Podcast Episode 6 – Why Money Matters to Women

An interview with Liz Taylor-Kerr on her mission to teach adults, particularly women, about investing, and also to increase conversations with our children about financial literacy.

Today, you find me waiting for my guest to arrive, Liz Taylor Kerr, will be with us shortly.

I’m dashing around, I’ve got a to do list as long as my arm and I was thinking, “Oh, Why Money Matters, that doesn’t sound like a really interesting title and I wish I could go back to doing the Vagina Dialogues,” which is what I’m planning to do soon.

I got to thinking yes, I’ve got a to do list as long as my arm and where on that to do list is looking at my money, my investments, my future, my pension? It doesn’t even get on to the list.

For some reason this just isn’t a sexy subject for me. I am hoping that by the time Liz finishes talking to us today that it will be slightly sexier, but more important than sexy is it might motivate me to actually do something.

I think, I can hear the scooter now.

Hello Liz, welcome.

Liz: Thank you very much, good to be here.

Michelle: Before we go on, I call this Local Women Global Issues and you’ve probably already realized this local woman’s got a bit of an Aussie accent.

Liz: A bit.

Michelle: How long have you lived in Guernsey, Liz?

Liz: I have been here 16 years, so 17 years in the UK, 16 in Guernsey.

Michelle: It must’ve been just after you moved to Guernsey that I met you then?

Liz: Yes, my first job.

Michelle: We used to work together at Credit Suisse, quite a while ago now then?

Liz: Yes.

Michelle: 16 years.

Liz: Yeah, about 15, 16.

Michelle: Wow.

Liz: Seems like another lifetime.

Michelle: Yeah. I left there 11 years ago, and you?

Liz: Probably 13 or so. Yeah, about 13 years.

Michelle: You started a new business, can you tell us a little bit about this new business of yours?

Liz: There’s two elements to it really.

The first is just to teach adults, particularly women, about investing. The second is to try to increase the conversations that we have with kids about investing, so financial literacy and just generally opening up conversations about money, and finances, and investing in general.

Michelle: I suppose really it’s from mothers often that the kids are going to learn about money?

Liz: Yeah. There are two elements really there’s learning at school and then learning at home.

A big part of kids, and I’ve noticed this recently with my four-year-old, is that they just copy everything that you do, so if you’re not confident in yourself about money issues and finances, and stuff in general then that generally passes on to the kids whether you say it or not.

It’s just living by example and quite often it tends to exacerbate, and kids leave school, and then they’ve got their own issues, they’ve got to learn by experience and the problem just continues and continues.

Parents say, “Well, I’d like to do better for my kids and give them the start that I didn’t have from my parents,” so that’s what we’re aiming to do.

Michelle: For me, I suppose, during those years when my daughter was growing up because I was working in finance, we were relatively well-off at that point that I probably threw money at her a bit.

Liz: Yeah. I think there are two sides to it. I think, there’s throwing money at it and I think also

that money seems to be a more taboo topic than any other topic including the most obvious topics that are taboo.

People just don’t talk about it, people don’t talk about how much they earn, they don’t talk about how much money they have in the bank.

With kids and stuff so many people of said to me lately that kids seem to have the idea that mum goes to the shop, pays with a card, and that card has an unlimited amount of money on it.

Just simple conversations like this is actually money that is on there, it’s not unlimited, and we just need to start having those conversations that are not difficult conversations, but we probably overlook them just in everyday life.

If we’re aware of it a bit more and just naturally able to chat about stuff. It’s nothing personal, you don’t have to tell your kids how much you earn or anything, but just the fact that this money is in this bank account and once it runs out it runs out.

Michelle: I think what taught my daughter money was going to university and having to live on a restricted budget.

Liz: Yeah, it’s a big thing. Also, they say that, I think, 78% of kids have their own money by the time they’re 11 so pocket money, but they don’t start, even in the UK, they don’t start learning about it until their 14 or so.

They’ve had years of owning money and not necessarily sure what to do with it, and they don’t get the lessons about savings, and things.

Then, when they go to Uni it’s a massive learning curve. They learn, but you just think, “Well, if they already knew that before they started Uni would that give them just that extra advantage that other kids might not have?”

