New financial year, new me! Money coach, Matt Hern joins us to share a bunch of budgeting brain hacks that you can put in place to get ahead at the start of this brand spanking new financial year. Consider this a refresher course on all things money. Tune in, learn & then put your steps into action.
Matt Hern is a Money coach from the Money for Life Podcast. You can find Matt on Facebook, Instagram and Linked In.
Definitions
FIFO: Fly In Fly out worker.
Correction: The improving by 1% each day quote that Blaize mentioned can be found here with the correct details.
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The following is a transcript taken from Episode 37 of the We Talk Cents podcast. The transcript is created by AI software so it might not be perfect - please forgive any imperfections or grammatical errors.
Blaize Pengilly 00:09
Personal Finance budgeting cash flow and investing don't have to be scary words. The We Talk Cents podcast is here to help you learn more about money and take control of your personal finances. We Talk Cents podcast is not a financial advisor. This podcast is made for entertainment and educational purposes only. All information shared is of a general nature and does not take into account your personal situation. You should consider whether the information is appropriate for your needs and where appropriate seek professional advice from a financial advisor.
Dan Jovevski 00:45
For more information, please check out wemoney.com au/disclaimer.
Blaize Pengilly 00:51
G'day g'day - Blaize Pengilly here from We Talk Cents joined by Dan Jovevski the money expert. Dan, how are you today?
Dan Jovevski 01:00
Blaize I'm feeling great. It is a brand new financial year we've gotten over our party hangover of the financial year party that we had last week with the tax Queen itself. I'm fully recovered and refreshed. How about you?
Blaize Pengilly 01:12
I yeah, recovered and refresh is a great way is a great way to frame it. I feel pretty great. And you know what I stepped outside this morning and saw a beautiful rainbow. So what a wonderful way to start the day and start the new financial year. Today's episode, we are fully celebrating the full new financial year. It is a new financial year new me. We are doing a essentially a refresher course on a couple of the things we've learned so far this year. And we're joined by Matt Hern, who's a money coach who will be taking us through some budgeting brain hacks so that you can start your new financial year strong. So think of this episode as yeah a refresher course or a clean slate for you to start your new financial year with a sense of knowledge and empowerment. So you can attack your finances and really kick some money goals in the second half of 2021 and the first half of the new financial year. But before we get into that, let's take a look at what's been happening in the world around us. Dan, did you see the news about Menulog?
Dan Jovevski 02:17
I did it just caught my attention very briefly. Tell me tell me more Blaize.
Blaize Pengilly 02:21
So we've been we've chatted about the gig economy quite a lot. And obviously, Uber, Deliveroo, Uber Eats, Menulog. They all hire people that are based in the gig economy, right where people are working for themselves, they're subcontracting, or independent contracting, and working under that brand. But Menulog has become the first major gig economy delivery company to directly employ workers. So it announced a few months ago that it was going to move away from the independent contractor model, which has been pretty criticized in the media. There's been a lot of issues with unfair dismissal and minimum wage for like issues, and people not having good working rights. I thought it was pretty interesting to see that, you know, given the meteoric rise of how popular delivery services has become in the last six to eight years, seeing them change, one of the fundamental ways of how they hire and employ people was pretty cool.
Dan Jovevski 03:20
Well, Blaize, this really interesting, because you know, only about two short years ago, the Fair Work Ombudsman found that Uber drivers were not employees. So I think this is global worldwide trend, especially starting in the US and the UK, where people are already looking at this gig economy working model and considering: Hey, people are not getting other benefits of Australian superannuation. You know, in the US, you've got other things like health insurance benefits, which are really important to US based workers, I think the whole world is sort of turning to these big conglomerate companies that are now turning their gig workers into employees, which actually could be a really good thing, because it means that people have more continuity of work, which is awesome. But they also receive some other benefits. But I think also as well, it's actually great for some of these companies, because what they do effectively, in these arrangements, where they have minimum working hours is they effectively get to contract these people to work for that company almost exclusively. Which basically means if you're like - I'm not saying this is the case now for Uber - but in the States, there's been some discussion where if you're an Uber driver and you sign up to become an Uber employee, then the likelihood that you go and work for a competitor, like Lyft is probably less likely. So there actually is some benefits to these companies outside of just maybe bringing some of these workers up to parity of full time workers. So yeah, it's interesting to see how this will all play out.
