She's Got the Terms

Here’s where we turn tricky financial terms into simple, bite-sized explanations. Think of it as your cheat sheet for all things money! Whether you're just getting started or leveling up your financial game, we’re here to help you feel confident and in control.

Let’s make money talk fun and easy—because you’ve got this!

50/30/20 Rule

The budget that lets you live, laugh, and save.

Definition: A simple budgeting method where you divide your income into three categories: 50% for needs, 30% for wants, and 20% for saving or investing.

Why It Matters: It’s easy to follow and helps balance spending and saving.

Examples:

If you earn $5,000 a month, allocate $2,500 to rent and groceries (needs), $1,500 to shopping and dining out (wants), and $1,000 to investments or debt repayment.

Pro Tip: Adjust the percentages if your financial situation changes, like saving more when preparing for a big goal.

Quote:
“Budgeting isn’t about restriction – it’s about making room for the things that matter.”

Asset

Things you own that make you money.

Definition: Assets are anything that puts money in your pocket, either now or in the future. They help you grow your wealth and improve your financial standing.

Examples of Assets:

Cash in the bank: Your savings, ready to earn interest or be invested.
Superannuation or pension funds: Growing for your future, thanks to contributions and investment returns.
Real estate: A home or rental property that appreciates in value or generates rental income.
Investments: Shares, ETFs, or bonds that grow in value or pay dividends.
Side hustle tools: Items like a laptop or camera that you use to make money.
Intellectual property: Patents, trademarks, or royalties from creative work.

Robert Kiyosaki says:
"An asset puts money in your pocket, whether you work or not."
Translation: Build assets that generate income even when you’re sleeping, like investments or rental properties.

Debt Repayment Strategies

Crush debt, your way.

Definition: Two popular methods to tackle debt:

Snowball Method: Focus on paying off the smallest debt first for quick wins and motivation.
Avalanche Method: Prioritize paying off debts with the highest interest rates to save money in the long run.

Examples:

Snowball: Pay off a $500 credit card debt before tackling a $5,000 student loan.
Avalanche: Pay off a 20% interest credit card before addressing a 5% car loan.

Pro Tip: Choose the strategy that works best for your personality and financial goals.

Quote:
“The journey to financial freedom starts with one debt at a time.”

Direct Debiting

Set it and forget it.

Definition: A system where companies automatically withdraw payments for bills or subscriptions from your bank account on a recurring schedule.

Why It Matters: It helps you stay on top of bills, avoid late fees, and maintain a good credit score.

Examples:

Your phone bill is automatically deducted on the 15th of every month.
Your Spotify subscription renews automatically without needing your input.

Pro Tip: Review recurring payments regularly to ensure you’re not paying for things you no longer use.

Quote:
“Automation is the secret to consistency – in fitness and finances!”

ETF - Exchange Traded Fund

An ETF (Exchange-Traded Fund) is like a box of your favorite chocolates! Imagine instead of just getting one type of chocolate, you get a box with a bit of everything—some caramel, some hazelnut, maybe even a bit of dark chocolate. An ETF works the same way with investments: instead of just buying one single company’s stock, you buy a little piece of many different ones in one go.

So, with an ETF, you get a "mix" of different companies or assets in one "box" (or fund). This helps spread your risk—if one "chocolate" (or company) doesn’t do so well, you’ve still got a whole selection that might perform better, making ETFs a popular choice for people who want a more balanced and diversified investment.

Ethical Investing

Align your money with your values.

Definition: Investing in companies that prioritize environmental, social, and governance (ESG) principles while avoiding industries like tobacco, gambling, or fossil fuels.

Why It Matters: It’s a way to grow your wealth while supporting causes you care about.

Examples:

An ESG-focused ETF that includes renewable energy companies and excludes coal mining.
Investing in a company working on sustainable fashion.

Pro Tip: Look for “sustainable” or “ethical” fund labels when choosing investments.

Quote:
“Invest in the world you want to see.”