Michelle: Absolutely. I’ve called this episode Why Money Matters to Women, and partly that was motivated by this whole thing of women …

There’s lots of stats out there and I’m not going to even begin to try to quote them, but how

women don’t earn as much as men, we don’t invest as much as men, and we’re more likely to end up in relative poverty in old age than men are.

That often we just, as women, as I said in my intro it’s just not top of the priority list.

Liz: It’s not.

Women tend to be concerned about home life and making sure that there’s enough money to feed the kids, making sure that everything’s paid off.

They inevitably control the budget in the house, but then that’s just as far as it goes and if there’s any left over the actual investing side of things they just tend to leave it. I think that more and more women are concerned about what happens.

The other problem often is, that if people go, for example, to see an investment advisor firstly, they pretty much ignore them, I’ve heard a number of stories about that, and secondly they don’t really know that they can trust the information they’re given.

I used to be an investment advisor in Australia at one of the banks and I was only able to recommend the bank products and so it was this ethical dilemma that I could only recommend products that actually were performing really badly and that was the sole way that my performance was appraised, was how many people I put into this product.

I know from experience that you can’t always trust these people because they are doing supposedly what’s right for you, the investor, but actually they’re doing what’s right for their pocket at the end of the day.

Michelle: Absolutely. I went to see someone, it was just a pre-crash and I was looking to do something on my portfolio. They were trying to sell me something and I was playing dumb, I was playing the woman. At the end of it I said, “So, you’re telling me that there’s a fee on this, a fee on this, and a fee on that,” and it was something like 7%. I know this was in the old days, but there was some kind of 7% in that, and I kind of knew what to say, and what to ask, and what to look for, but even so I’m still very wary of going to investment advisors.

Liz: They’ve changed the laws lately so that they have to be more transparent about the fees that they receive, they’re not allowed to receive commissions for putting you in certain products anymore, so there should be a lot more transparency to that, but I think just inevitably that over time people just don’t trust them.

Also, I know if you go into a situation and you just get ignored or the questions that you ask you’re treated as though you’re asking stupid questions it just makes you feel dirty in a way.

You just don’t want to put yourself into the situation where you’re made to feel stupid for asking a question that you should legitimately be able to ask.

Michelle: I think that’s a big one.

There’s so many women over in Guernsey who work in the financial services industry, but if you’re working in a fairly narrow field you know what you do, but you don’t necessarily know what that person over there does, or how the banks work, or how the trust companies work, or how different investment places work.

I went to a talk not long ago and it was quite high-level just going on about that we should be looking at our money, and this, that and the other. Then, when the question came at the end what’s the minimum that your bank will look at the answer was a million and everyone, “Oh, thank God I didn’t ask that question.” There are places out there that will look at much smaller sums, but you don’t necessarily know that.

Liz: No, you don’t. Also,

I don’t think you necessarily need to go to an investment advisor, depends on what you’re wanting to invest in. I think the problem a lot of the time is that there’s firstly, an overwhelm because there’s so much information out there.

You can go to a whole lot of different sources and they will give you some information, but not necessarily all the information.

Obviously, everyone has different personal situations and so what’s right for one person is not necessarily right for another person.

At the end of the day, the processes and the steps that you go through to determine what’s right for you is pretty much going to be the same no matter what situation that you’re in.

You can still go through steps to determine what your investment objectives are, how much you’re going to invest, and all this kind of thing, but at the end of the day whatever your ultimate decision is, its going to be different for everyone, but the steps that you take to get there are still going to be the same.

Michelle: Can you tell us anything about the steps?

Liz: Sure or is this where I say no? No, no, absolutely.

The first thing you really need to do is work out whether you’re going to be saving or investing.

There is a difference and people go, “Yeah, I know what the difference is,” but when you actually put them on the spot and say, “Well, what is the difference,” which I won’t do to you, but

generally speaking when we’re talking about savings we’re talking about putting money aside that you know you’re going to need later.

Whether it’s for a house deposit, or sending your kids to Uni, or repairing your car, or whatever it is, but you absolutely know that you need to use it.

If you have got money that you know you’re going to need in the future you are not going to invest because the very nature of investing is putting some money aside in the hopes that it’s going to go up in value, but then you inevitably have to acknowledge the fact that there is the potential that it’s going to drop in value.