Blaize Pengilly 04:42
When I was living in Sydney, I've absolutely received a Uber Eats delivery from someone in a delivery uniform, they over there, they love working multiple jobs at the same time. And it makes me think if they, when you're when you're an independent contractor, and you have the I guess one of the attractions of the work is how flexible it is, imagine if you're one of these companies and you really pissed off some of your staff, and there was a massive strike, you'd be kind of screwed, wouldn't you? Because they could all just go on strike, and then you'd have no one working for you. I guess like the flexibility goes both ways in that, you know, in case there was a massive coup or something. People you could be really stuck without any delivery drivers. Does that make sense?
Dan Jovevski 05:26
Yeah, it does. It does Blaize. Viva la revolution, by the sounds of it. So, we'll wait and see what and see how it all plays out in Australia will be super interesting to watch the Menulog case study.
Blaize Pengilly 05:39
Yeah, for sure. All right, Dan. The rest of the news this week is obviously Of course compulsory separate has now officially gone up to 10%. Moving forward, which is great half a percent increase from how it has been for the past past few years. And that's for the next financial year moving forward, which is awesome. Now speaking of the next financial year, let's start strong - Shall we press play on our interview with Matt Hearn who's got some budgeting brain hacks for us?!
Dan Jovevski 06:05
Let's do it Blaizey.
Blaize Pengilly 06:10
Dan, have you been stuck? Have you been lured into TikTok? Have you like I have spent hours and hours a couple of days a week just watching the Tok?
Dan Jovevski 06:22
I have - my very first experience with TikTok I downloaded the app I thought to myself that I'm going to be just casually browsing this for two seconds. And then at 2am or later [laughing] I just remember I vividly remember what I just kept on what I watched it about 30 times on loop it was this guy who had geese and they were like his kids and he put them in prams to like this Taylor Swift music and for some reason I just could not get my eyes off it. So I'll go ahead and delete it right away because I don't trust myself. How about you?
Blaize Pengilly 06:58
Well as I've really tried to limit my watching because ugh it's so easy to get sucked in. But I get really addicted to the hacks and one that I saw that has completely changed. This is maybe like three weeks ago, one that I saw that has completely changed the way I cook pasta is when you cook pasta, and you get the you take the pot off the stove and you get the strainer. Instead of pouring over the sink the pasta into the strainer. All he do is put the strainer on like a lid, tilt the pot upside down and then the pasta stays in the pot. Simplest hack ever - completely changes the way I do pasta now because now I don't have to move it all around and shuffle the pasta and I can just put the source in straight back on the stove. How good is that?
Dan Jovevski 07:42
That's amazing Blaizey - that's super smart. I've heard another thing actually and I saw it on TikTok. When you go to the shopping center and you want to take a watermelon back home people think that the watermelon is really heavy. What you do is you slide a bag over the watermelon and you just tip it up a little bit and you put it in the bag and it just saves your back when you buy really big watermelons. Hey! My family loves watermelon, so for me it was like super useful. Theress everything on TikTok!
Blaize Pengilly 08:08
There is everything on TikTok! And that just saves so insanely simple. But it's a great hack that can really make I guess, carrying watermelons or making pasta easier. Enough segue to get us into our conversation today, because you know, I love a good hack Dan and I thought, what about budgeting? How can we make money easier? We talk about tips and tricks and hacks quite often. But are there really simple, obvious things that we can do that can make managing money easier? And of course the answer is yes there are because we have a very special guest joining us today to talk about exactly that. Budgeting brain hacks. So he specializes in helping people working in the FIFO field. And he coaches clients all around Australia and he even has his own money podcast as well. He's got over 15 years of experience as a certified financial planner under his belt. He blends this experience and behavioral science with money to provide advice that is insightful, practical and delivered with humanity. His goal is to be able to help people to afford what brings them joy. And he joins us today to share insight on exactly that. Tuning in through the World Wide Web from Perth Western Australia is Matt Hern. Matt, how are you going?
