Money & Banking

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Gift-giving taboos that aren’t as bad as you think

<p><em><a href="https://theconversation.com/profiles/mary-steffel-213379">Mary Steffel</a>, <a href="https://theconversation.com/institutions/northeastern-university-1644">Northeastern University</a> and <a href="https://theconversation.com/profiles/elanor-williams-213382">Elanor Williams</a>, <a href="https://theconversation.com/institutions/indiana-university-1368">Indiana University</a></em></p> <p>There are many social norms that dictate gift-giving, including when, how and what to give as gifts.</p> <p>Interestingly, these norms don’t seem to be about making sure that recipients get the gifts they want. What makes for a good or bad gift often differs in the eyes of givers and recipients.</p> <p>In fact, behavioral science research shows that gifts that may seem “taboo” to givers might actually be better appreciated by recipients than they might think.</p> <h2>Taboo #1: giving money</h2> <p>Givers often worry that giving cash or gift cards might be seen as impersonal, thoughtless or crass. Yet <a href="http://static1.squarespace.com/static/5399fab2e4b083bff5af4518/t/5499c4fee4b0bb5843a0b371/1419363582068/Giver-Recipient+Discrepancies+in+Gift+Giving+Draft+12-17-14+FINAL.pdf">research</a> we have done with Robyn LeBoeuf of Washington University in St Louis shows that recipients prefer these more versatile gifts more than givers think they do.</p> <p>We find that givers underestimate how much recipients like seemingly impersonal monetary gifts, mistakenly thinking that they’ll prefer a traditional gift to a gift card, for instance, or a gift card to cash, when the opposite is true. And, contrary to givers’ expectations, recipients think that these less personal gifts are more thoughtful, too.</p> <p>Why don’t givers realize this? We find that givers tend to focus on recipients’ enduring traits and tastes and choose gifts that are tailored to those characteristics, and recipients are more likely to focus on their varying wants and needs and prefer gifts that give them the freedom to get whatever they currently need or desire most.</p> <p>Prompting givers to shift their focus from what recipients <em>are</em> like to what they <em>would</em> like makes them more likely to choose the versatile gifts that recipients prefer.</p> <h2>Taboo #2: giving a practical gift</h2> <p>A classic sitcom plotline involves the <a href="http://tvtropes.org/pmwiki/pmwiki.php/Main/GiftGivingGaffe">gift-giving gaffe</a>, with a prime example being the husband who buys his wife a vacuum cleaner or something else practical when the occasion seems to call for something more sentimental.</p> <p>These blundering husbands might not be as wrong as you’d think, though: research suggests that practical gifts are actually better-liked by recipients than givers expect. For instance, <a href="https://msbfile03.usc.edu/digitalmeasures/wakslak/intellcont/baskin%20wakslak%20trope%20novemsky%20(2014)-1.pdf">research</a> by Ernest Baskin of Saint Joseph’s University and colleagues demonstrates that givers tend to focus on how desirable a gift is, when recipients might prefer they think a little more about how easy that gift is to use.</p> <p>A gift certificate to the best restaurant in the state might not be so great a gift if it takes three hours to get there; your recipient might think that a gift certificate to a less noteworthy but closer restaurant is actually a better gift.</p> <p>In fact, even gifts that aren’t much fun at all, like the fabled vacuum cleaner, can make for great gifts in recipients’ eyes. <a href="https://static1.squarespace.com/static/50a5e160e4b0e80bad9bfe3d/t/567755bbc21b8664a205e822/1450661307640/SJDM+2015+Submission_ER_EFW.pdf">Work</a> that Williams has done with Emily Rosenzweig of Tulane University shows that recipients have a stronger preference for useful rather than fun gifts than givers expect them to have.</p> <p>We find that the best gifts people have received are much more useful than the best gifts they think they have given, and they want givers to put less emphasis on the fun features of a gift and more emphasis on its useful features than they themselves would when picking out a gift to give to someone else.</p> <h2>Taboo #3: giving an ‘uncreative’ gift</h2> <p>Givers often feel pressure to think of creative gifts that demonstrate how much thought they put into the gift and how well they know the recipient.</p> <p>This means that, even when they are given explicit instructions on what to purchase, givers frequently ignore recipients’ wish lists or gift registries and instead try to come up with ideas for gifts by themselves. Givers think that their unsolicited gift ideas will be appreciated just as much as the ideas on wish lists and registries, but <a href="http://static1.squarespace.com/static/55dcde36e4b0df55a96ab220/t/55e746dee4b07156fbd7f6bd/1441220318875/Gino+Flynn+JESP+2011.pdf">recipients would rather</a> have the gifts they requested.</p> <p>Another implication of this is that givers often pass up gifts they know would be better-liked in favor of getting different gifts for each person they give a gift to, according to <a href="http://static1.squarespace.com/static/5399fab2e4b083bff5af4518/t/539a15b3e4b0bf580fb57539/1402607027977/SteffelLeBoeuf2014.pdf">research</a> by Steffel and LeBoeuf. Givers feel like they are being more thoughtful by getting something unique and creative for each person on their shopping list, but recipients would rather have what’s on the top of their wish list, especially if they are unlikely to compare gifts.</p> <p>We find that encouraging givers to consider what recipients would choose for themselves before choosing a gift makes them more likely to go ahead and get the same better-liked gift for more than one recipient.</p> <h2>Taboo #4: giving a gift that can’t be unwrapped</h2> <p>The very idea of exchanging gifts suggests to people that they need to give something that can be tied up with a pretty bow and then unwrapped, but, in fact, some of the best gifts aren’t things at all.</p> <p>A <a href="http://static1.squarespace.com/static/5394dfa6e4b0d7fc44700a04/t/547d589ee4b04b0980670fee/1417500830665/Gilovich+Kumar+Jampol+%28in+press%29+A+Wonderful+Life+JCP.pdf">wealth of research</a> has shown that money is often better spent on experiences than on material goods, and this seems to be true for gifts as well as personal purchases.</p> <p>Joseph Goodman of Washington University in St Louis and Sarah Lim of Seoul National University <a href="http://apps.olin.wustl.edu/faculty/goodman/Giving%20Happiness.pdf">have found</a> that givers think that material items that can be physically exchanged and unwrapped make for better gifts, when gifts that are experiences actually make recipients happier.</p> <p>Experiential gifts have benefits beyond simply boosting their recipients’ enjoyment, as well. Cindy Chan of the University of Toronto and Cassie Mogilner of the University of Pennsylvania <a href="https://www.rotman.utoronto.ca/-/media/Files/Programs-and-Areas/Marketing/papers/ChanMogilner2013.pdf">have shown</a> that receiving an experiential gift prompts stronger emotional reactions in recipients, and this makes them feel closer to the person who gave them the gift. In other words, opt for the swing dance lessons over the sweater – it will make the recipient happier, and bring the two of you closer together, to boot.</p> <h2>If you still can’t think of a gift…</h2> <p>Gift-giving, especially around the holidays, can be a stressful process for both giver and recipient. An understanding of which gift-giving norms are misguided can perhaps relieve some of this stress and lead to better gifts and happier recipients (and givers, too).</p> <p>But even if givers ignore this advice, there is hope: one last taboo to bust is the taboo on regifting. According Gabrielle Adams of the London Business School and colleagues, givers <a href="http://www.people.hbs.edu/mnorton/adams%20flynn%20norton.pdf">aren’t as bothered</a> by regifting as recipients think.</p> <p>Even if what you get is not what you want, you can pass it along to someone else, and hope that next time, the norms will work in your favor.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/52293/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /></p> <p><a href="https://theconversation.com/profiles/mary-steffel-213379"><em>Mary Steffel</em></a><em>, Assistant Professor of Marketing, <a href="https://theconversation.com/institutions/northeastern-university-1644">Northeastern University</a> and <a href="https://theconversation.com/profiles/elanor-williams-213382">Elanor Williams</a>, Assistant Professor, <a href="https://theconversation.com/institutions/indiana-university-1368">Indiana University</a></em></p> <p><em>Image credits: Getty Images </em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/gift-giving-taboos-that-arent-as-bad-as-you-think-52293">original article</a>.</em></p>

Money & Banking

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The 4 biggest gift-giving mistakes, according to a consumer psychologist

<p><em><a href="https://theconversation.com/profiles/julian-givi-1395671">Julian Givi</a>, <a href="https://theconversation.com/institutions/west-virginia-university-1375">West Virginia University</a></em></p> <p>A good gift can elicit a surge of happiness and gratitude in the recipient. It also feels great to give, <a href="https://theconversation.com/whats-the-point-of-holiday-gifts-173306">with psychologists finding</a> that the joy of giving a gift is more pronounced than the pleasure of receiving one.</p> <p>Unfortunately, there are times when you receive a gift and you have to force a smile and fake your gratitude.</p> <p>I’m a consumer psychologist <a href="https://scholar.google.com/citations?user=wjAq_TcAAAAJ&amp;hl=en">who specializes in gift-giving research</a> – in particular, gift-giving mistakes.</p> <p>Here are four of the most common ones.</p> <h2>1. Prioritizing the big reveal</h2> <p>One way givers can err is by focusing too much on <a href="https://doi.org/10.1177/0963721416656937">the moment the recipient will open the gift</a>.</p> <p>Givers want their gift to be <a href="https://doi.org/10.1086/675737">desirable</a>. They hope <a href="https://doi.org/10.1016/j.jesp.2011.03.015">to surprise</a> the recipient and <a href="http://dx.doi.org/10.2139/ssrn.2733341">put a smile</a> on their face.</p> <p>A chocolate fondue fountain might meet these criteria – it’s quirky and sure to elicit curiosity and smiles from onlookers.</p> <p>However, when people receive a gift, they care less about the moment the bow comes off, and instead think about the weeks and months ahead.</p> <p>People want gifts that are <a href="https://www.acrwebsite.org/volumes/1023703/volumes/v45/NA-45">useful</a> and <a href="https://doi.org/10.1086/675737">reliable</a> and <a href="https://doi.org/10.1016/j.jesp.2011.03.015">meet their needs</a>.</p> <p>How often would a chocolate fondue fountain realistically be used?</p> <p>Compare that to a new coffee maker, which could see action every day. Sure, it isn’t a novelty – and probably won’t elicit “oohs” and “ahhs” on Christmas Day – but the recipient will be quite happy to have it on hand when their alarm rings each morning.</p> <h2>2. Unique and new are overrated</h2> <p>Another factor that can lead givers to go wrong involves unwritten rules for what constitutes good gift-giving practices.</p> <p>Givers often focus on these rules more than they should. For example, they may <a href="https://doi.org/10.1016/j.jbusres.2020.05.023">avoid giving the same gift</a> to someone in back-to-back years because this goes against the norm of giving a unique gift each year. Givers also often <a href="https://doi.org/10.1348/014466604x23428">refrain from giving used products</a> as gifts because this violates the unspoken rule that a gift should be brand new.</p> <p>In contrast, recipients are quite open to gifts that violate these norms.</p> <p>If someone loves a certain type of wine, they’re <a href="https://doi.org/10.1016/j.jbusres.2020.05.023">more than happy to receive it</a> in subsequent years. And if one digital camera is lightly used but possesses several innovative features, while another is new but has fewer features, people <a href="https://doi.org/10.1348/014466604x23428">are happy to receive the used one</a>.</p> <h2>3. Being risk-averse</h2> <p>Givers can make missteps when they avoid gifts that they see as too risky.</p> <p>Consider sentimental gifts, like a scrapbook or a nostalgic memento.</p> <p>Studies have shown that recipients <a href="https://doi.org/10.1016/j.jcps.2017.06.002">love these gifts</a>; they <a href="https://doi.org/10.1037/pspa0000036">elicit happiness for extended periods of time</a>.</p> <p>Givers, however, tend to <a href="https://doi.org/10.1016/j.jcps.2017.06.002">shy away from sentimental gifts</a> because they see them risky – sure, they could be a home run, but they could also whiff. Doubts can creep into shoppers’ heads as they consider sentimental gifts: What if it comes across as sappy? What if the recipient thinks I’m being cheap?</p> <p>And so people tend to opt for <a href="https://www.sciencedirect.com/science/article/abs/pii/S105774081730044X">safer, superficial gifts</a> that they assume will be at least somewhat well-liked. Or, to continue with the baseball analogy, givers are happy to take the sure single.</p> <p>As another example, consider material goods versus experiences.</p> <p>When giving gifts, people often opt for <a href="https://doi.org/10.1093/jcr/ucy010">tangible objects over experiences</a> because material goods are on the safer side – almost everyone could use a new appliance or a new shirt. Experiences are trickier; they require a bit more of an understanding of who the recipient truly is – not everyone loves going to see the symphony.</p> <p>Yet recipients tend to be <a href="https://doi.org/10.1002/jcpy.1281">more open to experiences than givers anticipate</a> – and these gifts <a href="https://www.acrwebsite.org/volumes/1017575/volumes/v42/NA-42">are actually more likely to make people happier</a> than material goods.</p> <h2>4. Does the thought really count?</h2> <p>Givers can also err by wanting their gift to appear especially thoughtful.</p> <p>Of course, recipients appreciate thoughtfulness – but not when it comes at the expense of receiving something that’s actually useful.</p> <p>This plays out when givers are shopping for multiple people. They’ll often <a href="https://doi.org/10.1086/674199">choose unique gifts for each recipient</a>, rather than give the same gift to everyone, because a distinct gift for each person will make them feel as though they put more time and effort into gift selection. People do this even if they realize that some recipients will be receiving less desirable gifts.</p> <p>You’ll also see this happen with <a href="https://www.acrwebsite.org/volumes/1020146/volumes/v43/NA-43">gift cards</a>. Givers often choose specific gift cards – to a particular clothing store or restaurant, for example – that reflect the interests or tastes of the recipient.</p> <p>But recipients are more open to gift cards that give them more flexibility and freedom – think an Amazon or Visa gift card. That way, they can decide whether to splurge on a new sweater, dine out at their favorite restaurant – or do both.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/195169/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /></p> <p><em><a href="https://theconversation.com/profiles/julian-givi-1395671">Julian Givi</a>, Assistant Professor of Marketing, <a href="https://theconversation.com/institutions/west-virginia-university-1375">West Virginia University</a></em></p> <p><em>Image credits: Getty Images </em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/the-4-biggest-gift-giving-mistakes-according-to-a-consumer-psychologist-195169">original article</a>.</em></p>

