Wealth Enhancers CEO Sarah Riegelhuth and Financial Coach Rebecca Pritchard have been having some real, authentic conversations about money in our new web series WEtv.
In this episode, Sarah and Rebecca talk about financial goals, societal conditioning, travel, spending guilt and Gen Y starting small with investing.
Sarah Riegelhuth: You kind of got involved in our community and then became Wealth Enhancers member before you joined. How was your experience of doing the goals and values session and all of that?
Rebecca Pritchard: Well for me the reason I joined Wealth Enhancers was originally just to become financially responsible. But I think the reason I’ve stayed for so long and why ultimately I’m now part of the team was actually the goal setting. I’d never written down my goals before, and I’d never done them explicitly with my partner.
SR: I was going to say that. I think one of the big things if you are in a relationship is getting that alignment. How often do you sit down and do it together, let alone connected to finances as well.
RP: And you know you’re roughly on the same page because there’s stuff you talk about generally in conversation but to actually sit down and go,
“This is what we would like our life to look like. We would like to have these choices available.”
Funnily enough we were supposed to have kids like two years ago, that goal hasn’t quite come true!
SR: Well, some things change, I think that’s okay.
RP: But actually then recognising that our goals have evolved over time and at least we put ourselves in a position that we had these choices and then we could say ‘No, we don’t want to do that,’ or ‘Yes ,we would like to do that,’ and then to actually connect your finances to it.
We were in a position where we were saving quite heavily but just for the sake of saving. Because that’s what we’re supposed to do and so there were naturally things that we were just sort of spending on, like we would save and then we take the money out of savings to spend it because we were like,
“Well, we’ve got all this money, what are we saving for? Do you need an indefinite pile of cash?”
And so actually connecting the goals with the finances. It’s funny, I was really, really good at spending money on stuff for the house. I felt no guilt whatsoever on that, but then I’d feel really guilty about traveling.
And when we sat down to do our goals, we identified that for both of us this was one of the biggest goals that we had. So I was able to shift to think traveling is not spending, traveling is achieving a goal.
SR: Well, that was society conditioning you to say, if you travel, you’re lucky. We are so much luckier than our parents’ generation and how much we can travel and it is, from that regard, much more affordable than it used to be. Hence why we do it so much, but you still had the belief that it was not the right thing for you to be doing with your money.
RP: Oh, it was like,
“Rebecca, you have a mortgage. You should be responsible. How dare you go spend a month in the States or doing this or doing that!”
SR: But then it’s like, this is your life. If you have those opportunities and you can create that, why wouldn’t you? Why shouldn’t you? That’s really one of the biggest things, just having that connection with your life and how you want to live it versus just what you should be doing.
The guilt is massive and seeing the transformation in people… because we do get members that join who are guilty about everything they spend and most the time they’re like in a super-awesome financial positional and you’re just like, You’re okay, you do not need to be guilty!
It’s almost relieving that guilt for them going,
“Look, we’re going to carve away this amount of your money, it’s all going to be invested and saved and working for you like a well-oiled machine and you have X amount every week, spend it on whatever you want! Go to the bar and spend it all or go buy really ridiculously expensive jeans or whatever you want to do, because it’s really only a small part and you’re actually building wealth over here.”
But releasing people of that guilt of every purchase they have, I know how powerful it can be to just feel like it’s okay, you’ve got a great plan in place and you’re going to be taken care of so just relax and spend your money how you want on a week-to-week basis.
RP: Within your expending budget.
SR: Within your spending budget, yes. Absolutely.
RP: Another thing I would add is the concept of starting small and ramping it up. I know I certainly felt at, what was I? 23? 23 when I started and it was like,
“Oh, we won’t invest because we’re too young, we don’t earn enough money, we’ll wait til we’ve paid off the house.”
In 29 years!
We started investing with our first share portfolio with $200 a month. It was with two people contributing to that!
SR: And now you can use all these little apps and literally invest cents and dollars., But even like 100 bucks a month, most people can do that. You get comfortable and then you can start building it up.
RP:And then you kind of get hooked on it.
I reckon that's what Get Rich Slow is. You start start small and then next time you have a pay rise or something like that you go, Great, how can I get to my goals faster now? How can I do more? Click To Tweet
It’s really addictive.
SR: It is. The good thing about it, is it’s addictive but it’s going to end up helping you in your lifestyle, your life.
RP: And along the way you can start seeing,
“Okay, I’ve ticked off this goal, I’ve ticked off this goal. Now I want more goals! And now I’ve started setting goals that I couldn’t have even imagined that I would have!”
We talk often about basic, comfortable and aspirational goals. A few years ago I had no aspirational goals.
SR: Yeah, because you were still trying to my meet your basic needs.
RP: My brain couldn’t comprehend it, and now that I have basic and comfortable largely taken care of, you think,
SR: It’s pretty exciting. I mean, I think that’s sort of one of the things for everyone. It’s nailing down what’s basic then what’s comfortable. Finn always talks about the Maslow’s Pyramid when it comes to investing and that’s certainly how we approach it. Let’s get your basic needs sorted in terms of whatever that means for a roof over your head and the basic needs of your lifestyle, then let’s start making it a little more comfortable, and then you get to that point where it’s like,
“Wow, now I can really start thinking bigger and start thinking about what a dream life really looks like.”
But you’re never going to get to that point if you don’t start.
One of the reasons why I’m so passionate about working with Gen Y is because we have such easy access to credit and then we have Instagram and everything like that, so it’s really easy to live the lifestyle but not be building wealth.
You look rich, but you’re not.
You’re probably actually really struggling. It’s the difference between actually being rich and building it up so that you’re going to have that lifestyle later versus okay, have the lifestyle now, but you are going to be on Battle Street in five years because you haven’t done anything.
And because we’re young, if we do start small but start now, it’s going to be easy.
I mean, when I ran the private wealth management firm I’d have people coming in and saying,
“Okay, I want to retire in five years. I’m earning around $350k a year and I’ve got $298k in super,”
and I’m just like,
“No. You’re fucked.”
I’m not a magician. This person’s been living on $350,000 a year, you know, you need probably ten, twenty million to be able to keep that lifestyle going. It’s just not possible, to do in five years. Whereas if they had started earlier it might have only been ten or twenty percent of their resources every year going into an investment and they’d be completely fine.
We’re certainly lucky that we have superannuation and we’ve had that our whole working lives, but it’s not something we can rest on our laurels about. We still need to actively be creating wealth because there’s also short-term needs.
I don’t want to have to work and live pay-check to pay-check until I’m 67 or whatever that age is going to be by the time we get there. I want to find a balance of traveling and having fun now while still building up for my future. And I want to be financially free well before that traditional retirement age.
That’s another thing that our philosophy is built on; it’s more about achieving financial freedom from which point you can work because you love it. You have full choice in what you do and how you spend your time because you have enough money now. That’s where I’m headed I’m hoping to get there within the next four to five years but I’ve been actively smashing it for ten years to try to really build my wealth.
We’re still young enough to make a difference.
Disclaimer: all information contained within this article is of a general nature. It should not be relied upon when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.