Matt Hern 09:21
I am tickety boo here in Perth Blaize.
Blaize Pengilly 09:25
Thank you so much for joining us, Matt. Matt, have you seen any of these crazy hacks? Or they're not really that crazy, are they?
Matt Hern 09:34
I certainly have and actually after this, can you please send me the pasta straining one because I want to see that and use that?
Blaize Pengilly 09:40
Yes, of course! Matt, now I'm starting to notice a theme here. You are the second guest we've had on in recent times that's gone from engineering into the money field. Now, is this just anecdotal evidence or is there some reasoning behind that engineers make better budgeters?
Matt Hern 09:56
Well, it's not just budgeters, but and engineers are trained to be highly analytical. And so you do find a lot of engineers transition somewhere into financial services. Sometimes it's into stock or funds management and that analysis, in fact, my cousin is did exactly the same way from engineering into financial services. So I think that's why you see it a lot - it's not just anecdotal is quite prevalent
Dan Jovevski 10:20
Amazing, and Matt, as a money coach and we've heard in the intro that you're interested in behavioral science and how this impacts the way that we manage our money, you've come to share some budgeting brain hacks today. But before we get into the nitty gritty, what exactly is a hack? And are we essentially tricking ourselves into becoming better at managing money? Am I going to get hypnotized not to spend what actually goes into it?
Matt Hern 10:43
Well, that's a great question, because I think hack is the trendy term for understanding ourselves. And, and using that to our best interest rather than the other way around. So you know, I think of it in this environment. And you've mentioned that on previous podcasts, you know, we're in an environment where we're exposed to, like 10,000 marketing messages a day, and many of those marketers are trained and skilled at, in a sense, hacking our brains to get us to desire stuff that we don't need, or even want, really just hacking us. So they're sort of hacking our natural brain, and our habits and our behavior, to get us to buy things that we don't need and the payment providers and then doing exactly the same, making it hacking, I guess, the environment and our instincts to get us to make it easy for us to buy stuff we don't need with money we don't have. So I guess this is like flipping their hats on air around and using it for good rather than evil.
Blaize Pengilly 11:42
It's a real life hackathon. Now, Matt, I know you've got an absolute plethora of budgeting brain hacks to choose from. But what is a really easy one that you can use, or you can try to get started if you do want to go down this hack off?
Matt Hern 12:02
Well, great one, the one that I think that we should borrow, but before our grandparents even used the word hack, and that's the one that's been going for generations. Like if you imagine grandpa, or great grandpa coming home with an envelope full of cash, and this was a stereotype back in the generation, but yeah, and grandma then took that and split it across multiple envelopes, jam jars, or biscuit tins. So what she was doing is compartmentalizing. And why that really works is because it's really tricky for our brains to do some sort of mental accounting, and sort of go, oh, this is how much I've got for this account, the butcher, the baker, the candlestick maker, and but grandma did all that in biscuit tins and jam jars, so compartmentalizing your bank accounts, is actually a great hack that takes some of the computing processing power away from your brain, and just makes it easy for you. So that would be the hack that, you know, the Barefoot investor has now popularized and call it bucketing. But you know, our grandparents were doing it for generations to get through tough times like the Great Depression.
Dan Jovevski 13:05
Absolutely. Matt, we see such interest. Now this space where it's kind of like the final frontier, right? People, people are really examining themselves and to uncover the personal sort of biases and the level of approaches one that's been tried and sort of tested, because you physically have to take the cash, put it in somewhere, and then spend it and you get to see that that money sort of moving and you have a much deeper relationship with that experience, as opposed to doing it on your debit card. And yeah, I'm just wondering now given that we're in this digital environment, and cash and COVID, what are ways that people are doing the envelope method now with digital means?
