Hi, and welcome to this week's episode of Money with Alpha. Today is going to be super practical and there'll be some numbers and things. So if you're listening to this on the run, you may want to listen to it first and then maybe come back to it with pen and paper as well. So what what I want to talk about is the uncertainty that we have around our money often is because we can't see it, we don't know what we're aiming for, the future feels too far away. It's not, there's nothing immediate that takes our attention and the priorities. We, we fix problems when they become problems, rather than trying to plan things a little bit more and just being a little bit more prepared. But there's a certain level of anxiety that goes around not being prepared and not knowing what you're aiming towards and are you heading in the right direction, will you have enough, all, all these sorts of things. So, so today I wanted to just sort of talk about a way to give you some sort of number to aim for in relation to retirement. I know when you're in your 20s, it feels too far away. 30s, we're too distracted building family and, and potentially career. Like, there's so many other things taking our mind. In our 40s, early 40s in particular, depending when you've had your kids, you're still in that kind of mum, mum zone. But then once you sort of hit that mid-40s and beyond, there's a little bit more of a realization of, "Oh, wow, where did that last 20, 25 years go? If, if the last 20, 25 years have gone as quickly as the next ones, then I really need to get my, my act together." So we start to kind of... But then, then there becomes this big black hole of, "Well, what does my act look like? Like, what would it look like to have my act together? I'm just, you know, day-to-day trying to get through this adulting thing and all of the life admin and mental load that goes with it all, that if I chuck something else on, I feel like it's going to, I'm going to collapse under the weight of it all." So, trying to make that as simple and easy as possible to at least calculate, but then at the same time, allow you to make better decisions in the now. And so keeping in mind, this is just purely about that sort of retirement kind of space. Lifestyle along the way to retirement is also important but that's not what I'm gonna be talking about specifically today. However, once you start to get yourself sorted to the point where you have a bit more clarity about the amount of money that you're working towards and what you, kind of lifestyle you want, it actually helps you clarify things in the interim as well, so that you can create that lifestyle that you want, rather than just constantly feeling like you're just surviving and trying to pay things off and making sure that you've got all the bills and everything and you know, you've, you've called the insurance. What, there's so many things. So let's, let's take some of the, the future visioning side of it, or off the plate, so you can then change your money in the, in the present moment. So but that, that's, that... We'll, we'll park that one for the moment. I will still talk about it today, but today, let's, let's start with the number. And sometimes it can be a little bit intimidating, too, when you, you talk in such, sort of big numbers, it feels a little overwhelming. However, we're gonna break it down. So first of all, if you have pen and paper, if not, you can probably do some of this initial stuff in, in your mind to begin with. So first, firstly, what age are you right now? If you're like me, you have to kind of think about that. I just had a birthday. I was like, "So was I turning 47, or was I already 47 turning..." I had to actually think about it, 'cause it... Yeah, it just, I don't know. Time just passes. So what, what your age currently is. And then just a rough idea of the age you want to be when you like, completely sort of stop work. And for a lot of us, if we're doing a business that we love, or there's, you know, we want to make sure that we're still productive in our, in our sort of twilight years, so to speak, we might want to keep on sort of working as such, and it might not feel like work in that traditional sense of like hard work or heavy work So that age, you're like, "Oh, I never want to retire." I can tell you from what I've observed and the people I've worked with, there does come a point in time where you want to focus more on other things. So I was even having a conversation with with a family member today who, they're in their mid-70s. They have built and run a very successful global business for many years. And the fire is not quite as strong as it used to be. So there are times in our lives where, where the, the seasons change a bit. We might go a bit more into sort of more that autumny kind of phase. So we still need to be able to plan for that. So think about an age. It could be 70. It could be 75. Or you might, if you're in that sort of fire kind of mindset, you might be like, "I want to retire by the time I'm 55," or, or whatever it is. I, I personally couldn't think of anything worse than retiring and doing nothing. But that's just me. So pick, just pick a number for the purposes of this exercise. So the age you are now, the age at retirement, and then calculate the difference. So