Noel Whittaker Interview - Making Money Made Simple

Episode 56

Podcast – Noel Whittaker – Making Money Made Simple

A very exciting episode of the podcast as Pete speaks to Noel Whittaker about his latest book ‘Making Money Made Simple’ and some of his personal finance wisdom. Find the full transcript below.

Here is the link to the calculators discussed in the episode – https://www.noelwhittaker.com.au/resources/calculators/

If you wish to get in contact with Noel you can do so here.

Catch up with the other episodes of The Wealth Collective Podcast here.

 

Transcript –

Pete:
Hi guys and welcome back to another episode of The Wealth Collective podcast. You’re in for a real treat today as I’m joined by Noel Whittaker all the way from sunny Brisbane. Noel is one of the world’s foremost authorities on personal finance and his CV is one of the most impressive ones you can possibly imagine. It includes being an international bestselling author, finance and investment expert, radio broadcaster, newspaper columnist and public speaker. His contribution to personal finance has been immense. It’s seen him awarded the Australian Centenary Medal in recognition of his services to the financial services industry. And in 2011 he was made a member of the Order of Australia for his service to the community in raising awareness of personal finance.

Pete:
Why we’re talking to Noel today is all about his new book, Making Money Made Simple, which is a completely revised and updated version of his original bestseller, which sold more than 2 million copies worldwide and was released over 30 years ago. It’s a great read and it provides some really reasoned, realistic views of the world of money and personal finance. It includes things like goal setting, mastermind groups, investing, superannuation, debt and plenty of stuff that you can actually sink your teeth into and will improve your own personal finances. So I could go on and on, but I’m sure you more interested to hear from Noel. So without further adieu, on to today’s show and I hope you enjoy it.

Pete:
Everything we talk about on today’s podcast is general advice only, because we don’t know your individual, personal situation. Before you act on anything we’ve spoken about, you should chat to your financial advisor. And if you don’t have one, feel free to reach out to us. Now on to today’s show.

Pete:
So Noel, thanks for joining us on today’s show. And you’ve been busy. So you’ve written a couple of books and the one we wanted to talk to you today about on our show was Making Money Made Simple. So this is a reboot, but having read it, it looks almost like a complete rewrite of your classic book. So talk to us, so what prompted you to actually update this and sort of effectively rewrite your classic?

Noel Whittaker:
Well the old Making Money Made Simple was written 32 years ago.

Pete:
Okay, that’s going back some time.

Noel Whittaker:
Yeah. And when I look, I just pulled out one of the first copies then and the whole book was based on interest rates at 15% for housing loans.

Pete:
Oh wow.

Noel Whittaker:
15%. You know there was no credit cards so much. There was no Afterpay, there was no sexually transmitted debt, there was no prenuptial agreements, there were no apps on telephones then. So it’s a whole new world, Pete. So what I’ve done, I’ve kept all the old principles because they never change. But this is a totally new book.

Pete:
Yeah. And it feels like that as well because some of those things are a relatively new phenomenon. Like especially Afterpay. That’s the buzz one at the moment. And that’s brand new and features quite heavily in the book there as well because it is one of those modern day problems that we’re facing.

Noel Whittaker:
Oh yes, yes. But you know, if you use Afterpay, you are spending money you don’t have. And the first principle of becoming financially successful is to spend less than you earn.

Pete:
And easier said than done for a lot of people. Because it does sound simple. And what-

Noel Whittaker:
Well we use strategies. And see one of the things in this book, I discovered after I read the book 30 years ago that information doesn’t help without an action plan. And the whole new Making Money Made Simple is devised around action plans.

Pete:
Yeah and there’s little mini challenges that people need to sort of tick off at the end of every chapter which is good because it sort of keeps you engaged throughout the process, which is fantastic. And they’re not too daunting. But it does get you thinking as well. What I loved about it, a lot of it involved actually sort of engaging in these conversations with your spouse or your partner. Which is good as well because it’s very rarely tackled.

Noel Whittaker:
Well, I think the two most important messages in the book. One, you get rid of the credit card because it’s very, very few people who will not overspend on a credit card. You know when the credit card statement comes, you always think, “Oh my God. How come all those tiny items added up to such a big sum?” Sidebar, maybe do a debit card. You can’t overspend. And I think the other thing is you need a financial buddy, a partner, child, parents work mate. Anyone who has the same goals as you so you can the-

Pete:
And is this the mastermind concept that you talked about?

