This transcript has been edited for clarity and checked against the available source transcript and recording. Filler, false starts, and obvious transcription errors have been corrected without changing the speaker’s meaning.
Lacey: Even if you don’t get to that goal, even if you don’t reach the point where your assets are paying you enough to cover your living costs, you’re still going to be in a much better financial position than if you didn’t. Your life will be easier and less stressful.
So why wouldn’t you take the shot?
Intro#
James: Hello and welcome to Graduate Theory. Today’s guest is a financial educator, founder, speaker and chemical engineer. She graduated as valedictorian in chemical engineering before starting work in the mines. Since then, she’s accomplished many things, including becoming financially free, giving a TEDx talk, writing a book called Money School and founding a company by the same name. Please welcome to the show the financial guru, Lacey Filipich.
Lacey: Hi, James. Thanks for having me.
The Start of Lacey’s Financial Journey#
James: It’s great to have you on the show, and I’m excited to talk about everything to do with finance and your own financial journey. Perhaps we can wind back the clock to the start of this journey. Was there a moment when you first started taking your finances a little more seriously and realising the potential that was there?
Lacey: I’m going to sound really strange right now and say it was when I was 10. That’s quite young, but that’s when I first learnt about compound interest. I learnt that money makes more money when it’s in the bank. My mum had told me it breeds like rabbits, and my eyes just lit up. From that moment, I started saving half of every dollar I’ve ever earned.
That’s nearly 30 years ago now, so that’ll date me. That’s a long time to be saving, but I put that as the start of when I became interested in money and realised that it could be wasted or used sensibly for a specific purpose. I thought, “Well, I’m going to spend half with impunity on what I want, and the other half I’m going to save and make the most of.”
Lacey and Financial Independence#
James: It’s a pretty young age to be exposed to the idea of saving. With compound interest, it helps to get started early, and getting started that young is really cool. I want to ask more about it because you’ve been on this huge financial journey.
When did you go from just saving to realising, “Hey, I can actually put my assets and savings to work and set up a life where perhaps I don’t have to work if I don’t want to”? What was that transition like?
Lacey: This is a really interesting point. Becoming financially independent is the goal a lot of people aim for. That’s where your assets might include properties that pay rent, shares that pay dividends, cash in the bank that pays interest or bonds that pay a coupon.
All those things are what make you financially independent: you make enough money from those assets that you don’t have to work anymore. I didn’t actually do anything that got me to financial independence while thinking about that goal, which sounds ridiculous, right? I just magically ended up there.
That’s not quite the case. It wasn’t magic or an accident, but while I was doing it, I never had the objective of being able to choose not to work. That’s really important for people to understand. It’s great if you have that goal, but it’s not why I did it. I did it because I wanted to make the most of my money.
I’m a chemical engineer, and engineers hate waste. Waste is our enemy. I just didn’t want to see any of that money get frittered away. Of course, I’d learnt about compound interest when I was young. I had money in the bank, and remember, this was back in the nineties, when interest rates on savings were hitting nine and 10%, compared with the couple of per cent you get right now.
You got really quick growth compared with what you get now. I’d seen that happening, and in my teens my mum had helped me put some of that money into a mutual fund, which got a better return than interest. I was aware that you could invest, but I hadn’t been very active. You just stick money in a mutual fund, it pays returns and they take a fee.
When I was about 17, we went to a seminar given for free at our local pub. Usually, when you go to these seminars, they’re sales pitches, but somehow we were super lucky. My mum and I went to this seminar, and this guy was just talking about how to buy property.
His general principle, which has stuck with me to this day, was to buy quality, undervalued properties. That’s what you’re looking for: good quality and paying less than the market price. I was 17, so we started learning about that. My mum gave me the book Rich Dad Poor Dad, which I love. I’m not a massive Kiyosaki fan. He’s not my favourite person in the world, and I would not recommend you go out and follow his advice everywhere, but that book is really good. The principles in it and the way he explains the story, which apparently he made up, are a very effective way to learn. That had all happened as I was leaving school.
When I was 19, I had quite a whack of savings. I was telling my mum that I was going to buy a nice car because all my friends—I don’t know if uni students are still the same; I’m assuming they are—drove terribly old, ugly, very cheap cars. That was pretty much the priority. If you spent more than $1,500 on a car, that was an expensive car.
I was going to buy something flash. I said to my mum, “Hey, look, I’m going to buy a car,” and she said, “That could be a deposit on a property.” I went, “Oh my gosh.” That’s when I started thinking about everything I’d been learning over the previous couple of years: how property investing worked and how you use leverage. Leverage is debt, right? You’re borrowing money.
It was a pretty risky decision at 19 years old. Now I look back and go, “Wow, that was gutsy.” It’s one of those things you do when you’re naive that you might not do if you had too much information. I did it when I did, in 2001 in Brisbane, just before we had a property boom.
I bought a little two-bedroom, one-bathroom apartment. It was hideous. So ugly. Oh my God. Brown everything: brown carpet, brown brick walls, brown ceiling. I cried when I got the keys, went inside and thought, “Wow, this is disgusting.” It was tiny too, 50 square metres.
It was the first property I bought, and I got in just before this boom. The property price doubled in two years. That timing was just luck. If I’d waited two years until I’d finished university and had a steady job, it would have been different. At the time, I was only working about 12 hours during the week and 30 to 40 hours a week during the uni holidays, but I was getting paid reasonably well.
