The Frugal Samurai Interview Series – Kate Campbell from How To Money

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Hey all,

It’s gonna be another profile interview today… this week we have Miss Kate Campbell from How To Money.

Kate runs her own podcast (awesome!) helping young Australians learn about money… and she’s only 22 years old! Gosh, they start young don’t they?

Good on ya Kate!

We need more people bringing money awareness to Aussies, young and old – can only be a good thing!

Kate from How To Money

Let’s do it!

Hey Kate! How old are you?

22 (and just getting started)!

What area of the country do you live in?

Melbourne, Victoria

Editor’s note: hope things are going well over there.

What are the main assets that make up your net worth and is there any debt that offsets part of these?

At the moment (given I’m at the beginning of my FI journey), I’m focusing on putting the basic building blocks into place. For me that means making sure my super is on track and in the right fund for me, building a core portfolio of ETFs and making sure I have a good cash buffer (emergency fund). My only debt would be my education debt, but paying that off is not a priority to me at this stage (thanks to the wonderful Australian HECs scheme).

INCOME

Did you pursue tertiary education and if yes, what are they?

As I started working full time straight after high school, I didn’t actually start my degree right away. A few years down the track, I gained a Bachelor of Business Management while working full-time, through an online practical application based course (aka no exams!). I certainly encourage others to explore their options, work and travel, before diving head first into university!

What is your current job?

Through complete chance, I ended up working in the financial industry about four years ago now, and currently work in financial operations type roles.

How has your income performed over time. What was the starting salary of your first job, how did you grow your income and where are you now?

When I first started working I didn’t have much to offer except my enthusiasm and willingness to learn, but I’ve found if you start getting passionate about the field you’re in, you start learning a lot more and build much better connections. So I’ve been building up my industry knowledge and using that to become a better employee, which I was able to leverage into salary increases along the way.

Would you recommend people to pursue the same career path? Would you choose a different job if you could go back? 

As a young person, I think the best thing is to just get out there and start trying out different roles. School tells you to “follow your passion”, but for most people, you don’t just wake up one day in year 12, knowing precisely what you want to do. There’s also millions of jobs out there you’ve never heard of, and you’re only going to start finding them when you head out into the world and start discovering them (or even creating them).

I’m still working out what I want to do, but I’m enjoying the journey! We are so lucky that we don’t just have to pick one job for life, and with a willingness to learn new skills, it’s easier than ever to move into different roles and industries if you decide to.

What tips do you have for others who want to grow their career-related income?

Focus on growing your broader industry knowledge, work out exactly what problem your company is trying to solve and find ways to improve the way your company delivers that solution. When it comes to salary negotiations/annual reviews, present your business case as to why you deserve a raise. Show your employer exactly how much value you’ve added and provide them with evidence. You need to learn to be your own advocate, because no one else is going to do it for you!

What’s your work-life balance look like?

Honestly at the moment I write this in August 2020, where I’m only allowed out of the house for 1hr of exercise per day, it’s hard to have much balance at all. When you’re working, studying and relaxing in the same spot, it’s hard to switch off properly. I think 2020 has taught me the importance of building structure into your day, and allocating time to eat, exercise, read, sleep, etc. Otherwise, you can go days with barely moving and giving your brain time to rest and reflect.

Do you have any sources of income besides your career?

Apart from my regular income, I also receive income from my investments (although I reinvest quite a bit of it), capital gains made from the odd share sale, bank interest, occasional freelancing and I’ve done a few market research sessions this year.

EXPENSES

Do you have a budget? If so, how do you implement it?

I tried using a precise budget for a while but I could never stay exactly in each category. I now move the approximate amount I need for my spending each month into a separate bank account, and leave the rest in my long term savings or investment accounts. I keep an eye on my spending through the inbuilt categorisation features my bank offers (good thing to be mindful and stay on track of).

What is your favourite thing to splurge on?

Honestly, I absolutely love books, and my dream is to one day have a home with a library! I also love spending money at bakeries, a wonderful return on investment if I say so myself.

Editor’s note: yep, can attest to this return on investment meself…

INVEST

What has been your investment strategy/philosophy? 

