Transcrição completa de Financial Capability Starts With Curiosity

need to know some of the basics, and that's where money school came from. 00:02:04.079 --> 00:02:06.159 So I co-founded it with my mum. 00:02:06.239 --> 00:02:08.560 Um, and so we ran it together for 10 years. 00:02:08.719 --> 00:02:09.840 Yeah, yeah, it was lots of fun. 00:02:09.919 --> 00:02:12.639 And sadly, she passed away in um 2020. 00:02:12.800 --> 00:02:14.879 But um I do carry it on in her legacy. 00:02:14.960 --> 00:02:22.400 It was lovely having her technical expertise, and she was much more into risky stuff than I was, which is pretty funny given she was 32 years older. 00:02:22.800 --> 00:02:31.759 So uh yeah, when she passed away, I had to wrap up her foreign exchange trading account, her Bitcoin and other cryptocurrency, all that other fun stuff. 00:02:31.919 --> 00:02:36.000 So we were very different in our styles, but it made for a lot of fun running it together. 00:02:36.400 --> 00:02:37.680 Oh, that's fantastic. 00:02:37.840 --> 00:02:40.960 Well, uh, you know, so tell us a little bit about what money school is. 00:02:41.039 --> 00:02:41.919 What does it do? 00:02:42.080 --> 00:02:43.199 Who does it serve? 00:02:43.520 --> 00:02:49.280 Yeah, well, when we started, it was basically to teach parents how to teach their kids the same way my mum had taught me. 00:02:49.439 --> 00:02:54.960 And after a couple of years, our most common client became a 40-year-old woman who was like, Yeah, yeah, that's lovely. 00:02:55.120 --> 00:02:57.680 Like, great for the kids, but can you just teach me? 00:02:57.840 --> 00:02:59.199 I didn't learn. 00:02:59.919 --> 00:03:10.639 Um, and so uh I had thought, you know, I'll teach the families and then the kids will learn and then the parents learn by default, but then we ended up going straight to adults, and that's where money school's mostly stayed ever since. 00:03:10.800 --> 00:03:17.520 So um we started in 2010, so it's been a while now, um, and we've taught everybody, but it's mostly uh grown-ups. 00:03:17.759 --> 00:03:34.080 And a lot of the time I'm getting hired by companies to come in and teach their cohorts of graduates or apprentices, um, or there might be specialist groups for like local government uh or local councils or schools that hire me to come in and teach financial principles. 00:03:34.319 --> 00:03:39.680 And why I'm a bit different from other people is actually my background is chemical engineering, it's not influence. 00:03:41.599 --> 00:03:43.280 Yes, totally different. 00:03:43.439 --> 00:03:45.919 Um, so we talk about, you know, nonlinear careers. 00:03:46.000 --> 00:03:47.840 I'm a pretty good example of one. 00:03:48.000 --> 00:03:53.360 Um, but because I have that engineering background, I take a very first principles approach to things. 00:03:53.599 --> 00:03:58.639 So try to break things down to very simple terms, but get people to understand the mechanics behind it. 00:03:58.800 --> 00:04:07.759 And that's become more and more important, I've realized, because so much is changing in finance and there's new products being made available, all those kinds of things. 00:04:07.919 --> 00:04:13.520 And it means that if you don't have the first principles, you can't reason through whether something is a good idea for you or not. 00:04:13.680 --> 00:04:15.840 So focusing on that has been really important. 00:04:15.919 --> 00:04:20.639 And I stick to just um three rules, six words save, buy assets, avoid bad debt. 00:04:20.720 --> 00:04:21.600 That's it. 00:04:22.000 --> 00:04:24.079 Um, make it really easy for people. 00:04:24.240 --> 00:04:28.240 Um, and I do try to avoid um jargon as much as I can. 00:04:28.399 --> 00:04:29.680 I think it's really difficult. 00:04:29.759 --> 00:04:41.040 And I noticed it with my mum being an accountant, you know, she would just use these words like forecast and you know, like acronyms that um made sense to her, but turned a lot of people off. 00:04:41.759 --> 00:04:47.360 Um so avoiding jargon's been very important to me and making sure people can understand those basics. 00:04:47.519 --> 00:04:51.600 And then finally, we've had some controversies here in Australia around financial education. 00:04:51.680 --> 00:05:02.720 Um, our biggest in-school program for 90 years was run by a bank, and it was the government bank for the first 60 years of that, and then it became a private bank. 00:05:02.879 --> 00:05:16.319 And in 2020, there was some research from our regulator that found that program had no improvement in saving behaviors, none, but did expose young children to very sophisticated marketing techniques. 00:05:16.480 --> 00:05:32.319 And so um getting people to understand the profit motives and understand where their education is coming from, because we have relied on a lot of private organizations with vested interests here in the past, um, making sure that's clear for people and they understand what that means has also been important for what I teach. 00:05:32.959 --> 00:05:36.879 So I I think, well, you said a lot there that was amazing. 00:05:36.959 --> 00:05:42.240 Um, but just that last point is understanding the bias of who's providing the education. 00:05:42.399 --> 00:06:03.120 I know in the States we have the same thing, and I know in other countries it's the same thing, is you have banks or credit card companies offering up financial literacy programs, and especially for school districts, which are always short of money, they're like, oh, we'll just go with a free program without realizing nothing is free. 00:06:03.360 --> 00:06:07.519 So I think that's a really important thing for people to talk about. 00:06:07.680 --> 00:06:13.920 The other thing that you said, and I hadn't heard it phrased this way, but I love that first principles approach. 00:06:14.079 --> 00:06:16.160 People have to understand the mechanics. 00:06:16.319 --> 00:06:21.040 Um, that's that's what I talk about is, you know, it's like a game. 00:06:21.199 --> 00:06:27.199 If you and I were going

