Founder of The Chilled Investor, Nicola Prentis, shares three ways in which we can start to grow our funds by exploring potential tax-free pensions, investments, and employer pension-matching options. This episode is not financial advice, but educational tips and insights designed to help you build your financial literacy.

Key talking points

Why is Money Difficult to Discuss?

Nicola delves into cultural and personal factors contributing to the discomfort around discussing finances, particularly in service-based industries like teaching.

Three Ways to Grow Funds

Nicola emphasises the importance of pensions, tax-free investing options, and workplace pensions with employer-matching contributions.

Overcoming Financial Fear

Nicola provides insights on gradually making financial changes, treating financial management like administrative tasks, and exploring personal money beliefs.

Watch the video with closed captions or refer to the transcript below.

Transcript

00:00:00:01 - 00:00:25:03

Laura

Hi. It’s Laura here from the TESOL Pop podcast. If you're interested in starting podcasting to grow your community, whether it's for your education business or for your school community, then check out my Podcast Pathfinder course. This is where I teach you how to plan, record and edit your first podcast mini series, and up to your first three episodes. To find out more about this program, check out my business website Communicating for Impact.

00:00:25:08 - 00:00:28:06

Laura

All the links are in the show notes. Now to today's.

00:00:28:06 - 00:00:33:07

Laura

TESOL Pop. Season 8, Episode 3.

00:00:33:09 - 00:00:53:18

Laura

Hello and welcome to TESOL Pop: the mini podcast for busy teachers. My name is Laura, and today I'm joined with the founder of The Chilled Investor, Nicola Prentis. We're going to be talking about taking care of our money. And in this episode we're going to cover why money is so difficult to talk about and three ways in which we can grow our funds.

00:00:53:20 - 00:01:07:06

Laura

Now, it's important to bear in mind that today's episode is not financial advice. It's educational tips designed to build your financial literacy. Let's jump to where I asked Nicola why is money so difficult to talk about?

00:01:07:07 - 00:01:29:10

Nicola

Yeah, so I think there's two layers because I think money's difficult for people to talk about in general, and I think that's culturally true in some places. More than others. So I mean, in the UK it's not really considered nice to ask somebody how much they earn, for example, or how much is in their bank balance. I mean, you just culturally, socially, you know, you shouldn't do that.

00:01:29:12 - 00:02:00:13

Nicola

It is fine to ask somebody how much the house is worth though. So that's an indirect way of talking about how much somebody's worth is in financial terms. But I think it's partly because money is a status symbol. So what you're really doing when you open that topic is is asking how their status is compared with your status. So I think that's why generally, but I think in this profession and any helping profession, teaching, nursing, anything like that, arts, writers, artists.

00:02:00:13 - 00:02:21:14

Nicola

I think there's this idea of the struggling artist, the poor, but noble teacher. And I think that when you've got low pay, that does affect your expectations about money, about what you think you could earn, but also your morale. You start thinking of yourself as somebody who will never have money, and maybe you start to pride yourself on that.

00:02:21:16 - 00:02:31:23

Nicola

But what you do anyway is basically brush it under the carpet because it may be scary to look at. And the longer you leave it, the harder it is to talk about it.

00:02:31:23 - 00:03:01:19

Laura

You raise so many interesting points in just that one question alone about cultural values that we have around money that can make it difficult to talk about and also perceptions that we have of service based industry. And when you mentioned this whole concept of like not earning high returns or not having a lot of money as an educator, that certainly resonates with what I've experienced and heard in the [language teaching] industry to a point that people leave the industry because they think they can't make enough money to sustain their lives.

00:03:01:19 - 00:03:16:12

Laura

And I think that's obviously certainly true for some places where they may be working a job or pivot to another place is needed. But yeah, there's a lot of underlying beliefs and values to deconstruct here.

00:03:16:14 - 00:03:40:06

Nicola

So many I mean, you could spend longer than we have just talking about that because also everybody's beliefs and mindset around money is very personal and it's very likely that it's based on their parents beliefs about money and the things that were said and done around money when they were growing up. So it's kind of like hardwired into you from your experiences of money when you were a child.

00:03:40:08 - 00:03:53:11

Laura

Well, let's try and move that forward by sharing some tips today So now you've got three ways in which we can start to look after our money, start growing it. Where would you like to start first?

