Have you ever wondered: “why are we so emotional about money?” If you feel bad about every purchase, you’re not alone. For most of us, it’s hard to view money as just a tool. It's tied to our fears, shame, guilt, and dreams.

But, what if you stripped that emotion out and gave money a new perspective? Think in terms of using money as force for good (or getting yourself that weekend getaway!) without letting shame and guilt tag along.

Enter Hannah Richards, better known as The Wealthy Empath on Instagram. She’s an expert on weaving the threads of finance and feelings. Hannah helps her clients harness the blend of self-awareness, emotional intelligence and strategy to resolve their feelings about money.

With roots that connect money with empowerment, Hannah makes personal finance less about the miserable budgeting and more about the 'why' behind it.

We are thrilled to sit down with Hannah and discover her personal money beliefs and investing strategy. In this episode, we also journey through her transition from corporate life to launching her own thriving money coaching business. Along the way, she's picked up strategies, like budgeting on uncertain incomes and the “profit first method” for businesses. Finally, she imparts quick, insightful tips that you can do yourself to save and invest more this year.

What inspired Hannah Richards to start investing?

Grandfather’s influence

If they’re lucky enough to have known theirs, everyone remembers a grandparent's influence on their lives. Maybe it's a recipe, a game, or a wise life lesson. For Hannah, it was about money, but not in the way you'd think.

Her grandfather, a savvy investor, wasn’t just about accumulating wealth for wealth's sake. He believed in the power of using wealth, both for self-betterment and helping others. A sort of Robin Hood with an investment portfolio.

Hannah recollects: "I saw firsthand how he could sponsor underprivileged folks and even gift things to our family. So I had this really positive influence of wealth creation and investing and what it could provide."

Hannah's story shares two important lessons. The first one emphasises how money beliefs can affect your finances. Early influence from close family sets an example for how we should act and feel around money as adults.

The second lesson here is that investing is not just about growing money. It’s a means to provide, protect, and even unlock personal dreams or opportunities for others.

Learning from the Global Financial Crisis

While that rosy picture of childhood influence was being painted, the world outside wasn’t so rosy.

Remember the Global Financial Crisis? While many saw chaos, high school-aged Hannah saw a lesson. Don't understand your money? Then you're at risk of being taken for a ride by those who do. The crisis wasn't a deterrent, but rather a push for her to be financially literate.

Hannah’s first investment

And as for her first dip into investing? We had to ask: "What did young Hannah dip her toes into first?" Chuckling, she revealed: "A 30 cent penny stock tip from my grandfather."

Now, for those not in the know, imagine placing your bets on a small company that's not even making a profit yet. In the sharemarket world, penny stocks are a risky gamble.

A few years down the line, a wiser Hannah realised this was not where her money belonged. Remember, this penny stock advice came from the generation that witnessed the Great Depression. But who hasn’t made an investment they later smirked about, right?

So, did this penny stock adventure make Hannah rich? In her words, she broke even. But the story here isn’t about profit or loss. It's about investing as early as possible, learning from experiences, and evolving.

Overview of Hannah’s investing strategy

Gone are the days when Hannah’s portfolio showcased the uncertain sheen of penny stocks. But why?

The answer is simple: e motion . Hannah decided to move the intense emotions out of her investing strategy.

Instead, Hannah has embraced the ”set and forget” strategy —a simple and direct way to invest. With this strategy, she moved onto the steadier journey of long-term investing and diversification. This change in perspective led her towards the calm embrace of ETFs.

But it doesn't stop at ETFs. Hannah has also dipped her toes into the world of real estate investing. Amid the current high-interest rates, she's wisely channelling more money into the offset account.

And for those scratching their heads, an offset account is essentially a savings account linked to a loan account. The money you put in the savings account (offset) reduces the amount you owe on your loan.

Personal finance lessons that Hannah learned from her corporate job

Diving into Hannah's past, we discovered her beginnings in corporate finance. How did this experience shape her financial journey? Here are some insights from her response.

Understanding money

Imagine handling projects worth millions or even billions. For most of us, it's an intimidating number. But Hannah's experience in corporate finance normalised these large figures.

Hannah saw money as just numbers on a spreadsheet. This detachment, in turn, eased her personal investment journey. Once she grew accustomed to battling the big numbers, the small ones didn't seem so tough.