to play chess, we'd learn how what the rules were before we started playing chess. 00:06:27.279 --> 00:06:31.839 We wouldn't just go to, you know, like a sophisticated strategy and try to replicate it. 00:06:31.920 --> 00:06:35.199 We start at the beginning, and money is like that. 00:06:35.360 --> 00:06:39.199 So I love how you're talking about that first principles approach. 00:06:39.439 --> 00:06:42.879 So, you know, let's take that just a little bit further. 00:06:43.040 --> 00:06:53.839 So, for other people who are running their own financial literacy initiatives, is how can they start to take that first principles approach and kind of make their programs a little bit less jargony? 00:06:55.040 --> 00:07:00.079 Well, this is a I guess the engineering's really helped me with this, like trying to get to the root cause. 00:07:00.319 --> 00:07:01.040 So, why? 00:07:01.199 --> 00:07:06.639 So there's a really common practice in um when you do root cause analysis, which is called the five whys. 00:07:06.800 --> 00:07:08.800 And you're just keeping asking why. 00:07:09.040 --> 00:07:09.519 Why? 00:07:09.680 --> 00:07:12.959 So uh, you know, I put money in the bank and I get paid interest. 00:07:13.120 --> 00:07:13.360 Great. 00:07:13.519 --> 00:07:14.000 Why? 00:07:14.319 --> 00:07:19.600 Oh, well, the bank wants my money because it's going to help it lend to other people to bank more money. 00:07:19.680 --> 00:07:19.839 Right. 00:07:19.920 --> 00:07:20.560 Why do they do that? 00:07:20.720 --> 00:07:25.199 And if you keep asking why, you you often get to the root cause of things. 00:07:25.360 --> 00:07:34.399 And once you understand those first principles and you communicate that this is why it's happening or give people that context, um, their understanding just accelerates, I think. 00:07:34.480 --> 00:07:36.879 It makes them um see the bigger picture. 00:07:37.040 --> 00:07:47.360 So, yeah, I would uh encourage anyone if you've got something up there, and often it's the best thing to do is put it in front of a kid, uh, you know, a teenager who'll go, but why is that? 00:07:47.519 --> 00:07:55.680 Because there'll be things that you're saying that um just make sense to you because you're a grown-up, you know, you've seen them a hundred times, or because you're familiar with the industry. 00:07:55.839 --> 00:07:59.680 Um, and if you get someone who hasn't seen it before to do that, hey, why? 00:07:59.839 --> 00:08:04.800 And you ask them to test, then you can start building down to those first principles and find out what they are. 00:08:04.959 --> 00:08:07.279 But I have that natural inquisitiveness about me. 00:08:07.360 --> 00:08:17.439 And because I'm not a financial professional and I've had to learn so much of this stuff, I spent my whole time every time I'm reading an article or learning about a topic, particularly for the first 10 years, going like, well, why is that? 00:08:17.600 --> 00:08:18.879 That doesn't make a lot of sense. 00:08:19.040 --> 00:08:21.600 Or how did that get decided? 00:08:21.759 --> 00:08:30.399 Um, and often when we talk about that uh that issue, like you say, whether you've got banks or credit card companies, the why for me is they are businesses that sell debt. 00:08:30.560 --> 00:08:31.839 That is their job. 00:08:32.080 --> 00:08:34.480 And in Australia, it's very similar with your corporation. 00:08:34.559 --> 00:08:37.519 We have the Corporations Act here, it's very similar with company law there. 00:08:37.679 --> 00:08:40.879 The job of the company directors is to make money for the shareholders. 00:08:41.039 --> 00:08:42.879 We call that shareholder primacy. 00:08:43.039 --> 00:08:49.200 And so they actually have to put the company ahead of the needs of the customers and their employees and the planet and all those things. 00:08:49.360 --> 00:08:55.840 And so, of course, those directors who and the threat if they don't do the right thing for the company is oh, we'll personally sue you. 00:08:55.919 --> 00:08:58.240 You'll lose everything, your house included. 00:08:58.559 --> 00:09:00.320 So it's pretty strong motivation. 00:09:00.480 --> 00:09:04.799 So whenever I explain that to people after going to those first principles, they go, Oh, yeah, that is a bit. 00:09:04.879 --> 00:09:05.840 Well, why do we do that? 00:09:05.919 --> 00:09:07.679 And I'm like, yeah, it's a really bad design. 00:09:07.759 --> 00:09:09.519 I'm not sure why we chose it. 00:09:10.559 --> 00:09:13.600 Um it's not what I would do. 00:09:14.639 --> 00:09:17.759 But it's yeah, one of those things. 00:09:18.799 --> 00:09:32.480 Well, I was gonna say, yeah, I I mean it is interesting how corporations are set up, but it is important for people to understand that the corporations operate for the benefit of their shareholders who are the owners of the corporation. 00:09:32.720 --> 00:09:37.840 So when you're thinking about it, they're doing what they're supposed to be doing. 00:09:38.080 --> 00:09:45.440 Um, now sometimes the way they do it, we can argue whether they're doing it ethically or morally, and that's a whole different discussion. 00:09:45.679 --> 00:10:05.200 But I think what you talk about asking why is for me, in all the work that I've done and working with uh elder fraud abuse, litigation consulting, everything that it comes down to curiosity, I think is our best defense against anything. 00:10:05.440 --> 00:10:14.240 And so when you talk about asking why, you think about little kids, and little kids are just, I mean, constant with that. 00:10:14.399 --> 00:10:14.960 Why? 00:10:15.200 --> 00:10:16.720 Why is the sky blue? 00:10:16.879 --> 00:10:19.120 Why, why am I paying for ice cream? 00:10:19.279 --> 00:10:20.960 Why can't I have more ice cream? 00:10:21.200 --> 00:10:23.279 But it's a constant series of why. 00:10:23.440 --> 00:10:28.799 But what the kids are doing is they're they're learning and they're asking all these things. 00:10:28.879 -->

