If you’re stuck in a financial rut, fear not: author Melissa Browne is here with some tough but refreshing financial tips to help get you where you want to be.
Bank account a little thin on the ground? You’re not alone – Australians have some of the highest personal debt in the world, behind only Norway, the Netherlands, and Denmark. And many young Australians, in particular, have gradually developed a less-than-healthy relationship with their finances.
Fuelled in part by a culture that rewards instant gratification, in which almost everything you could dream of is available at the touch of a button, young Aussies are having a harder time than previous generations when it comes to staying on top of their coin.
Thankfully, Melissa Browne is here to help. Melissa, a self-proclaimed ‘accidental’ accountant and entrepreneur, is the author and mastermind behind Unf*ck Your Finances, a book that aims to help Gen X and Gen Y-ers take control of their finances.
The book, which came out in January, has gone absolutely bananas. It’s taken Australia by storm, has been published in multiple languages and has catapulted Melissa – who had already written two finance books and has columns in The Age and the Sydney Morning Herald – to financial advisor superstardom.
Naturally, we gave her a call to see if we could get her to spill some of her secrets.
Melissa, what are some of the pitfalls young Australians fall into when it comes to their spending and their finances?
I think the easy accessibility to debt. It's so easy to have a store card, credit cards, Zip Pay, AfterPay, payday loans. It's so easy to get credit, and to get yourself into trouble, if you don’t know what you’re doing. That, combined with this comparison culture fuelled by social media – which makes people feel like they need to keep up – and feeling like they’re never going to be able to buy a house, makes people opt out. It’s a bit of a perfect storm at the moment.
I read somewhere that you don’t think budgets work – can you elaborate on that?
I don't believe budgets work in the same way that I don't believe diets work. If they're rough and really restrictive, they might work for a short period of time, but then you’ll just bust out of them. Instead, to go back to the food analogy, having healthy food practices is important. It’s the same with finances.
My suggestion is to split your money up into various accounts – your bills account, your savings account, your life account, your holiday account. And then you automate or you transfer and then you just live through your everyday account. And when that money runs out, you live like a uni student, and you don't raid the other accounts. It's being mindful about what you're spending. And if you’re excited about the life you’re designing, you shouldn’t mind foregoing the other things.
A big thing of yours is about normalising the conversation around money and finances – why do we find it so hard to talk about money with friends?
There's still an ‘eek’-factor attached to money where we just feel really uncomfortable. It's almost like it's not polite to talk about it. I can't ask you what you earn, I can't ask you how much your things cost. I talk about this in the book, but there are exercises you can do together as a friendship group, and it can actually start to give you a language around money that you're comfortable with. You can then ask questions curiously, without judgment, because you've given each other permission. I just think we need to get over it! We need to be having better conversations.
A lot of people focus on making more money as an answer to their problems, but if you don’t address the bad habits you have, more money isn’t going to help, is it?
Exactly. All that happens is that with more money, your spending increases. I know people that are on high six-figure salaries that are in an incredibly poor financial position, because they started with terrible financial habits and they just became worse as they earned more. Things can be easier when you’re making more money, sure, but that doesn’t mean life gets better.
How can being in control of our finances contribute to an overall sense of happiness?
When I talk to people, they say freedom and options are two of the things that are really important to them, and that is really about having choice. Having choice is when you're in control. I think we need to break apart the idea of ‘we are what we have’. That means both designing the life you love and want, but answering the questions: who am I? What do I want out of life? What's the reason I'm here?
I write in the book that I know that Tony, my husband, and I could go back to the tiny, two-bedroom house we lived in 11 years ago because we just don't need stuff. It's nice to have and it's really nice to be in that position, but I don't equate who I am with what I have. I think way too many people do. And, I think if you get caught in that cycle as having to live in the right suburb and going to the right school and wearing the right shoes and riding the right bike and doing all of that sort of stuff, that's when you're in that really dangerous spiral; when that stuff becomes a want not a need.
We’re talking about money, but there’s a much bigger picture here, isn’t there?
Absolutely. I believe the psychology of money and the psychology of how we think about our finances is often the root of most of our problems. But it’s not that complicated, we just need to stop being influenced by what we think we should have and what we think we should feel, and start focusing on what we actually want.