We would say determine how much you have got to spare, make sure that you keep some savings,

everyone should have some savings for a rainy day or for something that happens,

but if you’ve got extra at the end of the month even if it’s £25, it doesn’t have to be a huge amount, even £25 a month is enough to put aside

as long as you don’t need it later you can start to build a portfolio.

For example, you can nowadays invest in shares on the London Stock Exchange for no transaction fees.

Michelle: Really?

Liz: Yeah, through a new company called FreeTrade, I’ve interviewed them on my podcast lately, which didn’t work, so we’ll redo it. They are actually accepting transfers, purchases and sales on the Stock Exchange for zero fees.

Michelle: Give a little plug for your podcast.

Liz: It’s TalkingCents is my podcast.

I’ve just started, I’ve done just a couple episodes, so I’m going to talking to these FreeTrade guys fairly soon.

Traditionally, if you were going to buy and sell shares on the stock market you have to pay probably £12 every single time you bought or sold.

If you were only going to put in £25 to £50 a month immediately you potentially got half to a quarter of your money going in fees. Whereas, no transaction fees means that that whole £50 or £25 gets put into shares and you don’t have to worry at all. I think that £10,000 is the amount, the threshold that they’ve got before you have to pay.

Things like that, these days, are really opening up investing to everybody that you say, “Right, okay, £25, to me, is not gonna make a massive difference if I take it out of the bank every month, but if I put in for 5, 10, 15 years and it’s rolling over, and over, and over it’s gonna build up at least something for me so that when I come to retire then I’ve got a bit of a nest egg there.”

Michelle: How would you go about choosing what stocks and shares to put it in?

Liz: First thing is working, as I said, about savings versus investing.

The second thing you really need to out is what your personal objectives are for investing,

you need to work out, for example, what your end goal is. Are you saving for retirement? Are you saving for something in particular?

You want to work out what the mixture of capital and income is going to be. Capital is just that initial investment.

For example, you buy a house and it goes up in value, that a capital growth and income is the profit that that investment will make, so your shares … sorry, your dividends, the interest in the bank account, the rent that you would get from a house, for example.

The reason that that’s relevant is because if you are looking at the tax that you’re paying then it’s going to be a different tax rate for capital versus income.

Particularly in Guernsey that is a very big difference, how much income tax you pay versus capital gains tax. After that, then you work out what tax. Again, is relevant, tax planning not tax evasion.

Then, you want to work out the time frame that you’re investing for.

If you’re going to put something into an investment for 2 to 3 years that’s going to be very different from 15 years.

The reason for that is that if you look at any kind of investment or any asset class, we would call property an asset class, shares would be an asset class, etcetera that over a period of, let’s say, even 10 to 15 yrs history tells us that they will go up in value.

If you take any 1 or 2 year period within that they might go down in value. Say 2009, for example, the share market value crashed 30% in one year, so if you’d taken your money out you would’ve massively lost out, but if you’d left it in there, because you didn’t need it, it’s gone up over and above what it has ever been in fact.

You really don’t mind as long as you don’t have to take your money out.

It’s like if the market crashes in terms of houses it doesn’t matter unless you’re getting out of that market completely in which case you money, but if you don’t have to lose money it’s a hypothetical gain or a loss and it really doesn’t make any difference to you.

Michelle: That’s very much I used to think of it as “bubble money” because what your house is worth, what you paid for it is the real capital that you’ve explained.

Liz: Yeah, it does. Even with housing, just using that as an example, that if the house market crashes then if you are upgrading to a bigger house you’re actually don’t mind because your house might’ve dropped in value, but the house that you’re buying would’ve dropped by more in pound terms, so it’s not necessarily a bad thing.

The only bad thing is if you need to get out of the market completely.

Then, what you’ve got to do, so if working out your investment objectives, is risk versus reward.

How much risk are you willing to take?

The question I used to ask my students was, “If I gave you £50 and I said in three months time you would pretty much be guaranteed to get 5 quid, is that worth it to you? Versus, you had that same £50 you put it in an investment, you got a chance for winning 150 quid, but just as much chance that you’ll lose the whole thing, so which are you more comfortable doing?”

Women, typically, are much less willing to take risks because they’re like, “I have to feed my family.”