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What is the ‘sunk cost fallacy’? Is it ever a good thing?

<p><em><a href="https://theconversation.com/profiles/aaron-nicholas-1487960">Aaron Nicholas</a>, <a href="https://theconversation.com/institutions/deakin-university-757">Deakin University</a></em></p> <p>Have you ever encountered a subpar hotel breakfast while on holiday? You don’t really like the food choices on offer, but since you already paid for the meal as part of your booking, you force yourself to eat something anyway rather than go down the road to a cafe.</p> <p><a href="https://www.sciencedirect.com/science/article/pii/0167268180900517">Economists</a> and <a href="https://www.sciencedirect.com/science/article/pii/0749597885900494">social scientists</a> argue that such behaviour can happen due to the “sunk cost fallacy” – an inability to ignore costs that have already been spent and can’t be recovered. In the hotel breakfast example, the sunk cost is the price you paid for the hotel package: at the time of deciding where to eat breakfast, such costs are unrecoverable and should therefore be ignored.</p> <p>Similar examples range from justifying finishing a banal, half-read book (or half-watched TV series) based on prior time already “invested” in the activity, to being less likely to quit exclusive groups such as sororities and sporting clubs the more <a href="https://psycnet.apa.org/record/1960-02853-001">effort it took to complete the initiation ritual</a>.</p> <p>While these behaviours are not rational, they’re all too common, so it helps to be aware of this tendency. In some circumstances, you might even use it for your benefit.</p> <h2>Sunk costs can affect high-stakes decisions</h2> <p>While the examples above may seem relatively trivial, they show how common the sunk cost fallacy is. And it can affect decisions with much higher stakes in our lives.</p> <p>Imagine that Bob previously bought a house for $1 million. Subsequently, there’s a nationwide housing market crash. All houses are now cheaper by 20% and Bob can only sell his house for $800,000. Bob’s been thinking of upgrading to a bigger house (and they are now cheaper!), but will need to sell his existing house to have funds for a downpayment.</p> <p>However, he refuses to upgrade because he perceives a loss of $200,000 relative to the original price he paid of $1 million. Bob is committing the sunk cost fallacy by letting the original price influence his decision making – only the house’s current and projected price should matter.</p> <p>Bob might be acting irrationally, but he’s only human. Part of the reason we may find it difficult to ignore such losses is because losses are psychologically more salient relative to gains – this is known as <a href="https://psycnet.apa.org/record/1985-05780-001">loss aversion</a>.</p> <p>While most of the evidence for the sunk cost fallacy comes from <a href="https://link.springer.com/article/10.1007/s40685-014-0014-8">individual decisions</a>, it may also influence the decisions of groups. In fact, it is sometimes referred to as the <a href="https://www.nature.com/articles/262131a0">Concord fallacy</a>, because the French and British governments continued funding the doomed supersonic airliner long after it was likely it would not be commercially viable.</p> <p>Another example is drawn-out armed conflict that involves a large loss of lives for the losing side. Some may think it impossible to capitulate because the casualties will have “died in vain”.</p> <h2>Knowing about sunk costs can help you</h2> <p>If you find yourself justifying behaviour due to costs you’ve paid in the past rather than circumstances of the present, or predictions of the future, it’s worth checking yourself.</p> <p>Identifying sunk costs allows you to cut your losses early and move on, rather than perpetuating larger losses. This is apparent in the housing example: the larger the crash, the cheaper the bigger house; and yet the larger the crash, the greater the perceived loss from selling the existing house. Hence, the greater the loss in opportunity inflicted by the sunk cost fallacy.</p> <p>If you find it difficult to overcome the sunk cost fallacy, it may help to delegate such decisions to others. This may include the decision of whether to <a href="https://direct.mit.edu/rest/article-abstract/93/1/193/57894/The-Flat-Rate-Pricing-Paradox-Conflicting-Effects">go to a buffet</a> or subscribe to Netflix, with the latter potentially being a double whammy: one may feel compelled to binge-watch due to the flat fee structure and, as mentioned earlier, to finish mediocre series once halfway through.</p> <h2>Use sunk costs to your advantage</h2> <p>A second, less obvious benefit is actively using the fallacy to your advantage. For example, many gym memberships require upfront payments regardless of how much you use the facilities. If you find it hard to ignore sunk costs, choosing gym memberships that have large upfront fees and minimal pay-per-usage fees may be a way to <a href="https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2018.3032">commit yourself</a> to a regular gym habit.</p> <p>This can also apply to other activities that involve short-term pain for long-term gain – for example, paying for an online course will make you more likely to stick with it than if you found a free course.</p> <p>But be warned, this doesn’t work for everything: it seems that spending wildly on a <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/ecin.12206">wedding ceremony or engagement ring</a> doesn’t have a “sunk cost” effect – it fails to increase the likelihood of staying married.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/217798/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /></p> <p><a href="https://theconversation.com/profiles/aaron-nicholas-1487960"><em>Aaron Nicholas</em></a><em>, Senior Lecturer in Economics, <a href="https://theconversation.com/institutions/deakin-university-757">Deakin University</a></em></p> <p><em>Image credits: Shutterstock</em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/what-is-the-sunk-cost-fallacy-is-it-ever-a-good-thing-217798">original article</a>.</em></p>

Money & Banking

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How risky is it to give card details over the phone and how do I reduce the chance of fraud?

<p><em><a href="https://theconversation.com/profiles/paul-haskell-dowland-382903">Paul Haskell-Dowland</a>, <a href="https://theconversation.com/institutions/edith-cowan-university-720">Edith Cowan University</a> and <a href="https://theconversation.com/profiles/ismini-vasileiou-1031778">Ismini Vasileiou</a>, <a href="https://theconversation.com/institutions/de-montfort-university-1254">De Montfort University</a></em></p> <p>Paying for things digitally is so common, most of us think nothing of swiping or tapping our card, or using mobile payments. While doing so is second nature, we may be more reluctant to provide card details over the phone.</p> <p>Merchants are allowed to ask us for credit card details over the phone – this is perfectly legal. But there are minimum standards they must comply with and safeguards to protect consumer data.</p> <p>So is giving your card details over the phone any more risky than other transactions and how can you minimise the risks?</p> <h2>How is my card data protected?</h2> <p>For a merchant to process card transactions, they are expected to comply with the <a href="https://docs-prv.pcisecuritystandards.org/PCI%20DSS/Standard/PCI-DSS-v4_0.pdf">Payment Card Industry Data Security Standard</a>. This is a set of security requirements designed to protect cardholder data and the trillions of dollars of transactions each year.</p> <p>Compliance involves various security measures (such as encryption and access controls) together with strong governance and regular security assessments.</p> <p>If the information stored by the merchant is accessed by an unauthorised party, encryption ensures it is not readable. That means stealing the data would not let the criminals use the card details. Meanwhile, access controls ensure only authorised individuals have access to cardholder data.</p> <p>Though all companies processing cards are expected to meet the compliance standards, only those processing large volumes are subject to mandatory regular audits. Should a subsequent data leak or misuse occur that can be attributed to a compliance failure, a <a href="https://www.csoonline.com/article/569591/pci-dss-explained-requirements-fines-and-steps-to-compliance.html">company can be penalised</a> at levels that can escalate into millions of dollars.</p> <p>These requirements apply to all card transactions, whether in person, online or over the phone. Phone transactions are likely to involve a human collecting the card details and either entering them into computer systems, or processing the payment through paper forms. The payment card Security Standards Council has <a href="https://docs-prv.pcisecuritystandards.org/Guidance%20Document/Telephone-Based%20Payments/Protecting_Telephone_Based_Payment_Card_Data_v3-0_nov_2018.pdf">detailed guides for best practice</a>:</p> <blockquote> <p>A policy should be in place to ensure that payment card data is protected against unauthorised viewing, copying, or scanning, in particular on desks.</p> </blockquote> <p>Although these measures can help to protect your card data, there are still risks in case the details are misplaced or the person on the phone aren’t who they say they are.</p> <h2>Basic tips for safe credit card use over the phone</h2> <p>If you provide card details over the phone, there are steps you can take to minimise the chance you’ll become the victim of fraud, or get your details leaked.</p> <p><strong>1. Verify the caller</strong></p> <p>If you didn’t initiate the call, hang up and call the company directly using details you’ve verified yourself. Scammers will often masquerade as a well-known company (for example, an online retailer or a courier) and convince you a payment failed or payment is needed to release a delivery.</p> <p>Before you provide any information, confirm the caller is legitimate and the purpose of the call is genuine.</p> <p><strong>2. Be sceptical</strong></p> <p>If you are being offered a deal that’s too good to be true, have concerns about the person you’re dealing with, or just feel something is not quite right, hang up. You can always call them back later if the caller turns out to be legitimate.</p> <p><strong>3. Use secure payment methods</strong></p> <p>If you’ve previously paid the company with other (more secure) methods, ask to use that same method.</p> <p><strong>4. Keep records</strong></p> <p>Make sure you record details of the company, the representative you are speaking to and the amount being charged. You should also ask for an order or transaction reference. Don’t forget to ask for the receipt to be sent to you.</p> <p>Check the transaction against your card matches the receipt – use your banking app, don’t wait for the statement to come through.</p> <h2>Virtual credit cards</h2> <p>In addition to the safeguards mentioned above, a <a href="https://www.forbes.com/advisor/credit-cards/virtual-credit-card-numbers-guide/">virtual credit card</a> can help reduce the risk of card fraud.</p> <p>You probably already have a form of virtual card if you’ve added a credit card to your phone for mobile payments. Depending on the financial institution, you can create a new credit card number linked to your physical card.</p> <p>Some banks extend this functionality to allow you to generate unique card numbers and/or CVV numbers (the three digits at the back of your card). With this approach you can easily separate transactions and cancel a virtual card/number if you have any concerns.</p> <h2>What to do if you think your card details have been compromised or stolen?</h2> <p>It’s important not to panic, but quick action is essential:</p> <ul> <li> <p>call your bank and get the card blocked so you won’t lose any more money. Depending on your situation, you can also block/cancel the card through your banking app or website</p> </li> <li> <p>report the issue to the police or other relevant body</p> </li> <li> <p>monitor your account(s) for any unusual transactions</p> </li> <li> <p>explore card settings in your banking app or website – many providers allow you to limit transactions based on value, restrict transaction types or enable alerts</p> </li> <li> <p>you may want to consider registering for <a href="https://theconversation.com/your-credit-report-is-a-key-part-of-your-privacy-heres-how-to-find-and-check-it-116999">credit monitoring services</a> and to enable fraud alerts.</p> </li> </ul> <h2>So, should I give my card details over the phone?</h2> <p>If you want to minimise risk, it’s best to avoid giving card details over the phone if you can. Providing your card details via a website still has risks, but at least it removes the human element.</p> <p>The best solution currently available is to use virtual cards – if anything goes wrong you can cancel just that unique card identity, rather than your entire card.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/216833/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /></p> <p><em><a href="https://theconversation.com/profiles/paul-haskell-dowland-382903">Paul Haskell-Dowland</a>, Professor of Cyber Security Practice, <a href="https://theconversation.com/institutions/edith-cowan-university-720">Edith Cowan University</a> and <a href="https://theconversation.com/profiles/ismini-vasileiou-1031778">Ismini Vasileiou</a>, Associate Professor, <a href="https://theconversation.com/institutions/de-montfort-university-1254">De Montfort University</a></em></p> <p><em>Image credits: Getty Images</em></p> <p><em>This article is republished from </em><a style="font-style: italic;" href="https://theconversation.com">The Conversation</a><em> under a Creative Commons license. Read the </em><a style="font-style: italic;" href="https://theconversation.com/how-risky-is-it-to-give-card-details-over-the-phone-and-how-do-i-reduce-the-chance-of-fraud-216833">original article</a><em>.</em></p>

