Mary Holm is living proof that chasing and spending money are not the best ways to find happiness.
The cover of her recent book, Rich Enough: A Laid-Back Guide for Every Kiwi, describes Holm as the country’s most-trusted money expert; thousands of Kiwis follow her weekly newspaper column and regular radio slots in which she answers queries ranging from how to deal with credit-card debt to whether it’s really essential to save $1 million for retirement.
Holm chose a career in academia and journalism, eschewing a more lucrative path in the world of finance, and is living proof that chasing and spending money are not the keys to happiness. She’s frugal, a good saver and has reaped the rewards of practising what she preaches. The mother of one, now adult, son owns her own home by the beach, travels when she wants and her savings and investment decisions mean she has ongoing financial security.
Holm was born in Wellington and grew up in the seaside suburb of Seatoun. One of four children, she wryly observes that “it’s funny that everyone likes to say they grew up poor”. They weren’t rich, but she says her family were comfortable.
Holm was good at both English and maths at school, an early clue to her long career, which combines both talents. She has written for New Zealand and Australian publications, including the Listener, and, when she lived in the United States, for the Chicago Tribune. She holds positions with a number of organisations including the Financial Markets Authority.
What was your path into the world of personal finance and journalism?
When I did my BA, I majored in economic history and I got into the financial side of things. I went with my husband to the US when he was doing his doctorate, and initially, not being allowed to work, I did a masters in journalism and that got me on the road to being a journalist. I found that a lot of journalists are into words but not very good with numbers. And it’s a really common thing. I did a part-time MBA at the University of Chicago, majoring in finance, while I worked. I became really interested in the whole topic of investing.
Were you tempted to stay in the US, or did you have to come back to New Zealand?
Eventually, we became permanent residents, green-card holders, and could have stayed there forever, actually – we really enjoyed it. But we left in the 80s after having our son. We wanted him to know his wider family in New Zealand.
What makes your book different from “get-rich” books?
The book’s framework is about how much is enough and what really makes people happy. When I was teaching a financial literacy course for non-business students at the University of Auckland, I thought hard about how I really didn’t want these students thinking that more money is the goal, or that the more money, the better. So, we formed discussion groups about the relationship between money and happiness, and I got the students to do some little exercises. They had to think of five individuals or couples and rank them in terms of happiness and wealth. Then we looked at whether happiness and wealth were related.
Well, each time I ran the course, I asked the students why they had given people high scores for happiness. I wrote two lists on the blackboard without saying what they represented. One list was things that cost money and the other was things that weren’t about money. They tended to be about relationships and health and just sort of positive attitudes; the glass half full sort of thing. Every semester, there were always far more items on the list that had nothing to do with money and, at the end, I’d ask my students why I had made two lists. It was interesting – all the things that had nothing to do with money but were all about happiness. Of course, if you haven’t got enough money to feed the kids and put shoes on their feet, more money is going to make you happier. But once you get to a certain point, more money doesn’t necessarily make you happier. There’s quite a lot of research that says that, and you can think about your friends – the ones who have a lot more money aren’t necessarily having a nicer life, really. People can be rich and desperately unhappy if they’re in a bad relationship. I did a seminar about this book recently, and a woman said, “If you’re a parent, you’re happy when your children are happy.” That is so true.
What about money not earned but won? Lotto winners, for example – are they generally happier after their windfall?
That’s one of the things I’ve talked to the students about. Quite a lot of people, a year later, tend to be about as happy as they were before they won. At the beginning, they’re elated, of course. But I know a woman who won something like $200,000 – it wasn’t huge. But she got all sorts of grief from her brothers and sisters because they felt she should have shared more with them.
Some people say that you need $1 million to retire in comfort? True or false?
