Disclaimer: What you're about to read is of a general nature and doesn't take into account your personal financial situation, needs or objectives. We recommend you seek financial advice before making any decisions about your super and consider the relevant UniSuper PDS and TMD.

Marta: Hi, and welcome to another episode or Super Informed Radio, the official UniSuper podcast where we try to make super, super. I'm Marta.

Lyndon: I'm Lyndon.

Rob: And I am Rob. And in our previous episode of Super Informed Radio, we spoke with Dr. Shumi Akhtar from the University of Sydney, about the psychology of spending versus saving. And Shumi mentioned that it was okay to actually indulge in some spending every now and again, which made us all feel good.

Marta: Oh my gosh, big time. I think she was just...it's nice to hear from an expert or someone who's a little bit more smarter than me in that area to say, "It's okay to spend every now and again."

Rob: It was very comforting indeed. Because we found this topic so interesting, we decided to set up our own spending challenge here at UniSuper. We have our own Marta as well as James Lowndes from our contact centre. They both kindly volunteered to track their spending over a two-week period. James, welcome back to Super Informed Radio.

James: Thank you for having me.

Rob: Now James, how did you find the spending and savings challenge?

James: I found it very confronting. I...putting it down on paper made me aware that I am spending more than I'm earning. And how I did that was I used the ASIC MoneySmart website. It's all there, it's free.

Marta: They have a free budget planner tool that is quite dynamic, isn't it?

James: Yes. And it was all done within 20 minutes.

Marta: Wow.

James: And putting it down on paper was quite cathartic for me because now I realise...well, seeing where the money is going.

Rob: So cathartic and confronting?

James: Cathartic and confronting.

Lyndon: Okay. Marta, what about you? How did you find it?

Marta: I really liked it. I didn't actually change that much of my spending habits but I used...being a millennial, I used an app called Pocketbook, which is free. Not sponsored plug, just really liked the app, to track the categories. I was interested in where my money was going. I knew that I had two sort of mandatory payments, like my rent and my loan payment. And then the rest of it was sort of up to me to how I divvied that and then looked after myself. I found it really useful but reassuring that I wasn't going over my...I wasn't spending more than I was earning.

Lyndon: Now, I'm also interested in the mechanics of how this worked. So did you literally, for the two-week pay period that we're talking about, enter in, you know, to your...what's it? A spreadsheet or calculator, James or the app, Marta? Did you...is that every time you bought a coffee or every time you bought...you know, did your groceries, you made that effort to track it?

James: I wrote it down on paper and then used it all...put it all...multiplied by 26 fortnights to get a yearly budget for my...

Lyndon: Oh, wow. So you went above and beyond, James?

James: Yes.

Lyndon: And Marta, you were the same? You just did the total?

Marta: Yeah. So the app actually synced with my bank account. So that took out that hassle for me. So when I used my card to pay for stuff, it would just log it and then I'd have to just jump in and check the categories of certain things. Like if it picked up that I went to Deliveroo, then that picked it up as like food and entertainment. Or if I went to Woolworths, it picked it up as groceries. And I just sort of created some bespoke categories to suit my own life and needs. But yeah, that's what I did too.

Lyndon: That is fantastic. And so just in terms of what you found you spent a lot of your cash on over that period. When we last caught up in the last episode of the podcast, James, you mentioned some of your key expenditure was...

James: Secondary education.

Lyndon: Secondary education. I think there was a mortgage there?

James: Yeah.

Lyndon: Marta, you've already mentioned your expenses. Were there any surprises, did you find? Let's start with you, Marta. Any surprises that you found about your spending habits?

Marta: No actually. Like a lot of...I'm very conscious about my health and personal care. So I knew...so just looking at the app now, I'd say that, like, about 32% of my spending went on, like, my gym fees and health stuff. So that was very...and that stuff's important to me and I value that, so I don't regret that at all. But then the next sort of big chunk was 20% on entertainment drinks.