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Separating? 5 commonly overlooked money issues you need to address

<p>Amid the heartache of a relationship ending, it’s easy to overlook money, legal and logistical matters or make poor decisions on the fly. </p> <p>However, that can bring more pain – even years down the track.</p> <p>When a relationship ends, you have the chance to embrace your new-found independence and do things for yourself. Including managing money.</p> <p>Make the most of this freedom by taking charge of your financial affairs, starting with these aspects that commonly get neglected:</p> <p><strong>1. Split finances and expenses</strong></p> <p>Separating finances is an important first step. Otherwise, your savings could be pilfered or you could be held liable for your ex’s debts and spending.</p> <p>Be thorough – smaller things are especially easy to miss. That includes store cards, utilities, subscriptions, memberships, as well as loans and credit cards. </p> <p>Some could be cancelled; others may need to be retained, in which case they should be changed into just one name. Don’t leave it up to your ex to take your name off anything.</p> <p>Redirect your payments and direct debits to your personal bank account to avoid penalties for missed payments. Update details with your employer for your salary (and superannuation, if necessary) to be paid into.</p> <p><strong>2. Update estate planning</strong></p> <p>The next step is to look at your estate planning. Failing to do this means your ex could receive an unexpected windfall should you pass away – at the expense of loved ones you actually want to support.</p> <p>Update your will to reflect your new situation as well as the beneficiaries in your superannuation – which is treated separately from your will. </p> <p>The same goes for any trusts, companies, or similar structures you have.</p> <p><strong>3. Get your best settlement</strong></p> <p>Many people – especially women – settle for less than their fair share in a separation. Why? Some don’t realise their real worth or legal entitlements. Others just want to get it done with quickly.</p> <p>While it makes financial sense not to drag things out due to spite, your future quality of life and retirement depend on how much you walk away with.</p> <p>Among the factors to consider are:</p> <ul> <li>Superannuation: you may be eligible for part of your ex’s super because it forms part of the joint asset pool. This is especially valuable if you earned considerably less or had time out of the workforce to raise children or care for relatives.</li> <li>Custody: supporting children and pets obviously impacts ongoing living costs. Child support isn’t necessarily guaranteed.</li> <li>Your home: is this really worth keeping at all cost if you won’t be able to afford it on your own? </li> <li>Sale time: if you separate on good terms, do you really need to sell assets now? Could you keep them to maximise value jointly or sell later at a better price?</li> </ul> <p>Ensure you get pre-settlement financial advice BEFORE you sign on the bottom line.</p> <p><strong>4. Live independently</strong></p> <p>You’re now on one income. Economies of scale (most things cost less per person when you’re coupled) no longer work in your favour. Taking time off work may be harder.</p> <p>So, don’t keep spending like you used to. Be proactive in adjusting to your new situation. </p> <p>Make a new spending and investment plan (a nicer and more comprehensive version of a budget). See what you can and cannot afford and make necessary cuts. Update insurances, subscriptions, and utilities to ensure you’re only paying for what you still need. </p> <p>Set up an easily accessible emergency fund, to cover you should you lose your job or face an unexpected crisis.</p> <p>Tailored advice from your financial adviser can help you make the most of what you have – for now and the future.</p> <p><strong>5. Be wise in love</strong></p> <p>It may be the last thing on your mind amidst a separation, but a new relationship could be in your future.</p> <p>Learn from your current separation and take measures to protect your future self.</p> <p>A pre-nuptial agreement (pre-nup) could be useful to protect your assets. Or a post-nuptial agreement if you already have a new partner.</p> <p>Carefully consider co-habiting arrangements – your place, their place, a new place together? Who contributes what?</p> <p>Even if you don’t ultimately need them (fingers crossed!), the peace of mind from having protections in place will make any new relationship feel that much sweeter.</p> <p><em>Image credits: Getty Images</em></p> <p><em><strong>Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press, $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au">www.onyourowntwofeet.com.au</a></strong></em></p>

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The debate: Should kids over 18 pay rent if they’re still living at home?

<p>Parents have shared their thoughts on letting their children live at home rent free, as the age old debate of paying board stirred up some strong opinions. </p> <p>A <a href="https://honey.nine.com.au/money/should-children-over-the-age-of-18-pay-board-if-they-still-live-at-home-reader-poll-exclusive/77876711-2950-4bf3-bb30-716442a6fd74" target="_blank" rel="noopener"><em>nine.com.au</em></a> reader survey asked the question: Should children over the age of 18 pay board if they still live at home?</p> <p>The responses were many and varied, as a whopping 72 percent of respondents said grown up kids should be contributing financially to the household. </p> <p>One person commented, "If children have employment, it's important that they clearly understand that life is not free and they need to budget, show accountability and responsibility."</p> <p>Another wrote, "If the children over 18 are working, then yes, they should contribute or give money to the parents to bank for them."</p> <p>Others said children shouldn't be expected to pay board, and would rather their kids save money for bigger financial commitments.</p> <p>"My parents did not charge me board even though I was working because they did not need the money and told me to save for my first car, which I did," one person shared. </p> <p>Another wrote their parenting tactic, writing, "I let my children not pay board. So they could save for a deposit on a house. They did and they all (3) have a house."</p> <p>Despite many people sharing their strong opinions on the matter, most respondents said it was not a black and white question, as many households have individual circumstances that affect their decision. </p> <p>"Depends on if they are working or not and what income the parents have. My son is 22 but unemployed due to health problem, we just pool our unemployment payment so it differs for each family situation, not a YES or No answer," one reader wrote. </p> <p>Another said it depends on their employment and study status, writing, "Yes if they're working almost full time, not if they're studying and just working part time to cover living expenses."</p> <p>The poll comes as Aussies have struggled with a rise in basic living costs, with <a href="https://www.finder.com.au/australian-household-spending-statistics" target="_blank" rel="noopener">ABS</a> data showing that Australian households spent a total of $1.2 trillion on what was classed as general living costs in 2022. </p> <p>This sum is close to $100 billion more than in 2021. </p> <p>The average household spent $130,353 in 2022, which is the equivalent of $2507 per week. This is a 20.4 per cent jump on the previous year.</p> <p><em>Image credits: Getty Images </em></p>

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Petition launched for Miss Universe Australia to step down

<p>A petition is calling for Australia’s Miss Universe Moraya Wilson to step down, following reports that her parents owe $45 million to creditors. </p> <p>According to the Australian Securities and Investments Commission (ASIC) her parents, Anton and Melinda Wilson, owe $45 million to creditors following multiple company liquidations. </p> <p>They also owe $21 million to the tax office, with Anton Wilson due in court next month for knowingly signing a false declaration and defrauding creditors of a bankrupt, according to <a href="https://www.news.com.au/finance/business/other-industries/calls-for-miss-universe-australia-to-step-down-amid-reports-her-family-owes-up-to-45m-to-creditors/news-story/092c8e7e789b2749d5853f7b6dccf535" target="_blank" rel="noopener"><em>news.com.au</em></a>.</p> <p>So where does Moraya come into all of this? </p> <p>It is reported that she is the director of 10 companies that ASIC is looking to have struck off the business register, although she has denied any knowledge of, or involvement in the businesses. </p> <p>Moraya said that she had “tendered my resignation from all of the companies”.</p> <p>However, Anton Wilson's bankrupt trustee Nicholas Crouch, claims that Moraya was listed as the sole director of these 10 companies so that the family business can continue to run despite her parent's bankruptcies. </p> <p>In a submission to a parliamentary inquiry into ASIC lodged last year, Crouch wrote: “21-year-old daughter is now nominated as the director of the family construction group.</p> <p>“It would appear the family business has not been disrupted by strategic bankruptcies and liquidations.”</p> <p>It is also alleged that one of the companies Moraya is a director of owes $13,204 to the Australian Taxation Office, which means that it was operating and trading as a business. </p> <p>Her father claims that when Moraya was 19, and already successful in her modelling career, she wanted “to carve a career in property development”, so he offered her “general father-daughter advice”. </p> <p>“I just politely, as a father does to his daughter, said ‘I’ll help you get into business’. Pretty simple,” Anton said. </p> <p>Now, a Change.org petition has been launched by a member of the public, calling for her to step down as Australia’s top model.</p> <p>The petition reads: “Miss Universe is an international competition that empowers women and promotes diverse representations of beauty across the globe. This beauty goes beyond appearance and includes character and personality …”</p> <p>However,  Moraya said that she still intends to compete in the international pageant later this month. </p> <p>“I have become aware of a petition,” she said.</p> <p>“I intend to fulfil my duties as Miss Universe Australia to the best of my ability with the full support of The Miss Universe Australia management.”</p> <p>The organiser of the Miss Australia pageant, Troy Barbagallo also said that the controversy was “none of my business," and remains certain of his choice of Moraya as Australia’s top model.</p> <p>“There is (a) wide range of criteria and a large selection committee who found Moraya to be the best person for the job among 24 exceptional women and we stand by that decision,” he said. </p> <p>The model is set to travel El Salvador later this month for the international pageant. </p> <p><em>Images: Instagram</em></p>

