Building an emergency fund is my top money tip

with Nicole Pedersen-McKinnon

Debbie Robbie, from the Sunshine Coast via Sydney and Canberra, has been a financial counsellor at The Salvation Army’s Moneycare, a confidential financial counselling service, for 10 years. We sat down and discussed what life is like helping people get on top of their money.

Of the clients who come to Debbie at The Salvation Army’s Moneycare, she says, “It’s not just those who need a bag of groceries…I’ve had people who have made a lot of money – they’ve been up there earning over $100,000 or $150,000 and they might be made redundant. Just like that. Overnight. But because they haven’t been earning that amount of money for that long, they’ve got no backup.”

Her very clear message is that anyone can find themselves in financial strife and anyone is eligible to receive financial counselling…for free.

In Debbie’s branch of Moneycare, at the Sunshine Coast in Queensland, it’s not only the seasonal nature of tourism jobs but the year-long ‘holiday’ cost of living that sees people struggle. And the same is true of so many of our beautiful coastal regions.

Debbie and Nicole walk and talk along a pier

“When all the financial counsellors get together and compare the demographics in our areas, everything is just so different,” Debbie explains. “You might have a financial counsellor who lives close to a prison so their work and their passion is going into the prisons…At the Lockyer Valley: only last week a financial counsellor told us they used to farm fruit and veggies out there; it’s now hay and you don’t need a lot of pickers for hay. So they’ve all lost their seasonal work. Sydney is so multicultural. Every demographic for a financial counsellor is just so different.”

Where does money trouble start?

Debbie, with 10 years’ service at Moneycare, is one of the longest serving financial counsellors in Queensland. So I ask her: Is it people not knowing how to manage financially, because they were never taught, or is it things going wrong for them personally that tends to get them in trouble?

“What I have found is the majority were never taught budgeting skills.”

Debbie: It’s a combination of the two – but what I have found is the majority were never taught budgeting skills. I was brought up in a household that if you didn’t have cash, you couldn’t afford it. And every payday, you worked out your money and I just thought that was normal in every household. I was so shocked that there’s a lot of families that don’t even talk money.

Money is not ‘on the menu’, as it should be, at the dinner table…

Debbie: That’s right. Some people don’t know what the budget is. They don’t know money management and some of my passion about financial counselling is breaking that generational cycle and getting people out of poverty. It’s just the simple educational tips that we need, you know. It’s not easy to learn about money if it’s not spoken about.

Absolutely. And this generation is going to find it so much more difficult to learn with physical money all but disappearing. It’s tricky to teach.

Debbie sitting on a bench looking concerned

Debbie: Exactly. Because kids see a little piece of plastic and you tap it here and you tap it there. There’s got to be open communication about money from a very early age, you know, let them have their own money, let them, you know, learn about money A lot of people just weren’t taught money management skills and it’s heartbreaking.

Useful link: Teach your kids about money

Meanwhile, Debbie cites the expense of raising children as one of the biggest strains on family finances.

Debbie: A lot of parents put kids in every sport known to mankind and in all the eisteddfods. Education is a big money trap – people say education is free at a public school and it is not. Another trap is that students have to have a laptop because if you don’t, you’re going to be behind and I see clients who are trapped in consumer leases. If you’ve got more than one child then that’s four, five laptops that you’re paying a heck a lot of money for.

Useful link: Consumer leases

At this point in our conversation on the stunning Maroochydore inlet, close to the Moneycare office, we’re drowned out by the sound of a roaring jet ski.

Debbie: …oh and you have to have your toys on the coast. So, I go in, I get the boat, I get the Jet Ski, I get the campervan.

Sadly, it’s often women Debbie sees, usually because they have unexpectedly found themselves alone – whether through death or divorce – and with limited idea about how the family finances had run. Moneycare has devised a Confidential Personal Profile for couples to fill out in good times, which is designed to limit this trauma.

Cover of Confidential Personal Profile

What financial counselling is – and does

Debbie, can you talk me through the repair process? Say, I’ve got myself into money trouble, I’ve taken a really big step and I’ve called Moneycare. What then?

