Your financial security depends on these five courageous conversations: new book

Australia is at present in the midst of the biggest intergenerational wealth transfer in history with baby boomers set to hand over $3.5 trillion to the next generation.

But elders’ ability to take charge of their legacy is being compromised by the fear of having frank, open conversations about finance.

New research has revealed that more than 40 per cent of Australians (42 per cent) are yet to have important and proactive conversations with their loved ones about inheritance, despite 74 per cent saying these conversations are necessary.

The research shows that 20 per cent are not even sure how to begin the discussion with their loved ones even though almost half of people (48 per cent) believe that having the conversation about a legacy before a person passes away will cause less conflict amongst beneficiaries.

The research, commissioned by financial educator and communicator Vanessa Stoykov, reveals the compelling need for Australians to be confident and comfortable having conversations with family about money.

“The time is now for Australians to become more financially literate and break down unhelpful beliefs about money and talking about it,” Stoykov says.

 “This is about equipping ourselves with financial skills and independence.”  

Stoykov has just published her second book, The Five Conversations About Money That Will Radically Change Your Life, (Five Conversations) which she hopes will help to break down the harmful taboo.

The book guides the reader, via a number of relatable yet engagingly scripted scenarios, through the key conversations needed to guarantee your financial security, including:

• The (Essential and Honest) Conversation You Need to Have with Yourself
• The (Eye-Opening and Confronting) Conversation You Need to Have with Your Partner
• The (Awkward and Unavoidable) Conversation You Need to Have with Your Parents and Siblings
• The (Crucial and Confronting) Conversation You Need to Have with Your Kids
• The (Raw and Honest) Conversation You Need to Have with Your Financial Adviser

The lessons within, Stoykov tells Aged Care News, are appropriate for workers in our sector who are trying to build savings as best they can in an increasingly challenging economy, as well as elders managing their estates.

“Money is buying time and opportunity and future freedom,” Stoykov says.

“The reality is, talking about money will change your life, whether you’re an elderly person in aged care or whether you’re working in aged care, or whether you’ve got a parent who’s thinking about it.

“And because money, and family and emotion are all wrapped up, it can often be a very, very contentious subject within families.”

With sibling rivalries and the risk of financial abuse looming in many elders’ minds, it can often be an intimidating prospect to disclose one’s financial position and wishes.

“Sometimes people don’t like to talk about it just to keep the peace, and they kind of hope that it’ll all be sorted after they’re gone, but there’s no guarantee that things will go your way if you do that,” Stoykov says.

“Communication is key: if you have a vision for what you want to see, for your family, you should talk about it.”

With the prevalence of dementia on the rise, Stoykov says having honest conversations with your family and relevant financial/legal professionals, as early as possible, is vital to ensure decisions aren’t made against elders’ wishes in their most vulnerable moments.

“It’s a devastating disease and, unfortunately, it’s too late when you have dementia and cannot make clear decisions anymore,” Stoykov says.

And even for those who are blessed with a clear bill of health, Stoykov says planning ahead can make all the difference.

“Money strategy takes a long time to play out.

“It’s not like weight loss, you can’t do a diet and six weeks later fit into a dress two sizes smaller: it doesn’t work like that.

“It can be tricky to navigate difficult conversations around money, but everyone needs to have a dialogue with their partners, parents, children and grandchildren.

“This is not just about whether someone is leaving money, but also the financial legacy that you pass on to your children.

“Talking openly to them is a legacy and gift in itself.”

Stoykov’s book is complemented by a freely available five-part podcast series, which pulls scenarios from her first financial book, The Breakfast Club for 40-somethings, and involves discussions with key finance experts on how to navigate through a range of financially challenging situations, including the added strain felt by women due to motherhood and other caring responsibilities.

Stoykov anchors her advice throughout Five Conversations to what she calls ‘financial flashpoints’.

“Financial flashpoints are moments where you can make decisions that change your life down the track,” Stoykov explains.

“Throughout the book, I lay out scripts from fictional characters, about s*#t that’s going on for them in their lives — so each chapter there’s kids, parents, partners, all broken down with scripts.”