Matt Hern 13:44
In fact, it's easier now. And that's what I love, that I have seen in my lifetime, is that technology has come about and made it very easy and very low cost to have multiple bank accounts. And you can even get many of those accounts for free, no cost and have as many as you want. And transfer automatically between them, which is actually one of the other brain hacks is, you know, the more that we try to make the decisions conscious, the more energy, and we've only got a certain amount of brain energy per day in the center and a certain amount of willpower. So automating the transfers between those accounts is actually another another hack in a way is to make the decision once that acts in your best interest by also automatically saving for a goal that really lights you up. And then you've made that decision once, executed at once, and boom, you're on track. And now it actually takes energy to take you off track in one sense. So I love the fact that today. In today's environment, we can have multiple bank accounts and all and with open banking, we can instantly transfer between them now,
Blaize Pengilly 14:48
Open banking has been or the instant transfer has been one of the greatest things money wise to happen in my life I think. I remember being a 17 year old on a regional roadtrip needing money from my savings account and sitting in a KFC car park on the phone on a Saturday night trying to talk to someone and remember my pin for them to transfer the money for me before we had phone apps and before, like it was after hours. So I couldn't go into the bank. And now I can pretty much just think about it, press two buttons on my phone, and boom, in an instant, the money is transferred between my accounts, between accounts with friends or family. I think it's pretty incredible. So anyway, so that's just me getting excited about how times have changed.
Matt Hern 15:31
That's okay - Can I throw in though, there's also your dark side to that instant transfer, because it does actually make it easy to dip into that special savings account. And you know, overspend if the market has had got your got hold of your desire, and they've got enticed you to buy that pair of jeans that you didn't really need. It's really easy. Just open your app and flick it across from one account to another while you're in the in the store, even in the change room and make it happen. So there is a dark side to that as well. And so we have to look at other hacks to, to I guess, manage the dark side of instant transfers.
Blaize Pengilly 16:09
That is very true - it is super simple to transfer. But Matt, I would have to disagree. I probably definitely did need the jeans. What about temptation? How can we, so we're getting tricked into buying or as I say tricks, but we're getting lured into buying things or were desiring products that we don't really need - How can we resist that temptation?
Matt Hern 16:33
I actually think it's very difficult to resist. And the latest social science is saying that, like I remember back in the 90s, it was all around willpower. But I think the latest social science is saying, you know what, we think that there's not actually a whole heap of willpower that we can use into the day. In fact, some of the thought leaders in that space, say, well maybe got 100 units, think of it that way. So you actually want to use those 100 units of willpower really wisely. So rather than trying to resist the temptation, better to actually remove the temptation from you and save those willpower units for something that you can't remove. So this is part of, I guess, a global principle of redesigning your environment to remove the temptation. So you know, don't go into the jeans store Blaize. That's so you know, I remember back in the days when I worked in the CBD, and it was bustling, because there was no pandemic, at lunchtime, you would just wander down the malls and pass the shop. So what you're doing is exposing yourself to temptation at that point in time. So an easy hack, if you're prone to that sort of habit, because you live near a shopping center or work near a shopping center is actually don't go through the shopping center. And if you do go in with a specific list, so that you're only going into the short store. So the temptation is there. The other one, which again, we use technology, is to actually use the ad blockers that you can get on your browsers to stop those sort of things coming in and unsubscribe from all the marketing emails that you are getting, you know, you're going once and given the email address. So you get a bonus pair of jeans with your other pair of jeans - but then you're getting an email every single week, like some of the online stores that give me multiple per day at the moment after I transact. So remove that temptation of those emails coming in. Because I think, because those marketers are absolutely skilled at enticing desire, that's why they're sending them. So little hacks like that are great ways to remove temptation, because it's much easier than resisting temptation.
Blaize Pengilly 18:36
Just jumping in here, if you need a better picture of your finances, you have multiple bank accounts that you want to track and see in one place, or if you want to see where you're spending your money, download the free WeMoney app, set yourself up for the next financial year by setting up and tracking your progress towards your money goals for free in the app, if you download WeMoney and use the code "podcast", you'll earn $5 on signup when you connect an eligible bank account, all right back to the brain hacks.