00:03:53:13 - 00:04:18:14

Nicola

Okay, well, the first thing I always say to people is if you're going to do anything, get a pension, which sounds really boring. It sounds like the most boring place to start. But if you start thinking of a pension as free money for you in the future, then I think that's less boring. But it's also got a much more immediate benefit that I think people don't really think about, and that's that a pension is usually in most countries it comes with a tax advantage.

00:04:18:14 - 00:04:35:12

Nicola

So you put money into a pension and that is discounted against your tax bill every year. So you're reducing your tax and putting that money straight back into your pocket for you to take later. So or it might even be that that's just a reduction on your tax bill and it doesn't end up in your pension unless you put it there.

00:04:35:12 - 00:05:01:08

Nicola

So that's just straightaway a really instant benefit from having a pension. And I think everybody should do that. And then there are other kinds of investing again, depends which country you live in, but I'll use examples of the UK and the USA. You've got tax free investing products where you can that money can grow and you can take it out and you could earn money from dividends and it's all tax free.

00:05:01:08 - 00:05:22:00

Nicola

So this would be in the UK an ISA, in America would be a Roth IRA. And you don't even have to report that to the tax authorities. That's how tax free it is. You don't even have to tell them. And then note it down. So that's the first thing that you should be doing. Look at pension and whatever tax free investing options there are.

00:05:22:02 - 00:05:46:08

Nicola

And then the second thing is, if you've got an employer, you want to be looking at the workplace pension, if there is one, and you want to be putting as much money into that as you can, again, because there's a tax break that comes with that. And the best kind of workplace pensions are ones where your employer not only is contributing but has to match you.

00:05:46:08 - 00:06:10:07

Nicola

It's called employee match. So if you start putting more than the standard in, they have to put more than the standard in. So that is a pay rise, okay. It's a pay rise you can't take until later, but it's another benefit. So I think for people who are considering which job to take, look at the pension package because that's a massive bonus that you can weigh up against different with different jobs.

00:06:10:09 - 00:06:31:06

Laura

100%. That's one thing that we have here in Switzerland. We have a pension matching that you mentioned and that's something I wasn't aware of until I realised that different companies have different percentages that they’d match. And like you say, when you're thinking about your jobs and having those conversations with potential employers, the value of the contract could be a lot higher.

00:06:31:08 - 00:06:42:20

Laura

If you look at the terms and conditions and other features that they may offer, such as pensions and investments, than the actual weekly or monthly salary that they pay, that could be a really big thing.

00:06:42:22 - 00:07:00:16

Nicola

Yeah, really, it's a pay rise, but they might not be able to give you a pay rise, but they can give you more into your pension because they're getting some kind of tax break on that. So it's always worth negotiating on that. And I think very few people even even factor that in, let alone go into the negotiation.

00:07:00:18 - 00:07:12:04

Laura

It's certainly something I've not thought about, but I'm now beginning to think about more because, like you say, it's free money. It's like your younger self looking after your older self and it's protecting your future.

00:07:12:06 - 00:07:32:12

Nicola

Exactly. And, you know, care about yourself in the future. Why wouldn't you look after yourself? You like yourself. You're not going to not like yourself in the future. Why would you want to make it hard for yourself? You yourself are going to feel the same as you do now. So if money and comfort is important to you now, you be very sure it's going to be very sure that’s going to be something that you think about later.

00:07:32:14 - 00:07:35:06

Laura

So you’ve kicked off with pensions and talking about the matching of pensions and tax free pension options.

00:07:35:08 - 00:07:45:22

Laura

What else would you like to look at today?

00:07:45:24 - 00:08:06:12

Nicola

So the third thing is all the rest of it. So the rest of it is general investing. It's sometimes called these are investment accounts. Maybe you've got a broker. These are the kind of things where you are going to have to start learning a little bit about investing. But there's so many different ways to invest that don't require a lot of effort, that passive, they're not time consuming.

00:08:06:12 - 00:08:23:16

Nicola

You have to open some accounts and you have to set it up. But it's no harder than any other kind of bank account thing that you do. But those things don't come with a tax break. But I've heard people say, I don't want to do this because I'm going to you know what? If I have, I'm going to have to pay tax on it later.

00:08:23:16 - 00:08:42:15

Nicola

Or what if I go over this tax bracket because I've got this income coming in? People are so afraid of tax, but tax just means that you're earning money. And it's like if somebody said to you, I'll give you a bonus, and you're like, No, no, thank you, because I'm going have to pay 20% tax on that bonus.