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Matthew Perry's huge net worth revealed

<p>As the world <a href="https://www.oversixty.co.nz/health/caring/you-were-loved-tributes-flow-over-tragic-passing-of-matthew-perry" target="_blank" rel="noopener">mourns the loss </a>of one of its beloved <em>Friends</em> stars, Matthew Perry, whose iconic portrayal of Chandler Bing left an indelible mark on fans worldwide, it's important to remember the legacy he leaves behind – a legacy encompassing not only his role in <em>Friends</em> but also his achievements in film, television, literature, real estate and more.</p> <p>While his presence will be missed, his work will continue to inspire and entertain fans for generations to come. Let's take a look at the legacy he leaves behind.</p> <p><strong>The <em>Friends</em> Phenomenon</strong></p> <p>Matthew Perry's fame skyrocketed when he became Chandler Bing on the hit sitcom in 1995. Initially earning US$35,000 per episode, <a href="https://www.oversixty.co.nz/health/caring/so-utterly-devastated-friends-cast-break-silence" target="_blank" rel="noopener">Perry and his five co-stars</a> (Jennifer Aniston, Courtney Cox, Lisa Kudrow, David Schwimmer and Matt Le Blanc) rewrote history in 2002 when they negotiated a groundbreaking deal to earn US$1 million per episode during the show's final season. Each season consisted of 23 episodes, meaning that Perry made well over US$20 million for just one season. Over the course of the show's ten successful seasons, each cast member earned a staggering $141 million.</p> <p>To add to his wealth, <em>Friends</em> continues to be one of the most popular streaming series globally, guaranteeing the stars royalties of approximately $16 to $31 million annually. Even Warner Bros., the show's producer, reaps substantial profits, with an estimated $1.5 billion yearly from reruns.</p> <p>The 2021 <em>Friends</em> reunion special on HBO Max further contributed to Perry's financial success, with each principal cast member receiving $3.9 million.</p> <p><strong>Film and Television</strong></p> <p>Matthew Perry's talents extended beyond the realm of <em>Friends</em>. He starred in various film and television projects, including <em>The Whole Nine Yards</em> alongside Bruce Willis, Aaron Sorkin's <em>Studio 60 on the Sunset Strip </em>alongside <em>West Wing</em> alum Bradley Whitford, <em>17 Again</em>, and <em>The Odd Couple</em>, where he also served as an executive producer.</p> <p>In his memoir, Perry disclosed that he negotiated his <em>Studio 60 on the Sunset Strip</em> salary from an initial offer of $79,000 per episode to $275,000 per episode. In the romantic comedy <em>Fools Rush In</em> (1997), he earned $1.57 million.</p> <p><strong>Memoir</strong></p> <p>Perry's memoir, titled <em>Friends, Lovers, and the Big Terrible Thing: A Memoir</em>, was released in November 2022. Despite a <a href="https://www.oversixty.co.nz/health/caring/keanu-reeves-attacked-for-still-being-alive" target="_blank" rel="noopener">minor hiccup involving actor Keanu Reeves</a>, where he questioned why Reeves was still alive while others like River Phoenix and Heath Ledger had tragically passed, Perry's memoir received a warm reception. Perry swiftly apologised for the comment and promised to remove all mention of Reeves from future editions.</p> <p>It's rumoured that Perry secured a "seven-figure" book deal for the candid memoir, which is bound to generate significant earnings through book sales.</p> <p><strong>Real Estate Ventures</strong></p> <p>Perry also dabbled in real estate throughout his life. In 2011, he purchased a $17 million beachfront home in Malibu, later listing it for $23 million in 2020. Ultimately, the property sold in 2021 for $20 million.</p> <p>In 2015, Perry sold another Malibu home for $17 million. In 2017, he acquired a luxurious 40th-floor condo in Century City for $30 million. Two years later, he listed the condo for $46.4 million but eventually sold it in 2021 for $28.3 million, 38% less than the initial asking price.</p> <p>One of his most recent acquisitions was a $7.8 million Hollywood Hills home, purchased in June 2021. In 2020, Perry bought his Pacific Palisades residence, where he resided until his passing. This midcentury modern ranch-style home boasted four bedrooms, 3.5 bathrooms, a fire pit and a raised pool overlooking the ocean.</p> <p><strong>Car Collection</strong></p> <p>Apart from his real estate ventures, Perry was known for his impressive car collection. It included various luxury vehicles, such as a Lincoln Navigator, a BMW 6 Series Convertible, a BMW 7 Series sedan, a Porsche Panamera, and a Porsche 911 Carrera Convertible. He also owned a BMW Z8, an Aston Martin Vantage Convertible, a Porsche Taycan 4S, and an Audi R8 Spyder, each valued between $300,000 and $500,000.</p> <p>Perry's enduring legacy spans far beyond the confines of the <em>Friends</em> universe. His multifaceted career, literary contributions, and real estate ventures have solidified his status as an entertainment icon. While his presence will be missed, his work will continue to inspire and entertain fans for generations to come.</p> <p><em>Image: NBC</em></p>

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Parents slapped with hefty fee over badly behaved children

<p dir="ltr">Two parents have been slapped with a hefty fine tacked onto their restaurant bill after their children caused a ruckus during dinner. </p> <p dir="ltr">Kyle and Lyndsey Landmann were dining at a restaurant in Georgia, USA, when they were given a $50 fine for their allegedly badly behaved kids. </p> <p dir="ltr">Two weeks after the incident, Kyle took to Google to leave a negative review for the eatery to say he was “disappointed by the experience”. </p> <p dir="ltr">“The owner came out and told me he was adding $50 to my bill because of my children’s behaviour,” he wrote. </p> <p dir="ltr">“My kids watched a tablet until the food arrived, ate their food and my wife took them outside while I waited and paid the bill.”</p> <p dir="ltr">Lyndsey went on to tell <em>Today</em> that her kids were well behaved, although they were joined by other families, with 11 children in total at the table. </p> <p dir="ltr">“The kids were sitting at one end of the table and they were being so good,” Landmann said.</p> <p dir="ltr">“'I even commented halfway through the meal, ‘I can’t believe how well-behaved they are’.”</p> <p dir="ltr">After dinner, restaurant owner Tim Richter approached the table and told the party about the additional charge on the menu, which reads, “Adult surcharge: For adults unable to parent.”</p> <p dir="ltr">“Be Respectful to staff, property, and self. No Respect, No Service.”</p> <p dir="ltr">Landmann said she was expecting a compliment for the well behaved kids, but Richter said there would be $50 added to each bill at their table. </p> <p dir="ltr">When Landmann then asked for an explanation, she claimed Richter told her they were being “too loud”.</p> <p dir="ltr">He was angry that the kids were “running around outside” by the water after dinner, even though they were chaperoned by adults, she clarified.</p> <p dir="ltr">“I was like, ‘They were quiet the whole time’. He got in our faces and told us that we belonged at Burger King and not at his restaurant. We asked to speak to the owner and he said he was the owner,” Landmann explained.</p> <p dir="ltr">“I looked around the restaurant and everybody was frozen watching this show he was putting on. He was yelling.”</p> <p dir="ltr">The 61-year-old restaurant owner said that he implemented the rule during the pandemic, but never actually charged the couple, saying, “We want parents to be parents.”</p> <p dir="ltr">However, several other Google reviews blasted the quality of the service and the owner's attitude, including one that warns diners with children to steer clear.</p> <p dir="ltr"><em>Image credits: Facebook</em></p>

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15 money-saving habits self-made millionaires have in common