Dan Jovevski 19:08
Matt, another topic that I think you're really interested in by virtue of how you market your own self is around sort of FIFO's and people in that sort of territory. And I think using the analogy of FIFOS, my, my dad was FIFO I still is FIFO, he's been a FIFO person for like 30 years of his life. And he comes from a more traditional school of managing, you know, his money, which is putting dollar bills in his top pocket and that being his bank. But you know, some of the stories that we hear from people that you know, get exposed to a lot of money or end up seeing a big increase in earnings, this concept of lifestyle creep, you talk about as well. Just talk a little bit more about that in terms of how that can potentially become you know, an issue and tie that back into the behavioral psychology of how we think about progress and and making money and getting increases, like bonuses and salaries or high paying jobs.
Matt Hern 20:04
Yeah, and that's a really deep point. I know that you've also covered on other episodes, Dan. But I guess that when I first was taught about and learned about lifestyle creep, it almost came with a bit of shame as almost like, Why, what's wrong with me? I'm in lifestyle creep. But the more I delved into the social science, I realized, actually, it's our natural instinct, to you know, we naturally crave greater comfort and convenience, because I have a suspicion we're inherently lazy as a species. So this natural craving for greater comfort and convenience is there and and so lifestyle creep, for those who perhaps haven't heard of the term is where our standard of living, and our expenses raised to meet our income. So you could say our lifestyle is creeping up to whatever we're earning in that sense. But there's another social science concept behind it called hedonic adaptation, which is a fancy way that the social scientists call for what I call saying, basically, it's taking your lifestyle for granted. So when, particularly with possessions more than experiences, we get adapted to them very, very quickly, you know, the new car smell goes away, that's bright, shiny objects, it's no longer so shiny, and we need a new one. And so we're adapting to the pleasure which is the hedonic part. And so once we've adapted to the pleasure, we are naturally craving more pleasure in our life, more happiness. So where are we going to get that from? Spending more money. And that environment around us is in that we've grown up in certainly in the capitalist society, it actually needles that insecurity in our brain that we are not yet good enough for, unless we have greater status, the best shiny object, the newest, and the best, basically object. So and that's what we need to fit in as well. So it's needling two things about status and power, and, and, and fitting in and belonging, which are to human nature, really core traits for survival from the savannahs of Africa. So that's where lifestyle creep is actually really, really natural. The first thing is to accept it, but then also accept it's natural, but then use some of these techniques to work against it. And so so I guess, awareness is the first step to know that you're naturally going to do that. The next one I would say is when every time you get an increase in your income, use one of those compartmentalised accounts. So set up a brand new bank account, if you don't already have one, and automate a transfer, the day after your pay comes in for the amount of your pay increase. Because again, you're hacking yourself, if you shrink the size of the compartment, funnily enough, you stick to that smaller size, just like shrinking the size of the food that you put on your plate. Yes, suddenly you get adapted to that. So that's one of the techniques to hack your brain by using a system to combat lifestyle creep. Hope that's what answers the question then.
Dan Jovevski 22:55
Absolutely. You know, I really love that tie into the African savannah, I think it's, it's a fascinating topic that we love talking about. And I think we often need to remind ourselves that we are fallible, and we need to understand how we might overcome that by recognizing and punishing ourselves. But understanding that it is an issue and how we how we overcome that.
Blaize Pengilly 23:17
It's just so easy to go "I'm worth it". You know, treat yourself. Like, it's just so easy to justify spending money or doing things for yourself that might not really be that good. Or you might know deep down or subconsciously probably isn't the best decision, like spending that extra money or eating that fourth piece of cake or whatever it is, you know, so yeah, I think we're all super guilty of that. So it's so addictive, to be able to want to spend money and chase that feel good feeling. Is there a way that we can get the same sort of rush of endorphins when it comes to budgeting Can we make or can we make money feel as good and as desirable - or saving money? Can we make that the kind of feeling that we want to chase after as well? Is there a way we can hack that, Matt?
Matt Hern 24:07
Yeah, absolutely. We can. And so a quick question throwback to you when you said the word 'savings'. Did you get a bit of a buzz of pleasure?