Rob: You gotta live.

Marta: Exactly. So, you know, that sort of speaks for itself. Maybe I can probably pare back on that. But then the other stuff like food, miscellaneous spending money, car costs for my Flexicar rent. Yeah, no surprises there.

Lyndon: And what about yourself, James?

James: Yeah, look, I thought I was living frugally with, you know, driving with gas and on car and bringing my lunches. But the bottom line was I was spending more than $15,000 a year than what I was earning. So obviously a couple of things that get looked at now, the same as Marta, drinks and entertainment, which I budgeted as about $50 a week. But yeah, it...putting it down on paper is the way to go.

Marta: Yeah, I think so. Yeah. I think so too. It kind of forces you to...there's no hiding behind the numbers, right?

James: I agree.

Rob: Well, it's one thing to have Lyndon and I sit here and listen to your spending and savings.

Marta: It is. And like confirm that what we're doing is okay.

Rob: Yes.

Lyndon: Interrogating you.

Rob: That's right. But we thought it would be great to bring in a professional. So we've invited in Alexia Jackson, Private Client Adviser here at UniSuper, to provide some insight I guess, for the rest of the listeners. But also for yourselves, as to how you stacked up. And perhaps some tips to improve your savings. So welcome to Super Informed Radio, Alexia.

Alexia: Thank you. Thank you for inviting me.

Rob: Now Alexia, you've had a bit of a listen to both Marta and James' spending habits. What do you make of that?

Alexia: Well, both of them are in different stages of life. Both of them have different lifestyles. Marta's living in the city, you know, socialising more often. Whereas James has a younger family, commitments such as school fees and a mortgage that he's paying off. That debt servicing can be quite a big goal for many people in their middle years. So totally understand how that sort of commitment comes about. The difference is with Marta, is that she's also got her own debt strategy as well. And so paying down that debt is also a key goal for her. It's different to a mortgage, though, because it doesn't necessarily have that financial reward side of it that a mortgage has got an asset backing at it.

James: If I could chime in, you've had a look at my budget?

Alexia: Yeah.

James: And are there any glaring things that need to be addressed?

Alexia: Well James, when I was looking at your budget, I did look and you did an excellent job using the MoneySmart calculator. Because until you put it down on paper, you're sort of dealing with the unknown. And your spending habits can't be understood until you actually look at the different categories and where you're directing your cash flow. So that was a good step in the right direction, making the conscious decision to analyse where you're at. When I was looking at it, you're doing some great things.

I mean, some of it is debt repayment, some of it is actually paying off or putting contributions to super, even though you didn't actually include that. It comes out of your salary already and it's building for your retirement savings. So that's also a good step in the right direction. The things that you could think about is what's discretionary and what's non-discretionary spending. And so there were some donations that you do there, which is a great thing that you're doing helping the community and it's something that's close to your heart.

But you could consider that if you got in financial stress and you couldn't actually work, whether that cash flow could be used to help meet your day-to-day needs. Question to you is more around if something was happening to you if you are unable to work, if you were sick for the short-term, how would you fill the gap in your income need and your actual expenditure?

James: Yes, certainly. So I've got sick leave, obviously, a lot of sick leave built up. Once that's used, I've got income protection insurance cover in my superannuation, which is 75% of my salary in the event of sickness and accident and the waiting period's 90 days. So I just need to get through that 90 days with sick leave.

Alexia: Yeah. And I mean, that's really important. Does it give you comfort to know that if you were unable to work, you've got that protection there to help you out?

James: Yeah. It'd be very much so. Very important.

Lyndon: Now just quickly jump in there, Alexia, because this is a topic that comes up often for us in superannuation. Is that a lot of people don't actually realise that they have insurance through their super. Can you tell us a little bit more or just expand a little bit on that, how that comes to be?