Noel Whittaker:
The mastermind group. Yeah, the mastermind group. It was in Think and Grow Rich. You know, it’s the way to go.

Pete:
How do you see that working? Is that sort of like accountability means you’re sort of more likely to stick to your goals?

Noel Whittaker:
Accountability, yeah. Look, it’s exactly, look, if you want to start an exercise program, find someone you can meet up with at 5:00 in the morning to jog with. If you want to improve, you’ve got to find someone you can practice with. If you’ve got another person involved in what you’re doing, it makes you more likely to do it. I mean, I’ve had a personal trainer for 30 years. If the personal trainer couldn’t come, I wouldn’t exercise. You know, it’s the commitment.

Pete:
No, I fully appreciate that because I’ve got a gym membership that hasn’t been getting a hell of a lot of use. But when I have had a trainer in the past, it’s been, it’s chalk and cheese really isn’t it?

Noel Whittaker:
It’s a meeting, you know. We go to Pilates every Monday and Thursday. So I know that half past six every Monday and Thursday morning we got to Pilates. We’ve been doing that now for 18 years, which is why we’re so healthy.

Pete:
Oh very good.

Noel Whittaker:
So you need those commitments. It’s got to be in the diary. There’s no other way to do it.

Pete:
And then once you’ve got those commitments, how do people get started? Because it can often be quite daunting getting started in terms of personal finances. And people just keep kicking the can down the road. Once you get that plan in action, is there tricks to, other than the accountability, are there certain tips you’ve got for people that can help them get started?

Noel Whittaker:
The best map in the world would be useless if you didn’t know where you were. So the absolute first step is to write down where you are now. That’s your assets. It’s your debts. You know, write that all down. And that’s your resources. And once you’ve assembled your resources, then you work on your goals. You know, what can my goals be? Now if you’re in debt and consumer debt, then the first goal will be, “I got to get out of debt.” And the book… I’ve got ways in there that most people can be out of debt in two or three years. I’m talking about consumer debt now. You know, if you want to buy a house, well how much do you need? And the book keeps pushing people back to the calculators on my website.

Pete:
Your calculators are brilliant, so we will put a link in the show notes so that people can access those because they are really easy to access and it makes it more real. You’re using your numbers and actually sort of applying the lessons in the book instead of just reading it and putting it back down.

Noel Whittaker:
Yeah, I mean all those calculators, I designed them to be very simple because there’s a lot of calculators on the web but most of them are so complicated. But you know in mine, all you got do, if you look at the superannuation calculator, all you got to do is plug in your age and your salary and the rate of return you’re getting and bang, it all spits out for you.

Pete:
Beautiful.

Noel Whittaker:
Because all-

Pete:
Are there more calculators coming, Noel as well or are you sort of… it looks like it’s adding to it all the time.

Noel Whittaker:
Yes I’ve got time to do calculators now. I’ve got time to do calculators now, yes. Because I love them. See I use them. In all the stuff I write, I use them for the stuff I write in the age and things.

Pete:
Oh very good. Because there’s a lot of case studies as well throughout the book, which is good. So you can actually see the principles getting applied, which helps get the message across and send it through. So in terms of who’s the target person? Like who should be reading this book? We’ll be giving it away to a lot of our clients here and listeners and a few of them already got it and sent back some positive feedback. So hopefully it’s finding its way under the Christmas tree for a lot of people.

Noel Whittaker:
Hopefully, yes.

Pete:
Is there a person that would benefit the most from this or is there someone in mind when you were drafting or sort of redrafting this?

Noel Whittaker:
It’s kind of written for young people, but for anyone who doesn’t know much about finance. It could be someone 60 even. But I mean it’s aimed for the 15 to 40 market, but anyone can learn from it. That’s the point of it.

Pete:
Very good. And this is sort of… one of the things we struggle with is the affordability of financial advice now. So if someone actually wants to sit down with a financial advisor, it’s not necessarily a viable option to spend several thousand dollars to get full advice if you are starting out. Because that could be perhaps better allocated towards reducing the credit card that you mentioned before or seeding an investment portfolio.

Noel Whittaker:
Absolutely, yes.

Pete:
So this is a great tool to actually… a lot of these principles are what we as financial advisors address at a much deeper and bigger level. But the fundamentals are all still the same. So if someone can get a head start and get cracking with this, I say it is a brilliant way to sort of get the foundations in place.

