Gareth Colgan Aussies Out Of Control With Personal Finances Interview

Gareth Colgan Aussies Out Of Control With Personal Finances Interview

The new financial year starts this week and research released reveals an alarming number of Australians feel their finances are unmanageable. 80 percent of people admit to being worried about their future financial security or feel that they don't have control of their finances, painting a worrying picture for the future.

The study reveals the majority of Australians feel stressed about money, with 73 percent of the country claiming they are anxious about their current financial situation. Nearly half of the population (43 percent) also admit they find it uncomfortable to even talk about money.

Over 1,000 people took part in the nationwide study conducted by financial planning consultancy, Eqeus, which was designed to find out about the personal finance habits of Australians.

John Hollyman, Managing Director of Eqeus, comments: 'It's a big concern that the vast majority of people feel so out of control with their finances - this has serious implications for the future of individuals and families, not to mention the larger scale effect on the economy - particularly when it comes to how financially prepared people will be for retirement.

'We are seeing increasing numbers of people of all ages who simply don't know where to start with financial planning or who to turn to for advice which is fuelling the stress levels," he said.

Less than one in four people (23 percent) regularly set financial goals or track their progress suggesting a sense of complacency and apathy amongst a large portion of the country.

The study shows that the main barrier to setting goals and planning for the future is the feeling that there's little point, as any money coming into the household is already absorbed by bills and other living expenses, and it's therefore impossible for them to think ahead. This applies to both low and high income households.

The apathy factor is equally concerning, with one in four people (24 percent) admitting they haven't set goals because they -haven't got round to it'.

Hollyman comments: 'The research suggests a sense of hopelessness; many people feel there is no point in trying to improve their financial situation with no money left to play with after the daily outgoings. Others simply don't see setting financial goals as a priority.

'The reality is that ignoring personal finances will have consequences whatever stage of life people are in. We all need to take financial responsibility to ensure our personal security for the future. No matter what your current situation, there are always options available to help both manage the day- to-day and prepare for the important moments in life like saving for a holiday, buying a first home, sending children to school or getting ready for retirement," said Hollyman.

Hollyman and his team of financial planning experts at Eqeus recommend Australians follow five simple tips to help get their personal finances on track for this financial year:

For more information about Eqeus, please visit www.eqeus.com.au

Interview with Gareth Colgan

Question: How are most women handling their finances?

Gareth Colgan: In the personal finance research study commissioned by Eqeus, the findings show that the majority of Australians (73%) are stressed about money, with women (78%) notably more stressed than men (69%). 82% of females admit to feeling out of control with their finances or they are concerned about their future financial security.

At Eqeus we are finding that many of our female clients value education when it comes to finances. Whilst the research shows that 45% of women find it uncomfortable to talk about finances, in our experience we are seeing increasingly more cases of women who are the driver behind seeking out initial advice. They want to be educated enabling them to make smart financial decisions.


Question: Is it important to have a written budget?

Gareth Colgan: Firstly, we like to use the term 'spending plan" rather than a budget. We have found that when people hear the word budget, it conjures up images lacking fun. These negative connotations mean that people are less likely to commit, leading to them not achieving their goals and a loss of faith in the process.

With a spending plan, this allows you to have spending and saving in the same plan so that you are not missing out on the things that are important to you and enjoy life along the way. It also allows FUN.


Question: What should we be including in our budgets?

Gareth Colgan: The spending plan includes, living expenses (necessities) as a means to minimise stress, an amount to fund the goals that you've said are important to you now and in the future, as well as the lifestyle expenses so you can feel that you are not going without.


Question: Can you provide your top five tips for creating a family financial plan?

Gareth Colgan: Tip 1 - Start with WHY
Before you do anything else, stop and think why you want to make a financial plan. What do you love to do, who are the important people in your life and how will a good plan help you look after these things.

Tip 2 - Set SMART Goals 'I don't know what to do, so I will do nothing…" Regaining control means working out where you want to go and prioritising this. Set your goals and break these down in to steps to reach these goals. Make them SMART!

Tip 3 - Set a SPENDING Plan (link this to your Goals)
This is not a Budget or a Savings Plan, but it is a Spending Plan that is linked to your unique goals you are trying to achieve (everything has a cost). In this way you provide yourself with permission to spend in the areas that are most important to you. Knowing that in doing this, you will be able to celebrate the goals that you set above.

Tip 4 - TRACK your Plan (Monthly at a Minimum to start with, some do it weekly)
Are you staying on track with your spending plan? If not, why? Where is it going wrong and is this because you are losing control or is it because the goal you set and actual reality don't match up. If you aren't tracking this, then without you even realising you may be losing control again.

Tip 5 - CELEBRATE your Achievements
For each goal and for meeting your spending plan, celebrate these achievements as you deserve to, if you have met your goals (just make sure that the celebration isn't too big that you go back to being out of control again)


Question: What can we be doing different to set ourselves up for success over the next year?

Gareth Colgan: START. A journey of a thousand miles starts with a single step. Sometimes all you have to do is take the first step and at Eqeus, we believe the first step is to ask yourself - What you value and what you want to achieve. Talk to your family and loved ones and be proactive rather than reactive 20 years from now.


Question: Why do you believe the majority of Australians (73%) are stressed about money?

Gareth Colgan: Through the research we have discovered that less than one in four Australians habitually set goals and track their progress. So much of our lives are spent living in them and not working on them. There is a real feeling of helplessness for many people which stems from the feeling that any money that comes in is absorbed with bills and other living expenses.

But at Eqeus, we believe that with good planning this can reduce stress and help you activate the life you want to live today and tomorrow.

Question: Does it make it easier to talk about money even if it makes us uncomfortable?

Gareth Colgan: Having a financial plan in place, which in effect is a roadmap on how you will make steps towards achieving your goals, puts you back in control.

Knowing what's important to you, setting your goals and working towards these in an environment where there is no blame or criticism, as you are looking forward not backwards, can alleviate the taboo of speaking about money. Working with an independent person such as a financial planner can help you create a meaningful financial plan and provide an objective view of where you are and how you're going to get there.


Question: What type of money goals should we be setting and how often?

Gareth Colgan: Every person has an individual situation with certain needs, values and wants. Some people may have a goal to send their children to a private school, or some people want to go on a dream holiday.

It is important to have written goals that can be measured and reviewed regularly so you know when you have achieved the goal. At Eqeus we encourage our clients to celebrate their successes.


Interview by Brooke Hunter