Alexia: Yeah. So when you're joining a superannuation fund, whether it's UniSuper or another fund, often there's what's called default cover. And that's automatic cover that is in place when you first join. With UniSuper members, it's usually linked to their salary so it's really good on that basis. For UniSuper members with defined benefit schemes, it's a little bit more complicated. But the best way if you're looking to find out where you stand as an individual, is to review your annual statement because your insurance cover is listed there.

If you ever have any questions, there's advice services or member online services that you can ask questions of our team to give you guidance on where you're at. Because one of the biggest thing is the fear, when you're budgeting and you're looking at how much you're earning and how much you're spending, if there's a gap or...if it's even not short-term, it's long-term that you're out of work for a year or two, how do you survive that period? That's very important.

Marta: Yeah. One of the things that I did actually, like, talking to sort of the income protection. Well, when once I did refinance my debt and sort of figure out that's my mandatory payment, I was like, "Okay." And if the worst case scenario was to happen, how would I manage that? So I actually jumped onto MemberOnline and had a look at, "Oh yeah. That's how much I've got." It's actually really clear and I had no idea that, even though I work in super, that I could go and check and go, "Okay. So that's how much I'd get."

But then there's that niggly thing about the waiting periods depending on who you're with, where you could potentially be without an income. So I actually did this thing, creating a bit of a buffer account of a couple of grand that covers my rent and other mandatory expenses just in case something happens and I don't have access to that cash straight away.

Alexia: What was the biggest lesson that you learned from this exercise that you've done?

James: That I'm spending more than I'm earning. I was conscious about it but to see it in black and white, $15,000 in the red each year, I need to address that. I realise...we talked about this in the first podcast, that I've got two more years with the children being 14 and 16, before the private education finishes. And then there might be university, but who knows?

Marta: They're on their own.

James: So after that, it will be a lot easier with taking into account the school fees being $8,000 or $7,000 a year.

Marta: I think for me it was...I've sort of learned to say no to things. Like if friends call, "Oh, come out here. Do this." And if I, you know, hand on my heart consciously think, look, I shouldn't really because I can't...not that I can't afford it, but I shouldn't. I just say, "No." I don't know if that comes with age as well where you stop caring so much about having to be everywhere all the time. But having talked to a couple of friends about this and having it on the public record through the podcast, I think talking to your friends about money and then going, "Well, this is the reason why I can't do this."

People tend to understand. And I've just been much more comfortable with saying no to certain things. Therefore saving and being able to divert those monies somewhere else. Yeah.

Alexia: And so with your debt repayment, Marta, have you started to pay more off it now because there would be a high-interest rate not being related to a mortgage? So...

Marta: Yeah. Definitely. So I do the, like, standard $503 per fortnight and then just before the next pay cycle, I'll go jump in. And if there's anything else left over, I'll just put that in, even if it's $20. Like, you know, that's...having put my money away into my rainy day account like my savings, but any sort of extra things, that go on to the debt. Yeah.

Alexia: Sounds like a good strategy. James, are you concerned about the gap in your income and expenses impacting your retirement strategy?

James: I am. I'm 50 years of age so I've got, you know, 10, 15 years left to make hay while the sun shines or make every post a winner. So at the moment, I believe I've got a shortfall in superannuation. So I do need to make contributions on top of my employer contributions at some stage. I need to start contributing. At the moment, not feasible.

Alexia: Okay. So retirement adequacy is a key thing for most members and everyone as they get to older ages, over 50 or thereabouts, the same age as you, they start to get concerned. Do I have enough? What will I need in retirement and how long will it last? So those big questions are a big key. If you're looking at where you're at today, James, you could be thinking about what you're going through is the short-term thing whilst your children are at private education. Thinking about your super contributions, you're already doing above the 9.5% standard rate that most Australians are doing.

As a UniSuper member, you're doing a lot more than that. So also that's a good step in the right direction. And you're using pre-tax dollars, so you're actually saving tax by doing it that way. So that's also a benefit that you're taking advantage of. So there's a lot of good things there for you. If you wanted to know, will I have enough? There's a number of calculators on the UniSuper website. There's the one that you can compare yourself to other UniSuper members, just to see where you stand for your demographic, for your age and that sort of thing.