Noel Whittaker:
Yes. I mean that’s what you need. I mean if you’re in debt there’s… I mean to go to a financial advisor, you need to have money available to invest. Either money to invest or the resources to borrow. Now if you’re over your heels in debt, as you said, the first job was to get out of debt and start on the right path. I mean what they’ve done to financial advice is terrible. I mean all the regulators think the more information you give people, the safer they are and it’s rubbish. It’s just making more and more work for the good guys. And the bad guys still don’t do it. The bad guys ignore it. That’s the silly part about it.

Pete:
Yeah. And I think that’s why. If that money could be perhaps better spent on educating people instead of more and more regulation. Because there’s a lot of red tape at the moment.

Noel Whittaker:
It’s getting worse, Pete. It’s getting worse.

Pete:
And I feel that… I’ve heard you talk a lot and bureaucracy is not one of your favourite things from what I can gather.

Noel Whittaker:
Well nothing happens with bureaucrats. All they do is give you the reason not to. And it’s crazy. Like when you see a gambling ad on the television and in the minuscule print at the bottom, it warns you about it. You know, the warning shall be a biggest sight than the advertisement. It’s just crazy. Everyone knows about ticking boxes.

Noel Whittaker:
When we had our practice, if there was a complaint, you always had the odd complaint, I would get on the phone and fix it. And then you’d deal with a succession of things that happened. We ended up being owned by the Commonwealth Bank. And then the procedure was if you get a complaint, you put it in the complaint register and number it and forget about it. That’s why it was taking the Commonwealth Bank years to answer complaints. Because the focus was on recording it and forgetting about it. When you’re in your own small business, your focus is on solving it.

Pete:
Yeah, absolutely. And that’s lost in translation isn’t it? With all of these people actually aren’t living it and aren’t on the front line trying to sort of regulate and sort of create rules for it. Very obscure and perhaps going over the top and doing it for the 1%.

Noel Whittaker:
Way over the top. It’s way, way over the top.

Pete:
And are you saying… so regulations are changing. Rules change a lot, legislation changes. But I guess what seems to sort of ring through here is there’s a lot of stuff that doesn’t change in terms of building wealth and sort of getting yourself to a state of financial independence. Is that sort of, is that how you see it? So you’ve been around through several Prime Minister’s of economic cycles.

Noel Whittaker:
Yeah. I think you need to know what’s dangerous. The most dangerous thing is overseas tax. Most people don’t know that if you are born in America, you are an American citizen for tax purposes. So a couple of Aussies could go to America and have a baby born over there on holidays and come back. And he’s never been to America after his birth, after his whole birth, and is an American citizen. Now, if you’re an American citizen, you are required to put in your American tax return every year. The growth on your Australian super fund.

Pete:
Wow, I don’t think a lot of people know this one. So you’ve-

Noel Whittaker:
And they don’t. They don’t.

Pete:
A few ears are perked up, no doubt right at the moment.

Noel Whittaker:
Yeah. And they just passed laws this week. If you’re a foreign resident, you’ll lose your six year exemption. I’ve just read an article on it and it’s so complex. But this is the really complex stuff.

Pete:
Yeah. And that’s where there’s always a point where you’d need to go get a good advisor. Surround yourself by experts you can trust. And that can be easier said than done because there’s been a lot of trust washed away in terms of the people that aren’t advised. But you know, speaking to our clients, like the people that have an advisor in most cases are really, really happy and sort of see a lot of value in it.

Noel Whittaker:
Of course they are. And I mean, I think the best one of all is aged care. I think the most common problem now faced by the baby boomers is their ageing parents. And aged care is absolutely so complex. You must have an aged care specialist.

Pete:
Yeah. And it needs to be a specialist as well.

Noel Whittaker:
Of course it is. Of course it is. No, no.

Pete:
A generalist is not going to cut it because it is so unique in terms of the skill set required for that one.

Noel Whittaker:
Absolutely.

Pete:
So we might wrap it up there Noel, but I sort of came to ask you a couple of questions, which perhaps give us some insight into how the book was shaped and how you’ve got to where you are. So if you don’t mind humouring me with a couple of these.

Noel Whittaker:
Anything you like, Pete. Anything you like.

Pete:
What is the best investment that you’ve ever made?

Noel Whittaker:
Oh, I bought some Magellan shares. I bought 50 grand of Magellan shares for a dollar and they went to… they’ve went to 60.

Pete:
Yep, and paid some dividends out along the way as well.

