Given the previously seen volatility of the resources sector in WA, our expert Financial Planner, Louise Davies is warning those who have jobs as high paid fly-in-fly-out (FIFO) workers to spend wisely and make a financial plan or face some dire consequences.
As WA sees an increase in the demand for FIFO workers, Ms Davies is reminding those fortunate enough to be starting new jobs in the resources sector to get organised with their money or face the hardships that may come should there be another crash in the mining sector.
“The failure to plan and set aside funds for a rainy day in a resource-driven industry is a recipe for disaster that many former FIFO workers have come to know all too well,” she said adding, “I have heard so many stories of FIFO families that overcommit themselves as soon as a high-income level was achieved.”
FIFO work by its very nature is not secure because it’s based on the fluctuating fortunes of the resources sector which is prone to boom and bust. Once the contract finishes or they are made redundant, FIFO workers have often been seen to struggle to make ends, thereby adding to stress in not only their professional but personal lives as well. Under these circumstances, one should be very vigilant and as they say, it is important to learn from mistakes of the past.
Here are some simple strategies to adopt:
Look at your latest bank statements and find out where your money is going. If that is not your thing, then track your spending over the next 2 weeks to find where the leakage lies. There are multiple tools out there to assist with your spending habits i.e: TrackMySPEND by Moneysmart
Separate bank accounts:
Separate the funds you need to make debt repayments, bills and living expenses. Bills and Debt repayments are fixed expenses and need to paid first. Only access the money in your living expenses account (food, petrol, consumables) and once that is gone you know you have to survive to next pay day.
Sticking to necessities:
When you make a purchase decide whether it is a necessity or a ‘nice to have however could live without’ item. Be realistic – we could convince ourselves that everything is a necessity when it is actually not the case.
Treat yourself but don’t go over the top:
If a purchase is for pleasure then ask yourself is it’s within the budget, is it something you value, and will this help you achieve your goals? Having said that, it is always important to have goals – short term to long term. Many people need help on this and that’s why one needs financial advisors. Statistics show that those who use financial planners are actually about 15-20% better off than those who don’t.
If you are looking at upgrading house or cars:
check that the level of repayments are affordable on what you would earn in a local role as well. Make sure your lending capacity isn’t based on overtime or extra income that could stop at any time.
“Many FIFO workers take on the role in order to get ahead or provide a better lifestyle for their family. The problem is that when the big bucks start rolling in they tend to forget about the possibility of job loss.”
“The idea of getting ahead goes out the window and they end up spending everything or worse, taking out a loan against their new high income so they get into higher debt levels.”
FIFO workers and families who want more detail on how to control their spending and create their own security blanket can read jump onto our ‘No-Plastic’ challenge or access a complimentary discussion meeting by emailing email@example.com or Mili@infinitywm.com.au