Michelle: The myth that women are more risk-averse, so you find that that is actually true?

Liz: Absolutely because they are more concerned about their families and even if they haven’t got kids they’re concerned about paying the bills, getting the food on the table, and that.

Men are much more likely to be gamblers in the family and just go and say, “Oh well, this £50 doesn’t matter whereas the woman’s like, “Well no, hang on I need to use that for the bills and stuff.”

Michelle: Between my husband and I our pension portfolios, his is much higher risk than mine. I’ve gone for medium-low risk because I don’t like the idea of losing whereas he’s gone for high risk. When we go and see an investment manager we say – when you look at the two portfolios, put them together it’s more balanced.

Liz: Exactly. With risk there are a whole lot of different kinds of risks and, in fact, if you had your money in the bank there’s a risk to that as well and the risk is that, obviously, you still have your cash safe but the risk is that it’s not going to keep pace with inflation.

The interest that you’re earning might be a maximum of 1%, the inflation rate’s 2 1/2% so you’re effectively losing 1 1/2% in real terms with your money every single year.

Michelle: I wonder what actually is the alternative because, as you say, if you’ve done your investing for your long term and you’ve got some money in your savings bit. What is the options?

Liz: A few different options really.

If you’re really risk-averse and you don’t want to risk your money at all you could look at instead of the money in the bank which is awful interest, you could look at corporate bonds

so companies that instead of borrowing money from the bank are going to borrow money from investors and in return they pay interest like the banks will pay in interest and at the end of, let’s say, five years they’ll pay your whole capital back.

They will pay a higher rate than the bank because from the company’s point of view they got two options.

One is to borrow money from the bank. Let’s say the banks say, “Right, if you’re going to get a business loan it’s 6%,” whereas they’ll say, “All right if I go out to investors and I’ll pay you 4%,” you the investor says, “Well I’ve got two options I can to the bank which will give me 1% interest or I can loan my money to this company and they’ll pay me 4%. Yeah, bargain I’ll get the 4%.”

You can still have fairly low risk because if you are, again, risk-averse you would choose companies that have very good credit ratings.

You’re not going to choose your new up and coming companies that have no track record.

You get companies that have been around for years, and years, and years, they’ve always borrowed money and paid it back on time, so for you, the investor, you’ve got lower risk, but you’re still getting a better interest rate than you would at a bank. That’s one option.

Michelle: That sounds really sensible, but my immediate reaction, well where do I find out about them and what do I do and I’ve already forgotten the name of the company that you said before about stocks-

Liz: FreeTrade.

Michelle: Shares. FreeTrade.

Liz: I’ll send you some links afterwards, how about that?

Michelle: We need to put the links in the show notes.

Liz: Clearly. Yeah, I’ll do that.

Michelle: It’s like, “Oh right,” and then, for me, it always go to be a bit like sex education. We used to get the high level thing and then afterwards go, “Well actually, how does it work?”

Liz: Exactly. That’s why it’s good to have a resource that you can go to one place and find that information out.

As you said, because you can look in all different places and different people have different information, but corporate bonds, so you got companies that actually issue bonds in their own company.

For example, HSBC might go and issue corporate bonds, so you can do that, but they also operate in a way that if you initially got a corporate bond with a company and later on you wanted to free your cash up you could go and sell it onto someone else. I won’t go into the details about that, so that’s one option.

Another option for investing is shares and shares is a very, very broad asset class. You can compare your big FTSE 100 companies, which are the big companies that have been around for potentially hundreds of years that pretty much have a track record of every single year paying money back to investors.

Yes, they might go down, for example, in 2009, but again they bounce back to better than normal.

I went to a really good talk years ago from a guy who was investing in shares and he said, “If you don’t know what to invest in think about the companies that you use every single day that you will always use.” You always use electricity, water, you can go to supermarkets, various products and stuff that you buy and if you invest in those companies they’re not going to bust people need them.

You’ve got, for example, your Lamborghinis and stuff like that when the market tightens up that people won’t buy them as much, but people are always going to buy other types of cars and, again, everyone needs water, everyone needs electricity, well not everyone needs gas, but you get the idea.

Investing in companies like that may not give you fantastic returns, but they’re a pretty safe bet over time, so second option.