It’s still evolving as I learn and figure out what works for me, but I’m working towards a core and satellite portfolio. So essentially 80% of my portfolio is allocated to a diversified selection of ETFs, and then I have some direct investments in shares, managed funds and a few things for fun, making up the other 20%. I’ve set myself financial goals at the start of each year with my FIRE goal in mind and have a fairly consistent approach to reaching them.

What has been your best investment?

So far, I’d have to say focusing on my education has been paying off right now! As a young person increasing your skills and abilities can be the best investment you make, as it helps you to increase the gap between what you earn and what you spend.

What has been your worst investment?

Ah, pretty much everything I bought with no plan when I was just getting started – but it was a good way to learn and start understanding how the market operates.

How often do you monitor/review your portfolio?

I’ve been trying to be a little less focused on the numbers this year, but I generally review things on a monthly basis. I’d recommend keeping a close eye on your bank accounts though, don’t let any direct debits that you’re not using go undiscovered!

NET WORTH

How did you accumulate your net worth?

I’ve been working full-time since I finished high school, and have been slowly putting away money and investing on a regular basis. It’s very slow to start with, but as the years go by, you actually start to see visible progress towards your goals.

What are you currently doing to maintain/grow your net worth?

Automating my savings and investing on a regular basis is probably the main focus, along with reading and listening to as much content as I can on investing, to make sure I keep improving my knowledge.

Keeping your investment plan simple certainly helps, as the more complex your approach, the more actively you need to monitor it. Focus on dollar-cost averaging into the market rather than trying to pick the top and bottom. I’ve also focused a lot more on keeping my investment fees low, now that I know the impact over my lifetime – check out the MoneySmart Fee Calculator.

Do you have a target net worth you are trying to attain for FIRE, will you quit working when you reach this?

In all honesty, I have no idea how much I’ll eventually need, we all just need to take an educated guess at it. Having a number in mind makes the goal setting much easier, and at least it makes sure you’re moving towards your goal post – whatever that may be. We can always spend more money, but working out when we’ve got enough is the hard part. My FIRE number will probably change a dozen more times before I even get there, and with everything going on at the moment, it certainly reinforces that fact that you never know what tomorrow may hold. My goal is to be financially secure and I’ll keep adjusting that plan for whatever life throws at me.

What money mistakes did you make that we can learn from?

Playing day trader with no idea what you’re doing is probably a key one! Also, don’t take investment ideas from other people without thoroughly doing your own research – remember at the end of the day you are responsible for your own financial future. I actually wrote an article last year on 10 different ways to lose money when investing!

MISCELLANEOUS

How did you learn about finances and at what age did you “get it”?

Ah, probably when it came time to do my very first tax return and I realised I was actually an adult, and should start to look after my financial future. I then discovered the concept of financial independence about a year later, which started to change the way I approached everything.

Do you have any favourite money tools and resources you recommend (books, podcasts, apps etc)?

My Top 8 Books (because there are so many)!

• The Behavioural Investor – Daniel Crosby
• Money School – Lacey Filipich
• I Will Teach You To Be Rich – Ramit Sethi
• Happy Money – Ken Honda
• Smashed Avocado – Nicole Haddow
• Side Hustle – Chris Guillebeau
• Millennial Money – Patrick O’Shaughnessy
• The Simple Path to Wealth – JL Collins

Here is a list of my favourite personal finance resources to check out!

Top Personal Finance Resources for 2020

What does money mean to you? Should everyone pursue it? 

I think money gives you choices, freedom and security, and that’s why it’s so important to me to ensure I can support myself financially. I believe that everyone should build their own emergency fund, so they always have the option to leave, say no to a bad situation or buy a ticket to visit a sick friend/family member, if the need arises.

Finally, is there any advice you have for The Frugal Samurai readers regarding wealth accumulation?

I’d recommend checking out Ramit Sethi’s approach to this. He talks about viewing your spending through your money dials. What are the things in your life that bring you joy to spend money on? Are they convenience, travel, health, experience, freedom, relationships, generosity, luxury, social status, self-improvement? Arrange your finances to maximise your spending where it brings you the most happiness and cut your spending in the other areas of your life. Cutting all expenses to bare bones and removing any discretionary spending is not an approach that works for me – it’s all about balance and finding the approach that works for you.

Your financial independence goals shouldn’t be making you miserable and if they are, it might be time to take a step back and work out a better plan.