<p><strong>Start saving smarter</strong></p> <p>Learning how to save money like a self-made millionaire can mean the difference between stressing to dress and dressing to impress. It can help you retire younger so you’re able to see more of the world sooner. It can mean finally building that dream house. And more than anything, it can mean having the money when you truly need it.</p> <p>But let’s face it: Not all of us are natural savers. We waste our money on frivolous supermarket buys we’re convinced we have to have in the moment. We don’t bother with high-yield savings or investment accounts. And we have a tendency to try to keep up with the Joneses. In other words, we could really use the help of a self-made millionaire who not only knows the tricks to getting rich but is also skilled at saving. Luckily, we talked to some financial geniuses who were willing to share their expert tips on the money-saving strategies all self-made millionaires share.</p> <p>Whether you’re planning to retire at 30 or are opening your first savings account, these are the money-saving habits you should borrow from self-made millionaires to become one yourself someday.</p> <p><strong>They follow the 50-30-20 rule</strong> </p> <p>Forget complicated budgeting or uncomfortable belt-tightening; the secret to saving big might boil down to three simple numbers. Kimberly Palmer, a personal finance expert at NerdWallet, says that many a self-made millionaire follows the “50-30-20” rule.</p> <p>Using this formula, they put aside 50% of the money they earn for savings and necessities such as rent and groceries, 30% for lifestyle purchases like new clothing and 20% for fun activities like concerts or eating out. By regularly and intentionally setting aside a fixed amount of savings, the self-made millionaire builds a nest egg faster.</p> <p>Ready to try it for yourself? To get started, download a budget app to help you divvy up your income accordingly. “You might find that with some adjustments, such as shifting your food spending toward groceries and away from takeout and restaurants, or cutting back on monthly subscriptions, you can take steps toward reaching your wealth-building goals,” Palmer says.</p> <p><strong>They automate their finances</strong></p> <p>Budgeting is a smart move, but there are times when it can backfire, according to nine-time New York Times bestselling author David Bach, the founder of FinishRich.com. “You’re too busy, and you will just get frustrated and fail,” he says.</p> <p>Instead, self-made millionaires automate their financial lives so they can’t fail. That includes setting up a regular deposit into their savings accounts to be automatically withdrawn from their pay.</p> <p>Bach also recommends using autopay for many of your bills, including car payments, mortgage payments and credit card bills. Doing so helps you avoid missing a payment and getting hit with those pesky late fees, saving you money in the long run. Just make sure to leave out any of these bills you shouldn’t put on autopay.</p> <p><strong>They spend less than they earn</strong></p> <p>Believe it or not, “self-made millionaires don’t necessarily look like millionaires on the outside,” according to Palmer. Rather than spending money on flashy holidays or new clothes, “they often spend less than they earn so they can put their money into savings and investments,” she says.</p> <p>To maximise your savings like a self-made millionaire would, Palmer recommends taking stock of your personal spending and cutting back on categories that matter less to you. For example, if you enjoy taking a big holiday every year, consider cooking lunches and dinners at home to curb your spending at restaurants. On the flip side, maybe you would rather have a smaller clothing budget and create a capsule wardrobe to free up spending for dining out with your friends.</p> <p><strong>They avoid "want spending"</strong></p> <p>Another way self-made millionaires avoid spending more than they earn? They never fall into the trap of “want spending,” according to Tom Corley, an expert on wealth creation and author of Rich Habits. “According to Census Bureau data, there are approximately 30 million people who make more than they need but who are, nonetheless, one pay away from poverty,” he explains. “These individuals engage in something called want spending.”</p> <p>Are you a “want spender”? Corley’s research found that some of the biggest indicators include:</p> <ul> <li>Surrendering to instant gratification, forgoing savings in order to buy things you want now, be it a 60-inch TV, nice holiday, expensive car or fancy pair of shoes</li> <li>Spending too much going out to eat or ordering in</li> <li>Incurring debt in order to finance your standard of living</li> </ul> <p>Essentially, want spenders create their own poverty by rationalising their desire to spend in various ways, whether it be by planning to make more money in the future or relying on the economy improving down the line. That’s why self-made millionaires shun spending money on their wants and focus more on their needs and savings. That said, if you do want to make a purchase that you didn’t budget for, here are some quick ways to earn extra cash.</p> <p><strong>They're smart spenders </strong></p> <p>Impulse purchases can happen to the best of us. No, you didn’t need the trucker hat at the petrol station on your long, boring road trip. And yes, stuff like that, when made a habit, adds up. To prevent extraneous spending and save more money, Corley suggests a few specific strategies that self-made millionaires followed in his research:</p> <ul> <li>They buy in bulk. “If done properly and with the right items, buying in bulk can save your household money and reduce waste,” he says. Toilet paper, soap, laundry detergent, paper towels and shampoo are items proven much cheaper when bought in larger sizes. Prioritise food items like applesauce, canned goods or yoghurt, which can be portioned into glass jars and saved for future use.</li> <li>They create a meal plan. “If you can sketch out a menu for the week that utilises similar ingredients, you’ll have a more focused trip to the supermarket, and you’ll end up throwing less away weeks after it’s been shoved to the back recesses of the refrigerator,” says Corley. “Making a conscious effort here saves you money, and it keeps food waste out of landfills.” For other smart tricks to save money on groceries, consider following a budget grocery list and learning how to find coupons.</li> <li>They reduce energy costs. “Lowering your energy consumption is low-hanging fruit when it comes to cutting monthly expenses,” he explains. This can be as simple as swapping incandescent bulbs for CFLs or LEDs to lower your utility bill.</li> </ul> <p><strong>They prevent lifestyle creep </strong></p> <p>Whether you tried out a new side hustle idea or learned how to negotiate for a higher salary, you’re now bringing in more money. But be careful! It’s all too tempting to splurge on a bigger house or fancier car as your income grows. “It’s a common habit among many who suddenly find themselves making more money,” Corley says. But self-made millionaires avoid increasing their standard of living in order to match their growing income—a money-burning practice called lifestyle creep.</p> <p>In fact, Corley’s research found that a whopping 64% of self-made millionaires lived in a modest, middle-class home; 44% purchased used cars; 41% spent less than $3000 on their annual holiday; and 28% mowed their own lawn to save money.</p> <p>Here’s why lifestyle creep can hurt you financially: “Once you spend your money, it’s gone,” Corley says. “When you hit a bump in the road, such as a job loss, you are then forced to sell your stuff. If the stuff you purchased depreciated in value, you get pennies on the dollar.”</p> <p>As a good rule of thumb, he recommends spending no more than 25% of your annual net pay on housing costs and 5% on car costs, no matter how much you earn.</p> <p><strong>They don't lend money to friends or family </strong></p> <p>The self-made millionaire knows that your love for your family and friends shouldn’t be measured by your generosity, but sometimes that’s exactly what it comes down to. You’re inevitably left in an awkward bind: If you don’t provide a loan, there can be tension, but if you do, you may never get the funds back and might find yourself resenting your pal. “You will lose both your friend and the money, and you’re not a bank,” advises Bach.</p> <p>Say you do lend them money. Did you come up with an agreement for a timeline for repayments? When it comes to friends or family, setting such boundaries can be difficult, but it’s even more awkward to continuously ask for the money back.</p> <p>If self-made millionaires absolutely must lend money to someone near and dear, they make sure the loan isn’t open-ended. Bach recommends coming up with a timeline and sticking to it. You can also take advantage of companies that specialise in peer-to-peer lending, like Zirtue, which formalises loans between family members and friends.</p> <p><strong>They're frugal, not cheap </strong></p> <p>Although it may seem counterintuitive, buying cheaper products is not a common money-saving habit among self-made millionaires. In fact, Corley’s research found that 66% of poor people admitted to being cheap. “Cheap, to them, meant spending their money on the cheapest product or service available,” he explains. But cheap products break or deteriorate at a much quicker rate than quality products, which means you end up spending more in the long run.</p> <p>He also points out that, when looking for services, those who provide cheap ones are typically inexperienced or not very good at what they do. “If they were good, they would be able to command higher prices. Cheap service providers can get you in a lot of trouble, especially when it comes to taxes, legal representation or even just getting your car fixed. Cheap service providers are able to keep their fees down by paying their staff lower wages. This means they are not getting the best staff or are settling for inexperienced staff.”</p> <p>Being cheap won’t make you poor, but it will mean you save less money because you’re constantly shelling out for new products or services to replace the low-quality ones you bought in the first place. Self-made millionaires focus on buying fewer, higher-quality products that will last a long time.</p> <p><strong>They don't play the comparison game</strong></p> <p>Keeping up with the Joneses is more tempting (and common!) then you might think. According to a recent NerdWallet survey, 83% of Americans say they overspend due to social pressures from seeing others dining at expensive restaurants or taking fancy trips abroad. “It’s easy to get caught up in overspending, especially when you see peers or neighbours spending more than you on cars, houses or vacations,” Palmer says.</p> <p>But when rich people feel green with envy, Palmer says, they put things into perspective—and keep in mind that what they’re seeing may not be the entire picture. “It’s important to take a step back and realise you might not want the same things they have, or they might be creating financial stress for themselves by buying those things,” she says.</p> <p><strong>They pay themselves first </strong></p> <p>By setting aside a portion of their income every day, week or month—in other words, “paying yourself first”—self-made millionaires take one of the most important steps towards building wealth, according to Bach. “You’re going to work 90,000 hours over your lifetime; you should keep at least an hour a day of the income,” he says.</p> <p>He recommends setting aside an hour’s worth of your income each day and then saving and investing it—preferably automatically to begin earning some passive income and reach that high-roller status.</p> <p><strong>They find a passive income source</strong></p> <p>Speaking of passive income, self-made millionaires save even more money by investing their savings in an account that creates passive income through accumulated interest, such as a high-yield savings or investment account. There are several types of accounts to consider, and ultimately, the one you choose will depend on your financial goals.</p> <p>“No strategy is a one-size-fits-all approach, since everyone’s financial situation is unique and different,” Palmer says. She recommends speaking with a financial advisor to learn the right strategy for you and to avoid the most common retirement-planning mistakes.</p> <p><strong>They put away the credit card</strong></p> <p>Credit cards can sabotage even the best of savers, according to Corley. “Credit card use can easily get out of control,” he says. “If you rely on credit cards to pay for ordinary living expenses, that means you are living beyond your means.”</p> <p>Not only are there high interest rates on credit card debt, but paying with plastic could also trick you into spending more money. In a study published in the journal Marketing Letters, MIT researchers found that shoppers spend up to 100% more when paying with a credit card—and were even willing to pay twice as much for an item as those who paid in cash.</p> <p>The 100-day credit card money-saving challenge could help you break bad spending habits, according to Corley. Essentially, the goal is to go 100 days without using your credit cards for purchases. The result? “Having to use cash or your ATM card forces spending awareness and restricts how much you can spend,” Corley says.</p> <p><strong>They design their dreams </strong></p> <p>What do you want your life to look like in five, 10 or 20 years? Self-made millionaires always know their answer to this question, Corley says. He calls this dream-setting or creating a clear vision of your ideal future life. From there, you should set and pursue financial goals that will help you accomplish those dreams. “Dream-setting is a springboard for creating the goals you’ll need in order to help you get to your destination,” he says.</p> <p>For example, if you want to earn a master’s degree so you can get a job with a higher salary, you can set goals like setting aside two hours every day to study for the graduate record exam (GRE). “Goals are the transportation system to your ideal future life,” Corley says. “Once you have a clear vision of your destination, the goals you’ll need to achieve will magically manifest themselves out of thin air.”</p> <p><strong>They invest in themselves </strong></p> <p>There’s no question that saving and investing your money is key to accumulating wealth fast. But according to Corley, the first (and most important!) money-saving habit that self-made millionaires practice is investing in themselves—whether that means reading for at least 30 minutes a day, listening to podcasts during a long commute or seeking out career mentors.</p> <p>Exactly how should you invest in yourself? The self-made millionaires in Corley’s research focused their daily reading on content that was directly related to the dreams and goals they were pursuing.</p> <p><strong>They never give up</strong></p> <p>Maybe it sounds cliche, but it’s the type of mindset that will keep you above water. “No matter what happens, no matter how many times you fail, as long as you get up and try again, you haven’t lost,” says Bach. So commit to the sort of money-saving tricks a self-made millionaire would follow, but give yourself a break if you fall off the wagon. Dust yourself off and recommit to your saving strategies.</p> <p><em>Image credits: Getty Images </em></p> <p><em>This article originally appeared on <a href="https://www.readersdigest.co.nz/food-home-garden/money/15-money-saving-habits-self-made-millionaires-have-in-common?pages=1" target="_blank" rel="noopener">Reader's Digest</a>. </em></p>

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The move to a cashless society isn’t just a possibility, it’s well underway

<p><em><a href="https://theconversation.com/profiles/angel-zhong-1204643">Angel Zhong</a>, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a></em></p> <p>When was the last time you used cash? For many Australians using cash or even swiping a card has become a rare event.</p> <p>The move towards a cashless society started 50 years ago with the introduction of the Bankcard and was driven by technological advancements. But it really took off with the COVID pandemic when consumers and retailers were reluctant to handle potentially infected notes and coins.</p> <p>The federal government last week underscored its recognition of this trend by <a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/modernising-payments-regulation">unveiling reforms</a> to regulate digital payment providers. </p> <p>Treasurer Jim Chalmers said: "As payments increasingly become digital, our payments system needs to remain fit for purpose so that it delivers for consumers and small businesses. We want to make sure the shift to digital payments occurs in a way that promotes greater competition, innovation and productivity across our entire economy."</p> <p>From big cities to remote rural corners the shift towards digital payments is evident. This raises the question, is a cashless society inevitable?</p> <h2>The phenomenal growth of the digital payments</h2> <p>The convenience of digital transactions has become irresistible for consumers and businesses and has led to the sector eclipsing traditional payment methods.</p> <p>The relentless march of technology has produced myriad innovative platforms from mobile wallets to buy-now-pay-later (BNPL) schemes, each vying for a piece of this burgeoning market.</p> <p>A recent <a href="https://www.ausbanking.org.au/wp-content/uploads/2023/06/Bank-On-It-%E2%80%93-Customer-Trends-2023-1.pdf">report</a> by the Australian Banking Association paints a vivid picture of the digital payment industry’s explosive expansion.</p> <p>The use of digital wallet payments on smartphones and watches has soared from $746 million in 2018 to over $93 billion in 2022. Cash only accounts for 13% of consumer payments in Australia as of the end of 2022, a stark contrast to 70% in 2007.</p> <p>Digital wallets are popular with most age groups. Young Australians aged between 18 and 29 are leading the pack, with two thirds <a href="https://www.rba.gov.au/publications/bulletin/2023/jun/consumer-payment-behaviour-in-australia.html">using digital wallets</a> to pay for goods and services.</p> <p>About <a href="https://www.ausbanking.org.au/almost-40-leave-wallets-at-home/">40% of Australians</a> are comfortable leaving home without their actual wallets or even credit or debit cards, as long as they have their mobile devices with digital wallets.</p> <p>The astonishing speed at which Australians have embraced digital payments places the country among the top users of cashless payments globally, surpassing the United States and European countries.</p> <p>Digital wallets are not the only players in this space. The use of BNPL products is also growing rapidly in Australia, which was where many of the large-scale products in this category started.</p> <p>The Australian Securities and Investment Commission (ASIC) reports the total value of all BNPL transactions increased by <a href="https://asic.gov.au/regulatory-resources/find-a-document/reports/rep-672-buy-now-pay-later-an-industry-update/">79% in the 2018–19 financial year</a>. This continues into 2022 with an annual growth beyond 30% according to the <a href="https://www.rba.gov.au/publications/annual-reports/psb/2022/the-evolving-retail-payments-landscape.html">Reserve Bank of Australia</a> (RBA).</p> <p>PayID and PayPal payments are also claiming their shares in this space.</p> <h2>Are government regulations necessary?</h2> <p>The government’s planned regulation of the system, contained in amendments to the Reforms to the Payment Systems (Regulation) Act 1998, is a big step towards establishing a secure and trustworthy cashless society in Australia.</p> <p>It will subject BNPL and digital wallet service providers like Apple Pay and Google Pay to the same oversight by the RBA as traditional credit and debit cards.</p> <p>The regulations will require providers meet clear standards for security measures, data protection and dispute resolution to give Australians confidence their funds and personal information are safeguarded.</p> <p>With increasing concern over cyber attacks, the regulations will help reduce the risk of fraudulent activities and money laundering and help identify suspicious transactions, maintaining the integrity of the financial system.</p> <p>Also, regulation will promote fair competition and market stability by levelling the playing field and by preventing monopolies.</p> <p>While banks support the forthcoming regulation, new market players are less positive. For example, Apple Pay says it is merely <a href="https://www.afr.com/companies/financial-services/new-rba-powers-to-regulate-apple-google-payments-20231010-p5eb6d">providing technical architecture</a> rather than payment services.</p> <p>The current regulatory debate is not new. When credit cards made their debut in Australia in the early 1970s, there were hardly any safeguards for consumers. This led to card users being hit with high interest rates on money owed, sneaky fees and aggressive marketing tactics.</p> <p>Consequently, regulations were introduced to hold card providers to a standard of responsible behaviour. Today, they must openly disclose interest rates, fees and charges, and follow stringent guidelines in advertising their products and services.</p> <p>Regulating digital wallet providers strikes a crucial balance between innovation and accountability, ensuring life-changing technology continues to serve the public interest.</p> <p>The shift towards a cashless society in Australia isn’t just a possibility, it’s already well underway.</p> <p>The blend of technological advancements, changing consumer preferences and regulatory adaptations has set the stage for this transformation. The new regulations will help Australians navigate this transition more confidently.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/215446/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /></p> <p><a href="https://theconversation.com/profiles/angel-zhong-1204643"><em>Angel Zhong</em></a><em>, Associate Professor of Finance, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a></em></p> <p><em>Image credits: Getty Images</em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/the-move-to-a-cashless-society-isnt-just-a-possibility-its-well-underway-215446">original article</a>.</em></p>