Third option, just quickly, is what we call a REIT, which is a real estate investment trust.

If you want to invest in property but haven’t got tens of thousands of pounds you can invest as little as 500 quid and you can invest it in a London Stock Exchange listed property fund that go and buy properties in various things, so each one is different. One that I used to work in bought council houses from the council and they rented it back to the council.

They were in a win-win because council would sign like a 30 year deal to lease it back. The council was happy because they got an influx of cash and this fund’s happy because they’re like, “Well great, we’ve obviously bought these houses that we have a guaranteed rent for 30 years.”

That can be a really good way of investing into property that is fairly low risk that you can get a little bit of your cash out of instead of having to sell half a house or something that you obviously can’t do and is relatively risk-free because they have very strict limits, because they’re in the London Stock Exchange, as to what they can and can’t do.

Michelle:

If you’ve got, say, £10,000 sitting in a bank account at the moment earning nothing where would you go? Would you go for the corporate bond idea?

Liz: I have to be a bit careful just with giving investment advice versus information, but what I would do is I would work out how long I want to put it away for and I would have a look at, for example, if I had a wage that I was earning now and I said, “Right, well I don’t need the income now,” so where possible, and I would always say this to everybody, if you do not need income roll it over.

Wherever you invest it, whether it’s your rent that you’re putting on the mortgage that you’ve got on the house, whether it’s shares that you’re reinvesting them into more shares, whether it’s your interest that you’re putting back into it, wherever possible when you don’t need the income roll it over.

I would say, “All right, personally,” and I can’t for everyone else, again, everyone’s different, “I would invest mostly in shares.”

Then, potentially I would invest a bit in property and I would keep some available as cash because often people need … well, you need cash.

Even if you’ve got your money, your wage that goes into a bank account you can’t take all of it out because you need it for everyday life.

You would need, generally speaking, a certain proportion.

Some people say 10%, it just depends on everyone, but a proportion that you can take out within a week or two if you needed to.

Michelle: You need to keep that cash flow?

Liz: Yeah. Everyone does, even, for example, these big funds that have billions of pounds they all keep some money, cash in the bank because they’ve got people who want to take their money out, they’ve got fees, they’ve got transaction fees, as well as fees that they’re paying out to other advisors that they need cash.

Everybody needs some cash flow.

I would always, firstly to keep cash flow, but secondly to reduce the risk, make sure that I had some fairly easily available even if it was in bonds or something.

Michelle: I’m wondering, we’ve been talking so far about the concept of actually having some money that we need to invest, but probably anyone who’s listening who hasn’t got any money at all has already switched off.

There must be a lot of people out there in that situation just living on your wage as it comes in, it goes out, and you probably got some debt. Student debt, personal debt, what do you do for people in that situation?

Liz: I have quite a few people who come to me and, in fact, I’ve had a woman today who says that she’s got a real issue with money just psychologically.

There are a couple of things, and I’d say, as I said before you only need £20 a month or even less.

You don’t even need £20 a month, but if you could free up £20 a month that’s great.

Number one is payoff high interest, so you would pay high interest, for example, your credit cards and stuff before anything else.

Just a word about that as well, don’t necessarily think that paying your credit card off and putting the money on your mortgage is a good bet.

It’s not a good bet. You’re better to pay that credit card off quicker because having a mortgage that you’re paying over 20 years, that amount of interest that you’re going to pay even if it’s a lower interest rate will always be more, so don’t think that that’s a good idea.

You’re better just to put as much money as you can into reducing that.

Michelle: Again, I’m getting in danger of asking advice, but

hypothetically if you had a credit card debt would it be better to get a personal loan at a lower interest rate?

Liz: Yeah, you could get a personal loan.

The other thing that people do is to get an interest-free balance transfer for a certain amount of time so there’s no interest on it for, let’s say, even six months and they can pay that off.

That kind of thing can be useful as well. Personal loans yeah, because it’s only a maximum of five years rather than 20 years so if you can get a good personal loan then that can be good, but the risk is that you get a personal loan and then you start racking up credit card debt again.

People really need to, and I need to do this myself, budget.

If you are wanting to start to save don’t necessarily think you’ve got to pay all your debt off before you start saving because otherwise you’ll never get there.