Blaize Pengilly 24:15
Uhh, not really. Oh, did I get a buzz of pleasure? Not really, but you know what, when I open up my bank, or when I open up my app and see how much I get I have saved I do get really excited. Talking about saving not really because it feels like I'm sacrificing to save but when I see the numbers go up. And when I see the totals go up and my net worth I'm like oh my god, I get really motivated and I will check my app four or five times a day it won't change but I'll probably go down because usually spend but checking it is addictive for me.
Matt Hern 24:50
Hmm, interesting. So that was a bit of a I have a suspicion you'd say no actually Blaize because this is the because the word "saving" actually has all those other meanings attached to it, and doesn't really give us a buzz. But there's a great behavioral scientist out of Stanford University Professor BJ Fogg, who wrote a book tiny habits published over a year ago. And one of the things I love that BJ Fogg says is around, we change best when we feel good. So the hack, I guess, in ties in there is, is to how do you make doing the right thing- or the thing that you want to do - feel good? So in this case, how do we make saving feel good. So the way we do that is, I think, by by specifically naming those extra bank accounts that you've got what made them really specific, and that's what I love about technology is we can have 10 savings accounts if you want to 20. And it doesn't really matter. And so make them super specific. And then you get because it's specific, you're more likely to tie it to something that is meaningful to you, which will then give you a buzz every time around it. So that's one thing like, if you just call it a savings account, it's actually really not giving you the buzz. So it's not lighting you up every time you transfer money to it. But if you see that your holiday to Greece account is going up, or you know, the Uber account, or in my case, going up to the northwest pass the Pilbara in Western Australia. Yeah, that lights me up to think about that. So seeing money goes in there is a way to hack myself, and give myself myself that buzz of reward that for when I'm doing the right thing of saving just the same way that I get the buzz when I tap and go for a new pair of jeans, for example.
Blaize Pengilly 26:32
Yeah, nice. We so this, is this similar, this would be a sinking fund. Is that right?
Matt Hern 26:37
Yo, what's a sinking fund? Yeah, often I go back to the sinking fund is, I think, a great term that accountants have used for generations. But I don't know that us regular human beings ever use that term. So I love again to hack our minds and say, well, what's the natural term for me to use? And so I'm constantly searching for that. So I don't really know if it's a sinking fund, I would just say, look, you need a fund as a specific account for every particular goal that you're saving for, and automate the transfer to it so that you've made the decision once. And you're it's almost like, I wish I could automate going to the gym this morning. But I can't, but in saving you can. Even better, right, I can make the decision once that I am going to get financially fit and automate a saving and away we go. So I'm not sure maybe there's like a sinking fund. But I don't really find that term as enlightening or easy to latch on to for our brains.
Blaize Pengilly 27:31
Yeah, of course, I think so I've been trialing this this hack of naming my savers for a little while now I use, one of the banks I use is Up. And they have this fabulous thing where you can create many, many, many savings accounts. So attached to your main account. And I'm just looking through now. And would you guys like to have a guess about how many different savers I have set up? Because I think I've gone a little bit crazy. But I would like to hear your opinions on how many different small things that I'm saving for.
Matt Hern 28:00
Nine?
Blaize Pengilly 28:02
Oh my gosh, straight off. You're on the money. Yep, it is nine accounts. You're so right. You know, I've got I've got my road trip account, I've got an emergency account, I have my rent account, all these different things that I'm saving for. And it's so difficult if I'm on a night out, and I want to shout another round of drinks. And I come into this account and I go 'ooh, no, I don't want to take my emergency fund because that's for emergencies. I don't really want to take for my personal road trip fun because then it will take me longer to go on my personal road trip' - having that barrier, and the reminder, I 100%. Agree, Matt, that that is such a good hack. Because it really before when I had my money, my savings in a lump sum, it's so easy to dip into it because you have no idea where it's going. When you see right in front of you where it's going and what you're stopping yourself from in the future. Makes it definitely definitely much harder to withdraw from.
