way of thinking about it.

And yes, I'm going to get angry at you here.

It's about being sensible and properly prepared so that if something happens, or if a couple of crappy things happen at the same time, you can stay calm, you can avoid getting in debt, and you can actually hit the ground running as soon as you possibly can.

You're not having to start over again from a scratch.

You don't get, you know, sentence into this like chaos, this despair, this complete and absolute overwhelm.

You can work with what you've got because you've done the work previously and you're not arrogant in thinking that this will never happen to you, and you know that you're protected and all this stuff.

It's about being responsible and about being wise.

And I mentioned about the sleep sensitivity, which you didn't pick on up one, by the way, but you know, people get insomnia, people have anxiety, people get stressed, it's not good for health.

Having the right amount of emergency money is a great antidote for having a good night's sleep and to feel strong and resilient, to feel safe and secure and stable.

So, no, it's not about being pessimistic at all.

Tony Robbins would never call somebody ignorant or pathetic.

No, But I just feel like it's people use that excuse of not having enough emergency money to think that they may be, you know, manifesting a disaster, you know, self prophesizing something that's bad it's going to happen to them.

Like, I just think that's a little bit pathetic, and not saying you're pathetic at all, but I just want to wake people up because I see what happens when it goes wrong, and I experience what happened when it goes wrong, and I'm a financial planner, I should not have I look back and go, why did I think that that was enough?

It wasn't enough.

All right, We're going to take a quick break.

I'm going to sulk for a couple.

Of minutes, and I'm going to have to go and apologize to Michael for getting a bit snappy.

With him, and we're going to come back and get the next three goals for the next financial year.

I reckon your goal could just.

Be to be nicer at not a goal of resolution.

Okay, all right, okay, back in a moment, Kenna.

We are talking about financial goals.

We are putting together a list of six financial goals for twenty two twenty six, and so far we have goal number one a budget, start a new budget, start fresh, just get in there and get everything nice and clean.

Toxic debt first is the second goal.

Emergency money, making sure that you have the right amount of emergency money, which was a rather touchy subject which we're not going to revisit.

I'm sorry, that's okay, it came out of a place of protection.

Apology accepted.

Okay, okay, look at that.

But how quickly we resolve things in here?

It's good, it's nice.

It feels like we could actually turn this into it like a counseling podcast.

Wouldn't that be fun?

That would be a lot of fun.

But that would mean you have to listen to my problems as well, and I have lots of issues, not money issues.

But yeah, it'd be heavy counseling session.

Well, I wasn't suggesting that we counsel each other.

I was suggesting that we have people come in and we could counsel them together.

Okay, all right.

That could also be fun.

Maybe that's I don't get to share with you.

I'm sure you will any goal number four, what is it?

All right?

Start investing because superannuation for most of us is not going to be enough.

Okay, starting investing.

This is separate to superannuation because obviously superannuation is kind of your first big investment, right, This is separate starting to build a portfolio.

So making this the year to begin, not for when you're like waiting to feel ready because that will probably never really happen, and not when you have more money, but actually prioritizing investing now.

And super obviously is essentials.

It is an investment portfolio.

It's just locked away.

But for most Australians, superannuation alone is not going to give them the retirement that they actually envision for themselves.

Yeah, and this is why having invest in an investment portfolio as well as super is a great backupt on top of the fact that you can actually access your investments.

So you might have been really savvy with money and got say seven million dollars in super and you are fifty.

You can't access that yet.

So this is why we need to have that investment portfolio as well, so perhaps you can live off that before your superinnuation is accessible.

I don't want to because I mentioned before that I don't know the goals.

I'm wary of suggesting this in case I'm going to pinch one of your goals.

Seeing a financial planner would be it.

Yeah, that's not one of your goals, there is it?

No right in that case?

Can I make this a goal for a off the back of start investing?

Yes?

Yeah, that was very responsible.

I probably should have make this.

The year that you go and see a financial planner that if you're looking to go, hey, I want to start investing, then why not do it with someone who's able to help you.

Yes, on that journey.

You can set it up, make it happen, organize the buying of the shares or you know, the ETFs or the managed funds.

It may be the risk to wonittiful.

They implement it for you, so you don't actually have to do too much other than obviously listen and understand.

And I guarantee you the thought of someone else implementing things on your behalf.

It would be music to your ears for most people, right, and that is a major major draw card.

Okay, So that is goal for a along with goal four, start investing and see a financial plan.

A goal number five what is it?

And that is to focus on one meaningful, important money goal for yourself.

So this is where you would really focus on building up a goal or deciding on a goal that keeps you up at night, you know, one that creates that tension, worry, or uncertainty in your life.

So it could be something like you're looking at me blankly, like, so this is what I'm talking about, like at the beginning of the episode, about having a meaningful goal, something that it lights you up.

So let's go to the heart of what's stressing you out because that's where you're going to have the biggest breakthrough or impact or I guess change an improvement in your overall financial well being.

Okay, So this is basically it's kind of dealer's choice.

Just go for it.

Whatever is your whatever is eating away at you.

Most pick that as this is the year that you're going to have a crack at resolving it exactly.