if you're you know, 45 or if you're 50 and you want it to be 70, you've got 20 years. That's very simplified, so let's just work with that for now. So 20 years until retirement. Then start to calculate, if you haven't already... If you, you've been listening to me for a while, you may have already calculated this. If not, then now's the time to do it. Your net worth, your current net worth, which is a list of all of the things you own, like the assets that you own. And assets are something that you could sell and get money for. They're not necessarily income-producing, but you could sell them and get some money for them. So that's an asset. So anything that you could possibly sell that you own right now pop down, write it down. Then what you owe, so any debt that you have on anything... related to some of those assets like a home mortgage, a car debt any other kind of personal debt. Any kind of debt that you have goes on that side. Then you total them each up and take the, the debt away from the asset, and you get either a a positive net worth or a negative net worth. Either way, at the moment, it's just a number. We're not, it's not, there's no meaning to any of this right now. We're just trying to get to some clarity on numbers. So then comes, so that's the that's sort of like the, the starting point. Then we've gotta so it's a little bit like your age now, net worth now. Then, like we had age and retirement, we or to retire, we've also got to look at the amount of money that you would need at that point in order to sustain you, not earning income very simplistically, until whenever the time comes to, to exit this earth. So the rule of thumb around that, and it depends how much income you want to have in a year, and this income can come from investments, it can come from a government pension. Like, it can come from, wherever it comes from, it comes from. For right now, we're just trying to, to get to a number. And there's some benchmark numbers that are out there. The kind of standard, sort of comfortable retirement for a couple would be about 75,000 a year. You may want that to be closer to 100,000 a year. So let's, let's just see, 'cause I calculated the, the 100. But if you wanted it to be $75,000 a year, you then multiply it by, and the standard number would be 25 years. It'll be 1.8 875 million, so say 1.9. You could round that up to, to two million if you wanted to, 'cause some people work off 100,000 a year, which would make it 2.5 million. You can flex and work with this as you go. So I, I would I would probably start with that, say, 1.9 million to begin with, and that's sort of the amount to have at the point of retirement. Then, and this is provided you're a couple. If you're a single, then it's less, but as a couple, that would be the amount. Then you look at what your current net worth is, and say your current net worth is, say, 500,000, and you're looking at 1.9. You know you've got a gap of 1.4 million. So then you're like, "Okay, and how many years have I got to retirement? 20." So I need to take that 1.4, and that's where I need my calculator, especially as I'm talking and trying to think at the same time, and you divide that, 20. So you'd need an extra $70,000 a year, which sounds, sounds like a lot. But don't forget, it's not just money putting in. There's also returns on investment. There's capital gains. So there's, it's not as simple as saying, "Oh, I have to save 70 grand a year. Oh my gosh, that's impossible." It's not quite that straightforward. But it gives you a little bit of an order of magnitude to go, "Okay, well, I really need to do something about this now. I can't just coast along and go, 'Oh, I'll deal with that later. Oh, I'll deal with that later.'" Now comes the point where you're like, "I really actually have to go, all right, I need to make sure that I'm spending, saving, and earning my money in such a conscious, intentional way that I can enjoy life, but also make sure that I have a future to enjoy it too," because we want to balance it. You don't wanna, like, scrimp and save and miserly not do anything because you're trying to save for retirement, and then by the time you get to retirement, you're so burnt out and exhausted that you don't have any, like, joie de vivre left in you. You don't have any, like, life, life left in you to live. So we don't want that either. So and also, we don't, we wanna make sure that we're healthy in our, in our current years and later years as well. So we need to, there's a lot of, a lot of other considerations that have to go into this. So the numbers themselves are guides. But it's good to have that guide, because nothing like numbers to help kind of motivate. So then comes that whole, okay, well, say, your retirement number is 1.9 mil. You've got your current gap. You've got the amount of time you've got to fill that gap. What now? How do you fill it? So that then becomes looking at your, your money, so looking at the day-to-day that's going The amount of money that's coming in. If you're a business owner, then you'd be looking at how to optimize revenue and profit anyway, hopefully. So I'm not going to go into too much detail on the how to earn more money right in this episode, but that's one of the levers that you can pull, is how can you earn more