Financial Advisor

A financial planner helps you make smart decisions with your money to reach big goals like buying a house, starting a family, or retiring comfortably. They review your income, spending, investments, and superannuation to create a tailored plan. This plan not only shows you how to save more and invest wisely but also helps you manage your super effectively and ensure you have the right insurance coverage. They guide you on handling debts, preparing for unexpected expenses, and protecting your financial future. A financial planner acts as a project manager for your finances, advising when to engage additional professionals, like a mortgage broker, buyer’s agent, or lawyer, so you can feel secure and organized in all aspects of your financial journey.

Fringe Benefit

The little extras your employer throws in.

Definition: Fringe benefits are non-cash perks provided by your employer, such as a company car, gym memberships, free meals, or childcare discounts. Some are tied to salary sacrifice arrangements.

Why It Matters: Fringe benefits can save you money on expenses you’d otherwise pay for out of pocket, making them a valuable part of your total compensation package.

Examples:

Your employer offers a fully-paid gym membership.
You receive discounted childcare services through your workplace.
Your company provides a laptop and mobile phone for work and personal use.

Pro Tip: Some fringe benefits may be subject to Fringe Benefits Tax (FBT), so clarify how they impact your overall pay package.

Quote:
“Fringe benefits are the sprinkles on top of your salary cake – sweet, but make sure you know the cost!”

Good Debt vs. Bad Debt

Not all debt is created equal.

Definition:

Good Debt: Borrowed money that helps you build wealth or improve your life.
Bad Debt: Borrowed money that comes with high interest and no long-term value.

Examples:

Good Debt: A mortgage for a home that appreciates in value or a student loan for education that boosts earning potential.
Bad Debt: A maxed-out credit card balance from shopping sprees or dining out.

Pro Tip: Always evaluate whether debt will bring long-term benefits before taking it on.

Quote:
“Debt isn’t the enemy – it’s how you use it that matters.”

Liability

Things that drain your money.

Definition: Liabilities are debts or obligations that take money out of your pocket. While some liabilities (like a mortgage) can help you build wealth, others (like high-interest credit card debt) are purely financial burdens.

Examples of Liabilities:

Student loans: The cost of education, which can take years to pay off.
Mortgage: A loan for a home that can turn into an asset over time but remains a liability until paid off.
Car loans: Borrowing for a depreciating asset – cars lose value the moment you drive them.
Credit card debt: High-interest debt that adds up fast if not managed responsibly.
Buy Now, Pay Later (BNPL): Convenient but risky if you don’t repay on time.
Personal loans: Borrowing for vacations or unnecessary purchases that don’t add value to your life.

Robert Kiyosaki says:
"A liability takes money out of your pocket."
Translation: Be mindful of where your money goes and avoid liabilities that don’t contribute to your financial goals.

Money Coach

A money coach focuses on helping you build strong financial habits and develop a healthier relationship with your money. Unlike a financial planner who might create a specific plan for investments or retirement, a money coach works with you on the day-to-day aspects of managing money, such as budgeting, controlling spending, and setting clear financial goals. They guide you in building confidence around money decisions, helping you set and stick to budgets, reduce debt, and save for both short-term and long-term goals.

A money coach is there to support you as you build the skills and mindset to handle money effectively, offering accountability and encouragement along the way. They empower you to understand your cash flow, track spending, and create financial goals you can stick to. They might also work with you on money mindsets, tackling things like financial stress or self-sabotaging behaviors. Think of a money coach as your personal trainer for finances, helping you stay on track, motivated, and confident in managing your money.

Net Worth

Your financial health score.

Definition: Net worth is the value of everything you own (your assets) minus everything you owe (your liabilities). It’s like your financial report card, showing how much you’re truly worth financially.

Example:

If you own $50,000 in assets (cash, car, savings) and owe $20,000 in liabilities (car loan, credit card debt), your net worth is $30,000.

Robert Kiyosaki says:
"Your net worth is not determined by what you own, but by how much you owe."
Translation: Focus on reducing debt and growing assets to build a strong financial foundation.

Needs vs. Wants

Adulting 101: Know the difference.

Definition:

Needs: Essentials for survival or daily functioning, like housing, groceries, and utility bills.
Wants: Things that enhance your life but aren’t necessary, like Netflix, dining out, or luxury items.

Why It Matters: Prioritizing needs over wants is crucial for budgeting and reaching your financial goals.

Examples:

Need: Paying your electricity bill to keep the lights on.
Want: Buying a new designer handbag.