Back then, you got paid about $800 a week as a student engineer. That was pretty good 20 years ago. That was the decision I made, and it was the beginning. By the time I was 21, my property’s price had doubled, so my equity had doubled. I hadn’t taken out a very big mortgage, comparatively speaking, because I had a great big deposit, and I was paying the mortgage down. I was going, “Wow, so this is how it works.” That was the point when I realised I could do more with my money than leave it in the bank and earn interest.
James: That’s a really cool story. I guess there was a little bit of luck involved, but it certainly shows the things you can do with your money. Especially at the moment—and perhaps when you were looking at this too—the interest rates at the bank aren’t the best. It’s important to look at other avenues and places to put your money so that you’re not just getting 0.005%, or whatever the interest rate is.
Lacey: It’s hard. I think interest rates are going to go up, but the awful thing is that you’ll never know what’s going to happen when you do something. I can only look back in retrospect and go, “Wow, my timing was great.” The market could have stayed low for another two years, and I might not have built that equity. It could have gone backwards, as property does. I was very lucky, but luck actually ends up being circumstance plus being prepared.
In many ways, you can’t control the circumstances. We can’t control the life we’re born into or our starting point. We can’t control what the economy will do or whether there’ll be a war or a pandemic. We can’t control all these things, but you can be prepared to grab an opportunity when it comes along.
If you wait until the opportunity is there and you’re not prepared, it’s much harder to get ready before the opportunity passes. That’s what I’ve learnt in retrospect. The fact that I was prepared and able to buy at the time meant I could do it, and it was still a risky decision.
It’s not necessarily something that every university student should consider doing. There’s certainly a lot of risk involved, but it paid off and I was lucky. Those two things together add up to getting ahead. It could have gone the other way, but it’s important to make sure you’re prepared. Maybe the opportunity won’t come along, and that’s okay.
If the opportunity does come along, though, you’re ready to jump on it. You don’t lose time learning all those new things so you can be ready, only for the opportunity to be gone. That’s probably what I’ve learnt from that.
A Break from Work and Overseas Travel#
James: That’s really cool, and it’s pretty good advice. You were working full-time for a while. I know you mentioned this in your TED talk: you were working for a bit and getting burnt out from working so much. Then you went on this big trip, trying to almost escape work for a little while. Talk to me about why you went, what you learnt, what you reflected on while you were away and how that affected you when you came back.
Lacey: I think everybody has a moment in their life when they realise they’re not invincible anymore. A lot of your listeners probably haven’t had that moment, and maybe they’re saying, “It’ll never happen to me,” which is normal, by the way. It’s human nature to think it won’t happen to me.
At some point in your life, though, you’ll have this moment of crisis where you go, “Wow, I could die, I could get really sick or I don’t have complete control over my body’s response.” That happened to me in my twenties, which is quite young. A lot of people don’t have that moment until later in life. Some have it earlier or are confronted by it in their youth. For me, it came in my twenties because I had been working too hard, which sounds ridiculous, doesn’t it? I’m completely the opposite now, but at the time I was doing a really intense job.
It’s called change management, as a broad-brush term. My job was basically to go to mine sites and help them make more money without spending money. They had to produce more tonnes. It’s optimisation, business improvement and related work. When you’re dealing with a workforce that might have been there for 30 or 40 years, it takes almost a force of personality to convince them to change.
The big work is in sitting down with people and persuading them to do something differently after doing it the same way for 30 or 40 years. It’s hard and takes a long time. When I say a force of personality, you really do need it. You need charisma, persistence, and to be so annoying—which turns out to be something I’m very good at anyway.
I had done really well in this role and was getting promoted. They decided to make me an internal consultant because, of course, you pay a lot of money for consultants to do that. The mining company I worked for wanted an in-house team, and I was the guinea pig.
They started sending me to different sites. The work at all these sites was really intense and full-on, and I didn’t have a holiday for about 18 months. About a year in, I told my boss, “I’m really tired. I think I need to have a break.” My boss said, “Well, we’re doing this six-month turnaround. You can’t have a break now. Sorry, you’ve got to keep pushing through.” I knew I was feeling tired, but thought, “I’d better do it.” At this stage, I was still coming to terms with what it’s like being an employee in a big company and how, in some cases, the company’s needs come before yours.
My boss had a very good explanation. I know your listeners won’t be able to see this, but imagine two hands with their fingers interlaced: the employee’s needs and the boss’s needs, with the boss representing the company, have to go hand in hand. In this case, my needs couldn’t be met.
As a result, I got really sick. I spent five weeks in bed, which at 26 years old is quite shocking. I got a virus, so that was unavoidable. It wasn’t like I got chronic fatigue or anything, but the virus hit me for six because I was so run-down. I hadn’t been eating well or exercising. I was all work.
That made me think. After four weeks of lying in bed surrounded by tissues, I was wondering, “Am I ever getting out of bed again? Is my life ever going to be normal again?” That was enough for me to go, “Oh my gosh, I don’t really want to do this.”
I did run away. I came back to work for a few weeks when I was better to tidy up and hand over, then went to South America for three months with my partner, who’s now my husband. That was my time to get better and recuperate. I spent a lot of time thinking, and during that trip I thought, “This is stupid. Why would I work myself to death? They’ll pay me a good wicket, but life’s too important for that.”