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Five ways to take advantage of rising interest rates to boost your savings

<p><em><a href="https://theconversation.com/profiles/fredrick-kibon-changwony-234363">Fredrick Kibon Changwony</a>, <a href="https://theconversation.com/institutions/university-of-stirling-1697">University of Stirling</a></em></p> <p>With the Bank of England base rate <a href="https://theconversation.com/how-the-bank-of-englands-interest-rate-hikes-are-filtering-through-to-your-finances-210344">currently the highest</a> it has been since early 2008, you may have a valuable opportunity to increase your earnings on pensions, investments and savings accounts. After all, when the central bank raises its main rate – the base rate, which is typically used as a benchmark for loans as well as savings accounts – it is trying to encourage people to spend less and save more.</p> <p>But UK banks and building societies have <a href="https://www.independent.co.uk/money/martin-lewis-savings-rates-mortgage-crisis-b2362955.html">recently been accused</a> of letting their savings rates lag the recent rapid rise in the base rate. UK regulator the Financial Conduct Authority has urged these financial firms to offer “<a href="https://www.fca.org.uk/news/press-releases/action-plan-cash-savings">fair and competitive</a>” savings rates in response to the increasing interest rates.</p> <p>Many financial institutions do offer accounts with <a href="https://www.theguardian.com/money/2023/jul/15/uk-savings-accounts-interest-nsi-building-societies-banks-deals">rates of 6% or more</a>. This is good news for avid savers – but only if you keep an eye on the market so you can switch from less competitive products. This is why it’s important to establish a regular savings habit, but many people are unsure about what that should involve.</p> <p>My colleagues and I have studied the <a href="https://dspace.stir.ac.uk/handle/1893/32240">correlation between people’s savings goals</a> (if they have any) and how they invest their money. We also looked at how seeking financial information advice, and being “good with numbers”, both influence this correlation.</p> <p>We analysed data from more than 40,000 individuals in 21,000 UK households from five waves of the Office for National Statistics Wealth and Assets Survey (WAS), conducted between 2006 and 2016. This data captures comprehensive economic wellbeing information and attitudes to financial planning.</p> <p>Our research shows the importance to your finances of setting multiple savings goals, keeping up with financial news, and seeking professional advice. Based on this, here are five research-based ways to make the most of your money.</p> <h2>1. Set specific savings goals</h2> <p>Establishing personal savings goals is one of the first steps most financial institutions and advisers will recommend to their customers, because it’s a good idea to <a href="https://www.investopedia.com/terms/c/compoundinterest.asp">save regularly</a>. Plus, our study shows that total financial assets increase in line with the number of savings goals you have, and that setting specific, rather than vague, goals leads to higher performance.</p> <p>Specific savings goals should have an end date, target figure, and even a meaningful name – for example, “£1,000 for 2024 trip to Asia” or “£250 for 2023 Christmas present fund”. This will create tangible reference points that encourage self-control and increase the pain you feel if you fail to meet your goal.</p> <h2>2. Seek professional financial advice</h2> <p>Rather than relying on friends, family and social media for financial advice, speak to an expert.</p> <p>Our research shows households that access professional financial advice were more likely to allocate a higher share of their wealth to stock portfolios than those that rely on friends, family and social media for financial advice. This result was consistent even across different wealth and income levels, with lower earners possibly using products like ISAs to make investments in stocks and shares. Other <a href="https://academic.oup.com/qje/article/134/3/1225/5435538">research shows</a> stock portfolios outperform most other types of investment in the long term.</p> <p>We also found that access to professional financial advice can substitute for setting goals, because your adviser should help you to determine the kinds of products to invest in (which is called asset allocation) for specific timelines and aims.</p> <h2>3. Brush up on your maths</h2> <p><a href="https://doi.org/10.1111/j.1475-5890.2007.00052.x">Several studies</a> show numerical skills affect how households gather and process information, <a href="https://psycnet.apa.org/doi/10.1037/a0013114">set goals</a>, perceive risks, and <a href="https://heinonline.org/HOL/P?h=hein.journals/fedred89&amp;i=791">decide to invest</a> in various financial assets. So, by brushing up on your basic numeracy and financial literacy skills – even with free online videos – you could boost your savings for the long term.</p> <p>Our study shows that individuals with high confidence in their numerical skills tend to have better financial planning habits – such as investing more in stocks and bonds than cash, which carries more risk but also the potential for greater returns. This trend is particularly evident among households with no savings goals, suggesting that numerical ability could compensate for failing to set such goals.</p> <h2>4. Adopt appropriate savings strategies</h2> <p>Diversified stock market portfolios generally outperform bonds and cash savings <a href="https://doi.org/10.1093/qje/qjz012">over longer periods</a>. However, stock markets can be volatile, so putting savings into less risky assets like bonds and cash is wise for savings goals of less than five years.</p> <p>In the longer term, investing across different global stock markets for more than five years can help counteract inflation. And you can access low-cost, diversified investment portfolios via financial products based on indices of stocks or other assets, such as exchange traded funds.</p> <h2>5. Set, monitor and adjust your plan</h2> <p>Free financial planning and budgeting apps can help you save money by tracking your spending and savings goals, and encouraging you to adhere to a budget.</p> <p>Most importantly, once you set savings goals and create a budget, don’t forget about them. Check regularly to see how your savings are building up and to monitor for any spending changes. A growing array of fintech tools can prompt and encourage this kind of long-term planning.</p> <p>Keeping an eye on savings rates is also important. As banks change rates or create new accounts, consider switching to get a better deal if you can do so without falling foul of account closure fees.</p> <p>It’s important to make sure your savings are working for you at any time, but its crucial in the current economy, when finances are tight but interest rates are rising.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/208853/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /></p> <p><em><a href="https://theconversation.com/profiles/fredrick-kibon-changwony-234363">Fredrick Kibon Changwony</a>, Lecturer in Accounting &amp; Finance, <a href="https://theconversation.com/institutions/university-of-stirling-1697">University of Stirling</a></em></p> <p><em>Image credits: Shutterstock</em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/five-ways-to-take-advantage-of-rising-interest-rates-to-boost-your-savings-208853">original article</a>.</em></p>

Money & Banking

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5 signs your friend is struggling with serious debt

<p>Money is always going to be a sensitive topic, and part of the reason for this is the fact that so many people willingly suffer in silence. But if you notice the warning signs, you have to take action. Here are five signs your friend is struggling with serious debt.</p> <p><strong>1. They keep cancelling plans</strong></p> <p>Whether you’re talking about dinner, drinks or even just the occasional coffee, if your friend keeps cancelling plans (particularly if they didn’t have a reputation for doing so in the past) that could be a sign that they’re struggling with their finances.</p> <p><strong>2. Unopened bills</strong></p> <p>If you’re visiting your friend’s home and you notice a pile of unopened bills, this is a classic sign of money troubles. Generally these bills are left unopened because the recipient does not want to see what’s inside, or deal with the monetary consequences.</p> <p><strong>3. Sudden changes in behaviour</strong></p> <p>Does your friend seem more fidgety that usual? Do they become cagey or defensive when money matters are mentioned? Are they bitter when discussing other people’s spending habits? This could indicate stress about their own individual financial situation.</p> <p><strong>4. Ignoring calls and knocks on the door</strong></p> <p>If you’ve been staying at your friend’s house and noticed a knock on the door or phone that’s been left unanswered on multiple occasions this could be a very bad sign. Often this is out of fear of dealing with a debt collector who could be on the other side.</p> <p><strong>5. Not adapting to changes in circumstances very well</strong></p> <p>Lifestyle changes generally come with a change in financial circumstances, but if you’ve noticed a sign that your friend is living in the same way that may be a sign that they’re ignoring the demands of their new situation and not putting themselves in a position to succeed.</p> <p><strong>What can I do?</strong></p> <p>Experts recommend taking the following steps if you know a friend who is struggling to deal with debt. That being said, sometimes just providing someone to talk to about it can make all the difference.</p> <ul> <li>Encourage them to talk to their credit provider and discuss payment options.</li> <li>Talk about applying or a hardship variation to help make payments.</li> <li>Direct them to a financial counselling service.</li> <li>Encourage them to take up free legal advice.</li> </ul> <p><em>Image credits: Getty Images </em></p>

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How to spend time wisely – what young people can learn from retirees