00:10:38.240 And I think that's the thing is we need to encourage that curiosity that you had because you came over from not of the money world. 00:10:38.399 --> 00:10:41.840 So, you know, your mom was deep in the money world, I'm deep in the money world. 00:10:41.919 --> 00:10:52.960 So I get caught up in the jargon too, is to remind ourselves to ask why, maybe to have a childlike mind, to not act like a kid, but you know. 00:10:53.440 --> 00:10:54.720 I love that um line though. 00:10:54.799 --> 00:10:57.039 Curiosity is your best defense, it's such a good one. 00:10:57.200 --> 00:10:58.000 You're exactly right. 00:10:58.159 --> 00:10:58.639 I love that. 00:10:59.600 --> 00:11:12.080 Well, I I've really been um thinking a lot about that is because scams are getting so sophisticated and fraud, and you can't keep on top of them. 00:11:12.559 --> 00:11:14.080 Nobody can keep on top of them. 00:11:14.240 --> 00:11:27.279 So the only way you can bust these things open is to ask a lot of questions because scammers are not open to answering questions or to providing answers to your satisfaction. 00:11:27.360 --> 00:11:29.600 You know, that's not what they're good at. 00:11:29.919 --> 00:11:31.200 So they'll move on. 00:11:31.279 --> 00:11:38.559 So yeah, I I love that, but I think that gets back to that first principles is you know, you you talked about your mom with Bitcoin. 00:11:38.720 --> 00:11:42.720 That was a sophisticated asset, but she understood it. 00:11:43.279 --> 00:11:45.919 She had a financial background, she understood it. 00:11:46.000 --> 00:11:49.679 But for most people, the first it's not a first principles thing. 00:11:49.919 --> 00:11:53.360 First principles thing would be what, opening a savings account? 00:11:54.080 --> 00:11:54.639 Yeah, exactly. 00:11:57.039 --> 00:11:58.879 Yeah, and I think that Bitcoin's really interesting. 00:11:59.200 --> 00:12:03.120 Whenever I talk to people about crypto, I'm like, well, let's talk about where the blockchain technology came from. 00:12:03.200 --> 00:12:09.360 It's actually invented in the early 90s for shopping, and all it does is prove that something happened at a particular date in time. 00:12:09.519 --> 00:12:17.600 When they go, oh, okay, you know, they understand the underlying technology, then they go, ah, and then when you say, well, this is the block bit, this is the chain bit, this is how they work together. 00:12:17.679 --> 00:12:19.679 Um, and then people go, oh yeah. 00:12:19.840 --> 00:12:23.919 And it it is that whole curiosity, understanding the building blocks makes a huge difference. 00:12:24.000 --> 00:12:26.159 And yeah, I think that's a great defense against the scammers. 00:12:26.320 --> 00:12:32.159 I certainly love those comedy sketches when people push them too far and they give up with all their questions. 00:12:32.720 --> 00:12:42.240 Yeah, although I would I I would caution people to be very careful in messing with scammers, is unfortunately a lot of them are

run by organized criminal gangs. 00:12:42.399 --> 00:12:46.879 And as much fun as some of those videos can be to watch, is there's also danger. 00:12:46.960 --> 00:12:48.960 So sorry, I'm just doing a little public service there. 00:12:49.120 --> 00:12:50.000 Oh no, you've got to do it. 00:12:50.080 --> 00:12:51.120 It's really important for people to know. 00:12:51.279 --> 00:12:52.960 But that's that point about that curiosity. 00:12:53.120 --> 00:12:58.720 Like uh, you've thought deeply about this and being able to communicate that to people in a really simple, hey, here's the danger. 00:12:58.879 --> 00:13:00.480 I guess that's the the whole job, right? 00:13:00.559 --> 00:13:02.879 When you're teaching people about money, it's sort of what we all do. 00:13:03.039 --> 00:13:04.159 I love that you you get to do that. 00:13:04.240 --> 00:13:07.840 And dropping those little gems, someone will listen to this and hear it and go, Oh, yeah, that's right. 00:13:07.919 --> 00:13:08.559 Tony mentioned that. 00:13:08.639 --> 00:13:09.919 I better be careful. 00:13:10.399 --> 00:13:15.840 Yeah, well, and with what you're mentioning, uh, the six words, save by assets, avoid bad debts. 00:13:16.000 --> 00:13:24.240 I mean, if you can do those three things, you're a good part of the way there to having a solid financial life. 00:13:24.399 --> 00:13:28.320 I mean, so it it's simple and it's hard at the same time. 00:13:28.480 --> 00:13:36.240 But for people listening, is if you do feel overwhelmed by money, and I know a lot of us do feel overwhelmed by money, that's that's it. 00:13:36.480 --> 00:13:40.960 Come back down to your first principles, which is what first principles are about. 00:13:41.120 --> 00:13:44.480 So let's talk about your white paper, FinCap for All. 00:13:45.039 --> 00:13:47.120 What is it about? 00:13:47.360 --> 00:13:49.759 What surprised you the most with it? 00:13:50.080 --> 00:13:57.440 Well, the surprising bit, I guess, over 16 years, and I use this phrase, I hope there's no vegetarians listening, but maybe they eat the sausages anyway. 