21 things Effie Zahos has learnt in 21 years at Money


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You don't have to be a genius to create wealth. Just use common sense and follow some basic rules to achieve your goals, writes Effie Zahos

I don't pretend to be a financial guru nor do I pretend to be any wiser financially than some of our Money readers.

Believe me, some of our readers are extremely money savvy and I suspect quite a few of them could easily take my seat as editor of this magazine.

effie zahos editor money magazine

Having said that, though, after 21 years on this wonderful brand I've picked up some real money gems.

Interestingly, the ones that have stuck with me are the simple ones.

It's easy to take risks and look good when the market is up but it's far more inspirational if you can build financial security in an everyday situation because, let's face it, most of us sit in that world.

1. It's not what you earn that counts, it's what you spend

Paul Clitheroe, Money's chairman and chief commentator, taught me this little gem when he offered me a job to move from banking into TV on half my salary.

Of course he said it was a wise move, despite the lower pay, as it's "not what you earn that counts but what you spend!"

On a lighter note, another money-saving tip that I picked up from Paul was to occasionally forget to bring your wallet to lunch.

He was known for this strategy back when we were filming the popular Channel 9 program Money in the late 1990s.

2. Compounding interest can make you a millionaire

The great Albert Einstein once said: "Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it".

Put simply, compounding interest means you earn interest on your interest. A double boost for your savings!

Throw time into the mix and it is a serious money-making weapon.

Take this example: the average 25-year-old making $60,000 a year would only need to save and invest 10% of their annual pay in fortnightly instalments and they'd have over $1.3 million at 65. This assumes a return of 7%pa and that they never get a pay rise.

3. Nothing beats the basics

I keep things pretty simple and that works out just fine for me.

Making money is about buying good-quality assets and holding them for a reasonable amount of time.

If you can ride out the bumps then you should end up pretty well.

As for where to invest, don't over- complicate things. There really are only a handful of options you can invest in - yourself, cash, fixed income, property and equities. There's nothing mysterious about these asset classes.

4. Learn how to say no

This has been one of the hardest skills for me to acquire.

I always took "no" as an insult to the person who was asking for something to be done, when in fact it's quite the opposite.

It shows that you have direction, focus and a plan. Saying no can also be financially healthy too. "No" to happy hour (again hard for me), "no" to extravagant dinners and "no" to keeping up with the Joneses!

5. I am my best investment

Invest in yourself and understand your net worth.

Be proud of your achievements and don't be afraid to take on risks. I moved from banking to TV and then from TV into magazines.

I had no experience in either of these fields but that didn't stop me from applying.

Women are often their own harshest critics. Don't let your insecurities get in the way of moving forward. So long as you believe in yourself go for it!

6. I will continue to make mistakes

Should I buy? When do I sell? There's FOMO, or fear of missing out. Often I am consumed by investor paralysis.

The best advice I have received is not to do nothing. Doing nothing may be easier but it gets you nowhere.

7. Balance is a load of bull

You can have it all: a full-time job, kids, partner and a home, so long as you accept that it will come at a price.

On any given day my home looks as if it has been burgled (and I have a cleaner!).

I've missed countless school presentations, though, to be fair, some of them have been pretty lame.

My beautiful husband (who's understanding 74.3% of the time) has accepted the fact that I can be an emotional mess and that cooking is not one of my strengths.

And you know what? That's OK!

Prepare to be budget shamed! Do you spend more money on takeaways than on groceries? What about leftovers - are you constantly throwing away limp lettuce and soggy cucumbers at the end of every week? Have you downloaded more than one meal courier app? Are you on a first-name basis with your local takeaway? Do you do the unthinkable and buy your lunch at work? If you answered yes to any of these questions then you could be budget shamed. At least that's what's happening here at @moneymagaus headquarters. For the past couple of weeks I've been bringing my lunch to work. Not because it's saving me money (I eat the lot by 10.30am, only to buy another lunch at around 1pm) but because I've been shamed into it. These days it's no longer cool to be a spender. If you can feed your family for under $10 a night you are a hero. Post pictures on Instagram of Tupperware containers full of prepared meals for the next fortnight and you're sure to get plenty of likes (this one always makes me feel inadequate). Now don't get me wrong - I'm all for saving a dollar here and there but I've got to ask the question: have we gone saving mad? Assuming you spend $20 a day on lunch, then over 48 weeks (assuming you take four weeks of leave a year) that's $4800. Certainly nothing to be sneezed at but please let's tone down the budget shaming. After all, I would never, ever think of calling someone a cheapskate for bringing their lunch to work on payday. Let me know if you've been budget shamed! #budget #budgetshaming #frugal #thrifty #packedlunch #takeaway #food #tupperware #mealprep #mealprepsunday #saving #cheapskate #worklunch #saladagain #mealdelivery #groceries #moneyhq #moneymagazine #moneyteam #mystaff

A post shared by Effie Zahos (@effiezahos) on Aug 16, 2018 at 2:27am PDT

8. Love thy super

Superannuation has all the key elements for wealth creation: time, so the miracle of compound interest can work; money goes in on a regular basis, so you get the benefits of dollar cost averaging and, last but not least, there are the tax perks!

Earnings are taxed at only 15% inside a super fund. Once we move to a retirement pension phase there is no tax on earnings.