Noel Whittaker:
Well, oh yes. I’ve never owned CSL. I know it’s the best performing share over 10 years up 700%. I bought a good house on the river, which has gone up well. That’s done well. The biggest regret is that when we bought the house on the river, I sold another house on the river and that’s increased eight times since then. You know, as everyone said if you would’ve always kept your real estate, how good it would have been.

Pete:
Yeah, well that’s true with a lot of growth assets isn’t it? And that’s that compounding. That features pretty heavily in your book as well. The magic of compound interest, getting that working for you. And that’s one that is literally, it’s a wonder of the world and sort of never ceases to amaze me. It is very boring at the start, but it does, when sort of those wheels get working years down the track, it’s pretty amazing stuff.

Noel Whittaker:
See in Making Money Made Simple, I refer to a book, The Slight Edge by Jeff Olson. The Slight Edge. And as he said, “We get used to television shows and movies where it’s all sorted out in 90 minutes. But it’s the progression every day of doing the right thing, plod, plod, plod.” I mean for the first five or six years with compounding, nothing happens.

Pete:
Yeah and people give up. Several get bored. They then chase and make silly decisions.

Noel Whittaker:
Well they do. They get sick of it. But all of a sudden it just starts. It starts to take off. I told the story in the book of the lily in the pond. If a lily’s in a pond and it goes from a tiny speck, it doubles every day and goes and it fills the pond in 10 days, how long to go from quarter full to full? The answer is two days. It goes from from quarter to half on the ninth and half to full on the 10th. Now, if that was your superannuation, if you had to harvest that on the eighth day, you’ve lost three quarters of what you could have had because all the growth comes at the end. So if you harvest early-

Pete:
And too often people don’t make take advantage of that, do they?

Noel Whittaker:
They don’t. They do not. And that’s why working a bit longer is so important. That’s why if you can get a part time job after you retire, it’s important.

Pete:
Yeah, and we see that quite a lot actually. This transition, like retirement I think is getting redefined constantly and is more like a, it’s a transitory stage as opposed to this sort of the finish line necessarily that people used to look at it like. And we’re all living longer as well.

Noel Whittaker:
You know, people living longer, it’s important to have a purpose in life. I mean I’m 80 next month. I don’t want to be-

Pete:
Oh happy birthday. Congratulations.

Noel Whittaker:
Thank you. Kerry Stokes is 78 and Gerry Harvey’s 80. John Howard’s 80, Warren Buffett’s 90 I think. It keeps you healthy. Gives you a purpose, things to do.

Pete:
Oh very good. And that might segue into my next question I had for you. If you could give advice to a 30 year old version of yourself, is there anything… what in particular would that advice be?

Noel Whittaker:
Well, I guess who I am is all the mistakes I’ve made along the way. But I never started to learn about this stuff until I read Think and Grow Rich at age 35. I would, yeah. So I guess I would have started earlier I think.

Pete:
Yeah. So start early and sort of read good books I imagine would be part of that as well.

Noel Whittaker:
Oh, of course. Because you know, you either can learn from people’s mistakes and they put that in books or you can make your own mistakes. If you make your own mistakes, they can be very costly at times.

Pete:
Yeah. And so in terms of a book recommendation, and Noel, we will recommend your books, Noel. A book recommendation outside of your own that people should be sort of considering for their holiday reading. If you have to pick one.

Noel Whittaker:
The Richest Man in Babylon. Well The Richest Man in Babylon, written in 1928. It’s a classic. I like The Slight Edge by Jeff Olson. I think that’s a great one. If you’re in marketing, The Psychology of [Persuasion] by Robert Cialdini. It’s a great book. It’s a fantastic book. There’s so much stuff out there.

Pete:
Noel, love it. There are some good suggestions and well, hopefully, I’ve got to get through yours first. And they are a really, really easy to digest and sort of work through and you can take it chapter by chapter, which is fantastic.

Noel Whittaker:
Oh yes, yes, yes. Yes, yes.

Pete:
And then so you’re happy for us to share the links to the calculator. For people who’ve got questions are they sort of, are you okay for people to sort of reach out to you directly and send you an email?

Noel Whittaker:
Of course, absolutely. Absolutely. Yes. Oh yes. Yes.

Pete:
Well, very good, very much appreciate you giving your time today and sharing so generously with us.

Noel Whittaker:
It’s been a pleasure, Pete.

Pete:
Well no worries. We’ll let you go and have a wonderful day and we’ll speak to you in the new year, hopefully.

Noel Whittaker:
Thank you.