This week, Money101 is celebrating our 13th birthday. We’re officially a teenager! While putting together a bit of a history of the organisation, we realised just how far we’ve come. Since founder and CEO Catherine Birchall started Money101 back in 2004, we’ve seen dramatic changes in the technology used to create online interactive educational content. We’ve seen the rise and rise of smart phones and other mobile devices, the emergence of the global fintech industry, and powerful shifts in the way that online education is delivered and used.
All this has got us thinking about the lessons we’ve learned over the years. By researching, experimenting and testing different ideas and strategies, we’ve figured out what works and what doesn’t for our content. It’s a bit like how you learn by experience as you grow up. And on that note, we decided find out what other people have learned – about money – since they were young.
On the frontline
Catherine asked some locals near the Money101 office in Melbourne what they’d learned about money since they were teenagers. Here’s what they had to say.
We also had a chat with a diverse group of Aussies from the city, country and overseas, of all different ages from under 21 to over 70. What we learned is that lots of people have similar financial goals and values. For example, nearly three quarters (74%) of people had either bought a home or wanted to buy one. Buying a car was also a top priority (67%) – especially for those country kids! (74%). Most people (66%) either are, or want to be, financially independent.
What was different, though, was the lessons they’d all learned about money, and the route they’d taken to get where they are today.
Save for a rainy day – you’ll wish you had the money when the time comes!
When you’re trying to plan ahead, it can be hard to account for all the bad (and good!) things that could possibly happen along the way. This can mean anything from paying mechanic bills and transport costs while waiting on insurance after a car crash, to unexpectedly having to become a carer for a family member. Nobody can ever know for sure what’s going to happen – or how much it’ll cost – which is why having an emergency fund is so important.
As a rule of thumb, it’s a good idea to build up an emergency fund that (like the answer above) is equal to three months of living expenses. That means all your rent, bills and essentials – including loan payments.
Take every opportunity to save
Looking back, what most people wished they could tell their younger selves was to take every opportunity to start saving as early as possible. Especially before living out of home, moving house or having a family caused disposable income to dwindle away.
Feel like you don’t really have any opportunities to save? It may be up to you to make room to set aside more. And that means budgeting.
Make a budget…
Everyone agreed that budgeting was important, but people had different ideas about how to go about it, based on their own experiences. Some people think it’s better to budget for every day, and some think it’s easier to look at the bigger picture. One respondent talked about how when she was younger it was easier to budget day to day, but as she got older, it was harder as the expenses became bigger differently spaced.
…but ensure you leave room for the things that make you happy…
For those who did grow up hearing about the value of budgeting, it seems that the message worked almost too well sometimes. Some people talked about how they didn’t have much success with budgeting at first, because they were being too strict with themselves.
…and just cut out the things you don’t really need.
There’s lots of different things that make people spend money on things they don’t need and hadn’t planned for. In fact, our survey showed that impulse shopping and not sticking to a shopping list were two of the most common bad habits people fell in to. With hindsight, it’s easier to tell what is or isn’t really needed. One respondent said if she could go back in time, she’d tell her 18 year old self not to spent it all on alcohol!
Don’t fall in to the credit trap
There are some lessons that you can only really learn from experience, or by watching someone close to you deal with a tough situation. Overusing credit is definitely one of those lessons. The majority of the people we chatted to said that the most important lesson for young people to learn was to live within their means, and avoid being in debt wherever possible.
Appreciate the hard work that goes in to earning money
There was one money life lesson that seemed to really stay with people; both older and younger respondents had the same thing to say on this point. Basically, getting money takes hard work, and that fact needs to be respected.
Listen and learn from people who know their stuff
Ever hear, *ahem* *seniors* say “Young people, they think they know it all!”? Turns out those oldies might be on to something. Look out for learning opportunities, and listen to people who know what they’re talking about; what you learn could change your financial situation dramatically. That includes getting help from a professional; there’s no shame in seeking out advice.
Invest in your future
If there’s one situation where you can (and should) learn from others’ mistakes, this is it: investing early (and smartly) is critical. It’s one lesson you don’t want to learn when it’s too late.
As one respondent pointed out, worrying about money doesn’t do you any good (unless you can change the cause of the worry). In hindsight, may people who worried about money a lot when they were younger could see that over time, things generally worked out. This is a good lesson to learn if you’re going to be investing for the long run. What’s more, if you’ve got the knowledge and skills to deal with your own cash, it’s important to be confident about that. Confidence helps you to ride ups and downs, and take advantage of opportunities that suit your risk appetite.
Remember what really matters to you
We asked people what they thought was the most important lesson for young people to learn about money, and what they wish they’d known back in the day. One theme that came up time and time again? The fact that money is important, but it’s not everything – not by a long shot.