Rather than being daunting, these numbers felt like tools she could strategically employ to find opportunities and assess risk. At the end of the day, the real mastery lies in understanding and leveraging them to achieve your dreams.

Navigating income stability

First, hats off to those who have the courage to jump ship from a steady job to start their own venture. It's like trading your comfy couch for a roller-coaster ride. But how do you do it without getting financial whiplash?

Hannah's journey provides a roadmap for this. She explained that preparing for such a transition means meticulously planning your finances months ahead. It's a dance between managing time and money.

As she prepared for the leap, she saved up three months' worth of basic expenses. It gave her the cushion to reduce her working days gradually and adjust her spending habits. In her words, it's about "giving myself more time back.”

While still in her corporate job, Hannah used her resources to buy more time (like hiring a VA). Doing so allowed her to focus on setting up her business. Also, she didn’t overlook the importance of safety nets. She got herself specialised income protection insurance.

Hannah's journey gives us two powerful takeaways here:

1. Money is relative : Whether it's millions on a spreadsheet or a few thousand in your bank, money is a tool. Embrace it, play with it, and make it work for you.
   
   
2. Plan for instability : Dreaming of being your own boss? We’re rooting for you! But remember, with great freedom comes great financial responsibility. Build a system, save, and always have a backup plan.
   

How to budget with an irregular income as a business owner

Two common tales in the entrepreneurial world are burnout and non-profitability. Hannah, keen on avoiding these pitfalls, leaned into stories of business failures to navigate her path.

Surprisingly, many thriving businesses weren't profitable at all. The aftermath? A lot of financial stress leading to businesses sinking because of cash flow troubles.

So, how do you manage income peaks and troughs as a business owner? Hannah puts it neatly. Even in a world of variable income, the trick is to strip away the emotion.

The Profit First method

Profit First isn't just about making profits but making sense of where the money goes. It's about setting a structure to your earnings and making money management a habit.

Think of it like your monthly budget, but supercharged for business. When your business income arrives, you divide it into designated percentages. A bit for profit, a chunk for expenses, a small part saved for the taxman, and a generous heap for yourself.

Profit First is also the business version of "paying yourself first.” Hannah highlights a nifty trick for this. She recommends setting a regular salary for yourself based on an average of what you earn.

But what happens to the extra cash from the good months? That goes into a separate account, acting as a financial buffer. It's like creating your own salary "smoothing" system, as Tash points out.

Planning and knowledge is key

Ana rightly identifies a looming fear most new business owners grapple with. The deep end of this challenge is juggling business growth, new client acquisition, and personal expenses.

You know how these financial woes feel like they can suck out your brainpower? Turns out, it's not just a feeling.

Tash highlights a Princeton University study showing financial stress can plummet one's IQ by 13 points. Scarcity can trap our brains in a 'fight or flight' mode, making it almost a luxury to think long term. As a result, we are bound to make more mistakes and bear the long-term consequences. So, breaking this cycle becomes crucial.

When money worries hover like dark clouds, the instinctive reaction is to think: "I need more money!". But beneath that urge lies a deeper emotion: fear. Rather than a problem of quantity, it’s the lack of clarity around your finances. It’s the fear of the unknown.

But what's the remedy? If you had a flashlight (knowledge) showing what's ahead, that fear would vanish, right?

Simply put, you need to get a grip on your numbers and understand:

• How many clients you need to cover your basic expenses.
• How many months of a financial buffer you have saved up.
• Tracking tools to monitor your income streams.

Remember, it’s not about how much you earn, but how you manage what you earn.

Automate your finances

Just like we champion automating investments and daily cash flow, doing so for business also seems logical. Getting into a groove with your finances ensures you're not making impromptu, potentially disastrous decisions. Hannah drives the point home, suggesting that automation is " a proactive stance rather than being reactive. "

Common financial struggles that Aussies face

So, what’s been pinching the pockets of Aussies lately? To Hannah, the story six months ago isn't the story now. Economies fluctuate, just as seasons change. Currently, the talk of the town (or rather the entire country) revolves around rising interest rates and the surging cost of living.

And speaking of interest rates, Tash chimes in with a truth bomb. Many are caught off guard when their fixed rates end. People are often unprepared for the ensuing rate rise. It can feel like a sudden, unexpected plunge into icy waters.