Matt Hern 28:59
Actually, you've just raised one of the other hacks because there's two you could say hacks that come from compartmentalizing, and specifically naming your account. One is the hack of making progress visible, which makes it feel good to do the right thing. But what you've just described is the other hack, which is making trade offs visible. So we want to make it feel bad, you could say to do the wrong thing. And so you get basically two benefits there of using that compartmentalization technique, which is why I mentioned it as the first one because it is really foundational. So you know, making trade offs visible makes it, gives you that extra little bit of hopefully, of attention to go, "Actually maybe I don't need that" - and sometimes just simply having a name on your account can give you enough of an interjection in that decision to stop you doing it. So yeah, that's the second hack. So good on you. But Blaize, you're on to it.
Dan Jovevski 29:55
Awesome, Matt. And what's another tip that you got that you think we haven't covered off, that would be super useful to learn more about.
Matt Hern 30:04
Yeah, this is one that you guys may have heard of, but it's somewhat recent coming out of social science. And the BJ foggs book I mentioned was called Tiny Habits. Another really popular habits book has come out in the last couple of years is called Atomic Habits by James Clear. And this is this is, you know, was amazing to me, because there's all this go hard or go home rah rah stuff that you have in here, actually flip it - go small. So the the way that this is the brain science behind it is that progress feels good. And so if you go small and consistent, you can start seeing yourself making progress, wherea going hard, you can sometimes burn yourself out and fall backwards, which can then actually be a downer for you, and end up making the three hands in there and giving up so you know, start small, you know, momentum before magnitude is the way to go. So if you start small and consistent, then you're getting momentum. And that momentum just really builds and builds and builds, and you start seeing progress faster and faster. So that is probably one of the great things ever, the recent social science that I think really totally changes how we go about revolutionized in some way, the way that we go about changing any of our behaviors, including those about money. So with that said, take it into the money example, if you've got a holiday savings account, just set up an automatic transfer for $1. Pay is a very good start in that sense.
Blaize Pengilly 31:37
I'm so glad you mentioned Atomic Habits by James Clear, I haven't actually read the book, but I listen, I don't listen, I can't listen to an email. I received his email every Thursday, he does a weekly email. And he talks about the tiny, tiny changes. And what's something that has stuck with me is that he says if you do 1%, I'm going to butcher this because I can't remember the actual figures. But I will find it and put it in the show notes. If you get 1% better every day over the year. That is I don't know the math, but three year like 365% better by the end of the year by just by doing 1% better every single day and doing 1% small, small, small amount. Maybe it's that you're maybe of meditating or going to the gym or just transferring that $1 to a savings account. The tiny changes really add up over time. And I guess it's like compounding right? It just improves and grows exponentially over time. So...
Matt Hern 32:36
Teah, that's right. And probably the extra part that that's worth mentioning from both James Clear and BJ Fogg - particularly BJ Fogg - is set that first step as one that you know that you can and will do. So that's how you, you could say criteria for deciding. So in that step, the example I gave before of transferring $1, that probably feels like you can and will do it. So set that first transfer as something where you go, yeah, now shrug it off, won't miss it. And then the next day you increase it and the next day you increase it. So that's a really great, great thing to try doing. If you're wanting to break a habit of overspending and build a savings habit. Start small and make your progress visible. Any trade off visible.
Blaize Pengilly 33:19
Yeah. Awesome. Matt, we've only got time for one more hack today. So for your for your final hack your final tip, I suppose not that this is financial advice. But for your final hack? What would what would be the one thing you could leave our listeners with that if they want to start hacking their brains get better with their money? What should they start today?
Matt Hern 33:41
Well, if we say what they should start today is compartmentalizing their accounts. Absolutely. But if I throw another one in that I find that I kind of love is because we've used the word budget as we naturally work would with the WeMoney podcast, right, We Talk Cents. But yeah, budget often has all these connotations in it, that particular word, right? So for me, the people have said to me over the years, 'ah they need to come up with a better word for budget', or they need to change the word. And I'm a bit of a geek, if you haven't worked it out. And so I love etymology, the origins of words, and I looked it up and the origin of the word budget is actually from French, and it was a bougette, which was actually the leather, let's say folder, the leather folder that people carried stuff around him. And then over the years, that leather folder, began, to the government's, you know, would carry the financial plans of the country that they were working with that carry the financial plans in this leather wallet, leather folder. And so then the population started the call that the financial plans, the bougette, or the budget where it got into the ears of the English language in that sense. So, so it's not about changing the word. It's the mean that we've associated with come to associate the word budget or diet with restriction, but it's not actually meaning that as well. So the word budget actually is the letter folio, you carry your financial plans for your financial prosperity and affording to live a life that lights you up. So for me, I think, well, let's hack our brains in that sense, don't change the word budget change the way we were mean. And I think I find that kind of handy to think if the etymology the origin of the word budget is from France, then maybe I can hack my brain and just say, bougette with a sexy French accent, every time I'm talking about my bougette, just like we would say, Target or a 'tarjay'. Well, it just changes the way I think about it. And so from here on in Blaize, please do mention a bougette, not a budget.