9. Never mix friends and money

I learnt this the hard way. What's worse than having to chase up debt when the person on the receiving end is a lifelong friend?

Don't get me wrong: I'm still happy to help out but now I either just gift the money - far easier and I can never be disappointed (it's also good karma) - or if it's a big request I set up a formal arrangement.

10. Busyness is a threat to your wealth

I'm like the builder without a finished home (this is actually true), the hairdresser without a great cut and the finance expert who could do with more time on her finances.

Often I'm so busy with work that I neglect my own personal affairs and this has cost me money.

The tip here is to make the time and get your money working for you rather than you working for it.

11. Use just one calendar

I've never really understood the concept of having a personal calendar and a work one.

There's only one of me so I run just one calendar. By scheduling everything into the one diary I have a better picture of what my personal and work commitments are.

12. Cost per wear is more important than cost

This needs little explanation and most fashionistas would agree that Louboutins at just $2.64 per day are a bargain.

Disclaimer: you would have to wear the shoes for 365 days in order to reduce the price to $2.64.

13. Time is money for you too

Doing everything yourself may save some cash but if you believe your time is money then some quick sums will tell you that it's OK to outsource some services.

Your hourly rate should be at least double the cost of the outsourcing.

14. Have a plan - and stick to it!

As Benjamin Franklin once said: "If you fail to plan, you are planning to fail!"

For me short-term goals are just as important as long-term goals.

Too often we talk about saving for retirement and as I'm getting older I'm certainly realising the importance of building wealth in the long term.

But I need motivation to get there, which is why my short-term goals are just as important. Plan to have fun along the way otherwise you may never get there.

Visualise your goals (short or long), put them down on paper and focus on doing what's needed to get you there.

15. Set your savings to autopilot

The best thing I ever did was learn to pay myself first, set up some money buckets and automate my savings.

I set up a periodical payment of just $40 each payday to go into my kids' accounts.

I almost didn't do it, as I thought $40 was too little, but at the time that was all I could afford. That was six years ago and to be honest I forgot I had actually done this.

The money was never an investment for them but a cash pot to be used either for their first car or to help out with a post-HSC holiday, which for the eldest is the end of this year.

16. Budgets aren't set in stone

I know people who've never done a budget and are financially successful while others watch every cent yet because of their circumstances continue to live from pay to pay.

If you're going to do a budget you've got to be honest with yourself. If you like to go to the hairdresser every six weeks you've got to note that. There's no point making a budget that doesn't reflect your life.

For me a budget is a living-and-breathing document I revisit every six months. If you are going to follow a budget it's really important you have an emergency fund attached to it, otherwise you set yourself up for failure.

17. Try to work out what makes you tick

Why are some people better savers than others? How do advertisers trick us with "mid-priced" options.

What are the brain barriers that stop us from reaching our goals.

Understanding your financial psychology could save you money. Take the time to find out why you do what you do. The answers could be surprising.

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18. You don't have to pay full price

I'm never afraid to ask for a discount.

Yes, there is a time and a place to haggle. I'm not a big fan of going on an overseas holiday and haggling a poor local on an item that costs only a few Aussie dollars.

I'm talking more about haggling on everyday items at home.

As I said in one of our free e-newsletters, I saved $1878 in under four hours by simply phoning my service providers and asking for a discount. The surprising part was just how easy it was.

19. If your kids are bad with money, look at yourself

Long before kids get a taste of financial literacy in school, they learn from the bank of mum and dad and those lessons (good or bad) can have a lasting influence.

How much damage have I done? I'm not too bad here.

I've even gone so far as to write a kids' book about saving money as I picked up very early that one of mine was a spendaholic.

I've managed to curb this illness and now I have one reformed spender and another child who's a great saver.

20. I may be my parents' retirement fund

I'm in the "sandwich generation" and by definition, that means I'm a middle-aged individual who is pressured into supporting both ageing parents and growing children.

Yep - that sounds just about right.

It's important to do a financial check-in with your parents and other family members to find out whether they expect your support in their later years. Don't put your head in the sand about this one as it will come back to bite you.

Better to know now rather than later.

21. Personal finance is just that ... personal

It took me a while to realise this. As editor of a finance magazine, I get to speak to some of the best experts in the country.

You'd think this would be good but to be honest I always feel that I'm not investing enough, that there are always better products to get into and that I don't know enough.

I've finally put this down to fear of missing out - in my line of work it's to be expected but then I remember that nothing beats the basics.

Always remember that what works for me may not necessarily work for you. The important thing is that you reach your own goals.

Effie Zahos' third book, A Real Girl's Guide to Money: From Converse to Louboutins, is on sale from March 1

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Effie Zahos is editor-at-large at Canstar and a financial commentator. She is the author of A Real Girl's Guide to Money: From Converse to Louboutins, and a regular money commentator on TV and radio across Australia. In 1999, a background in banking Effie helped kickstart Money, which she edited until 2019. Effie holds a Bachelor's degree in economics.
November 3, 2018 4.53am

Thanks Effie. Great article. I am one of the sandwich generation too. Bit scary!

Gary Green
August 13, 2021 8.24am

One of the best ideas is to sit down and write a budget,it brings a reality check into your life of where your money goes and alerts you of wasted money which may help you into saving more.

Patricia Austin
September 4, 2021 6.58am

Insightful I can see where I have been going wrong. Still working 69 this year not ready to retire as my Super is small. Tricia