You have finally completed your law degree and about to start a graduate role. Life is amazingly sweet and two (no, three) things go through your mind:
Now the order of the questions may change for some people or the context, but I am doing my best to either make you remember your first job, or for those currently walking the path hopefully I nailed it.
Starting out you feel there is no need for savings, super, health insurance and all that garbage, you have SO much time up your sleeve for all that later. Now is about fun !
Well it is, but why do we all work? Some work for the enjoyment, some work for the prestige, some for personal satisfaction but mostly, people work for money. But then the question remains, what do we do with that money? If you handled it smart, very smart and correctly from your very first job, then you could retire at 40. Yes, 40 - to do what you please, enjoy life on your terms and do what you want to do. Now that’s living the dream, however, very, very, very few people approach and in fact have a financial plan like that from their early twenties. In later life we wished we had listened and paid attention when our parents told us to start a savings plan, or read this book, or map out our future. But again we didn’t - we were too busy socialising, drinking espresso martinis in our most gorgeous new black patent leather heels, looking hot with that fabulous new lip, cheek, eye combo from Mecca. “Making memories and having experiences” you’d tell folks that would chind you for spending your money fruitlessly whilst being dubbed the ‘avocado generation’. All the while you scrape together enough to be able to lunch out, but have two minute noodles in the cupboard at home, until the next pay day arrives.
But who teaches Financial Education? This debate reigns in Australia as to whether this lays in the home or in the education system. Is it high schools, university, workplaces or family? Who is qualified to teach is the bigger question, and WHAT are they teaching? If your parents weren’t great at managing money, are they best qualified to teach you or does that in fact perpetuate a cycle to another generation? If your family was great with money, then you will see this first hand through your upbringing, and you may integrate it quickly and easily into your life, or rebel against it. Like with anything, what you do with the learning is your choice, but who is best equipped to teach this fundamental life education? And who is teaching it?
Banks teaching it in primary schools with their own business agenda front of mind seems like something the Royal Commission should investigate. Teaching and influencing are two very different things but who is there to correct the thinking. We have scenarios now where both parents are working, sometimes more than one job, so this may be something in our advanced world that is being missed and not shared or even discussed. And if that is the case, are we developing a generation that does not actually know what financial stability means, and what it could do for their future?
I don’t profess to have got it right. Challenges present themselves, and sometimes life throws lemons. I was divorced at 26, trying to hang on to two houses, at the height of the GFC, working a mostly commission paid role. Talk about lemons, but you take stock, you do what you have to and you rebuild again. Compound interest - my Dad had talked about it but I thought I didn’t need to know about it. It is, however, those credit cards, those loans, the lending of all money that starts the snowball effect...the noose around your neck. And when it tightens that is when real stress begins.
My real financial education has really only begun in recent years and it wasn’t through any teachings as such but it was by questioning the status quo and taking it upon myself to discover, uncover and learn. It was through reading, trying different strategies and saving methods and seeing them successfully working. It was through reducing debt and bringing that credit card right down to living within your means. It was saying no to some things, and yes to others. It was knowing exactly what percentage of your income was being spent on housing, living expenses, and play things but then also learning to spend money on self development, education and charitable efforts. It is these teaching that that likes of Tony Robbins, Napoleon Hill, Robert Kioysaki, and Lewis Mocker have been teaching for years. To buy your own freedom, you need to plan for it now.
Now I could be opening a can of worms by discussing financial education and I am not here to spruik methods, approaches or my beliefs. However I worry about the grads on Eagle Street and in Martin’s Place that are embarking on their life without a financial career plan. Wage growth over the last year in Australia was 2% and as law firms battle with this, it means you need to set yourself up for success, as opposed to relying on a rapidly increasing salary over the years.
If you have not yet received an education in financial smarts, or you find you are questioning the financial education your parents provided, then it is time to educate yourself. Your future is in your hands, and the financial management aspects means you can lead a life without financial worry by building a sensible long term plan with room for holidays and the spoils of life (I am not advocating a life of a hermit!). It may not seem cool, or the fun thing to be doing on a Saturday afternoon while your friends are all out shopping, but the investment right now in yourself will be repaid in spades in the near, and not so near future. When you have specific accounts for specific purposes, and can then invest in a way you are comfortable with. When you have savings if disaster strikes, when you have investments set up for the long term so much so you don’t even notice them making you money and the compound interest on compound interest over the next 10 years.
Access to this information is just so easy now. Youtube, search any of those names mentioned above and you will find streams of their teachings. Some of their teachings are controversial, some educational, sometimes even completely at odds to what you have been taught your entire life. Hard to digest at times but just keep reading. Get audio books, read their books and challenge yourself and your lifelong beliefs. One day, you may just thank me for it. Or you can choose to ignore it and talk to me when you are 35 and missed 15 years of compound interest.
From my own discovery, if you are interested, I would recommend getting started with the following books, and if you can’t face them all, then just start with the first one:
Think and Grow Rich - Napoleon Hill
Rich Dad, Poor Dad - Robert Kioysaki
The Barefoot Investor - Scott Pape (even subscribe for his weekly newsletters - they are great!)
Cashed Up - Ben Walker & Harvee Penn
Money Master the Game - Tony Robbins