From Bitcoin and homeownership to becoming your own trust fund baby, Bondi financial guru Canna Campbell outlines 6 steps to achieve financial freedom in your twenties.
Founder and director of SASS Financial Services since 2007 Canna Campbell is a Bondi Based mother of two. Not only is Canna Channel 9’s financial commentator she is the bestselling author of The $1000 Project & Mindful Money in addition to being the founder of financial media platform, SugarMammaTV.
Canna is all about balance and wellbeing and says you are never too young or old to start saving money. In other words she values facials and expensive handbags just as much as building passive income and “becoming your own trust fund baby.”
- Put Emergency Money Aside First
Canna says emergency money is vital before you start investing or looking at superannuation because you always want to safeguard your financial wellbeing. The amount of emergency money each person needs varies depending on the amount of accrued annual and sick leave and financial responsibilities such as rent, mortgage OR CAR repayments or HECS debt.
“Taking a realistic look at risks to your financial wellbeing is important. For example If you are a casual worker and between jobs you may need to save 2 months’ worth of living expenses or if you have a sick family member overseas and may need to suddenly jump on a plane, set aside $3K for airfares and accommodation.”
With new research from the Australia Bureau Statistics showing 38% of Australian’s are experiencing financial stress, Canna says when you get your emergency fund in order, “there is a huge flow on effect in a mental health capacity.”
2) Work Out What Is Important to You
Post emergency fund “look at what excites you, what’s important to you and where your value system lies and then start building a strategy around that.” Whether you want to start investing, save for your first home or retire at age 60 instead of 65.
3) Set Defined Goals And Stick to Them
Opening a dedicated savings account separate from your emergency money, formulating a budget and setting mini goals will help you save for your first home. For example, “I want to save 5K by the 1st of July or 10K by 15th December. Set defined goals with a clear deadline.”
Canna’s philosophy when it comes to investing is to build up passive income. Passive income is income that requires no effort to earn and maintain and may look like dividends, rent from an investment property or money from the sales of a book. “Get your money to work for you and pay you a salary. Reinvest your dividends when you can afford to.”
4) Renting Isn’t the End of the World and is Sometimes Cheaper and/or Better than Mortgage Repayments
Contrary to popular belief Canna doesn’t think renting is a waste of money explaining “interest (on a mortgage) is dead money” and “sometimes the cost of interest (on a mortgage) exceeds the cost of rent.” She encourages investing elsewhere if you are renting saying, “just because you’re renting doesn’t mean you shouldn’t or can’t invest.”
5) Match your Goals and your Investment Timeline
Always make sure that what you are investing in “suits your goals and your time frame,” with the best investment for a 5-year time frame being “a high interest-earnings savings account.”
Canna asserts, “the only benefit of owning property is that it is forced saving- you are forced to pay the property off.”
6) Always Understand your Investments
A buzz word as of late, the cryptocurrency Bitcoin has taken the world by storm. Canna says to never invest in something you don’t understand “whether it be crypto, shares or property.
If you don’t understand it you’re gambling with your money because you don’t understand the risks that you’re taking. It is not an educated and informed decision.”
She says educating yourself is key and encourages research and furthering your understanding stating, “Once you educate yourself about it you may not want to invest in it anymore.”
Whether we like it or not money is an essential part of our lives. Canna shows that educating yourself about investment options, superannuation and where your money is going is just as important as creating financial goals that motivate and excite you.