With time out of the workforce raising children and generally lower rates of pay, women need to pay special attention to protecting their financial future. Self-made millionaire, mother, financial expert and best-selling author Jodie Nolan highlights an important need for women to start putting in place strategies to build their wealth in her new book 'Surviving the Storm'.
A millionaire by age 29, Jodie Nolan, knows how to start with nothing and turn it into millions. However after losing everything in one of Australia's worst financial collapses, Jodie's story Surviving the Storm, highlights a path that will help families come back from financial ruin and teach women to plan better for their life ahead.
Jodie Nolan commented: "It's a well known fact that more women tend to be the primary carer for kids and take time out of the workforce, thus lowering their super contributions and more. With divorce still prevalent, taking time to budget and plan for our future is really important. My own divorce and then financial loss drove me to find a way and now I hope to inspire other women to become more financially literate for the sake of their future".
Surviving the Storm takes readers on a journey of how one woman overcame despair and desperation to claim back her life and her millions. Ready to retire at 30, Jodie was in hospital giving birth to her first baby when the storm hit. It offers a rare insight into how a successful career in finance turned suddenly to destroy everything she worked for and the impact it had on many Australian families like Jodie's.
In amongst the loss and desperation, Jodie's story provides hope and tips to teach people how to build and increase their wealth. She is passionate about educating people and families with children about finance in an easy to understand no nonsense way, which puts the control back in the hands of everyday Australians.
Written from the perspective of a woman, mother and leading Australian Financial Adviser with over 15 years' experience, Surviving the Storm shares tips that Financial Advisors don't want customers to know and strategies that the everyday person can easily implement to benefit their financial future.
Chapter 21: 'Super Smart Strategies'-maximise your outcome
Superannuation may not be a topic you love to discuss, however the quality of your retirement years-whether a long way off or just around the cornerwill be set by the amount of super you can ultimately accumulate between now and then! So you have two alternatives to fund your retirement:
1. You can accumulate your own assets
2. The Aged Pension
The earlier you start contributing to superannuation the better. It is the power of compound interest that allows your fund time to grow. In the 2011/2012 financial year, Australia has roughly $13 billion sitting in unclaimed super and for those of us who are worried that we may not have enough; it is worth spending a few minutes to think through some key strategies and issues.
Woman have different life experiences to men
Sometimes it is interesting to consider how money and finances impacts a woman's life in comparison to that of a man. In my experience, women generally have different life experiences to men. Generally women earn less. Women live longer than men on average which means women need to save more for retirement (or live a more frugal retirement) and often have time out of the workforce raising children. Often many women continue to be that primary carer while their partner keeps working and will only fill part-time positions around school-hours. So too is the woman who becomes primarycarer in the event of divorce or separation and therefore cannot sustain a full-time working position too. These issues together with many other life experiences mean some women never build an appropriate superannuation fund balance or don't start building super until well after their child rearing days are behind them.
Salary Sacrifice brings significant tax benefits
Making voluntary contributions to your own superannuation may be a very effective means of saving. Not only will you pay less tax, but your investment will benefit significantly through the power of compound interest-a great start some say.
Consider the example of Anne and Mary. Each earns $55,000 a year. Mary is eligible to salary sacrifice $10,000 into her superannuation and instead of paying her marginal rate of tax (30 per cent) on this amount, she only pays 15 per cent. In addition her medicare levy is lower as the $10,000 is not counted as assessable income. Combing these Mary saves $1650. Anne doesn't salary sacrifice and would prefer to take home more in her pocket now rather than save for retirement. When comparing both situations, and after taking out income tax and the Medicare Levy, Mary takes home $37, 275 while Anne takes home $44,125. This is a difference of $6850 or $131 a week but Mary now has $8500 ($10,000 less 15 per cent) more in her super and while she has less to spend this year, she is actually better off by $1650. Over 20 years the $8500 she saved would equate to $27, 261!
Chapter 26: 'Money Smart Children'
As I mentioned in the first chapter we are often raised, whether intentionally or not to become a society of workers or labourers, and our school system currently teaches children to become adequate in many aspects of growing up to get a good job, but very little about what they do once they get that good job. I have devoted the following chapter entirely to my thoughts on lack of financial literacy in Australia and what I feel needs to change going forward to rectify this situation for our future generations.
