Ever think about the way your younger self managed money, and cringe just a little bit? The things you wasted your money on, the missed opportunities – it’s easy to look back and wish you’d done things a little differently. If you feel this way, there’s good news and bad news. The good news is that you can (hopefully) learn from your own mistakes. The bad news is that you may have a few more money mishaps in your future.
Over time, academics and statisticians have gathered a lot of data on what people learn about money, and when they learn it. Pay attention to some of the money mistakes and lessons that other people have gone through. You might be able to avoid a few painful experiences for yourself.
18+: It’s all too easy to fall in to the credit trap
According to research from Experian, more than half of millennials (18-35ish) are hooked on credit. They say they use (or would use) credit even if they couldn’t afford the repayments comfortably[i]. Millennials are also twice as likely as older generations to say they couldn’t maintain their lifestyle without credit. They “would not have any quality of life” without a credit card or loans to fall back on. One survey by Canstar found that, specifically, 19% of 18-29 year olds stress out about their credit card debt[ii].
Credit cards are often presented and marketed to young people in a certain way. Marketers make them seem cool, convenient and pretty much like free money. There’s the status symbol of a platinum card. And let’s not forget the ads that emphasise the emotional value of what you can buy with a credit card. Once you get a credit card, it’s easy to get used to the convenience and satisfaction of buying something when you want it. But the most important lesson to learn at this age is how to avoid falling in to the credit trap. When you’re deep in debt, it can take several years to get out.
30+: Build your security
The average age of marriage is around 30 in Australia. The average mother of a newborn is aged 30.7, and the average father is 32.9. It makes sense that around this age, you should start (if you haven’t already) thinking about who else you’re financially responsible for.
This doesn’t necessarily mean redirecting your spending from fun experiences completely. Toys, mortgage payments and baby stuff might be some (though not all) of it. What it’s more about is protecting the lifestyle that you’ve built with your new family. This means reducing your liabilities. In other words, paying down your mortgage, and getting rid of debts wherever possible. It also means looking at your dependants’ needs. How they would be covered were you to lose your ability to earn an income.
50+: Don’t leave it too late to put away money for retirement
In Australia and other countries with similar retirement savings systems, there’s a bit of a trend. Often, people won’t really start ramping up their retirement savings until they’ve reached a certain age. Some don’t look ‘til they’re 10-15 years away from retirement. It’s known as the ‘mid-50s savings dash’.
This makes sense in a lot of ways. Just think about how busy people are and what their priorities are in the middle of their working lives. Some people might feel like they can’t put much in super while they’re still paying down their mortgage. Or a couple with kids might not feel like they have money to spare until their kids have moved out and are well set up.
The problem with this is that they may be missing out on compound interest on their super savings. The longer money is in the account, the longer it’s earning interest, and then interest upon that interest! Late starters may miss out on investment options that generally take more time in the market to work out.
Where to from here?
If you’re worried about the money mistakes being made by your diverse cohort of people, we’ve got a solution. Money101 is made for learners of all different ages, life stages and backgrounds. From millennials managing their own income, to senior Aussies dealing with the costs of aged care, there’s something for everyone.
Having a targeted approach to educating your market is infinitely better in the long run. Your audience will get the information they need to make smarter decisions. You’ll get higher conversions to seminar and advice signups when you can target your message. Everyone’s better off in the long run.
At Money101, we offer an array of data-driven methods for targeting your education offering. We understand that some cohorts need simple age-based education, whilst others prefer broader life-stage based ‘just in time’ info. Our team is also developing a variety of interfaces through which users can self-select the category they belong to with zero assumptions. In other words, ways to deliver a closely customised learning experience without spying over the user’s shoulder!
Your users deserve the benefits of lifelong learning about their finances. Get in touch with Money101 today for a chat about how we can help you cater to your people.