In addition, you could also look at some of the other calculators on, you know, how do I improve my UniSuper contributions if I'm not using my cash flow effectively? Could I increase them or change them? And also, what else should I be considering as far as can I see how much I might have based on where you stand today? So you can start with your balance in super today and say, "This is how much I'm putting in. How much will it be worth when I reach age 60?" Because I don't know about you, James. Do you wanna wait till you're 65 to retire or you wanna retire a little bit earlier?

James: A little bit earlier.

Alexia: Yeah?

James: I will have a look, Alexia, now that you've pointed that out.

Lyndon: And if members would like to take advantage of those calculators on the UniSuper website, I believe the URL is unisuper.com.au/calculators. There are other calculators there too, Alexia. We've spoken briefly about insurance today. Some of our members can use one of those calculators to, you know, put in their...a little bit like what we've done in this exercise. What their expenses are and all the rest of it and sort of figure out what could be right for them. It doesn't tell them, does it? But it gives them an idea.

Rob: Absolutely. And as our discussion sort of shifted to retirement now, I'm keen to ask both Marta and James what their ideal retirement might look like. And that's still a way off...particularly for you, Marta. But just given what we've talked about today, how do you see your retirement? Your ideal retirement?

Marta: My ideal retirement, I'd retire tomorrow. No. In all seriousness, I would like...oh. I'd probably like to have a property here and potentially overseas in Poland, and be able to flip between the two, chasing the sun, as they say. And, yeah, just having a bit of a...having a comfortable retirement. So being able to enjoy travelling and entertainment and also have enough to look after my health and potential family as needed.

Rob: Lovely. And yourself, James?

James: Yeah. Look, it's not too far away for me at 50. Look, I obviously, I need to start thinking about it. A comfortable retirement for me would be paying off my home loan, then I could, you know, concentrate on the finer things in life, you know, food...fine food and fine wine. Bit of voluntary work in retirement. And I would imagine grandchildren on my lap. So all going well. But that's a few years down the track.

Rob: Well Alexia, thank you so much for joining us at Super Informed Radio here today. We really appreciate you sharing your insight and your wisdom. And I think it's certainly given a lot of food for thought for both James and Marta.

James: Very much so.

Rob: And thank you, James, for joining us also.

James: Thank you for having me.

Alexia: Thank you.

Rob: So there you have it. It was great to have Alexia Jackson in, chatting with Marta and James about their spending and savings habit. And we've given them something to think about. I hope we've given something for you to think about also.

Lyndon: And if we have given you something to think about, just recapping once again those resources, a few of those resources that are on our UniSuper website, go to unisuper.com.au/calculators, for some of the calculators Alexia was highlighting there. There's a retirement adequacy calculator. There's a compare me tool, which is the one where you can compare yourself to other UniSuper members in your demographic and so on. And also, the insurance needs calculator.

There's also many other calculators too, so check those out as well. MemberOnline, if you'd like to check out, you know, your account and situation, that's at unisuper.com.au as well. There's a login there. And if what we've spoken about today has prompted you to think about potentially seeking advice on your own spending and saving and future retirement, you can get in touch with UniSuper Advice on 1800 UADVICE, which is 1800 823 842.

Marta: And that brings us to the end of another episode of Super Informed Radio. How sad?

Lyndon: We'll be back.

Rob: We will.

Marta: Remember you can listen to us on the Apple podcast or SoundCloud or give us a rating through those channels, it helps the podcast out a lot. You can also catch up on the past episodes at unisuper.com.au/podcast. Also if you've got any questions that you'd like us to maybe explore in the next episode or in future episodes, hit us up at superinformed@unisuper.com.au. Thanks very much.

Lyndon: And we'll see you next time.

Rob: Bye bye.

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