<p><em><a href="https://theconversation.com/profiles/boroka-bo-1371004">Boróka Bó</a>, <a href="https://theconversation.com/institutions/university-of-essex-1291">University of Essex</a></em></p> <p>For many young people, retirement is a blip on the radar, if not a total unknown. This is particularly true during our cost of living crisis, when investing and contributing more to your pension might fall down the priority list behind paying rent.</p> <p>Despite this, more and more young people are starting to think about retirement in <a href="https://www.forbes.com/advisor/retirement/the-forbes-guide-to-fire/">earlier ages</a>, with many focusing on their future quality of life and financial independence after they leave work.</p> <p>This can sometimes come at the expense of their wellbeing while they are still working, spending extremely frugally and focusing on the “hustle”, instead of enjoying the freedom and good times that could also characterise young adulthood.</p> <p>For my <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8681690/">new research</a>, I interviewed over 200 people and surveyed hundreds more to understand how they balance time and money. I focused on people going through major life transitions: recent retirees and new parents, and people preparing for those moments. While we expect retirees to have all the time in the world, I found that in reality, retirees are often pressed for time.</p> <p>Over a quarter of them feel <a href="https://link.springer.com/content/pdf/10.1007/s11205-015-1029-z.pdf">time poor</a>, with not enough hours left in the day for all they need to do. This is regardless of the amount of money they have. Although wealthy retirees generally have more control over their schedules, both rich and poor retirees are impacted by time poverty in older ages.</p> <p>It’s never too late (or too early) to start making the most of your time and living a better life. Here are some important lessons learned from my retirees’ journeys.</p> <h2>Don’t chase money, let money chase you</h2> <p>One of the biggest regrets among my <a href="https://betterdwelling.com/city/toronto/heres-torontos-richest-and-poorest-neighbourhoods-interactive/">less privileged</a> research participants was their inability to get as much education as they wanted when younger. Some left university or college early to support their families, or because they could not afford to continue. But all regretted not getting as much education as they needed to be competitive in the labour force later on.</p> <p>To make enough money, pick something and follow through: whether university or skilled technical trades, get good at something. Then, the money will follow.</p> <h2>Worry about how you feel – not how you look</h2> <p>When youth wanes, you are left with how you feel. In retirement, will you be in pain thanks to spending your life in hard labour or nonstop work? My interviewees made clear that when you prioritise making money over health – whether by necessity or by choice – you pay for this by having to give up your precious time in retirement.</p> <p>Some of my new retirees’ health recovery efforts included spending extra time with medical providers, and spending money and time on commuting to appointments. Women were doubly disadvantaged here as, unlike men, they continued to face societal pressures to look younger than their age.</p> <p>To avoid having to <a href="https://academic.oup.com/gerontologist/article/57/5/910/2632069?login=false">spend extra</a> time and money on health recovery in later life, focus on health preservation in earlier life. Sometimes you may need to to prioritise your own wellbeing above the needs of your employer, for example by taking time off for your physical or mental health.</p> <p>While this is a luxury currently not afforded to all, movements like “quiet quitting” are beginning to start a public conversation on this topic.</p> <h2>Make your time count by sharing it with others</h2> <p>We can “buy” time by exchanging money for tasks we do not wish to do. Consuming items can also have <a href="https://www.jstor.org/stable/pdf/24737120.pdf?addFooter=false">time costs</a>, as both shopping and learning to use new items takes time. Thanks to my retirees, I now also know that we can get more out of time when we share it with others.</p> <p>Time is what social scientists would call a “<a href="https://sociologicalscience.com/time-network-good/">network good</a>”. In other words, how we value time depends on the number of other people we can share our time with.</p> <p>All of my retired participants spoke of the need to build strong, healthy relationships while younger, to have friends we can share life with when older. Shared time leads to <a href="https://sociologicalscience.com/time-network-good/">greater emotional wellbeing</a> and happiness.</p> <h2>Identify your passions early</h2> <p>While nearly all of my retirees spent a considerable amount of time financially planning for retirement, almost as many regretted not planning ahead when it comes to cultivating hobbies and interests. This was particularly pressing for my wealthy retirees, as they faced a drop in their social status and loss of work friends when they retired.</p> <p>Starting new hobbies and interests once retired – out of necessity – can feel like extra work. Pursuing passions is <a href="https://www.tandfonline.com/doi/abs/10.1080/07053436.1995.10715491?casa_token=Puyxz2akU2oAAAAA:Gl6qIREhdxqfcm5fo0cJ6_5DLLjTCuEVPF7Da2JDyxVHNwbeq6N-9Hbc0nMLiKn-cO1fZfd8cKRi">necessary for wellbeing</a>, but this should be done before retirement, while it is purely for fun.</p> <h2>Time is love</h2> <p>Repeatedly, my interview participants gently reminded me that giving your time to another person is the biggest act of kindness we can do. This is because once you give your time away, you can never get it back.</p> <p>Be mindful of this as you give your time, to your friends, employers, acquaintances or to social media companies. Thanks to my participants, I now often ask myself: Does this company or organisation love me? Generally, the answer is no, at which point I also know they do not deserve much of my time.</p> <p>At the same time, when a friend, trusted mentor, teacher or stranger donates their precious time to me, I am aware that my appreciation and kindness can only ever partially repay them.</p> <p>My retired participants show that it is important to remain grateful for the time we share with each other while on this Earth. When the daily grind gets you down, remind yourself that time is love.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/189340/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /></p> <p><a href="https://theconversation.com/profiles/boroka-bo-1371004"><em>Boróka Bó</em></a><em>, Assistant professor in sociology, <a href="https://theconversation.com/institutions/university-of-essex-1291">University of Essex</a></em></p> <p><em>Image credits: Getty Images</em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/how-to-spend-time-wisely-what-young-people-can-learn-from-retirees-189340">original article</a>.</em></p>

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Diary worth over $50,000 found in mother's attic

<p>The world of diaries often holds a realm of personal musings and daily chronicles, but for one fortunate woman, a hidden treasure in her mother's attic turned out to be far more valuable than she ever imagined.</p> <p>In a captivating episode of<em> Antiques Roadshow</em>, an unsuspecting woman sought the expertise of the renowned Richard Price, presenting him with a diary that held not just sentimental value but an astonishing historical significance.</p> <p>With a sense of anticipation in her voice, she began, "We believe that it is the transcript of the diary written by one of the Shackleton expedition crew members aboard the <em>Endurance</em>."</p> <p>This remarkable artefact had been handed down to her father 45 years earlier and had subsequently resided in her mother's attic, concealed beneath layers of dust beside an old television set.</p> <p>The Shackleton expedition, set against the stark backdrop of Antarctica, unfolded in the year 1915. The woman eloquently narrated the captivating tale, "That was the famous expedition that got stuck in the ice, and the crew members survived on the ice for a number of months. Then they made a journey in the lifeboats to Elephant Island, and Shackleton, along with five others, embarked on a perilous voyage to South Georgia as a rescue party.</p> <p>"They managed to secure a ship to retrieve the remaining men stranded on the ice. Astonishingly, every member of the expedition survived, a testament to their incredible resilience."</p> <p>This remarkable diary bore witness to the harrowing journey and contained invaluable insights into the crew's survival tactics, including details of their sustenance during their ordeal.</p> <p>Price, the seasoned expert, meticulously examined the diary's condition. While a few pages had become detached from the spine, the document was, for the most part, remarkably well-preserved.</p> <p>However, one crucial mystery lingered – the identity of the diary's author remained elusive. Recognising the importance of this missing puzzle piece, Price urged the woman to seek out an expert capable of uncovering the writer's identity, emphasising that this revelation could significantly enhance the diary's value.</p> <p>As the moment arrived for the much-anticipated valuation, Richard declared, "I'm just going to say off the top of my head, £30,000 (over $50,000)."</p> <p>The room fell into a collective state of shock, with audible gasps emanating from the captivated audience. The guest herself was visibly taken aback by the astronomical figure.</p> <p>Despite the woman's earnest efforts to safeguard this extraordinary document over the years, Price issued a stern warning, "I don't want it back under your bed or wherever it was before. You must go to Cambridge to let the real experts work on it."</p> <p>In the end, this unassuming diary, tucked away for decades in an attic, not only unveiled an epic Antarctic adventure but also carried an unexpected fortune, proving that sometimes, the most extraordinary treasures are hidden in the most unlikely places.</p> <p><em>Images: Antiques Roadshow / 9Now</em></p>

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Forcing people to repay welfare ‘loans’ traps them in a poverty cycle – where is the policy debate about that?

<p><em><a href="https://theconversation.com/profiles/hanna-wilberg-1466649">Hanna Wilberg</a>, <a href="https://theconversation.com/institutions/university-of-auckland-1305">University of Auckland</a></em></p> <p>The National Party’s <a href="https://www.1news.co.nz/2023/09/26/more-sanctions-for-unemployed-beneficiaries-under-national/">pledge to apply sanctions</a> to unemployed people receiving a welfare payment, if they are “persistently” failing to meet the criteria for receiving the benefit, has attracted plenty of comment and <a href="https://www.1news.co.nz/2023/09/26/nationals-benefit-sanctions-plan-cruel-dehumanising-greens/">criticism</a>.</p> <p>Less talked about has been the party’s promise to index benefits to inflation to keep pace with the cost of living. This might at least provide some relief to those struggling to make ends meet on welfare, though is not clear how much difference it would make to the current system of indexing benefits to wages.</p> <p>In any case, this alone it is unlikely to break the cycle of poverty many find themselves in.</p> <p>One of the major drivers of this is the way the welfare system pushes some of the most vulnerable people into debt with loans for things such as school uniforms, power bills and car repairs.</p> <p>The government provides one-off grants to cover benefit shortfalls. But most of these grants are essentially loans.</p> <p>People receiving benefits are required to repay the government through weekly deductions from their normal benefits – which leaves them with even less money to survive on each week.</p> <p>With <a href="https://www.stuff.co.nz/pou-tiaki/132980318/auckland-mother-serves-up-cereal-for-dinner-due-to-rising-food-costs">rising costs</a>, the situation is only getting worse for many of the 351,756 New Zealanders <a href="https://figure.nz/chart/TtiUrpceJruy058e-ITw010dHsM6bvA2a">accessing one of the main benefits</a>.</p> <h2>Our whittled down welfare state</h2> <p>Broadly, there are three levels of government benefits in our current system.</p> <p>The main benefits (such as jobseeker, sole parent and supported living payment) <a href="https://www.workandincome.govt.nz/products/benefit-rates/benefit-rates-april-2023.html">pay a fixed weekly amount</a>. The jobseeker benefit rate is set at NZ$337.74 and sole parents receive $472.79 a week.</p> <p>Those on benefits have access to a second level of benefits – weekly supplementary benefits such as an <a href="https://www.workandincome.govt.nz/products/a-z-benefits/accommodation-supplement.html">accommodation supplement</a> and other allowances or tax credits.</p> <p>The third level of support is one-off discretionary payments for specific essential needs.</p> <p>Those on benefits cannot realistically make ends meet without repeated use of these one-off payments, unless they use assistance from elsewhere – such as family, charity or borrowing from loan sharks.</p> <p>This problem has been building for decades.</p> <h2>Benefits have been too low for too long</h2> <p>In the 1970s, the <a href="https://mro.massey.ac.nz/handle/10179/12967">Royal Commission on Social Security</a> declared the system should provide “a standard of living consistent with human dignity and approaching that enjoyed by the majority”.</p> <p>But Ruth Richardson’s “<a href="https://www.stuff.co.nz/the-press/christchurch-life/124978983/1991-the-mother-of-all-budgets">mother of all budgets</a>” in 1991 slashed benefits. Rates never recovered and today’s <a href="https://www.1news.co.nz/2022/03/29/benefit-increases-will-still-leave-families-locked-in-poverty/">benefits are not enough to live on</a>.</p> <p>In 2018, the <a href="https://www.weag.govt.nz/">Welfare Expert Advisory Group</a> looked at how much money households need in two lifestyle scenarios: bare essentials and a minimum level of participation in the community, such as playing a sport and taking public transport.</p> <p>The main benefits plus supplementary allowances did not meet the cost of the bare essentials, let alone minimal participation.</p> <p>The Labour government has since <a href="https://www.beehive.govt.nz/release/government-delivers-income-increases-over-14-million-new-zealanders">increased benefit rates</a>, meaning they are now slightly above those recommended by the advisory group. But those recommendations were made in 2019 and don’t take into account the <a href="https://www.stats.govt.nz/news/annual-inflation-at-6-0-percent">sharp rise in inflation</a> since then.</p> <p>Advocacy group <a href="https://fairerfuture.org.nz/">Fairer Future</a> published an updated assessment in 2022 – nine out of 13 types of households still can’t meet their core costs with the current benefit rates.</p> <h2>How ‘advances’ create debt traps</h2> <p>When they don’t have money for an essential need, people on benefits can receive a “special needs grant”, which doesn’t have to be repaid. But in practice, Work and Income virtually never makes this type of grant for anything except food and some other specific items, such as some health travel costs or emergency dental treatment.</p> <p>For <a href="https://www.1news.co.nz/2023/02/27/very-stressful-beneficiary-says-he-cant-afford-msd-debt/">all other essential needs</a> – such as school uniforms, car repairs, replacing essential appliances, overdue rent, power bills and tenancy bonds – a one-off payment called an “advance” is used. Advances are loans and have to be paid back.</p> <p>There are several issues with these types of loans.</p> <p>First, people on benefits are racking up thousands of dollars worth of debts to cover their essential needs. It serves to trap them in financial difficulties for the foreseeable future.</p> <p>As long as they remain on benefits or low incomes, it’s difficult to repay these debts. And the <a href="https://www.legislation.govt.nz/act/public/2018/0032/latest/whole.html">Social Security Act 2018</a> doesn’t allow the Ministry of Social Development (MSD) to waive debts.</p> <h2>Contradictory policies</h2> <p>Another problem is that people on benefits have to start repaying their debt straight away, with weekly deductions coming out of their already limited benefit.</p> <p>Each new advance results in a further weekly deduction. Often these add up to $50 a week or more. MSD policy says repayments should not add up to more than $40 a week, but that is often ignored.</p> <p>This happens because the law stipulates that each individual debt should be repaid in no more than two years, unless there are exceptional circumstances. Paying this debt off in two years often requires total deductions to be much higher than $40.</p> <p>The third issue is that one-off payments can be refused regardless of the need. That is because there are two provisions pulling in opposite directions.</p> <p>On the one hand the law says a payment should be made if not making it would cause serious hardship. But on the other hand, the law also says payments should not be made if the person already has too much debt.</p> <p>People receiving benefits and their case managers face the choice between more debt and higher repayments, or failing to meet an essential need.</p> <h2>Ways to start easing the burden</h2> <p>So what is the fix? A great deal could be achieved by just changing the policies and practices followed by Work and Income.</p> <p>Case managers have the discretion to make non-recoverable grants for non-food essential needs. These could and should be used when someone has an essential need, particularly when they already have significant debt.</p> <p>Weekly deductions for debts could also be automatically made very low.</p> <p>When it comes to changing the law, the best solution would be to make weekly benefit rates adequate to live on.</p> <p>The government could also make these benefit debts similar to student loans, with no repayments required until the person is off the benefit and their income is above a certain threshold.</p> <p>However we do it, surely it must be time to do something to fix this poverty trap.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/212528/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /></p> <p><a href="https://theconversation.com/profiles/hanna-wilberg-1466649"><em>Hanna Wilberg</em></a><em>, Associate professor - Law, <a href="https://theconversation.com/institutions/university-of-auckland-1305">University of Auckland</a></em></p> <p><em>Image credits: Getty Images </em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/forcing-people-to-repay-welfare-loans-traps-them-in-a-poverty-cycle-where-is-the-policy-debate-about-that-212528">original article</a>.</em></p>