What I would say to you is if you do want to even save £20 a month and you can free up £20 by not having a cup of coffee a day or not going out for one meal a month or whatever it might be, but pay yourself first.

You’ve got direct debits that come out for your electricity, your gas, everything else set up a direct debit every month, as soon as you get paid, that goes into a specific account that you can’t easily touch.

That way you don’t even think about it, you don’t think, “Well, I’ll see how much I’ve got at the end of the month,” because there will be none at the end of the month.

You just need to do that first, get it out of the way, and to that, and concentrate not so much on the low interest cards and loans that you’ve got, but concentrate on mainly your credit card and stuff to get that down because it works out at like 18, 19% interest that you’re paying on that.

Michelle: There’s a lot of useful, practical information that’s coming over here. I’m wondering about the wider aspect of this topic in terms of, you mentioned briefly, the psychological. Can you say more about that?

Liz: I’ve just had a few people lately say to me particularly when I was probing the idea of financial literacy for kids because I’ve actually been speaking to the states about the curriculum because they’re bringing it in to the curriculum in Guernsey in September, which is fantastic.

I’m going to be helping them teach the teachers to then teach the kids because you’ve got a lot of teachers who are teaching subjects they’re not familiar with and trying to pass that on to the kids.

In terms of people’s association with the money this woman today was saying when she was younger she would get beaten for breaking things because they had no money and they couldn’t replace stuff.

She found out later that her mum wouldn’t eat so that the kids could eat because the dad took all the food and so she now doesn’t feel as though she’s worth anything really and it’s had a very long psychological effect.

It’s like anything with your childhood there are traumas, there are things … I’ve had things that have affected me my whole life and I think that you need to identify it, and I think that if you really sit down and, for example, if you’re scared to look at your credit card bill, and I know I don’t like looking at my credit card bill, but is it because you’re afraid of what you’re going to find?

Sometimes it’s easier to say, “Look, just a man or woman up,” and check it. Then, you can start a plan. I think people feel as though quite often either they don’t deserve money or that they’re never going to be good at managing money because they owe money.

Michelle: Yeah. Thinking back to my childhood when I was little my grandfather used to give us pocket money. I’m going to share how old I am, people already know that by now, we used to get 2 and 6 in old money.

Liz: I was looking at, the other day, what shillings and stuff were the equivalent of.

Michelle: I remember that when we got home, when we had this precious pocket money we had to give some of it to my mother and she would put it in the bank purse. I remember trying to save up for Sindy doll outfits which were extortionate and seeing that little bit of money go into the bank purse and it was

psychologically money went into the bank, it never came out again.

In fact, that bank money I did use when I was 16 to buy a scooter so yeah I did get it back out again, but I think there’s still that deep psychological impact that it’s only safe to put money in the bank, it’s not safe to get it out again.

Liz: Absolutely. I think these days it’s a lot more difficult because I know when I was young you went to the bank and you put your money in and you got the bank book that said what your new balance was, and all that kind of stuff.

Kids these days just see plastic, they see credit cards, debit cards.

Only 10% of the world’s money is in physical form because everyone just uses cards.

I said to you before that kids seem to have an idea that this piece of plastic is unlimited money and that they don’t know that money that you earn in your wage actually goes on to this card and when it runs out it runs out, there’s no more.

I think it’s very, very powerful and

what we’re hoping to do is to reward kids for doing certain activities by actually working their points and money towards a physical reward that they get much like you used to with your pocket money.

That once you’ve saved up however many points you actually physically get something in the mail to give them that incentive and that sense of excitement that you used to get when you were saving up for something.

Michelle: I don’t think it’s only kids because I’m just being reminded as you were talking about my grandmother.

My grandmother lived until she was 98 and my grandfather had died 14 years earlier. Of course, she was from a generation where she didn’t work so the money she had was his money.

Even right until the end she was quite frugal with how she spent it and she certainly wouldn’t spend money on taxis, if she couldn’t get a lift she wouldn’t go somewhere. Yet, when she died she left tens of thousands of pounds. It was like

how do you persuade old people as well to use what they’ve got?

Liz: I don’t know that you can. I know my Mum will not spend any money that she doesn’t have to.