Debbie: Okay. So we just start the rapport and find out: “What is your immediate issue?” It could be that they’ve fled from domestic violence; it could be that they’re recovering from an illness; they might have been made redundant. And so we go through that step by step. And then, we say: “At what stage are you?” And a lot of people say: “Well, they’re going to come and repossess my house today.”

Often people leave it to that crisis point?

Debbie: …they leave it to the last minute. I’ve had a few that have come in that haven’t even been able to talk, they end up here because it’s just such a burden that they have to carry, that they have been carrying. They’ve stuck their head in the sand and haven’t acted until that last point…or when they can’t take the harassment anymore of the telephone calls and SMSs from debt collectors.

Which must be so distressing. So what then?

Debbie: We encourage them to bring in their mail with them – or their unopened mail – and say: “When your creditors ring, just let them know that you have engaged with financial counselling.”

And then they have to back off?

Debbie: It might give them a little bit of a rest period.

Nicole and Debbie sitting on a bench in a park talking to each other

What happens next all depends on circumstances – whether, on clients’ behalf, Moneycare goes straight to the hardship departments of creditors, contacts Centrelink direct, or arranges a no-interest, emergency loan…or all of the above.

Useful link: The Salvation Army’s financial counselling service

Debbie: It all depends on what stage of debt they’re in, how much debt they’re in and what options are available.

Debbie explains that some people even engage a counsellor just to have their budget tweaked – to make sure they’re squeezing out every dollar that they can to reach their financial goals.

But not enough of those goals revolve around retiring comfortably and she believes super – or saving for retirement another way – should be a higher priority. This is particularly so in places like the Sunshine Coast, where many residents are self-employed or own their own businesses and are perhaps pinning all their hopes for funding retirement on a successful sale down the track.

The key to stress-free finances

At any given point, Debbie says the key to a worry-free financial life is knowing your financial capacity. In other words, your incomings and outgoings – and what’s leftover.

And for someone is a financial hole, it’s more than key.

Debbie: If they’re on a Centrelink income, which is a protected income, there may not be any capacity there. It may be that they’re not getting 100 per cent of that income anyway. So, you’ve got to wait until you see what capacity is there to be able to put forward an offer to their creditors and then of course, you’ve got look at whether it’s a pro-rata system that you need to look at, is it just the minimum payment… and is it temporary or long-term? That makes a big difference.

Thankfully, Debbie reports that creditors are getting more lenient with people who find themselves in financial hardship. And she stresses you are never alone and there are laws to protect you if you get in trouble, not least the National Credit Code. There is also Fair Work Australia, the Banking Code of Practice and various Ombudsmen which can be accessed.

Debbie: You’re never alone and you don’t have to journey through this financial nightmare by yourself.

“You’re never alone and you don’t have to journey through this financial nightmare by yourself.”

On a more day-to-day level, Debbie says too few clients know about CentrePay, a “fantastic tool” where you can get Centrelink to deduct from each of your payments – and pay – the appropriate amount to cover all your various bills. So you spread them evenly across the year.

Useful link: Centrepay

Debbie: We just work out what, say, your electricity or your school fees cost over 12 months, and divide that by probably 26 fortnightly payments.

Perfect. It does your budgeting for you!

Debbie, laughing: Absolutely. So rather than being too frightened to open your electricity bill, you might see you have a credit.

Debbie and Nicole continue to chat on park bench

Knowing everything you know and having seen everything you’ve seen, Debbie, what’s your No.1 money tip?

Debbie: You have got to have that emergency fund… pay yourself first.

So, if something goes wrong, you’ve got that buffer there. Three months’ ready cash could be life saving. And can you tell us, Debbie, a case where you were able to turn someone’s life around…

Debbie: There’s so many, which is such a good thing. There’s nothing better than seeing a client get back on their feet and move out there and into work…taking steps to get financial freedom. Peace of mind; happy health.

“There’s nothing better than seeing a client get back on their feet.”

And that’s what brought Debbie to what she describes as a “ministry’. A nurse by trade, a decade ago she was lined up for the youth group supper at the Salvos, when the Minister persuaded her to apply for the vacant Moneycare position.

Debbie: And here I am 10 years later.

Good decision?

Debbie: The best! And the best part of my job is that the clients educate me.


Nicole Pedersen-McKinnon

Nicole Pedersen-McKinnon

Money educator and commentator

Photos by Nicola Holland

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