In the meantime for those who are parenting children now, here is some information on teaching your children to respect, value and appreciate money so you can better equip them for their adult years ahead. If you are a parent reading this, here are a few tips to get us started:
- Examine your own attitudes about money
- Become financially literate yourself
- Involve your child in family financial planning
- Give your child an allowance and let him or her be in charge of spending it
- Provide opportunities for your child to earn money
- Teach your child to save towards long-term goals. save 50 spend 50
- Show your child how to be a wise consumer
- Set a good example with responsible credit use
- Talk about the mistakes you have made with money
- Encourage your child to take personal finance classes
- Encourage your school system to add personal finance classes if they don't already have them
The question of allowances is often raised by parents and children alike. While it is a personal decision, the concept of giving an allowance and having work income appears to work well.
Some things you could keep in mind when paying allowance to your children (depending on their age) may be:
Shift some spending decision to the child
Eliminate or dramatically reduce the need for the child to ask for extra money
Provide a method for learning about saving and spending money
Jodie Nolan was born in Darwin in 1976. She grew up in a supportive family who taught her a lot about money matters when she was young. Jodie is married to Peter and lives with her two children in Sunshine Coast. After her financial collapse Jodie established EQUIS Group which was born out of her desire to educate Australians about how to manage money and build wealth. The EQUIS group runs educational seminars, with no products and no sales pressure.
Jodie Nolan is passionate about teaching people about money, the core fundamentals that should be taught in our schools - but still aren't. Jodie is making a real difference in not only adult financial education, but more importantly for our next generation to give them the best financial start possible.
Surviving the Storm
Author: Jodie Nolan
Question: What initially inspired you to leave the Financial Industry?
Jodie Nolan: I was one of many advisers at Storm and only in that role for 18 months or so. During that time I had trusted their approach and advice they gave us as staff. I also invested in Storm along with family and friends. At the time of the collapse I was on maternity leave for 6-months and having my first baby in hospital when the collapse happened. I became aware of the crisis when I received a series of redemption notices in the mail, indicating all my personal investments at Storm were sold without my knowledge. I felt cheated and sickened with what happened and aimed to get out of the industry after losing all my trust in it.
Question: Can you tell us what happened, after you left the industry?
Jodie Nolan: When our investments were sold down we had absolutely no cash flow and were left with a massive debt (over$1M) on our home, I needed to find a way to make ends meet. I put simple financial tips to the test and worked out a plan for us to work our way out of debt. As part of my overall strategy here is a few things we did. Each week I photographed items and sold them on Ebay. My personal items like handbags, barely worn shoes in their boxes, formal dresses, mobile phones, our 2nd computer - I even had to sell jewellery that was very sentimental to me. Basically anything that wasn't nailed down and we didn't use every day had to go. We also sold major things like our cars, jet skis and horse float, saddles etc (and my precious horse!).
We rented the first floor of our home to a family of 3 and used the rent they paid us for groceries. A very difficult time made harder by living around another family, but you need to do whatever it takes to get yourself out of that situation. We rented the garage out to my brother who needed extra space for his possessions. I phoned all our utility providers (banks, phone companies, council, electricity, water etc) and put our bills on 'small regular direct debits' where I would pay the minimum amount that I could. Bills were never paid in full but the companies didn't mind as I was trying.
I started to think about education in financial literacy as a goal to teach others, that lie us, had lost everything and now didn't know where to turn or what to do.
From here I started to write 'Surviving the Storm' it was a bit cathardic for me to write the first chapter (my story) and many ex-storm people have read it and all agree it was and still is quite a difficult time however there is always light in the end of the tunnel and so the rest of the book is about the crucial financial information people should have been taught in schools coupled with information on how to start again after your own financial adversities.
Question: How did you started to re-build your life, after that?
Jodie Nolan: Just like I've outlined in my book, I had to go back to the basics and start from the beginning - just like I had been telling people for years now I had to follow my own advice!
Question: What should women do to protect their financial wealth?
Jodie Nolan: There are a number of reasons why women should take control of their own money. Divorce is common occurrence today, coupled with lower rates of pay for women and limited super savings due to time out of the workforce having children. It requires women to be savvy about how they accumulate wealth. Being a woman with kids, I know it is important to take more control of my future.