Blaize Pengilly 35:37
A bougette - Haha, wow, I like that. And it is such interesting origins of the word. I had no idea.
Dan Jovevski 35:45
Yeah, I love it, too. But that was incredibly insightful way to talk about your bougette. And I'm looking forward to confusing everyone, in my day to day talking about that. That's absolutely hilarious. And also insightful. As we wrap up, what are some final tips you want to leave the audience with in terms of, you know, one big takeaway in terms of managing your financial life? And then also, we'd love to hear how people can learn about more about you and what you do?
Matt Hern 36:10
Yeah, thanks, Dan. The one thing I'd love to leave with people is looping back, something we already said about willpower, is that if you've been struggling to save, it's really not your fault. Yes, it's your responsibility to fix it. But it's not your fault. Because the environment around us is designed to entice you to buy to desire things that you don't need, or make it easy to, to buy them in that sense, I think of it like a spending buffet. And I've never been to a buffet and not overeaten. It's just too hard, right? So if you're, if you've been struggling to save, it's not a character flaw. It's not that you're not good enough. It's, it's that you just never have been taught the right systems to how to navigate that environment of abundant temptation and easy money. So the one thing I'd love to leave everybody with is to say, hey, go easy on yourself. And to become a good saver to become financially fit for the life that lights you up, is just go about finding the right system for you to navigate that environment. And then you'll be affording a life that lights you up.
Blaize Pengilly 37:09
Awesome advice. Thank you, Matt. If our listeners want to find out more about you, where should they go?
Matt Hern 37:12
So Blaize, I'd love it if they could go to matthern.com.au, which is Matt with two T's and Herns spelt, h e r n.com.au. Or check out my own podcast, which is moneyforlife.
Blaize Pengilly 37:25
I will chuck a link to those sites and your podcast in the show notes. So you can check out Matt there. Matt, thank you so much. That was so insightful. I am so excited to hack my brain and my bougette.
Matt Hern 37:37
Absolutely pleasure. Thank you, Dan and blaze in delight to join you on the We Talk Cents podcast.
Dan Jovevski 37:41
Thanks, Matt. Thanks for tuning in.
Blaize Pengilly 37:48
Now we are taking a one week break a little holiday. So we won't be in your ears next Monday, but we will be back on Monday the 19th of July.
Dan Jovevski 37:59
If you want to learn more about your finances then give the WeMoney app a go. If you want to track all your spending all your credit scores and also access a really powerful community, then head over to the Google Play Store or the Apple App Store and download WeMoney. And better yet, if you want $5 simply enter the referral code 'podcast' to get $5 on us.
Blaize Pengilly 38:15
And a great treat to start the new year would be if you could leave us a review on Apple podcasts. If you're tuning in for the first time or if this is your 37th time listening to the show, thank you so much for joining us. We would really really love to hear your feedback. That would be a wonderful new year's treat for us.
Dan Jovevski 38:31
And if you got any feedback about the show, then please reach out directly on Instagram at our handle @getwemoney. We'd love your feedback. If you want to give us another favor. Then just share the show with a friend that needs help with understanding their money a little bit better. Thanks.
Blaize Pengilly 38:44
We will catch you on the 19th of July. Have a lovely week off and can't wait to be back in your earholes then! Have a good one. See you later.
Dan Jovevski 38:52
See ya.
Blaize Pengilly 38:53
Bye