00:13:57.519 --> 00:13:59.360 You know that phrase, how the sausage is made? 00:13:59.519 --> 00:14:03.679 Once you see how the sausage is made, you're like, oh wow, I don't know if I can eat that sausage. 00:14:03.840 --> 00:14:06.000 Um, it's it's a bit like that. 00:14:06.159 --> 00:14:09.840 Over 16 years, I've learned so much about financial education. 00:14:09.919 --> 00:14:16.320 Like before I started my business, it wasn't in the curriculum in Australia, and I had to explain what a financial educator was in detail. 00:14:16.480 --> 00:14:17.519 Now people get it. 00:14:17.679 --> 00:14:19.759 They're like, oh yeah, I know what that is. 00:14:19.919 --> 00:14:27.600 Um, but over that time I've learned quite a few interesting things about um how financial education and capability that comes out of financial education. 00:14:27.679 --> 00:14:34.000 That's why we've called it FinCAP, it's about

financial capabilities, about the I know is not enough, I need to do the things I know. 00:14:34.399 --> 00:14:38.559 Um and it's kind of there's some gaps that are terrifying for me. 00:14:38.799 --> 00:14:45.200 Um, and so in Australia, we have this situation where we have legislation that covers the one-on-one interactions for people who are really distressed. 00:14:45.360 --> 00:14:48.480 So if they're struggling with debt, they can't make ends meet, that kind of stuff. 00:14:48.559 --> 00:14:50.559 And that's called financial counseling in Australia. 00:14:50.799 --> 00:14:54.639 Heavily regulated, it's in the not-for-profit sector, and we can't charge for it. 00:14:54.720 --> 00:14:56.159 It's a free service. 00:14:56.240 --> 00:14:59.600 Um, they are our most valuable players in Australia, they're amazing. 00:14:59.840 --> 00:15:02.320 And then at the other end of the spectrum, we've got financial advice. 00:15:02.480 --> 00:15:03.519 Most people are familiar with that. 00:15:03.600 --> 00:15:08.399 It's that one-on-one, sit down, tell me what to do, how much do I need for retirement, where should I put my money? 00:15:08.559 --> 00:15:09.279 Kind of stuff. 00:15:09.519 --> 00:15:18.960 And the cost of that has gotten higher and higher in Australia because we had something called the Banking Royal Commission in 2017, and it found widespread misconduct. 00:15:19.039 --> 00:15:21.360 Um, and basically it was just poor incentives. 00:15:21.440 --> 00:15:22.080 It was systemic. 00:15:22.240 --> 00:15:25.120 It wasn't individuals, it was that bad design again. 00:15:25.279 --> 00:15:32.720 Um, and so the cost of uh advice is an average of$4,800 a year in Australia plus$3,000 in the first year. 00:15:32.799 --> 00:15:34.399 So it's very expensive. 00:15:34.639 --> 00:15:44.080 In between, the gap is plugged by money coaches, so people who are not giving advice but working one-on-one, and financial educators like us, where we're um not giving advice at all. 00:15:44.159 --> 00:15:46.000 We're just telling people how things work. 00:15:46.240 --> 00:15:49.600 But financial educator, a money coach, completely made-up job title. 00:15:49.679 --> 00:15:50.480 Anyone can do it. 00:15:50.639 --> 00:15:53.759 Like an engineer can turn around and call themselves a financial educator here. 00:15:54.000 --> 00:15:56.320 It's not a not a regulated area. 00:15:56.480 --> 00:15:58.559 There's no set training for it. 00:15:58.720 --> 00:15:59.840 You have to learn as you go. 00:15:59.919 --> 00:16:02.559 You just have to make sure you don't cross the regulator's line. 00:16:02.720 --> 00:16:10.080 And the regulator's line is so long as you're just giving information and the sort of rule of thumb is so long as it's balanced, fair, and factual. 00:16:10.240 --> 00:16:12.639 So you always have to talk about the pros and the cons. 00:16:12.879 --> 00:16:23.279 Um, you have to talk about how the thing works, and it has to not be uh intended to make a people make a

specific decision, you know, pick a particular bank or a retirement fund, things like that. 00:16:23.519 --> 00:16:25.759 Then you don't have to have a license, but that's it. 00:16:25.919 --> 00:16:31.759 And so what I'm finding as I've been here for so long now, and certainly this started back in 2019. 00:16:32.000 --> 00:16:36.159 So you have been thinking about the paper for seven years, so it's taken a while. 00:16:36.399 --> 00:16:40.480 Um, but it's uh it's that a lot of people don't know that. 00:16:40.559 --> 00:16:49.440 They have really good intentions, they want to join us, they want to help, but they don't know how to do it without creating risk for the students, you know, by accidentally crossing boundaries. 00:16:49.519 --> 00:16:50.960 I know so many people who they've done it this way. 00:16:51.039 --> 00:16:52.480 I've put everything in my retirement fund, it's great. 00:16:52.559 --> 00:16:54.320 I'm like, yeah, but that's not universally good. 00:16:54.480 --> 00:16:55.519 It's not for everybody. 00:16:55.679 --> 00:16:57.360 You have to teach people pros and cons. 00:16:57.519 --> 00:17:03.919 So they don't even realize that what they're doing would get them in trouble with the regulator, but also be bad for the students, which is the important bit. 00:17:04.079 --> 00:17:09.200 So writing that paper was about bringing that to light because we hear a lot about the school system in Australia. 00:17:09.279 --> 00:17:20.000 There's a heavy focus on the curriculum because we put it in the curriculum in 2011, and then our financial literacy scores went backwards on the international PISA test uh seven years later. 00:17:20.079 --> 00:17:21.519 We were six months less financially literate. 00:17:21.599 --> 00:17:22.880 So everyone's like, oh, what are we doing? 