That’s where I started thinking that I didn’t want to slog my guts out. I was on what they call the high-performer program, and I was earmarked to be a vice-president within five to seven years. You want to hit these targets, and they motivate you mostly through money. I thought, “This is not worth it.” I looked at all the people who had reached general manager and vice-president level and thought, “This is about time served. They’re the last people standing; other people tapped out.” It’s about who can keep up, much more than capability. I sound very cynical, I know.
Lacey: But that’s what happened to me. Lots of people can do that well. They can be promoted or do high-stress work and manage their personal life. I’m just not like that. I’m a campaign worker. When I work, I work intensely and I’m very focused. Then I have to stop and take a break. That’s what I’ve learnt about myself. I can do intense work for a period, but I have to allow recuperation time.
Monday to Friday, 48 weeks a year, isn’t going to accommodate that, so I don’t suit working as an employee anymore. That was a big thing to realise in my twenties.
James: We had Mel on recently, and she had a similar story. She was working so much that everything fell down, and she had to put things back together. It’s important for people to realise that you have to pay attention to what’s going on. It’s fortunate, in some ways, that you got sick and were able to realise what was happening.
Lacey: The silver lining for every cloud, right?
It was pretty much, “Oh my gosh, my career plan to become CEO by the time I’m 40 just disappeared. I don’t do that anymore. What am I going to do?” It felt awful, but you’re right: it was pivotal, and it opened so many other options I hadn’t even considered.
When I look back now, I think I could have been slogging my guts out and putting my kids in childcare from 6:00 am to 6:00 pm. What would be the point? Why bother having them if you’re going to do that? I know I sound very judgemental. There are people it works for who want to do that, but it’s not what I want.
I want to be at home with the kids. I want to see them grow up and for them to know me. I want more satisfaction than just knowing that I helped some shareholders get an extra two or three cents on a dividend.
How did Lacey restructure her life?#
James: I think that’s really cool and important. How did you approach that? You’d gone from working a lot to realising you wanted to change things. What did that look like? Did you change jobs at that point? How did you restructure things so you could live life the way you wanted to?
Lacey: This concept of mini-retirements was something important that people need to realise, and it changed everything for me. I read The 4-Hour Workweek. A friend heard me going, “Oh my gosh, life crisis. What do I do?” and said, “You need to read The 4-Hour Workweek by Tim Ferriss.”
The whole premise of The 4-Hour Workweek is to design a business that you work on for four hours a week so you can live anywhere in the world. It becomes what he calls a muse: it’s just a cash flow for you. The idea is that, if you set the business up right, you can take chunks of three, six or 12 months off work. You do that when you’re young; you don’t wait until your sixties.
At the moment, we think of life as divided into three segments. There’s education when you’re young, work from your twenties to your sixties and then retirement, when you play golf, become a grey nomad, travel the world, look after the grandkids or do whatever your priority is when you finally stop working. That’s 40 years when you’ll get four weeks of leave a year and maybe long service leave if you hang around. Who does that anymore? You’re basically going to work for 40 years and, when you’re on holiday, you’re just trying to recover from work.
His idea was to have those breaks. Take the 10, 20, 30 or 40 years of retirement you might have, depending on your health and how long you live, break it into smaller chunks and take them in your youth.
I thought, “That’s me. That’s what I need to do. I need to work really hard for six months, then have six months off. I want to try that.” That’s what I decided to do. It took me a while to get to that point, by the way. After my holiday around South America, I returned to work for another year and a bit. It took me a while to decide that I really wanted to do this.
When I did resign, I took six months off to work on a business idea because I was going to create this muse. If I’m honest, it was just recuperation for me, but it was a beginning. I wrote and self-published a children’s book called Bunny Money, which is about teaching kids about money, because I thought, “I really should work in this area.” We can talk later about how I ended up picking that.
I spent the next three years working for six months over winter and taking six months off over summer. I did that by becoming a contractor instead of working as an employee. It turned out that the company that had trained me while I was an employee had a non-compete policy. They couldn’t make me a job offer while I was employed, but the day after I resigned they called and said, “Hey, would you like to be a consultant for us?” There are opportunities out there that you’re not aware of, and I was able to take these six-month contracts.
Because the work was intense and contractors got paid a lot more, I made more than my annual salary in six months. I didn’t know that would happen, but it did, and my pay went up very quickly. I was eventually making a lot more than I would have if I’d stayed in the line, while working four days a week for only six months a year and then having six months off.
I did that for three years. During those mini-retirement breaks, we would live near Margaret River, south of Perth. We’d have a great time, eat well, exercise, sleep in, throw the alarm clock away and do all those wonderful things. I would work on my idea for Money School, which came about because all my friends, who were slogging their guts out, were asking, “How come you don’t have to work full-time anymore, Lacey?”
I said, “I’ve been buying properties and paying down the debt, investing in shares and earning dividends, and still saving 50% of everything I’ve earned.” Taking time off was nothing: I could have lived for five years on my savings alone, without the income. They asked, “How did you do that?” I said, “I started saving when I was 10 and investing when I was 19. What have you been doing?” Of course, they had credit cards they weren’t paying off and car loans, but really fancy cars. I was driving my crappy old car—it was still safe, but crappy—and I didn’t have to work.
They were saying, “This isn’t fair. How did you learn about that?” That’s why I started working on Money School, to teach people about it. All that happened as I was starting to see quite a lot of wealth being developed, and I was still channelling my money into investing. That was the point when I thought, “Hey, there’s an alternative, and I want it.”