Actionable tips for dealing with rising interest rates

So, how does one stay afloat despite the recently risen interest rates? First, if you've got a mortgage, having a good broker is as vital as having a good umbrella on a stormy day. They should be prepping you months in advance for any looming challenges ahead.

Anna recommends a pinch of audacity. Why not ask to reassess and see if you can snag a lower mortgage rate? It's like haggling in a marketplace. You might not always get a discount, but there’s no harm in trying.

And if you’re a fan of simulations, Tash offers a gem: play with financial calculators. It's not as fun as playing with puppies, but it's way more useful. It lets you understand how much you might owe in the future and practice living on that budget now.

Money saving hacks that Hannah teaches her clients

For those new to the money game, let's kick off with a classic. The 50-30-20 budget allocation.

In its simplest form, it proposes that 50% of your income should cover needs and obligations and 30% can be spent on wants. The rest of it—the 20%—should be directed towards savings. It’s a general rule that can provide a snapshot of your financial health.

And Hannah's clients often reveal the state of their finances through these numbers. If you're feeling the pinch, it might just be that your spending isn't aligning with these ratios.

Dive deep, spot the issue

What if your budget pie is not looking the way it should? This is where looking into the smaller details can bring significant savings. Once you identify areas that are over the place, solutions often present themselves.

Remember that top-tier health insurance you got last year? The payment plan might be worth revisiting if your needs have changed. Or do you even need that top-tier package in the first place? It’s about assessing your options and making tweaks to ensure you're not losing cash.

Look at the bigger picture

Tash highlighted a common trap many fall into, especially with significant purchases. Like that flashy $60,000 car that, when you reflect on it, isn’t really a must-have. It's essential to differentiate between emotion-driven decisions and logical ones.

Sometimes, taking a step back, or having a friend or coach to provide perspective, can change the game. Always take time to evaluate the big money decisions and align them with your actual needs and long-term goals.

Know what you truly value

Anna's take on spending was insightful. It’s not just about what you spend on, but why . Is the purchase something you genuinely value?

Maybe that daily coffee is non-negotiable because it gives you a moment of solitude in a hectic day. A $60,000 car may be excessive for some, but if you're frequently on the road for work, it could be invaluable. Or it could also double up as a safety measure for family adventures.

Knowing what you value can help ensure your money is spent in ways that bring you the most satisfaction. As Hannah pointed out, discerning between self-led and external-influenced decisions is crucial.

Prioritise and thrive

Finally, as Tash puts it, you can have your car, your home, and your holidays. Maybe even those weekends out. You can have it all—but not everything at once.

Life, like budgeting, is about making choices. Prioritise what matters most now, and work towards the rest. Smart money decisions come from finding a balance and understanding your core desires.

Three quick money tips from The Wealthy Empath

Ever had that 'I wish I knew that before' moment about your finances? Our episode with Hannah Richards has been nothing short of enlightening. Here are three quick-fire money tips from The Wealthy Empath to wrap it up.

1. Don't let emotions control your finances

Fretting about upcoming bills or being swayed by flashy sales? It’s common to let our feelings sway our financial choices. The fix? Introduce some clarity.

Draw a budget, know your expenses, and create a strategy. Emotions might drive us, but a plan will always guide us.

2. Review, review, review

It's tempting to stick to our comfort zones, even in finances. But why pay more for the same service? Hannah nudges us to review our bills annually. But a word of caution—always dive deep into the details. Sometimes, that glittering "deal" isn't gold.

3. Asking for help is a strength, not a weakness

We often brush money troubles under the rug or share a light-hearted meme about "being broke.” But it's time to shatter the taboo. Financial stress is real, and let's face it, we've all felt it.

Hannah's third pearl: don’t be shy to ask for little help. You wouldn't be too proud to ask for directions if you were lost, would you? The same goes for your finances. Whether it's confiding in a friend or seeking a money coach, there's no shame in reaching out.

And if you need an inspiring support group, the Pearler community is here for you. Money talks aren't taboo here because we’re navigating the hiccups and highs just like you. And remember, the path becomes clearer and more rewarding when walked with others.

While this article offers a glimpse, there’s a wealth of insights in the full episode. So, give it a listen and swing by our Instagram to share your thoughts or stories with us.

Happy investing!

Tash & Ana