00:17:23.119 --> 00:17:26.480 We stopped doing the testing and we've just opted out of doing the next round of testing. 00:17:26.559 --> 00:17:27.440 It's very embarrassing. 00:17:27.519 --> 00:17:29.440 But the focus is heavily on school, is my point. 00:17:29.519 --> 00:17:31.279 We focus a lot on that, which is good. 00:17:31.440 --> 00:17:38.640 We need to, but there's 22 million adults in Australia out of our 28 million people that didn't learn this in school and it wasn't taught effectively. 00:17:38.720 --> 00:17:44.559 Um, and they need help, and we need to do it in a high-quality way that's going to make sure that they get a good result. 00:17:44.720 --> 00:17:47.680 So that's what the paper was about, trying to bring that section to light. 00:17:47.759 --> 00:17:49.599 Um, and working with my co-authors, Dr. 00:17:49.680 --> 00:17:54.720 Tracy West and Jenny Rolf Wallace, um, both of whom have been involved with the Myers for a long time. 00:17:54.880 --> 00:18:04.319 Jenny won a Best Influencer one year, and Tracy was leading the extra program, um, Talk Money, which was the school program, which got, I think, a recommendation or a runner-up one year. 00:18:04.400

--> 00:18:07.359 Um, but the three of us have been talking since 2019 about this. 00:18:07.440 --> 00:18:08.640 And this year I was like, that's it. 00:18:08.720 --> 00:18:10.319 We're writing it down and we're sharing it. 00:18:10.400 --> 00:18:12.559 Because it's getting a bit of momentum in Australia at the moment. 00:18:12.720 --> 00:18:20.400 We've had a big research report about financial well-being released from RMIT, one of our universities, and Extra Foundation. 00:18:20.559 --> 00:18:26.799 And so we wanted to make sure this was in the discussion and that we focus on adults too, not just kids. 00:18:27.599 --> 00:18:28.319 Fantastic. 00:18:28.559 --> 00:18:33.519 Well, and unfortunately, financial literacy in the US has declined over the last year. 00:18:33.680 --> 00:18:40.720 The most recent study that came out of um Stanford also showed that financial literacy is declining in the US. 00:18:40.880 --> 00:18:47.279 And for people watching and listening, is right now uh Tracy West and I are trying to work out a date. 00:18:47.359 --> 00:18:54.319 So you'll probably have be hearing the conversation with her on the podcast coming up soon. 00:18:54.400 --> 00:18:56.960 If I can just finish that sentence, it will be okay. 00:18:57.279 --> 00:19:01.359 So I'm looking forward to that conversation as well. 00:19:01.519 --> 00:19:09.680 So, you know, as we talk about it, where do you see that adults need, you know, like some basic support with money decisions? 00:19:09.920 --> 00:19:12.000 Um it's a fascinating thing. 00:19:12.079 --> 00:19:27.039 You know, the piece of research that most uh was formative for me in this space was the stuff out of Princeton University about poverty brain in 2013, which showed that when you're under financial stress, um, you're making worse decisions because your brain space is being chewed up by money worries. 00:19:27.119 --> 00:19:33.839 And it's the same effect as going 24 hours without sleep or being over the legal driving limit for alcohol. 00:19:33.920 --> 00:19:37.759 So you you're actually impaired when you're trying to make decisions when you're stressed. 00:19:38.000 --> 00:19:45.759 What I think um has been a big learning for me as I've been teaching people is it's really unfair to ask anyone to save themselves when they're financially stressed. 00:19:45.920 --> 00:19:52.000 We need a lot of systemic change in Australia so that people can have a chance of making good decisions. 00:19:52.160 --> 00:19:59.200 So I think I'm a financial educator and I'm saying the first stop is probably not financial education for a lot of those people. 00:19:59.359 --> 00:20:08.240 So the the systemic stuff that needs to be fixed, closing um any of those gaps that are making it hard for people to make good choices is like kind of the underlying, we need to focus on that first. 00:20:08.480 --> 00:20:14.480 But once you've got, you know, I talk about the, you know, you don't uh teach someone who's drowning to swim, you save them first. 00:20:14.880 --> 00:20:18.480 Once we've saved them and we've got them on the shore and they're safe and they're good. 00:20:18.640 --> 00:20:28.000 Um, the basic stuff about understanding those um opportunities that exist for people that aren't immediately obvious is really important. 00:20:28.160 --> 00:20:34.079 And what I mean by that is there's some fundamental stuff you can do with money that is automated. 00:20:34.559 --> 00:20:37.440 It's not like diet and exercise, you know. 00:20:37.519 --> 00:20:41.599 Like if I want to be healthy, I've got to eat well most of the time, I've got to exercise most days. 00:20:41.759 --> 00:20:44.400 But with money, so much can be set up automatically these days. 00:20:44.559 --> 00:20:46.319 For example, your saving system. 00:20:46.720 --> 00:20:50.480 And when you automate something, you're then not fighting your biology. 00:20:50.960 --> 00:20:54.400 You know, like our brains are constantly, if they see money, they're yelling at us. 00:20:54.480 --> 00:21:00.319 Some of us have had more discipline, some of us are less prone to it, but your brain is literally yelling, spend me, every time it sees money. 00:21:00.400 --> 00:21:10.640 So if you can set up your savings system so that you don't see that money and it's automatic and you save first instead of saving what's left over, then you've got a much better chance of hitting a savings goal. 00:21:10.799 --> 00:21:13.359 So things like that aren't necessarily intuitive. 