So if you have been stressing, for example, that you don't have enough money in superannuation, but you've been doing nothing about it, but just but it keeps you awake at night, or you feel a bit of a you know, sick to the bottom of your stomach about you know, your super and not having enough for this.

Make a goal then around that, okay, to address it, Like, go straight to whatever is creating that anxiety or that stress or that worry or that fear, you know, face it head on and build that goal around that.

Go you know what, I'm not going to let that that problem dictate how I feel about my future.

That is really I like that that this is It gives you the This goal gives you the freedom to zero in on what it's been bugging you.

And it might be the fact that you feel like you are perhaps underinsured or something.

That's another great one, that this is the year.

That you get your income protection insurance sorted, or your life insurance or any of those ones.

I like that.

I was a bit worried because you were looking at me very blankly as I started explaining this, and I'm thinking, oh, dear.

No, I was listening, going did I miss the actual goal in here, and then I realized, No, the goal is is whatever you need it to be.

Yeah, which is perfect.

Goal number six.

I have no idea where you're going with this one.

What could it be?

Really superannuation?

Yes, I should known that.

And I'm not necessarily saying you've got to be adding more to your superannuation.

Of course if you can, amazing great, Obviously see a financial planner, but just simply engage with your super.

You know, I get we're all on really tight budgets right now and there is nothing left over or this there is, it's barey anything.

But make sure you are being more in involved with your super.

Know where your superannuation is.

You know if it's appropriate to consolidate it or not, or get advice if you're not sure.

Make sure you understand what your risk profile is for your super.

Make sure your money is properly invested.

Don't just go with the default option such as a balance fund.

I mean, if you're a balanced investor, that's fine, but know you're a balanced investor in it matches.

You know, if you do a risk profile and you go wow, mutually a high growth investor and you discover your supers in a conservative option.

We need to do something about it, and you know, get that advice and you know, make sure that your money is working for you.

We've spoken so much about passive income, you know, particularly for our fire episode.

If you look at your superannuation account and you look at your statements, you will see how much passive income your superannuation portfolio has made you.

That is going to eventually be your retirement income.

So start working on your superannuation, build goals around that superannuation so that you can build up that passive income so when you do retire, there is your one hundred thousand dollars a year worth of income coming in because you had a goal around super about engaging with and making sure it's probably invested in giving it that TLC.

Yeah, and it's not hard to start, is it.

You?

Just Step one is log in, download the app for your super fund or log in online and look at it and look at your statement as well, and just start to get to know what each item.

Understand the fees you're paying or you know, making sure you're not paying things that you don't need, What are the options you can whether our investments are available, even calling up your superinneration provider and asking what general advice is available or what you know, limited advice and the fees that they charge, because a lot of it is very cost effective.

These pay.

Yeah, and as you say, there is a general advice and often that is free the basic level.

And almost every super fund as well has great information available on their website.

Yes, now where education is as big a part of what they're doing as the kind of the back end stuff trying to help people gain more knowledge about where their money is going and how to use it.

And the Money Smart website.

Yeah, money is smart.

Really, that's one of the best.

Yeah.

Okay.

The goals budget, toxic debt, emergency money, start investing, tackle the thing that's been eating away at you?

And superannuation.

Can I ask something?

Can I stop you?

I suspect not go on?

All right, it's about having systems in place for those regular financial checkups.

Like most of us set these really great, sexy, ambitious, exciting goals in January.

And you hate you use the word.

Sexy only because you did.

Oh my gosh, you did it.

At the risk of sounding like a child, you said it first.

All right, Well, my point is we set these ambitious, attractive meaningful goals at the beginning of the year, and then we don't look at them again until like maybe tax time or even sometimes come December, and you know, we've lost that momentum.

So what I recommend is having a goal to have a system in place so that it makes you accountable.

You've you've got maybe a monthly check in or a weekly check in where you sit down and go, all right, how am I tracking?

You know?

Have I stuck to my budget?

Have I got my account set up correctly to manage that budget?

Have I engaged with my super?

What have I learned about my super?

So that you are actually making progress?

You're not sort of having going out with this great intention but with no actual action.

You're actually making progress.

You're seeing results.

You're creating these shifts and these breakthroughs, and your financial life is now in future is now looking very different and much better.

Things aren't scary anymore.

You're not sleeping better.

This has been an absolute rollercoaster of an episode.

From its been a bit emotional.

From sexy budgets through to a right crank a pillar sitting over.

Here, yet I got really annoyed.

Then finishing in a really positive optimistic, motivational place, which I think is the place where we need to finish.

Yes, if anybody wants to hear more from you, potentially put themselves in the firing line of a can of Campbell Spray.

Tough love.

Is that what you call us?

Yeah?

That was tough about I was like, come on, no, like, let's step up and make ourselves accountable and don't try and create these floppy, fluffy excuses to you know, to potentially jeopardize our financial well being.

I'm said it.

I wish I hadn't got you started again.

Now I'm finishing on a downer once more.

Want a down is coming from a place of love, protection.

Love of being mean.

Where do we find you all right at sugarmom My tv on Instagram or Canna Campbell Official.

And you can hear me every day with Sean Ayle or on Fear and Greed, which is business news you can use.

Thank you very much for joining us today.

Remember to hit follow on the podcast.

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