Here are some tips to get women started:
Identify your attitudes towards money and see where your potential pitfalls are. Are YOU positive or negative about money? Do you value it or spend it on frivolous purchases? Identifying your attitudes makes you understand where you may be going wrong and how to set your finances straight!
De-clutter your world - clean out your office , study or bedrooms. Get organised. You will be surprised at how this will truly change your world. Invite money into your life - make room for it. Set up proper filing systems, treat money with respect.
Work out where your money is going. Think of your household like a business? Develop a profit and loss statement - how much is coming into your household? and out again? Find out where the bleeds are which keep you from becoming wealthy and able to invest in shares, property and other business interests. Stop Spending on Your Credit Card - If you can't afford to pay down your credit card each month, stop buying! Say no to new purchases until you get it back under control. Remember, it is you against the world, no one can do this for you. Baton down the hatches, if only for a while, your finances will thank you for it.
Be Creative to Earn More - Can you potentially earn more? Can you start a side hobby or home business, take a boarder or rent your garage space, consolidate your debts and streamline your shopping to free up some cash flow? Can you sell some of your jewellery, clothes, handbags? Many items that sell well on Ebay - have a look around, are there items you don't use or don't need any more that you could sell? Perhaps a garage sale? You could be paid to be a secret shopper, typist, Social Media updater or you can look into a multilevel marketing company such as Avon or Amway for additional income.
Teach your Kids about Money - develop 'money smart children'. This will help you monitor what you spend on your family and have you all working towards a goal. Even a child as young as 2 can earn pocket-money through age appropriate tasks to understand and value money. Consider what your parents taught you…..what do you wish they had told you? If you wish they told you certain things about money and life, that is generally the stuff you desperately need to share with your children so they are wiser for knowing.
Learn to Shop Wisely - Look in 'Op shops' for similar or 2nd hand items you don't need to buy new. Wait for the specials at the supermarket or until 4pm Friday when most fresh and meat items are discounted before the weekend. Freeze your credit card, so when the impulse to purchase something arises you have to wait for it to defrost before you do, usually the urge will be over by then!
Start today Compounding Interest is king - it is not how much you have, but how much time you have.
Question: What inspired you to write Suriving the Storm?
Jodie Nolan: This book was born from conflict and my inspiration to finally document the struggle I had in losing millions in Australia's largest financial collapse. Writing this book helped me find a pathway to recovery, financially and emotionally. I had worked within financial institutions for over 15 years and have come out of it feeling despondent with the whole financial planning arena, no longer wanting to be a tied planner to a bank or firm, but still with the desire to educate others on money. My hope now is to inspire other women and families to take the steps necessary to increase their wealth again or for those who just want to start. It really can be done, we just need a bit of commitment.
Question: What are the basic oversights Aussie's make about money?
Jodie Nolan: I provide a personal insight into the finance industry and share with my readers what financial planners generally won't or don't with their customers, in my book. The basic oversight we make is that we spend too much! Australians can be very concerned with keeping up with the joneses and not taking care of where we spend our money. It is not just about what we earn but where and why we spend it. It is one of the biggest oversights we make today and the main reasons why not more of us are millionaires! (plus a huge lack of financial awareness - we just aren't taught good financial habits in school or early in life….it is crucial)
Question: How can the average household benefit from your book?
Jodie Nolan: Many families, single people and retirees can benefit from this book. I supply a no nonsense approach to managing money and making plans to get your financial future back on track. Everything from recognising and destroying old habits; to implementing cash flow strategies and household budgets; to tips on leveraging your super. Surviving the Storm offers advice and tips from an expert who has experienced both great wealth and loss, providing a very real account of money management in today's world. Specifically a great tool for people who need to start again financially - divorce, business loss, death - they are all life's triggers to financial loss and leave a person having to start again.
Question: Is there a simple formula to financial wealth in your book?
Jodie Nolan: No magic pill unfortunately, but it isn't rocket science. There are really simple, solid and practical information in this book that people need to know - it will set them apart in their financial journey and all it takes is a little planning (starting today!) to make a difference to our debts and bank balance. With a little commitment people can really achieve what they deserve. I will teach you what the financial planners generally don't or won't teach Australian's about building wealth and financial planning.
Interview by Brooke Hunter