00:21:13.519 --> 00:21:16.960 And we don't necessarily think, oh, well, I need to set up my system this way. 00:21:17.039 --> 00:21:21.359 And a lot of the tendency is to talk about discipline in personal finance. 00:21:21.440 --> 00:21:23.440 I think the automation is a big part of it. 00:21:23.519 --> 00:21:38.079 If you can automate payments to your retirement fund, if you can automate payments to your savings, and then even you can automate so much investing these days because the cost of, for example, here at buying shares has come down so much, because so much of it's online, you don't have to call a broker anymore on the phone. 00:21:38.160 --> 00:21:40.480 It's not a couple hundred bucks, you know, it's a few bucks. 00:21:40.559 --> 00:21:42.240 Um, even that stuff can be automated. 00:21:42.400 --> 00:21:55.519 And the more you can do that's going to set your system up and make it hard to undo that and sending you towards the direction you want, the better chance you have of having good outcomes without having to fight your your innate desires. 00:21:56.000 --> 00:21:59.359 Um, so I think that's something that people really need to be familiar with. 00:21:59.519 --> 00:22:05.039 Um, The other thing I'm talking a lot more about now at the moment in Australia, it's a big deal is um property stuff. 00:22:05.200 --> 00:22:06.720 Housing affordability is a problem here. 00:22:06.799 --> 00:22:08.319 I know it is in America as well. 00:22:08.559 --> 00:22:11.440

Pretty much everywhere is having problems with housing affordability. 00:22:11.599 --> 00:22:14.079 Um, and we've got a really interesting um problem. 00:22:14.240 --> 00:22:21.920 I haven't looked at the stats for America, but in Australia, it's predicted that one in 11 properties will be uninsurable by 2030. 00:22:22.000 --> 00:22:23.680 That's only four years away. 00:22:23.759 --> 00:22:25.680 Um, and that's a lot to do with climate risk. 00:22:25.759 --> 00:22:28.319 So that's really changed how people want to buy property. 00:22:28.400 --> 00:22:32.079 So there's things like that that I think get hidden and they need the new. 00:22:32.160 --> 00:22:36.240 This is not a problem that even I had to think about, you know, five years ago. 00:22:36.319 --> 00:22:39.680 Um, so there's stuff like that that's coming that I think people have to be on top of. 00:22:39.839 --> 00:22:43.920 Uh so that's making it a little bit more urgent getting some of this learning out there. 00:22:45.119 --> 00:22:54.240 Well, I I I think, you know, uh what you're talking about is one is you know, automating what you can. 00:22:54.319 --> 00:23:00.960 And I think it's very important as you talk about is the order of things that you do. 00:23:01.440 --> 00:23:06.720 Is that normally a lot, you know, we think we'll just save whatever's left over at the end of the month. 00:23:06.960 --> 00:23:11.279 But all you're doing is you're just reordering saving first. 00:23:11.599 --> 00:23:21.359 And the advantage of that is that you can then spend whatever's left over without having to worry about it because you've already taken care of your savings. 00:23:21.519 --> 00:23:23.440 So it's a brilliant advice. 00:23:23.599 --> 00:23:27.119 And the other thing about the insurance, this is a huge issue. 00:23:27.359 --> 00:23:29.920 Um, in the US, it's exactly the same. 00:23:30.160 --> 00:23:32.079 It's the same all over the world. 00:23:32.319 --> 00:23:38.400 And the problem is you know, I'll just say this for people who've heard some of my episodes on insurance. 00:23:38.559 --> 00:23:41.119 Insurance companies pull risk. 00:23:41.359 --> 00:23:46.160 And insurance companies have to pay out less than they take in in premiums. 00:23:46.400 --> 00:23:52.000 Insurance companies cannot pay out more than they take in premiums, otherwise, they go bankrupt. 00:23:52.240 --> 00:23:58.079 And so what's happening is you can argue all you want if climate change is real or not. 00:23:58.319 --> 00:24:05.839 But if you want to find out the answer from the people who are putting up the money, insurance companies believe in climate change. 00:24:06.000 --> 00:24:08.559 And they are going to charge you appropriately for you. 00:24:08.720 --> 00:24:22.160 And what you're talking about, that's something you and I definitely cannot handle during this podcast episode, is what's going to happen to uh insurance companies because they are really having these conversations. 00:24:22.319 --> 00:24:26.880 It's like, well, we can't afford to provide insurance for property. 00:24:26.960 --> 00:24:34.960 We can't afford to insure against you know climate risks because they're just not set up for that. 00:24:35.039 --> 00:24:36.079 They can't price it. 00:24:36.319 --> 00:24:42.079 So I think that's a brilliant point and something to focus on for financial capability. 00:24:42.720 --> 00:24:46.400 Yeah, certainly taking my attention for the last uh probably 18 months. 00:24:46.559 --> 00:24:48.559 But I think that's again that first principles thing. 00:24:48.720 --> 00:24:50.880 People, when I talk to them about it, and they're like, well, why does that matter? 00:24:50.960 --> 00:24:56.960 I'm like, well, if you can't get insurance, then you have to save hundreds of thousands of dollars and have it sitting there in case your house gets knocked over. 00:24:57.200 --> 00:25:01.279 And people can't buy your house because getting a mortgage requires insurance. 00:25:01.440 --> 00:25:03.200 So you can only sell to people who have cash. 00:25:03.279 --> 00:25:04.400 And they go, oh, yeah. 00:25:04.480 --> 00:25:08.640 So it's that first principle is understanding the flow-on effects and what it means for sleeping well. 00:25:08.799 --> 00:25:10.640 I often talk about the sleep well test with money. 