How to start your financial journey#
James: That’s a really cool story. There are a lot of different things I want to touch on. First, let’s say someone is three years into their career. They’ve heard this and are thinking, “I really want to embark on this journey, take my financial life more seriously and grow my finances towards the FIRE movement. I want to be financially sustainable without necessarily having to work, or while working less, or whatever that might be.” What first steps should they take to go down that path?
Lacey: When I talk to people about becoming financially independent, there are only three rules: save, buy assets and avoid bad debt. That’s it. As long as you’re applying those rules, the percentages don’t really matter. How much you save depends on what you can afford and your personal circumstances. I could afford to save 50% of everything I earned. Other people can’t, and some can save more. If you want to get there really quickly, there are people who save over 90% of their income and live on 10%. The percentages are irrelevant; the principles are what matter.
You save, then take most of those savings while keeping some cash as a buffer for emergencies. Take the rest and buy assets, which are things that put money in your pocket. Don’t get sucked into bad debt. By bad debt, we’re talking about car loans, credit cards, buy now, pay later, pay advances and anything else where you’re taking money from future you, because future you has to pay it back, but you’re not buying an asset with it.
As long as you do those three things, you have a very good chance of reaching financial independence. It’s about how aggressively you do them. If you want to get there quickly, save and invest more. That means you might sacrifice some quality of life or something you want to do earlier on.
If you don’t want to make that sacrifice and can only save a little, it takes much longer, but you still get there. Even if you don’t reach the goal, where your assets pay enough to cover your living costs, you’ll still be in a much better financial position than if you didn’t try. Your life will be easier and less stressful. Why wouldn’t you take the shot?
Think about how much you can save. If you can’t save anything right now, when will you be able to? Is it when you get your first job out of uni? Is it when you go from probation to permanent employment? Is it when you get a certain number of clients for your small business as a sole trader?
Once you get there, set it up so that you can’t stop saving. Make it automatic. Isolate your savings account and automate the transfers so they happen straight away. Get payroll to pay into that savings account. Don’t have it connected to any spending, then make sure you do something with those savings, and you’ll get there.
That’s my advice to everyone. If you can’t save right now, that’s normal for a student. It’s normal for students to be on the bones of their bum, struggling and eating baked beans or two-minute noodles. That’s fine, and it happens to everybody. I think about my mother, who was a single parent. There was a good decade when she couldn’t save anything because she was too busy making ends meet and trying to support two kids on about $30,000 a year. That’s okay. It happens to everybody.
It’s not your fault or a problem. You just need to be ready. When you finally have extra money, save it; don’t spend it. Make sure you start, because the longer you wait, the longer it’ll take to get there.
James: I like what you said about eventually getting there if you save any amount. It’s about how much you want to save and how quickly you want to get to that point.
Lacey: It’s about speed. The people who get there fastest, often in under 10 years, usually save the most. My saving rate sounds high at 50%, but some people routinely save 70 to 80% of everything and live super-frugally. If that’s okay for you and how you want to live, go for it. It’s not my journey. I don’t want to give up nice holidays or nice food. You don’t have to, but if you’re dedicated and committed and that’s what you want, go ahead.
It’s not a one-size-fits-all answer; it’s a choose-your-own-adventure answer. You just have to follow those three basic principles.
Learning to run her own business#
James: I also want to ask about starting your business with Money School. A fair bit goes into that. You have to learn how to market your product correctly, and how to write and produce all the content. There are heaps of different things involved. How did you get started on that journey and learn all those skills?
Lacey: Gosh, if I’d known then what I know now! First, The 4-Hour Workweek was useful because it talked about things that will suck up time in your business and why you need to thoughtfully design your business before you start. That was an advantage. I think a lot of people build successful businesses and spend enormous amounts of time on them, then suddenly go, “I can’t leave the business because it relies on me.”
From the beginning, I wanted to build something that didn’t require my time. That was a guiding principle, and it’s why I’ve never taken on investment or grown the business to have lots of employees. If that happens, you can’t turn it off unless you have a really good general manager whom you trust to run it so you can walk away.
I didn’t want to go down that path. Everything I did was about making a business I could switch on and off that would keep producing value for people while I wasn’t physically working. That was my guiding principle.
It works for someone who’s a content producer and educator, which is what I do. I produce educational financial content. Most of it is online and pre-recorded, which I’ve been doing for years. The last couple of years have been great because people finally said, “Oh yeah, we love this.” I’ve also written a book, which now sells without me. You can read the book at any time, but I did the work for it back in 2019 and 2020.
It’s almost like having a passive-income setup for a business. That’s how I’ve thought about it. I still exchange my time for money and get hired to deliver courses. State governments, local councils, employer bodies, schools and all sorts of people hire me to deliver workshops. They might be more bespoke: “We want these people to learn about debt,” “These ones want to learn about shares,” or, “Can you talk about superannuation for women?” I get asked to do those sorts of things, so that’s more time-dependent.
But you’re right: you have to learn how to do absolutely everything. You have to learn to be the accountant and bookkeeper, the social media marketer, the person writing the emails, the copywriter and all that stuff if you don’t want to build a big team, which I don’t. I’ve become a bit of a jack-of-all-trades, but the great thing is that there are lots of supportive communities you can join to become a member and get advice. There’s lots of online information and there are short courses you can do.