She’ll spend no money on herself ever. Their car was 30 years old that they just replaced and that was a really big deal because they were like, “Well, if there’s nothing wrong with it why do I need do we need to replace it? Why do we need to go and spend?” That’s the generation, especially generations that grew up during the war, you just had to save stuff. There was just not an option about it.

I think there’s something to be said for that and I think these days it’s so easy to spend money. Again,

you don’t notice when it’s on a card, it’s not actual cash that you’ve got.

Sometimes if you get a certain amount of cash out at the start of the month and you say, “This is my spending money. When I have spent it that’s it,” it’s a much easier way to tell how much you’re spending rather than just handing a card over, doing the contactless, and there goes 20 quid, 30 quid, 15 quid.

You don’t notice it coming out whereas if you’re actually physically handing over cash you’re like, “Ooh where’s all that money gone,” and suddenly you’re starting to realize exactly where it’s gone and the fact that you’ve probably spent more on nothing.

Michelle: When I hand over the card in the supermarket and sometimes it’s rather a big number if I was paying in cash that it would really hurt, but it’s like oh, forget it.

Liz: There’s something to be said for working out how much you want to spend on non-essentials, extra stuff during a month and actually having that in cash.

For example, in Australia you have four transactions a month that are free from the bank and after that they charge you.

We’re talking your direct debit for your electricity, gas, etcetera, and after that every single time you use your card whether it’s contactless or whatever you get a charge 20p, 20 cents I should say.

We used to take cash out because we didn’t get charged that way, but then you don’t want to go around carrying around huge wads of cash, so there’s two sides to it.

You would have cash a lot more because it was saving fees firstly, but secondly it really does hit home when you’re trying to create a budget of exactly what’s essential and what you don’t really need.

Michelle: The other issue that’s coming up, especially from my perspective as a coach, in that I have had clients in the past, who have to come to say that they have suddenly found that their safe, secure life that they thought they were leading, that actually the husband had taken a second mortgage on the house and they were deeply in debt and they had no idea.

Are you coming across this in your line of work?

Liz: I haven’t come across that situation, but I think that’s common … well not necessarily really common, but it does happen.

I think this is also why women increasingly are wanting to pay more attention. Or, I’ve had a couple of friends recently whose husbands have just left them with young children or older kids, or whatever. You need to be just aware of what’s going on and I even know someone who’s related to me who split up when they were in their 60s and the husband has never ever told the wife how much he’s earned and how much the pension is.

He will not share that information, so her whole life she’s never known how much he’s earned, or anything like that.

I think that it’s just good to be empowered, just to know what you can and can’t do, and just having that feeling of independence rather than that you’re relying on anyone for your day-to-day living and, “Please, can I have another £100 for the shopping,” or whatever else it might be.

Michelle: It’s this really sensitive, difficult conversation.

Liz: Yeah.

Michelle: I know it took us, when we first got married, we both had kids from different marriages and it took us the best part of 10 years to finalize getting our wills sorted by which time the kids had grown up so it was a little bit more straightforward.

It really is sensitive territory. It’s like you were saying before, it’s one of those taboo areas that it’s really difficult to talk about.

Liz: Absolutely.

I think it just gets handed on through generations and generations that it’s taboo, people don’t talk about it so they don’t, and then they have their kids, and then they don’t talk about it because their parents didn’t talk about it. It’s just not talked about.

Again, it doesn’t have to be the information that’s really personal or sensitive that you’re talking about although it’s probably good to be open with your spouse, but you’re not having to say, “All right, I earn 20, or 30, or £40,000 a year.” It doesn’t have to go into that much detail, but having an idea and for kids just having an awareness about the limitations and what you can and can’t do with money.

Also, even with certain occupations who earns what and why, why do certain occupations in finance for example earn three times more than a nurse who’s saving your life at the hospital? Just these kind of conversations is, in a broad sense-

Michelle: I was going to say, Liz, can you answer that one, please?

Liz: Well, that’s a whole other subject, isn’t it?

I’ve got friends who are nurses and doctors at A&E and I’m just like, “Your work is just so important,” because these things are government run and you’re talking about taxes and all that kind of stuff aren’t you, but it’s a difficult thing especially in Guernsey with being so financed based that there is really the disconnect between value that you’re providing to the wider community versus wage.

