Money Smart

A special thanks to Heather, Mel and Hope for their youthful insight.

Firstly, thanks for all your messages and questions.  Today I would like to answer questions from a much younger audience. I must say I was pleasantly surprised to find a question from a 19 year old as well as a lot of questions from adults in their early 20s. It was great to find young people are worried about their financial health so early on in their lives. Most of them had similar questions though and it got me thinking what financial decisions I would made differently at that same age.

1. Get a job

In my opinion, having a part time job as early as possible in life is good because you basically have no living costs to worry about as you are still living at home and every little bit helps. I started on my grandfather’s farm working a few hours after school and sometimes on weekends and holidays to earn a few extra dollars. Later progressed to working data entries as a teenager in an office and earning $1/hr. So working for a family business, babysitting, cleaning, etc. are good start up jobs. Maybe putting out flyers in your area highlighting jobs you are comfortable doing and hourly rate charge.

2. Setting up an account

I never had a bank account until I entered university and I wish I had. I literally hid money in my sock draw so it was always in reach for me to spend on things I saw my friends had like branded clothes, shoes, etc. If I had a bank account back than (before atms), I would have been saving $40/weekly, $2080 a year and let’s say from age 13 to 18 would have given me $12,480. At that time it was enough to put a deposit on a house in my country. I would have had more prestige with my friends if I had a house at 18 rather than branded clothes.

3. Cutting costs

No matter how much you earn, if you spend most or all of it you will still save nothing. First step always to cut costs: clothes do not need to be branded and wearing a new outfit is not necessary every day. Homemade meals are best, learning to look after your things like simple maintenance on car there are so many ways. Life should be comfortable but not to the point where flashy defines comfort. I have a friend Linda whose salary is nearly twice as much as I do and yet to this day she struggles to save money for a deposit for a house because of her expenses.

4. Enrolling in an investment course

My first advice came from my grandfather, very basic about saving, buying a house and land and living happily forever. Later out of necessity in my first year of uni trying to balance my expenses with my income, I took a free seminar at the university student centre to make a budget. That got me on the financial track and firstly I read books than later looked up advice on the internet. I made mistakes but learned from it. I was working two jobs and a full time study and any money I was saving was being invested in a fund. I wish instead I had enrolled in an investment course, would have saved me a lot of time and money and less struggle. This year finally at the age of 31, I enrolled in an investment course and learnt so much and also kicked myself for taking so long to do so.

5. Investing early

If I had done no 4, I would have known that saving does not get you ahead, investing does. I would have invested my money earlier meaning I would have had more than what I have today. Hell, I might have even be able to retire by now.

5. Never getting a credit card

First day of University, there were lots of booths with lots of offers from free credit cards to interest free laptops. There is always a catch and paying cash on an item means one can negotiate a good deal. At 19, I did not understand so I got the credit card and well used it in a week and then was paying it off for 6 months. Save for what you want if you don’t own a credit card and if you have one, pay it off quickly and cancel. If you buy online get a debit card.

6. Loans to friends

I call it the success guilt, the need to give money to friends as loans and never ask for it or let it slide. Hey, I am the lucky one, I have a house, good job, etc, and surely I can lend some money to my less successful friend. Don’t be heartless, bad things happen and a good friend should be there for the in need person. But giving money so they can update their car, house or go on a vacation or anything that they don’t need right now and can save for is bad. You have worked hard for it, you don’t want to work hard further to get that money back.

In conclusion, there are a lot of things I could tell my younger self but the big question is whether I would have listened than. When I was young, peer pressure got to me, so I did spend money on things to keep up with friends. In my opinion, it’s a personal choice to be financially stable and from the time you start full time doing that it will on average will take you 10years regardless of one’s income. Its individual choice whether that journey starts at 16 years old or 30.