I’ve actually learnt the most from copying people who do it well. I don’t mean that I copy and paste their content. If I get a really good email and think, “That’s a great email. How have they done that?” I’ll analyse the spacing, sentence length, headline placement and how they chose the headline. They’re never in my industry—not many people write great emails in my industry—but you can learn just by observing.
I do a lot of that and a lot of Googling. I’ve now run my own business for 12 years, so lots of people ask me, “Where should I start?” Starting with the end in mind is really important. I started my business knowing that I didn’t want it to be big, didn’t want to take investment because I didn’t want a boss, and wanted to be able to turn it off. That has determined where I’ve spent my time and what I’ve learnt.
Not everyone will want a business like that. It depends on what you want; that was just my priority. The resources out there are fantastic, and observing other businesses is great. You can learn so much by watching who does it well and learning from their methods.
James: That’s really cool and interesting to hear. A lot of it came from picking up things from other companies. I want to continue with this learning theme.
Saving More or Earning More#
James: When we talk about financial independence, one side gets a lot of attention: “I’m going to save X amount of what I earn.” The other side is perhaps discussed less: if I continue to save at the same rate but earn more, I’ve also saved more. You can either save more or increase your income. How do you think about that? In particular, how did you increase your income at different stages?
Lacey: I find earning more income vastly more interesting than saving money. I don’t have a budget, which sounds amazing for a financial educator. I put 50% of what I’ve earned in an account and spend it with impunity. I’m pretty good at mentally budgeting, I know my expenses, and I’m not a frivolous spender.
That works for me, but I don’t have a detailed, line-by-line budget. I couldn’t tell you exactly where every dollar goes because I don’t have to. I find that really boring and don’t get value from it. I’ve tried it before. It works for a lot of people, but not for me. I have much more fun asking, “How do I make more?” If I’m going to spend my time somewhere, I spend 90% of it on how to make more.
My whole life has been like that. It started when I was 10, when I ran my own business to make money because I couldn’t get a well-paid job and paper rounds paid too little. I started a business that ended up employing five of my friends.
I chose my career at school. When I was 13 years and nine months, which was the legal age for getting a tax file number in Queensland at the time, I could finally be an employee. I started working in before- and after-school care and vacation care, and got a coaching qualification in artistic gymnastics. I was the youngest qualified coach in Queensland at the time. They usually made you wait until you were 16, but I qualified at 14.
I did that because you earned about $15 an hour as a coach, versus $5.60 an hour at McDonald’s at the time. All my mates were earning $5.60 an hour at McDonald’s, sticking their arms into pickle barrels and coming home stinking. I was coaching artistic gymnastics, and coaching for an hour and a half was like them working for four hours. From the beginning, I was aware that some jobs paid more and you had to look for them. That was a priority for me.
Part of the reason I chose engineering was that it was super-well-paid. It’s a really well-paid job. It’s not like medicine, but I don’t like medicine and don’t particularly want to work a 24-hour shift, which is what they expect many doctors and nurses to do. I wasn’t interested in that, but engineering had really good job prospects at the time. I started university around 2000, just before a mining boom and an oil and gas boom, and jobs were plentiful.
I’d also researched the fact that engineering was the most common qualification among CEOs in Australia after an MBA. Lots of engineers run big companies because we’re good problem-solvers. I thought, “A CEO is well-paid. I’ll be an engineer, then become a CEO.” I loved chemical engineering and problem-solving, but my whole career strategy was very much about picking a role in which I’d earn a lot of money.
These days, when I go to Women in Technology WA, we visit schools and talk about studying STEM. I say, “Girls, ladies, everyone present: on average, you make much more money in STEM careers than in everything else. The end. Pick a STEM career.” If you want to be financially independent, pick a well-paid job.
I understand that many people want to do caring roles, and that’s fine. Our society doesn’t pay caring roles well. If you choose one, a good income will be rare and you’ll have to fight for it. If you’re okay with that, that’s fine, but go in with your eyes open.
It sounds quite mercenary, and I don’t like it. I think we should pay carers more and pay all caring roles more. This is a mark of how society values people’s time. People have to acknowledge that if, at the beginning, you pick a career without good prospects for earning a solid income, I think that’s a little crazy. It doesn’t matter how much you love it: if you struggle financially, you’ll induce stress and have a harder life.
That’s pretty depressing. Sorry to ruin the excitement of everyone studying philosophy who plans to live on a beach and relax. Go for it if you want, but go in with your eyes wide open. You have to be deliberate about what kind of career you choose.
I’ve always been like that. When I was in engineering, I would ask for an out-of-cycle pay rise every six months. You’d have your review once a year, but I’d go into the office between reviews and say, “Hey, boss, I’ve done really well. Here’s my list. I would like a pay rise.”
When I was finally promoted to superintendent, they said, “You’re already in the superintendent’s pay band. How did you do that?” I said, “I’ve just been negotiating the whole time.” They told me they couldn’t even give me a big pay jump, and I said, “No, you still need to pay me more. I’m not going to be a superintendent at that rate.” They still had to give me a pay rise, but they said, “You’re already outside the band.” Well, I should be. I’m very, very good at my job.
I say that with a self-entitled attitude that really pisses employers off, but if you don’t ask, you won’t get. It’s important to be willing to ask. I’m not rude about it. I come in with evidence and strongly believe I’ve delivered the value, which is why I get paid more. I’m not nasty about it. You can’t go in if you haven’t done the job; you have to perform. But you have to ask, so I kept pursuing it.