income? Then how can you streamline your spending and your expenses to the point where they're as minimal as possible without strangling you from living? So, and sometimes there's some really quick, easy wins. Things like eating out or getting takeout is, is probably one of the biggest and quickest fixes that I've seen working with the clients that I have. And, and that's so invisible, which is why, coming up very soon, I will have an app that will allow you to see a lot of this a lot easier. So this will be... it's... I'm very, very excited. I've been working on this for feels like so long. And it's, it's very, very close to being a 100% reality. It exists. It's just being tested right now. But what it will do is pull all of your financial data in, categorize things, so you can see where the big hitters are a lot easier without you having to do too much manual analysis, which I know is what holds a lot of us back. Because data analysis can... let's just face it, it's boring and time-consuming. So the two killers of most, most you know, investigations that we have into our money. So eating out is actually probably one of... it's a pretty big one. Subscriptions is another one. And I hear this bandied around a lot, and that's not to say you've got to cancel everything and you can't have Netflix or Stan or whatever it is that you've got, but make sure that you're actually using them. And look at what your kids are using as well, because I've had quite a few clients where they have all these subscriptions that they didn't even really know. They don't even know what they are, and they're... it's their children who've just randomly signed up for stuff and the kids aren't even using it anymore. And I've seen people save hundreds of dollars a month just by looking at this and going, "Oh, what Earth am I paying for that? I don't even know what that is anymore. I signed up for that for something and the free trial period ended and now I'm just paying for it and I've got no idea even how to access it. I don't even have my login details anymore." Like that kind of stuff. And so you can find that like... literally I had one client was $450 just on just basic. We didn't even really have to investigate too much. That was, that was... just that one. Then your insurances and making sure that you're asking for better deals. So there is literally probably, I would say, at least $5,000 just sitting, lying around in your budget, which could go towards that gap. Then comes making sure that you're actually saving for things rather than constantly putting things on credit. Using your, your home loan in the best possible way. If you've got an offset account, have it split so that you can put money aside for fun, so you can actually save for the fun things that you want to do, for the travel, for the, the theaters, for the outings, for the concerts, whatever happens to be. And then have money set aside for emergency. So if something does have to come up, like for instance, I'm likely to have to have dental surgery soon, which I'll find out more about that you can... you've got the money aside to pay for that sort of thing And then, you... there's o-other, other ways. You know, there's the money pie that I, that I've talked about previously, which allows you to, to sort of carve up what's left over at the end of every month. The thing is though, if we don't have the money pie and the purpose of where to put all that extra, there is no extra at the end of every month when there could be. So that's, that's one really good way of actually getting a bit more visibility to help you make the choices that will give you extra money left over at the end of every month, and then start to put them in things like micro-investing, shares, salary sacrifice into super or retirement funds, however you do it. Then making sure that you're... if you're wanted to save for an investment property, if you start to speak to the right professionals about... if you've got a home and you've got equity, perhaps using the equity in your home to get an investment property. Do you want to go down the path of a self-managed super fund? Again, have those conversations. Like do the work to set things up so that your money has a purpose and it is for growth and it is for your lifestyle, both now and in retirement. And then you can start to see, oh wow, I can see this gap narrowing. You can do the same exercise that I just did with, you know, age now, age to retirement net worth... current net worth, the and then the number that you need may or may not change It probably won't at the start, and every sort of 6 to 12 months, you can do this assessment again and again, and you can start to see the gap closing. And by seeing that gap closing, it gives you the motivation to continue. Because when we don't get the gratification of a result, we just give up. Like for instance, say you're on a diet and you have stripped everything out. You're really... you know, you're, you're, you're doing really well. You've gone to the gym every day for a month. You're eating really well and nothing changes. I can tell you, your motivation is going to plummet. We're we're humans. That's what happens. Unless we see somewhat immediate results or we get some sort of short-term recognition, we're not going to continue. That's why there's a thing called beginner's luck. I truly believe this is why there's that, you know, that initial win that we get, which gives us that dopamine hit to kind of go, "Oh yay, this is working," or, "I can do this. Let's keep going." The same thing happens with your money. You've, you've got to start to see some of the benefit before you'll actually keep going. It's like being at, you know, the financial gym. If you're going... you're, you're, you know, you're pulling things and you're pulling in the reins and nothing is happening, then you'd have to really start to go, "Okay, well what, what reins am I pulling in? Are they the right ones?" And maybe the eating out part, you can't avoid too much, but then maybe buy less groceries. 