However, the very first financial flashpoint is not fiction, but rather a real anecdote from Stoykov’s 20s.

She candidly reveals the emotionally fraught but transformative moment in which she decided to quit her high-flying, corporate job and rebuild her career on her own terms.    

A finance reporter turned fund manager, Stoykov thought she was living the dream, earning in excess of $100,000 per annum, driving an enviable set of wheels and walking into work each day adorned in the latest designer garb.  

“I had everything that I thought would make me happy, but I just wasn’t,” she recalls.

“I walked into the office one day and just couldn’t breathe… I went to the basement and burst into tears and thought ‘I just don’t want to do this anymore. It’s just not me’.”

Whilst it’s easy to buy into self-defeating beliefs in these times of crisis, Stoykov hopes that she can share with the public the importance of searching for the opportunity hidden in these crisis points — which can pay dividends in the long-run.

“If you have an awareness that this is more than an emotionally turbulent time in your life, that you are also in a financial flashpoint, then you might be able to ask ‘from a financial point of view, what are the strategic things I should be thinking of now?’” Stoykov says.

“These are the plans that, 10 years down the track, you’ll thank yourself for.”

For Stoykov, a conversation with herself and what she really wanted to be doing with her time and money led to the creation of her business Evolution Media, now an award winning boutique production company that’s gone from strength to strength over the last 20 years.

But she says that financial literacy can be used to materialise any number of personal goals: it’s about deciding how you want to live your life, and spend your time.

“Maybe it is going to a yoga class and spending the money on that, because you want that health benefit,” Stoykov says.

“It’s investing in yourself and your vision; that’s what additional money can give you.”

A mother of three herself, Stoykov is sympathetic to the plight of fellow mums and those with caring duties, who often find it difficult to prioritise personal goals when they are stretched thin across professional and familial duties.  

“Over time, we’ve learned to put ourselves second and others first — our kids, partner, parents, job, and other responsibilities tend to get the best of us,” Stoykov writes in the first chapter of the book.

“Yes, it’s important to prioritise all these people and things that are closest to us, but there comes a point in our lives where we start to treat ourselves like observers sitting on the sidelines.

“Even if everyone around you demands a lot of you, you’ve got to make time for knowing yourself again.”

Stoykov says that breaking down our inherited belief systems is a vital step in having a more productive relationship with our finances.

“The bottom line of money is that everyone’s got a ‘Money Story’, but most people don’t recognise that how they grew up and who’s influenced them dominates their thinking,” she notes.

“So if you’re not happy with where you’re at with money, you’ve got to look at why, and own it yourself.”

This process, Stoykov continues, is not just about materialising a healthier bank balance — although in this current economic climate that certainly helps.

But beyond fulfilling material needs, a healthier relationship with money can ensure the strength and longevity of your most precious relationships.  

“The process has always been for me to ask people what have been their financial flashpoint moments, and those people who have been able to recognise them and use their experience to leverage them have become incredibly successful,” Stoykov says.

“And those people that haven’t?

“Well, they’re the people that are divorced and don’t have a property anymore or are stuck in custody relationships that are less than satisfactory, people cut out of a will or you hear of elder abuse going on.”

With aged care workers some of the lowest paid employees in the country, it is undoubtedly tough to imagine a way to accumulate wealth.

But Stoykov says that everyone, no matter their financial status, should look for extra income streams, which could range from selling unused clothes and possessions online— for example, on apps such as Ebay or Depop — to turning a hobby into a side-business.

“I know it’s really tough, but I also think there’s a new term everyone’s using now and it’s called ‘side hustle’.

“If you’re in a job like that, it’s exhausting, I know: you get home and you’re really tired.

“But time is your asset, so even if you dedicate three hours of your weekend to having a think of what your side hustle could be… you need to bring in additional income, and it’s not going to be from that job — that’s the reality of it.

“I’d encourage aged care workers just to put a bit of time into thinking about themselves outside of the job.”

• The Five Conversations About Money That Will Radically Change Your Life is available to purchase via Booktopia, Amazon Australia, Angus and Roberson and Dymocks.
• To find out more about Vanessa Stoykov’s work, and to download her free, online resources to help empower your financial journey, follow this link.