That was while I was an employee. One day, someone on the team I was on as an internal consultant was running SAP. SAP is affectionately known as “suffer after purchase”. It’s an online system that big companies use for inventory control and invoice management. If you ever come across it, enjoy that.
One of the guys on site had managed to look up the SAP code for the project we were on. Five consultants had worked for seven months, and it cost $2.2 million. He and I sat down and calculated that, back in about 2007, our company was paying between $3,000 and $6,000 per consultant per day. We thought, “Oh my gosh, that’s ridiculous.” That was more than we would earn in weeks, and we were doing the legwork while they just turned up.
We were going, “Holy amazeballs, Batman!” Since then, I’ve learnt that, for the type of consulting I do, I’ll get charged out at $5,000 a day. That’s what a company will pay for me every day for six months.
You make a lot more money, so you have to look for those opportunities. It’s exactly the same skill set. I could be an employee doing that internally for a company and earn a quarter of what it would pay a consultant to do. I’m a bloody good deal, and I would think I was winning, but actually, changing over to consulting pays more.
When you go into a big firm, it takes a very big cut. You might be charged out at $5,000 but only earn $2,000 while they keep $3,000. You have to find companies that will pay you more, so I looked for those that gave me a bigger cut. That’s how I’ve approached it.
I sound very financially driven. Not everybody cares about this stuff, but I’m sorry to those who say, “Just follow your passion and the money will follow,” or, “I know it’s not a well-paid job, but you should do it anyway.” You have to be pragmatic about whether you’ll be able to sustain the lifestyle and life choices you want. If you can, that’s fine. If you can’t, you’re setting yourself up for a bit of misery, and you need to acknowledge that.
I’m at the complete opposite end of the spectrum. I’m chasing the best pay I can get and refusing to accept less. I can do that with my particular skill set, and I’ve been very deliberate about building my skills. That’s part of why I became a consultant and focused on those skills. I thought, “Wow, if I can charge that amount of money for my time, why wouldn’t I pursue that?”
Fortunately, I loved that type of work. But if you’re doing it for money, you may as well make the most you can. That’s a very long, cynical answer. There’ll be lots of people who think it’s probably awful, and that’s fine. You don’t have to do it my way. But if you want to make a lot of money quickly when you’re young, it’s worth thinking seriously about how you’ll do that.
Asking for Pay Rises#
James: That’s really interesting. I want to touch on asking for out-of-cycle pay rises every six months. You’ve got to do it in a certain way. You can’t just go in and say, “Hi, boss man. Please pay me more,” and then say nothing else. Could you elaborate on what you did? You said you had a list of things you’d done and ways you’d outperformed or done well against what was expected of you. How did you typically approach those situations?
Lacey: There are two important things to consider with pay rises. Your greatest opportunity for a pay increase is when you start a new role. That’s true when you move from one role to another within a company, but even more so when you move to another company. Before they get you is your biggest point of leverage, because they want you to fill that role.
The amount and approach to money you start with will set a precedent for how they’ll continue to treat you. It’s when they’re least likely to take you for granted and most likely to try to entice you.
Of course, I experienced much of this during a boom, when there was a lot of competition to employ people. It’s very different in an industry where you’re one of 100 or 1,000 applicants, or where there’s a lot of slack. You can’t necessarily do this in every role. You have to be very cognisant of what’s happening in your industry. But if you’ve chosen a career and industry where the market is currently on the seller’s—the employee’s—side, you can really push.
At that point, you need to think seriously about how you do it. My book has a script I was taught. I learnt all this through mentoring; consultants and friends at work taught me this stuff. It was nerve-racking to apply. The first time I said, “That’s not enough money, and I want 50% more,” I chewed all my nails off and sweated bullets for 24 hours, but they gave it to me. It was worth doing, so you have to be prepared for that.
If you want to read the script, borrow the book from the library and look at it. I won’t share it here because it won’t work if we all do it, and not everybody will go and read the book. Those of you who are excited about that kind of thing, go and look it up.
When you’re in a role with the same boss, the point is: why would they pay you more? Because you’re adding more value and they either don’t want to lose you or want to share profits with you. That’s the way to think of it.
You can’t get away with this if you’re a slacker who doesn’t turn up to work or hit deadlines. You can try, and they might give you more money, but it’s not a reasonable ask and will look entitled. First, you have to do your job well. Once you’re doing that, ask away and put it in the calendar.
Have a chat with your employer and say, “Can we talk? I’d like to discuss an out-of-cycle pay rise,” or, “I’d like to talk about other opportunities to request a pay rise.” Remember, you don’t have to be rude and pushy. Make it a chat.
If they say no straight out of the gate, you can ask, “Okay, but why? When might you be able to do that?” It’s reasonable to ask for an explanation and a future date when you can do it. If they say, “You’re never getting a pay rise, and don’t ask me again,” you have to think seriously about whether your career will progress there and whether it’s the right fit for you.
If they instead ask, “Why do you think you’re worthy of a pay rise, Lacey?” have your evidence. Mine wasn’t necessarily about milestones, though those are important. It was about the actual value I delivered. For example, we’d seen a 10% increase in production in my area. On one project I led, we were helping to add about $40 million a year to the bottom line. I was one of those people, not the only one, but I was leading the team. We had added $40 million a year to the bottom line. That’s worth something. I’m doing a really good job.