00:25:10.720 --> 00:25:14.400 You know, it doesn't matter what the mathematically right answer is, you want to sleep well. 00:25:14.559 --> 00:25:17.599 And I personally would not sleep terribly well if I couldn't get insurance for my house. 00:25:17.680 --> 00:25:22.160 So that's why it's uh it can be a big deal, I think, in personal finance sense. 00:25:23.519 --> 00:25:24.240 I love that. 00:25:24.720 --> 00:25:26.160 This help you sleep well. 00:25:26.640 --> 00:25:27.200 I love that. 00:25:27.359 --> 00:25:35.920 And I do want to walk back to one thing because I forgot, uh, because this is highly important, what you said about when you're under financial stress, you make poor decisions. 00:25:36.160 --> 00:25:42.400 That's also um Julia Chin, who you may know some of the people who watch and listen. 00:25:42.480 --> 00:25:44.240 Uh, Julia's been on the podcast. 00:25:44.319 --> 00:25:46.720 She's coming on again to have this conversation. 00:25:46.960 --> 00:25:52.960 Is when you're struggling with poverty, is you're more likely to become a victim of scams because you're desperate. 00:25:53.039 --> 00:26:02.960 It's not because you're making necessarily bad decisions, but what it's but it's what you're talking about is that you're under stress when you're in poverty. 00:26:03.039 --> 00:26:04.960 You're living paycheck to paycheck. 00:26:05.119 --> 00:26:10.880 So you're more desperate and you tend to take chances that you wouldn't normally take. 00:26:10.960 --> 00:26:13.359 So all these things come together. 00:26:13.599 --> 00:26:16.160 So yeah, and it makes it complicated, right? 00:26:16.240 --> 00:26:17.759 It's getting worse and worse

for people, I think. 00:26:17.839 --> 00:26:25.680 There's so many different things coming together, and that is making it harder for people, I think, to uh even focus sometime on their finances. 00:26:25.759 --> 00:26:27.599 You know, they're like, I'm too busy just getting through. 00:26:27.680 --> 00:26:30.400 I've just got to work out, you know, how to feed my family. 00:26:30.559 --> 00:26:32.319 I can't think about saving right now. 00:26:32.480 --> 00:26:41.759 So yeah, it does make it harder, I think, for people the way that the uh the current economic situation is and the complexity, like you say, um, with the with the scams and how sophisticated they're getting. 00:26:41.839 --> 00:26:46.799 It's uh it's a very big ask to tell people, well, you need to look after yourself, buy beware. 00:26:46.960 --> 00:26:49.039 That's why the systemic change part is so important. 00:26:49.119 --> 00:26:51.279 We've got to protect people in those situations. 00:26:52.160 --> 00:26:53.359 Definitely, definitely. 00:26:53.519 --> 00:27:02.079 And you know, that's that's what it comes down to is like that again, we can't stress the first principles enough, is that you come back to that. 00:27:02.240 --> 00:27:05.839 If you don't understand something, then you shouldn't be doing it. 00:27:06.000 --> 00:27:08.799 And money is one of the few areas where we do that. 00:27:08.960 --> 00:27:18.480 If our doctor recommended something and we didn't understand what they were doing, we probably wouldn't let the doctor do that operation or whatever it was. 00:27:18.640 --> 00:27:25.759 I mean, granted, we're not going to understand how the operation is done or the mechanics, but we're gonna understand the why. 00:27:26.000 --> 00:27:32.480 You know, we we challenge our doctors before they do something with our bodies, but with our money, we're like, eh, a lot of times. 00:27:32.799 --> 00:27:36.640 So, you know, you need to take that into account. 00:27:36.799 --> 00:27:40.720 So, Lacey, to close out, I have what's called the get ready hot take trio. 00:27:40.960 --> 00:27:44.160 These are three quick questions I ask all my guests. 00:27:44.400 --> 00:27:51.359 The first one is what's one myth about financial education or capability that you would like to break? 00:27:53.759 --> 00:27:57.599 This is people who are thinking um I'm not capable. 00:27:57.839 --> 00:28:01.039 I really um want everyone to understand it's not about the maths. 00:28:01.200 --> 00:28:05.119 I still see people who think being financially capable means you have to be good at maths. 00:28:05.359 --> 00:28:11.119 If you got through the maths you had to do in school when you're about 10 years old, you can do everything you need to do with finance. 00:28:11.200 --> 00:28:12.960 So don't think it's about the maths. 00:28:13.200 --> 00:28:16.000 Focus on the values and behaviors is much more important. 00:28:17.119 --> 00:28:26.240 I love that is anybody can do money and um yeah, listen to the show because I have all kinds of guests on, like Lacey, who'll give you great tips. 00:28:26.559 --> 00:28:29.119 So let's get out the timing machine for a minute. 00:28:29.279 --> 00:28:35.519 If you can go back in time, knowing what you know now about money, what advice would you give your younger self? 00:28:36.480 --> 00:28:44.000 I think the big one is um mistakes are actually useful and often worth whatever you lost or it cost you. 00:28:44.079 --> 00:28:51.680 Now, maybe not for scams, but certainly when I've made financial decisions that were suboptimal, we'll call them. 00:28:52.240 --> 00:28:59.680 Um and so I've lost money or it's cost me money, the lesson I learned was so powerful out of that that I've never had that problem again. 00:28:59.839 --> 00:29:00.640 I've really learned from it. 00:29:00.720 --> 00:29:05.359 So although it feels expensive at the time, I'd actually say mistakes are a pretty cheap lesson. 