Pro Tip: If you want to save for big goals, try a “want detox” for a month and redirect that money to your savings.

Quote:
“Needs keep you alive, but wants make life fun – just make sure they don’t derail your financial plans!”

OMG Fund (Emergency Fund)

Your “Oh My Gosh, I’m covered!” fund.

Definition: An OMG Fund is a savings safety net to cover 3–6 months’ worth of essential expenses during unexpected situations like losing a job, a medical emergency, or car repairs.

Why It Matters: It keeps you financially secure in emergencies, reducing stress and helping you avoid high-interest debt like credit cards.

Examples:

If your monthly expenses are $3,000, aim to save between $9,000 and $18,000 in your OMG Fund.
Your car needs a $1,200 repair. Instead of using a credit card, you dip into your OMG Fund and avoid interest charges.

Pro Tip: Keep your OMG Fund in a high-interest savings account for easy access and growth.

Quote:
“Life happens. An OMG Fund ensures that when it does, you’re saying, ‘I got this!’ instead of ‘OMG, what do I do?’”

Pay Yourself First

The ultimate self-care move.

Definition: Setting aside money for savings or investments before spending on anything else.

Why It Matters: It ensures you prioritize your financial goals over impulse spending.

Examples:

Automate a $500 transfer to your savings account every payday.
Dedicate 10% of your income to investments before paying bills.

Pro Tip: Treat your savings like a non-negotiable bill to build wealth faster.

Quote:
“Pay yourself first, because you deserve to be your number one priority.”

Salary Sacrificing

The pre-tax money hack.

Definition: This is an arrangement where you agree to give up a portion of your salary in exchange for your employer providing benefits like superannuation contributions, car leases, or additional leave, using pre-tax dollars.

Why It Matters: It reduces your taxable income, which means you pay less tax while boosting your long-term benefits.

Example:
You earn $80,000 a year. Instead of taking it all as take-home pay, you “sacrifice” $5,000 into your super. This reduces your taxable income to $75,000, lowering the tax you pay while growing your retirement savings.

Pro Tip: Check if your employer offers salary sacrificing and consult a financial advisor to see if it aligns with your financial goals.

Quote:
“It’s not about how much money you make, but how much you keep – and salary sacrificing is a smart way to keep more in the long run!”

Superannuation (Super)

Your future freedom fund.

Definition: Superannuation is a mandatory retirement savings account where contributions from your employer (and sometimes you) are invested to grow over time. The money in your super is typically invested in assets like shares, property, or bonds, which can generate returns to fund your retirement. Don't forget it's your money!

Why It Matters: Your super builds over time through regular contributions, investment returns, and compound interest, giving you the financial security to live comfortably when you stop working.

Example:

Let’s say you’re 25 years old, earning $70,000 annually. Your employer contributes 11% of your salary ($7,700) into your super each year. That money is invested in a mix of assets, such as Australian shares, international shares, and property. If your fund achieves an average return of 7% annually, by the time you’re 65, your super balance could exceed $1.6 million.
Want to grow it faster? You add an extra $50 a week from your pre-tax salary as a voluntary contribution. This simple step could increase your balance to over $2 million by retirement, all thanks to the power of investing and compound growth.

Pro Tip: Regularly review your super fund’s performance and investment options to ensure it aligns with your risk tolerance and retirement goals.

Quote:
“Your super isn’t just savings – it’s an investment in your future freedom and dream retirement.”

Zero-Based Budgeting

Give every dollar a job.

Definition: A budgeting method where every dollar of your income is assigned a purpose. This approach prioritizes saving, paying for needs, and planning for wants, leaving no unallocated money at the end of the month.

Why It Matters: It gives you total control over your money and ensures that nothing is wasted.

Examples:

If you earn $4,000 a month, you might allocate $2,000 for needs, $1,200 for wants, and $800 for savings or investments.
Budget $50/month for unexpected expenses like birthday gifts.

Pro Tip: Use apps like YNAB (You Need A Budget) to automate zero-based budgeting.

Quote:
“A budget tells your money where to go instead of wondering where it went.”

The information provided on our website or at this seminar, online course, event, webinar or workshop is general in nature and is not personal financial product advice. Read Full Disclosure Here.