You don’t need $1 million. That makes me so cross. The industry has said that because it wants your money; because it manages the funds and makes more money out of it if you save more. Some people might want to aim at $50,000, or an amount like that. That can still make your retirement quite a lot nicer. If you retire with $100,000 in cash, you can spend $100 a week, in addition to New Zealand Super. If you retire with $500,000 cash, that’s $500 a week on top of Super. That’s if you retire at 65. If you retire older than that, you can spend more as you’ll have fewer years of life left.
What’s your view of a capital gains tax?
Broadly, I support a capital gains tax and have, for years, in my newspaper column. If one person is earning their money by the sweat of their brow, and another is earning it by the value of their assets going up, you could come up with quite a good argument for reversing it – taxing the one who’s made the capital gains and not taxing the one who’s worked for their income. New Zealand society is getting more and more unequal. We’ve still got families really struggling and paying tax on the incomes they earn.
Politically, isn’t it the case that there never seems a time when the electorate is overwhelmingly keen on it and political parties are willing to risk pushing it? Michael Cullen, for example, did not go near it when he was Minister of Finance.
Everyone’s allowed to change their mind. He might have thought more about it, and watched the world a bit more and thought, “This is what we should be doing.” And not enough attention has been given to the fact that Cullen’s Tax Working Group was told to make the whole thing revenue-neutral. That means, if the Government gets more tax from capital gains, it’ll get less from income tax, or find some way to cut tax elsewhere. And Cullen’s talking about cutting it at the lowest tax bracket, so that means everybody’s [PAYE] tax is reduced. When you look around, I know there are some people who don’t try, but there are a hell of a lot of people struggling to make a decent living and look after their kids.
There’s a perception that younger people are not so good at saving, but that’s not always the case, is it?
There’s a new movement that says you should be very frugal – save half of your income; some people are even saving 70%. There are blogs and books about it. It tends to be millennials, apparently, and they’re “super savers”. Their idea is to retire early, and you save something like $2 million because you need a lot if you’re going to retire at, say, age 40. But people who do this are going to be working hard and being really frugal and then suddenly having all the time in the world. In the meantime, are they enjoying themselves? They can get a bit competitive with one another, seeing who can save the biggest percentage of their income. Overall, it’s probably more good than bad, but it might be better if people adopt a more moderate approach and save 10-20% of their income and just watch their spending a bit more.
What’s been your biggest financial struggle?
When my husband and I bought our first house, it was hard to get mortgages, and we needed to get a second mortgage through a lawyer. But we did manage to do that. I have been divorced and that really knocks you, when you’re halving your assets. But I’ve probably always been fairly good with money.
What does that mean on a day-to-day basis?
I really don’t like shopping. I don’t even like going to the supermarket. If I have worn a dress over and over, I make myself go to the shops and buy new clothes, but I just don’t enjoy it. Someone was admiring the coffee table in my house the other day – I bought it in the 70s. The couch and chairs and bookcase came from Mum and Dad. I don’t care if it’s not fashionable furniture and it looks worn.
So, you’ve never been acquisitive?
No, I haven’t, and I would say my brothers and sister, although I’ve not thought about it before, aren’t particularly acquisitive, either. That’s probably partly thanks to my mother coming from Scottish farming stock. I can’t throw away food. I’ll put leftovers in the fridge and bring them out again the next day, and sometimes even the day after that. But I don’t want to come across as mean; I’m not, and I don’t think my friends would say that, either.
What would you spend money on?
I strongly advocate “SKI-ing” – spending the kids’ inheritance. If you don’t do it, they’ll travel first class. I don’t travel first class, but I do fly business class. I’ve worked hard and I’m not a big shopper. Most recently, I went to Turkey. I haven’t travelled as much as I’d like to, but there’s a lot more of it on the horizon, I hope.
What are you likely to be reading on your travels?
Novels. If I am about to travel, sometimes I find a novel set in that country. I almost never read financial books – articles, yes, but not whole books. There are too many excellent novels out there.
This article was first published in the March 16, 2019 issue of the New Zealand Listener.