00:29:05.440 --> 00:29:09.519 And that's why when I'm talking to parents, I do like to encourage them to let their kids make mistakes. 00:29:09.599 --> 00:29:12.319 Because at some of us, that's the best way we learn. 00:29:13.279 --> 00:29:14.559 Well, it's true. 00:29:14.640 --> 00:29:19.519 If you're not making mistakes, you really aren't progressing because you're playing it too careful. 00:29:19.680 --> 00:29:21.599 And we all make mistakes. 00:29:21.759 --> 00:29:27.359 Is I'm thinking actually adding that as a question for every guest is what's your biggest money mistake? 00:29:27.519 --> 00:29:29.599 I won't spring that one on you, but I think that would be a good thing. 00:29:30.000 --> 00:29:32.079 I've got a long list when you're ready for that one. 00:29:33.200 --> 00:29:38.480 Um so the last question is what's your number one tip uh to change the way we think about money? 00:29:38.960 --> 00:29:43.039 I think the most powerful connection for me came about when I connected money to time. 00:29:43.359 --> 00:29:45.119 So you can always get more money. 00:29:45.359 --> 00:29:52.559 It doesn't matter how much money you've got, you're not gonna get the time back that you have just spent listening to this show or preparing for an interview or doing whatever you're doing. 00:29:52.720 --> 00:29:55.759 Um, time's our most precious non-renewable resource. 00:29:55.839 --> 00:30:00.720 And you're going to exchange a lot of your time to earn money so that you can get ahead. 00:30:00.880 --> 00:30:03.920 So every time you waste that money, it's like you wasted that time. 00:30:04.160 --> 00:30:06.720 And I certainly, when I was younger, thought I had forever. 00:30:06.799 --> 00:30:09.599 So it's harder to understand this when you're younger, I think. 00:30:10.160 --> 00:30:15.839 Um but as I get older, I everything I see with my money is how many units of time did I have to spend to earn that? 00:30:16.000 --> 00:30:16.559 What's it worth? 00:30:16.640 --> 00:30:19.759 And using my money to create what I think of as more

time for me. 00:30:19.839 --> 00:30:22.960 So my goal is actually not money rich, it's to be time rich. 00:30:23.119 --> 00:30:29.359 And I find that really motivates most people because they do appreciate the value of having free time and the choice. 00:30:29.519 --> 00:30:36.960 It's not about not working, it's about choosing how you spend your time, choosing what job you do or who you work for or with or on what. 00:30:37.119 --> 00:30:38.640 And that's what money can do for you. 00:30:38.720 --> 00:30:41.039 So I find that's a very powerful motivator. 00:30:41.440 --> 00:30:42.240 That's awesome. 00:30:42.559 --> 00:30:43.599 And I completely agree. 00:30:43.759 --> 00:30:49.119 In fact, I had a guest on, and that was the whole topic of the show is the concept of time and money. 00:30:49.279 --> 00:30:55.839 But you, you know, that that's it is you know, sometimes when people talk about, well, should I hire somebody to help me around the house? 00:30:56.000 --> 00:30:58.400 It's like you're trading time for money. 00:30:58.559 --> 00:31:03.359 In that case, you're buying back your time because as you talk about, you can't get this hour back. 00:31:03.519 --> 00:31:07.759 Hopefully, the hour, half hour you spent listening to Lacey and I has been worth your time. 00:31:08.079 --> 00:31:10.960 But unfortunately, we can't give you a refund on it. 00:31:13.440 --> 00:31:17.759 So, Lacey, where can people learn more about you and money school? 00:31:18.400 --> 00:31:20.079 Well, for social media, I'm a big nerd. 00:31:20.160 --> 00:31:21.279 I hang out on LinkedIn. 00:31:21.440 --> 00:31:25.440 Um, and because my name's Lacey Philipich, I'm the only one on there, you should be able to find me. 00:31:25.519 --> 00:31:30.480 Um, but on my website is uh it's moneyschool.net.au. 00:31:30.960 --> 00:31:35.839 Um and then I have a book that's available online anywhere, um, which is out with penguin. 00:31:35.920 --> 00:31:38.400 So if you want to read a book, grab it from the library. 00:31:38.559 --> 00:31:42.240 Um in Australia, authors get um money for books that are taken out from the library. 00:31:42.319 --> 00:31:43.599 So please feel free to do that as well. 00:31:43.680 --> 00:31:45.839 You're not robbing me by using the library. 00:31:46.480 --> 00:31:48.960 Um, but yeah, so yeah, so there's that sort of stuff. 00:31:49.039 --> 00:31:52.079 And um, yeah, lots of free blogs and I write a lot online. 00:31:52.240 --> 00:31:56.240 So um, if you're on LinkedIn or go to my website, you'll find all those. 00:31:56.720 --> 00:31:57.279 Cool, cool. 00:31:57.359 --> 00:32:06.319 And for everybody watching and listening, as always, if you go to the show notes, you'll find all those links, as well as there'll be a link to Lacey's white paper that we discussed, FinCap for All. 00:32:06.559 --> 00:32:08.079 So, Lacey, thanks for coming on. 00:32:08.400 --> 00:32:09.920 Get Ready Before Life Happens. 00:32:10.400 --> 00:32:11.599 Thanks so much for having me, Tony. 00:32:11.680 --> 00:32:12.720 It's been a delight. 00:32:13.119 --> 00:32:18.240 Yeah, and thank you, everyone, as always, for tuning in to this episode of Get Ready Before Life Happens. 00:32:18.319 --> 00:32:25.440 If you learned something to change the way you think about money and financial capability, please be sure to subscribe and to share with a friend. 00:32:25.599 --> 00:32:34.000 You can also create your own in case of emergency plan by starting your free financial readiness plan on my website at Tony Stewart.com. 00:32:34.160 --> 00:32:38.559 Because when life happens, the way you think about money matters.