Whatever it is in your job—client satisfaction, reviews, costs, production, something you’ve done, an improvement you’ve delivered or making other employees’ lives easier—keep notes. I had a diary where I wrote and highlighted them.
When I had that first discussion and said, “Hey, boss, can we talk about this?” and they responded, “Tell me why,” I’d say, “Here are five things I’ve done in the last six months that added a lot of value and went above and beyond. I think that means I deserve a pay rise.” Most of the time, they’d say, “Okay, let’s talk about it.” Then it’s a negotiation: they make an offer, and you say, “That’s not enough.”
Another important part is lifestyle-driven benefits. We think only about money, but it isn’t just money. Companies can sometimes give us things that won’t have massive financial impacts on them. They don’t have to find extra money for salaries, but they might give you more flexibility, offer you a car or let you salary-sacrifice something. There are lots of things they can do that aren’t necessarily financial.
Have an idea of what would work for you. It might not just be money. Have that list so you can discuss it and they can take it back. Also recognise that, in a big company, someone above your boss usually has to approve anything out of cycle, and it depends on how high the request has to go. Have patience, be polite and follow up at agreed times.
If your boss says, “Look, I can ask,” you can say, “When can I check in with you? Would next Friday be okay?” If they answer, “We won’t have the meeting until the following Thursday,” say, “Great, can I meet with you the Friday after to find out?” Don’t let it go or expect them to do it. Be polite but reasonable, and ask for what you want.
I don’t think there’s anything to lose from asking politely. If they say, “There’s no way. Our company is suffering, we’ve got layoffs coming or something massive has happened. We just can’t,” then okay, that’s fine. You’ve asked. If you don’t ask, you’ll never know, so you have to ask.
James: That’s really good. Even if they say no, you can ask why, and that gives you things to do. Next time it comes around, you can say, “You told me to do this, and I’ve done it. Where are we now?” If they’re refusing to budge and that’s what you want, you have to consider whether you see yourself there.
Lacey: Exactly. Timing is important here. I’ve been in the mining industry since 2001 or 2002, when I did my first vacation work. I’ve been through a big boom, then a downturn, and now it’s booming again. The up period is when you really want to try this. If I’d tried it in about 2015, when everybody was getting laid off, I would have been laughed out of the building.
You have to be aware that it won’t work at every point in your career. Sometimes that’ll be because of you and sometimes because of circumstances beyond your control. You should always be thinking about it and actively deciding whether this is a good time. Being willing to ask is huge. Sometimes your boss will simply be too busy and won’t have noticed.
It’s also worth looking at organisations such as Hays—H-A-Y-S—which do benchmarking and tell you the typical bands for your salary. Sometimes employers haven’t kept up because they’re too busy doing their jobs. Go into it assuming they have good intentions. If you’re not being paid the market rate, assume it’s not because they’re deliberately undercutting you, but because they didn’t realise the market had moved or that it was important to you.
If you approach it with inquisitiveness and a willingness to have a discussion, you generally won’t get a black mark against your name. It’s only when you walk in all bolshie and say, “I demand a pay rise today because I’m amazing. Just give it to me; I won’t accept anything less,” that you create future problems. You create a belief among management that you’re problematic or entitled. You have to think carefully about how you approach it, but it’s worth doing.
James: That’s really cool, and it’s important. If you’re not testing the limit of how much someone can pay you, you’re leaving money on the table.
Lacey: Exactly. You should feel a bit uncomfortable. Honestly, I still get nervous when I do it. It’s perfectly logical to feel nervous, but I work on the premise that, as long as you don’t make it impossible for them to say no or give them an ultimatum—“Do this, or I’m leaving”—then it’s a chat. It’s a negotiation, and you’re representing yourself. You have to get the best for yourself, so it’s worth trying to overcome those nerves.
James: That’s cool. I like that a lot.
Lacey’s Advice for Graduates#
James: I’ve got one more question for you today, Lacey. Obviously, Graduate Theory is a career-focused podcast. If you had to restart your career and wind back to when you first started working, is there anything you would approach differently in your career progression or finances, knowing what you know now?
Lacey: There’s one small financial thing I didn’t understand as a graduate that now makes me think, “Shoot, I should have done something about that.”
When I was working for Western Mining, BHP took us over. That was in my second year as a graduate. We had been given options with Western Mining, and I didn’t understand what options meant, so I didn’t exercise them. Now that I understand options, I think, “Ah, that’s $8,000 I could have had.”
When something financial happens at work—perhaps they have a share plan or talk about salary sacrificing or superannuation matching—take the time to get support if you don’t understand it so you can make a good decision. If you get an offer from work, it’s important to understand whether it’s right for you and take the opportunities you can. Share and options plans are often designed to keep you with the company, but they’re a leg-up. They are an advantage. If you sign without understanding them or ignore them because they’re too hard, you can give up a lot. My advice is to take the time to learn.
The other thing I would encourage people to do is something I hadn’t thought about at the time. You can tell from our discussion that I’m quite forthright and will fight for what’s right for me.
In my second year as a graduate, I was one of seven graduates, two of whom were female. The five men and we two women were at a site with 10 women out of 300 employees in Kalgoorlie, Western Australia. That was the reality of going into mining in a remote location back then.