'Cause I see some people who are spending as much as you would on groceries as if you were cooking, throwing a whole lot of stuff away, and then buying takeout And all I'm it's just you're duplicating on things, and then the, the nutrition's not there, and then you start to feel bad because you're eating out all the time and, and then your health suffers and, and everything is sort of interlinked. I find money and health very, very closely related, and the behaviors and the habits and the mindset that we have around it are very similarSo when you start to, to work on one, the other one tends to kind of come along for the ride as well. And it's the same level of sort of consistency, discipline, willpower. Yeah, there's a combination of those things, but the habits that we, we have. And a lot of them are micro-habits. So like we have micro-investing, we have micro-habits, things that will, will start to move the needle bit by bit. But you've actually got to figure out what you want first. And that's where, that's why I wanted to talk about the number, having a number to aim for so that you can start to make better decisions and choices, so that you can start to move the needle and then understand what habits you need to support you, and the beliefs that you have around your capability. So the more information that you get that's simple and easy to implement, the more progress you'll make, the more capable you'll feel, the more confidence that you are, the more open you will be to making the changes that you need to make in order to progress to where you want to go. And it'll feel good 'cause it'll feel aligned as well, because you're clear. It's so amazing when you get clarity on things. Like when, when I finally found the name for my app, I was just like, "Oh my gosh, I finally..." it literally... I know it sounds so menial, but it was really hard to try and find a name that I connected to, that was meaningful, that was simple and easy. And it's called Prosperous, in case you're wondering. And there is actually, if you wanted to go onto the wait list to be the first to find out when it's officially launching, just go to my website, moneymadesimple.com.au, and you'll see the form there to, to join the wait list. And and then you'll be able to hear all the progress updates and how it's all going. But I'm hoping within the next two months it's going to launch. Very, very exciting, 'cause for me I think this is going to be a game changer to helping, helping you manage your money. And it will do the net worth stuff as well. So you can start to do this now, but when the app's fully working or fully launched, you can do all this in the app, and the app will give you all the insights that you're going to need to be able to help you, and it'll nudge you along as well. But for now, I want you to start. I don't want you to wait for that. I want you to start with this right now, so that when you do have access to the app and you want to use it, then you can just punch these numbers in and just go, "This is really cool. I, I'm already on, on the path." You know, "I, I'm I'm feeling some momentum happening already." It's the year of the horse. It's the year of momentum. So take this and start your financial galloping so that you can end up where you want to actually go, which is so much what I want for you. I just, I, I heard... And I, I won't necessarily end on this, but there, I had a story yesterday which was absolutely heart-wrenching about looking for a venue for something, something else big that I'm planning. And one of this lady's colleagues who, who works at the venue that I was talking to had taken her own life. And she was in her... It was, it was it was a mixture of hormones, I think, so perimenopause, and finances, and life, and all of this. And I just, that just really, it just, yeah, makes me sad that people don't feel like they have an option. So I, I want this to be about, let's have the conversation, let's create the clarity, let's create some momentum, let's, let's keep the hope going, and let's make that a reality rather than just a possibility So on that uplifting note, I will leave you to, to take, do this exercise. If you can do it straightaway, then you have that in front of you. If you have any questions, please reach out. And yes, if you want to go into the wait list for Prosperous, then just head along to my website. I'll put the link in the show notes anyway, and you can yeah, you can hear all about it. All right, have a wonderful week, and I'll catch you in the next episode
