I was amazed recently when chatting to a student working in the local café that she hates spending money. And that includes her parents’ money.
Getting ahead financially does require choices. And it means getting educated on how good financial management works. It can also mean going against the norms in friendship groups.
Some people do have curved balls thrown at them that stand in their way, such as mental health issues, or simply have never seen what good financial management looks like.
Yet not every young adult who is good with money comes from a home where money is well managed.
One example I wrote about was Tamzin Letele, now a manager in the construction industry. Tamzin grew up in a single-parent household beset with financial issues. At age 14 she taught herself about money management in order to write a budget for her mother to get the family on track financially. By age 19, Tamzin, who had left school to work before later studying, and her mother were able to get on the housing ladder together.
Another example of people taking control of their future was Melissa Pearce, who I wrote about a few years back. Melissa’s rise started as a mother of four children. Her entry into the workforce was as a part-time school cleaner for OCS. Pearce always worked towards the next step up, eventually working all the way up to OCS regional operations manager.
Succeeding with financial goals requires a good dollop of belief that it can be done. I don’t believe simply saying: “I’m going to be a millionaire by age 30″ is all you need. Goals need to be accompanied by solid plans. Be wary of authors and influencers who preach “get rich quick”. It’s best to learn the basics first.
If you don’t know where to start, try reading my colleague Frances Cook’s book: Your Money, Your Future, or Scott Pape’s The Barefoot Investor for a do-able introduction to the nuts and bolts.
I happen to follow @CharlotteMiriam on YouTube, and my ears pricked up when she vlogged recently about her 2023 financial goals. For the record, she’s a friend of the family, not an influencer. Charlotte, like a decent number of young people, has made an active choice to be in charge of her own financial future. After watching videos about budgeting, cash stuffing and financial goals, Charlotte, a nursing student who supports herself, set ambitious short-, medium- and long-term goals.
I’m a great fan of “gaming” yourself to save more or pay down more debt. Charlotte is gaming herself to achieve such challenges.
It’s heartwarming to watch the video and see the process of learning good money management in action. The learning from an exercise like this will stay with her for life.
As well as setting goals and learning how to budget, adults in training, as I like to call young people aged 16 to 25, need to think long and hard about credit. That includes the portion of student loans spent on non-essentials. Saving a measly 10 per cent of a part-time income soon adds up, and the habit can be life-changing longer term.
After mastering budgeting, saving and goal setting, there is a lot to learn by investing. Even $5 a week drip-fed into investments adds up to a lot of learning and, over time in growth investments, the money will snowball.
KiwiSaver is a must, thanks to the various government sweeteners including the annual government contribution, and the First Home Grant. Over and above that, thanks to Sharesies and similar investing platforms, young people can learn lessons as they go, with more information than their parents could have dreamed of.