It’s very different now. The next site I went to was 20% female, compared with 10 women out of 300 employees. The first situation wasn’t normal, but when you’re the only woman on a site, or one of a few, you often get the women’s jobs.
In this case, during the 18 months I’d been there, my general manager had lost five executive assistants. That’s not normal. Clearly, it was a difficult role, but they couldn’t find someone and really needed someone. They asked me to fill in, and I had a massive tantrum. I wasn’t throwing my fists around, but I went into my boss’s office and said, “You’re asking me to do this because I’m a woman, and I’m not happy about that. There are five other graduates who are male. Any of them could do that role. Why did you pick me?”
I had a real bee in my bonnet about this. We always give women the job of taking notes, and they always have to get the frigging tea and all that stuff. It was a real issue I’d heard so much about, and I was very sensitive to it.
I overreacted, but it was a fair call. My boss said, “That’s a fair thing for you to say because this does happen. But I promise you, Lacey, that’s not why you were chosen. Can you take my word for it that you’re going to learn something really important and that you want to take this role?”
I thought, “Okay, fine.” I really liked the boss; JP was fantastic. I said, “All right, fine, I’ll do it. But I’m not happy that you’ve picked me because I’m a girl.” He said, “I’m not picking you because you’re a girl. Stop it.” I said, “Okay, fine.”
It turned out that BHP was looking to buy Western Mining. I got to be part of the war room set up for the merger and acquisition. I was in discussions with the executive team and heard how they’d pitch the company and persuade another company to buy them. I learnt about M&A.
Learning that at 22 is unusual for a graduate engineer who has just come off the furnace in a scruffy, dirt-covered outfit. I was in these meetings because I could make graphs and type. They needed that. Hearing those conversations, understanding how the war room was set up and learning about the process were some of the most invaluable experiences I got in that graduate program. You couldn’t have planned it.
My boss had noted that I wanted to be a CEO because I’d told him. He had asked, “Where do you want to go eventually?” and I said, “I’d like to be a CEO eventually, so I want to do management stuff.” He put me in the role so I could get this amazing experience, because I was the graduate who’d said she was interested in it.
He was doing the right thing by me. The fact that I was female was neither here nor there. I’m lucky that, when I didn’t listen to him, he didn’t say, “Fine, I’ll give it to someone else,” just to spite me. I’m very lucky that he understood my response. That’s the difference between having a good boss and a bad boss.
What did I learn from that? Sometimes you’ll think something happened for a reason when it didn’t. I had a bee in my bonnet. I looked at everything and thought, “They’re asking me to do that because I’m a girl. I’m refusing on principle because I’m a feminist, and thou shalt not make me.” That’s not always the case; it’s just your frame of reference. You need to be willing to listen when people tell you you’re wrong. Sometimes you’ll be right, and sometimes you won’t. I think that’s the most important thing.
The second thing I learnt from this experience, which has carried me through my whole career, is to pick your boss wisely. No one will have a bigger impact on how happy you are at work than your boss. The end. I reckon 80% of your satisfaction at work comes from whether you have a good boss or a not-so-good boss.
You have to have had not-so-good bosses to understand what a good boss is, I think. I’ve had only a couple of bad ones in my time. I’ve been very lucky and had fantastic bosses, but I became very choosy early on about who I’d work for.
When I was younger, there were times when I worked for—I’m going to be blunt—a bad boss. He was shocking and shouldn’t have been allowed to manage people. Everything was cookie-cutter, with no consideration of anyone’s personal views, circumstances or preferences. It was just, “No, this is how we do it. You will do it this way,” or, “We never give people that high mark. Everybody gets an average.” He shouldn’t have been allowed to manage people.
Recognise that that’s not necessarily you; it’s not your fault. When you’re new in the workplace, you don’t understand whether you’re not meeting expectations or have just been lumped with a bad boss. Sometimes it’s a little of both, so you have to be honest with yourself. But if you have a bad boss, accept that they’re not right for you. Maybe they’re good for other people, but they’re not right for you, so become choosy.
That’s something I learnt from my experience in my youth: I’ve got to be really picky about who I work for. Don’t work for arseholes. The end.
James: That’s a good point to finish on. You’ve given us lots of great tips. I agree with you about the boss situation. I’ve done three rotations at work and had three different bosses, and it’s clear to me and many of the other grads that, as you said, your boss is a very important part of satisfaction at work. I’m glad you’ve found that as well.
Connect with Lacey#
James: Thanks so much for chatting today. If people want to find out more about you and what you do, where should they go?
Lacey: Head to moneyschool.org.au. You’ll find everything there. I’ve got lots of free blogs, a free course on how to get out of debt, plenty of reading and information about how to get my book. Obviously, I consider the book to be a financial education. If you’re interested in this and want to learn about money and get ahead quickly, the book is a great place to start. You can grab it from your library or favourite bookstore. It’s everywhere because I went with Penguin, so they’re pretty mainstream. Money School is the place to start.
James: We’ll have that in the show notes for anyone who wants to find it. Thanks again for coming on today, Lacey.
Lacey: Thanks for having me, James.
Outro#
James: Thanks for listening to this episode. I hope you enjoyed it as much as I did. If you want my takeaways—the things I learnt from this episode—please go to GraduateTheory.com/subscribe, where you can get my takeaways and all the information about each episode straight to your inbox.
Thanks so much for listening again today. We look forward to seeing you next week.