00:08:42:15 - 00:09:08:10

Nicola

Like you wouldn't say that. So once you've maxed out any, you know, private pension tax breaks or workplace pension tax breaks, I mean, you might not have either of these things in I live in Spain. There is no tax free investing in Spain. I can put a certain amount of money into a private pension. That's it. So for me, if I if I stopped there, I wouldn't be achieving as much as I could.

00:09:08:10 - 00:09:25:04

Nicola

So I am doing investments that, yes, generate a tax bill for me, but that's okay because I'm earning money from those. So why would I mind? Okay, I would like to do everything I can to reduce the tax bill, but if I can still rather have something than nothing.

00:09:25:06 - 00:09:45:22

Laura

Exactly. It's it's you're paying money on what you're earning, right? Just like you would a salary. It's the same exact same concept. And like you say, to be creative and to research and find out, there's also really nice investment options out there. We can also invest in things that you care about, which I find yet you know, also is something that's attractive.

00:09:45:22 - 00:09:53:17

Laura

It makes it a little bit more interesting as well. When you think about the portfolio, the options and where your money could be helping other causes as well.

00:09:53:19 - 00:10:13:13

Nicola

Definitely there's a in the investing course that I teach, I have a part on ethical investing and I say, Look, these are the different ways you could do it. And I've got, you know, only a little bit of money in it, some kind of green project where they're building a solar panel farm or something like that. And I'm invested in that.

00:10:13:13 - 00:10:31:03

Nicola

So you can you can do a lot a lot more than you think, actually, because there's also government bonds and schemes where you are investing in the infrastructure of the country, where you live or other countries because you're giving your loaning money to the government for them to spend on those schemes.

00:10:31:05 - 00:10:55:05

Laura

And as you say, like this is just so much more interesting and I feel a lot more intrigued to kind of research this, knowing that I could have these options in addition to obviously the financial literacy aspect of it. I think it just makes it a little more accessible. Certainly from for me personally speaking, at the very start of this episode, we talked about mindset briefly and I wondered if we could just circle back to that as we close today's episode.

00:10:55:07 - 00:11:08:08

Laura

Do you have any final tips or. Yeah, tips or gifts to share. I would say as we close today's episode, particularly on that issue of mindset and the fear that some people have around money.

00:11:08:10 - 00:11:32:12

Nicola

Yeah, so I think it is normal firstly to be afraid about money, but everybody's fears will look slightly different. But the first thing you can think of is you don't have to suddenly take all of this on all at once. It's small, incremental changes once you've learned about it, and then you've made the changes one by one. You know, I've got a lot of different investing accounts because I choose to have it be structured that way.

00:11:32:12 - 00:11:50:11

Nicola

I didn't open them all on the same day, so you can do it bit by bit and a lot of those changes will be ones that last and a permanent changes that you make. You just think about them anymore. The next thing you do is just think of it like admin. You've got loads of admin tasks and lots of people that move around a lot like teachers.

00:11:50:13 - 00:12:09:06

Nicola

You know, you have to get visas, you have to open your bank accounts, you have to change your mobile phone provider. It's just another thing like that that you already are perfectly capable of doing. And then the third thing I think is you really want to explore your own money beliefs and your mindset around money where it comes from.

00:12:09:12 - 00:12:25:05

Nicola

Because I think you take the fear away from something by shining a light on it and exploring it. And I've got a money mindset course based on exactly like that, what I call like make friends with your money monsters. The idea that the monster under the bed isn't scary anymore. When you switch the light on.

00:12:25:07 - 00:12:34:00

Laura

That's brilliant. Thank you so much for sharing these tips and giving such great insights to how we can grow our money. It's been super helpful talking to you today. Nicola.

00:12:34:02 - 00:12:34:20

Nicola

Thank you.

00:12:35:00 - 00:12:51:15

Laura

To find out more about Nicola's work, including those courses she mentioned, go to her website The Chilled Investor. I'm going to include a link to that in the show notes so you can find that easily. Now, as always, if you have a question or an idea to pitch for Tessa Pop, you can contact us via Facebook, Instagram or the website TESOLPop.com

00:12:51:17 - 00:13:04:09

Laura

Finally, if you love the work we do, you can support us by sharing today's episode with your teaching community, by leaving a rating, a review wherever you listen to the podcast, or by even buying as a coffee at ko-fi.com/tesolpop

You might also like

Good to know

This blog space and its associated multimedia content contain affiliate links. To learn more about how affiliate links work, please read our disclaimer here.

Please also note that this episode and all of its associated content is not financial advice - it is only intended for educational purposes to help you build your financial literacy.