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7 ways to create realistic financial goals that you'll actually stick to

<p>Establishing robust financial habits not only fosters comfort but also alleviates anxieties about the road ahead. A positive change in our financial circumstances commences with a shift in our money mindset. When you shift to creating lasting change, you can achieve more than you believe is possible.  </p> <p>When creating financial goals that you’ll actually stick to, parallels can be drawn between achieving physical and financial fitness. Let’s take a look.</p> <ol> <li><strong>Precision in Goal Setting</strong></li> </ol> <p>Just like any other endeavour, the path to financial well-being requires setting clear objectives that are both quantifiable and feasible. Whether it's building an emergency fund or saving for a major purchase, your goals need to be well-defined and measurable. </p> <p>Just as a fitness regimen consists of various exercises targeting different muscle groups, your financial goals should cover different aspects of your financial life.</p> <ol start="2"> <li><strong>The Inaugural Step</strong></li> </ol> <p>The hardest part is starting – there will always be competing priorities.   Think of it as taking one step at a time.  Starting your financial goals might feel overwhelming due to competing priorities and uncertainties. </p> <p>Start small and build momentum gradually. Establish a budget, track your expenses, and save a modest amount regularly. </p> <ol start="3"> <li><strong>Avoiding Extreme Measures</strong></li> </ol> <p>Remember, lasting change comes from sustainable actions. Financial quick fixes like waiting for bonuses or tax returns won't foster healthy habits and can lead to financial fatigue. Instead, embrace gradual progress; small efforts compound over time. </p> <p>The allure of crash diets can be tempting, but they rarely yield lasting results. Instead, opt for consistent, manageable actions. Focus on building sustainable habits, like making regular contributions to savings or investments.</p> <ol start="4"> <li><strong>The Power of Knowledge</strong></li> </ol> <p>Equip yourself with information. Education is a powerful tool in achieving financial well-being.  Understanding the options available is pivotal to making informed financial decisions. Gain a comprehensive understanding of your financial options. </p> <p>Research investment opportunities and strategies that align with your goals. Knowledge empowers you to navigate the complex landscape of personal finance confidently.</p> <ol start="5"> <li><strong>Exploration of Strategies</strong></li> </ol> <p>Just as someone might prefer running over cycling, finding financial strategies that resonate with you enhances your chances of long-term success. Experiment with diverse approaches to identify what resonates best, reducing stress and enhancing commitment. </p> <p>Opt for strategies that resonate with your values, minimise stress and amplifying commitment.</p> <ol start="6"> <li><strong>Consistency </strong></li> </ol> <p>Success lies in cultivating steady habits over time, ensuring enduring benefits. Just as regular workouts lead to improved physical health, cultivating small, consistent financial habits over time leads to enhanced financial well-being. </p> <p>Set up automated transfers to savings accounts, make incremental increases in contributions, and avoid overspending.</p> <ol start="7"> <li><strong>Intermittent Rewards</strong></li> </ol> <p>Occasionally treat yourself.  Sporadic indulgences can enhance well-being and acknowledge hard-earned victories. Rewarding yourself for achieving financial milestones enhances your commitment and prevents financial fatigue. It's essential to strike a balance between frugality and enjoyment.</p> <p>By embracing these principles, we not only engineer realistic financial objectives but also cement a commitment to achieving them. That’s the key to lasting financial prosperity.</p> <p><strong><em>Amanda Thompson, author of Financially Fit Women, is a sought-after speaker and qualified financial adviser.  As the founder of Endurance Financial, Amanda is driven to support women to have a great relationship with money and own their own financial success. For more information visit <a href="http://www.endurancefinancial.com.au">www.endurancefinancial.com.au</a></em></strong></p> <p><em>Image credits: Getty Images</em></p>

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What does financial abuse really look like?

<p>Sally is in her 20s, lives in a dilapidated rental home and works three jobs. Fifty-something Sarah owns a large home, drives a Mercedes and is a corporate executive. Pensioner Scott, in his mid-70s, still lives in the home in which he and his late wife raised their children. Who would you say is more vulnerable to financial abuse?</p> <p>The answer, you may be surprised to learn, is all three. Financial abuse, according to the government’s <a href="https://moneysmart.gov.au/living-in-retirement/financial-abuse">MoneySmart</a>, is a type of family and domestic violence:</p> <p>“It often happens alongside other types of violence, such as physical or emotional abuse. It can leave you feeling vulnerable, isolated, depressed and anxious. It can also take away your independence.”</p> <p>Commonly a spouse or partner is the perpetrator, but it can come from any relative or friend. A <a href="https://www.commbank.com.au/content/dam/caas/newsroom/docs/Cost%2520of%2520financial%2520abuse%2520in%2520Australia.pdf">2022 Commonwealth Bank report</a> suggests over 623,000 Australians experienced financial abuse in 2020 alone – roughly one in 30 women and one in 50 men. Anyone – regardless of age, wealth etc. – can be a victim. </p> <p><strong>Financial abuse has many faces</strong></p> <p>Just as finances are complex, so too is financial abuse, which can be viewed from many angles:</p> <ul> <li>Couples: One partner controls everything money related. I know of one instance where a woman’s partner went so far as counting coffee pods; another checked car mileage to stop his partner driving further than school drop-offs.</li> <li>Exes: Not working specifically to avoid paying child support; withholding information to delay settlement; bullying into a menial settlement.</li> <li>Multi-generations: Children or grandchildren milking elderly relatives; seizing control over their finances and living arrangements.</li> <li>Non-relatives: Such as friends buying property together without properly documenting everything, then fighting come sale time.</li> <li>Business relationships: Duped signatures on trust and business documents; hiding debts; impeding or undervaluing someone’s exit.</li> </ul> <p><strong>Warning signs </strong></p> <p>There are common warning signs that you, or someone you know, is suffering financial abuse:</p> <ul> <li>Pressure to make decisions: to invest your money or superannuation in crazy things that go bust, or to do nothing and not keep up with inflation (let alone grow your wealth), go guarantor on a loan, or sign power of attorney.</li> <li>Draining money: using your money to fund their business or investment on the promise a return is coming that never does (which could be poor management or deliberate deceit). This could continue for years until you’re left homeless and bankrupt.</li> <li>Unfair claims: your partner came into the relationship with nothing and stays just long enough to make a claim on your home.</li> <li>Controlled spending: this may start small (‘Don’t spend so much on clothes!’) but can become extreme. </li> <li>Blackmail: I’ve heard of people denied access to their grandkids unless they gave their son/daughter money or amended their will.</li> <li>Restricted access: you’re denied access to your own or joint finances, from having your own accounts, or are banned from working to earn your own income and superannuation.</li> <li>Tracking: sharing your location by smartphone may sound practical or safe but is open to abuse.</li> <li>Social isolation: cutting you off from friends and family; pressing for an interstate move.</li> <li>Reckless spending: your money is spent haphazardly – you may be kept in the dark or pressured not to ask questions.</li> <li>Tying down: trapping you into a big mortgage to crimp your freedom.</li> <li>Guilting: I have seen wealthy adults guilt their less fortunate parents into paying their bills, and gambling addicts guilt partners into paying their debts (with no intention to address their addiction or plan to pay it back).</li> </ul> <p><strong>Protecting yourself</strong></p> <p>The best prevention of all is to avoid thinking ‘it won’t happen to me’. So many victims of financial abuse once thought exactly the same.</p> <p>Other tips include:</p> <ul> <li>Speak up: Sometimes, starting a conversation can be enough to deliver positive change and even save a relationship (avoiding divorce is cheaper for everyone!)</li> <li>Have an emergency fund – cash only you can access, easily, in a crisis.</li> <li>Keep separate bank accounts – deposit your income here, then transfer money for joint bills into a joint account. </li> <li>Make decisions together – don’t leave money matters to your partner/children. It’s your money too.</li> <li>Get outside perspective: financial advisers are accountable to you as their client and help provide visibility over your assets, liabilities and risks. Ensure they are qualified and currently practicing.</li> </ul> <p>If you think you may be a victim of financial abuse, I beg you – seek help immediately. Suffering in silence and letting the situation snowball is the costliest thing you can do. Both financially and emotionally!</p> <p><a href="http://www.lifeline.org.au/">Lifeline - </a>13 11 14</p> <p><a href="https://www.1800respect.org.au/">1800RESPECT - </a>1800 737 732</p> <p><a href="https://www.familyrelationships.gov.au/talk-someone/advice-line">Family Relationship Advice Line - </a>1800 050 32</p> <p><a href="https://goodshep.org.au/">Good Shepherd Australia Financial Independence Hub  - </a>1300 050 150</p> <p><a href="http://www.ndh.org.au/">National Debt Helpline - </a>1800 007 007</p> <p><strong><em>Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press, $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au">www.onyourowntwofeet.com.au</a></em></strong></p> <p><em>Image credits: Getty Images </em></p>

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