Michelle: I think that’s actually part of the money education that we should do because I think once we get into the system to over here and everyone’s earning a certain amount you compare yourself to other people and what they’re spending on handbags, and what they’re spending on clothes, and shoes.

Then, it wasn’t really until I left the finance industry and my daughter was coming back from university and I thought, “Well, just get any job,” and we looked at what it would be to work in Waitrose on the checkout, or a hotel receptionist and when I realized how low those wage rates are, it’s minimize wage a lot of them. It was then, even with actually using those establishments I have never stopped to think how little some of these people were being paid,

how many hours that they would have to work to get what I’d got in an hour.

Liz: When my father-in-law retired earlier this year and he was saying for 15 hours work that I was able to do in an office in a week would earn same as he earned for over 40 hours doing a job in the shop, or something.

It’s a crazy amount, but I suppose that was the amount that he was used to having, so he did everything within his means. They paid their house off years ago when interest rates were 15%, so that was their priority. I think, at the end of the day, it’s priorities.

I used to pick strawberries in Canterbury and I earned like £10 a day or £20 was a really good day, was how much we earned.

We worked from like morning to night because it was based on how many strawberries you picked. We would have Asda, for example, would have cheap bread. You had another supermarket that had cheap pasta, another one that had cheap whatever, so we would walk to get two items from one place, one from another, and one from another.

One day we had 46p left in our bank account and so you can’t even get cash out with 46p so we very carefully added all the items up and it came to 42p and we switched 42p and then had our dinner.

That was literally the only money that we had in the world.

When it is that desperate you just do what you have to do and you say, “Right, my priorities are …” they’re say your living, your shelter, your food and stuff at first, and other things come secondary to that.

Ultimately, you need to make sure that you’re comfortable and able to feed yourself and have somewhere to live.

Some of these other things like Netflix, is that really important? If you’re having to save money because you’ve got no money … Or ditch your SkyPlus fix. For example, I ditched Sky a couple years ago, I don’t even miss it, so there’s like £20 a month right there.

Michelle: Oh gosh, you’re reminding me when I was a student, I remember because we were on a very tight budget that there was one day that we had 10p left and that 10p, I remember sitting there with my boyfriend going, “Should we buy a Twix and have a Twix half each or a bath?” To this day, I remember the conversation, I don’t remember the decision.

Liz: I know. I had a similar thing, we had 35p or something and we could choose one chocolate bar we hadn’t had for months, and months, and months.

We got a KitKat and I will never forget how amazing that KitKat tasted because we hadn’t had any chocolate, we’re like, “This is the best chocolate we’ve ever had.” It will live in my memory forever because we just didn’t have it, and so 35p was the best 35p we’ve ever spent.

Michelle: There we are. We started talking about money and we got to chocolate, so that sounds a good place-

Liz: That’s where all good things end, chocolate.

Michelle: Any final words you want to leave us with, Liz?

Liz: No, I think that obviously, everyone’s situation is different. I think it’s just worth whether it’s for your own situation, or for your kids, or what have you just being aware about your own budget and all that kind of stuff.

With kids, having conversations, taking them to the shops and just comparing different items and stuff like that. Then, if it’s for you and you’re interested in investing or just considering about the options and stuff don’t think that you’ve got to go to an investment advisor, there are other places that you can go for information.

Michelle: Remind us again, your podcast is?

Liz: Podcast is TalkingCents, you can look us up on Facebook.

We’ve got investing woman practical tips and the TalkingCents hub which is our financial literacy for kids is coming soon but it will be www.talkingcentshub.com.

Michelle: That’s c-e-n-t-s, rather than-

Liz: C-e-n-t-s, yes.

Michelle: Rather than talking sense.

Liz: That’s correct.

Michelle: What I’m going to do after this is I’m going to go and look up corporate bonds and that FreeTrade?

Liz: FreeTrade, yeah. Freetrade.io.

Michelle: That’s what I’m going to do right now. Thanks ever so much Liz. I feel motivated to go and do that thing that never even got onto my to-do list.

Liz: My pleasure, and if you’ve got any questions then drop me a line. liz@talkingcentshub.com

Michelle: Wonderful. We’ll put your contact details on the show notes. Thanks ever so much.

Liz: Thank you.

Michelle: Until next time, goodbye.

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