As a parent I am familiar with the challenges around getting children to understand what money is.  It is even more difficult as we become a cashless society.  It is so easy to tap the plastic (or your phone with a virtual wallet) and not even know how much you paid.

The new generation born after the year 2000 are referred to as the “Invisible Money Generation” as they have been born into a world where they will rarely handle money in their lifetime.  It refers to children and teenagers for whom money is rarely seen in physical form and that their exposure to online payment methods and digital forms of money is often dramatically more than their experience with banknotes.

I recently read a report from The Financial Planning Association of Australia (FPA) which revealed two thirds of Australian parents (66%) believe digital money is making it harder for children to grasp the value of real money, and that they struggle to teach them.  Three in five parents (62%) believe this Invisible-Money Generation will be financially worse off than their own generation.  SOURCE

For most of us, our first memories of money are of collecting small change, and witnessing our parents using cash to make everyday purchases.  Do you remember the 20 cent bag of mixed sweets that was sold at the school tuckshop (or am I showing my age)?  This experience, however, is no longer common – the game has changed, and money has become invisible.

How can we teach our children that money doesn’t grow on trees, when the trees have become digital?  Below I have three tips for passing on financial knowledge and valuable habits to the younger generation.

Tip 1.  Visit the bank

Taking your child to the bank to deposit saved money will help them understand that the money we use comes from your bank account.  Count the money at home before you go to the bank and then show your child how the money they have deposited has grown their account balance.

You can talk about how the amount you deposited is now the same amount emerging in your bank account and is now transformed into a digital form.  You can also explain that the money is in your bank account as a result of hard work, and if money is taken out, there will be less in the bank account.

Tip 2.  Discuss budgeting with your children

Involving your kids in discussions about the family budget is another way you can teach your children about money.  Discussing the family budget with them will teach your children more about how to manage costs from week to week.  This helps give them the bigger picture about costs and the value of wise spending.  What you want them to learn is that they have the power to direct where their money goes, whatever the source. They will also learn that choices they make now impact the future.  It is also useful to give children an idea of what different things cost and relate them to each other.  For example, a milkshake at a café is $7, pancakes are$14 so they could have 2 milkshakes for the same cost as the pancakes.

Tip 3.  Go shopping with your children

Shopping with your children is a great opportunity to educate them on how product prices differ, and engage them in helping you to ‘shop around’ and pick the best price. When you are paying with your debit or credit card, you can put into words what is happening when you are holding your payment card next to the eftpos card terminal.  Explain that this action indicates that the money is now transferring from your bank account to the store’s bank account to pay for the grocery shop.

Ultimately, to challenge the idea of ‘invisible money,’ parents will need to have an ongoing conversation with their children, as they grow to understand more about the world around them and work toward their own goals.  Each of these conversations have the potential to positively impact  your children and help them to form valuable habits, well before they have started a part time job or finished high school.

You can read more insights in the report from the FPA here:  SHARE THE DREAM

About Massey Financial Advice

I am a Brisbane-based Financial Adviser with more than 14 years of experience working with professionals to achieve financial freedom.  I have clients in Brisbane, Ashgrove, The Gap, Kenmore and Chapel Hill.

Sometimes people don’t really understand their financial situation – whether that be their personal cash flow, wealth creation or retirement plan.  And this puts their lifestyle at risk.  I partner with professionals so that they feel empowered to make the best financial choices for them, their family and their career.

The first step is to book a cost and obligation free Financial Gap Strategy Session by clicking the link below.  This is a phone call at a time that suits you to discuss what you are working to achieve and find out whether I can help.

If you would care to share your experience with me, please comment below!

Life is busy!  I know being self-employed makes life more challenging for me to find the balance with family, fitness and health.  But what happens to the life balance when you decide to study and further your career?

I decided to study and complete my Certified Financial Planner Certification, the highest financial planning designation worldwide.  Before I chose to study I knew there would be a financial cost, which is why I continued to work.

What I hadn’t factored in was the time cost when studying.  I went in thinking that I would just find time to fit study into my life.  It did not take me long to realise that this wasn’t the greatest plan and that it can put a lot of strain on your personal life.  After a weekend of playing catch up, and a not too impressed family, I decided it was time for a study plan.

Below are three tips that helped me find the right balance in this busy time of my life.

Step 1 – Have a schedule and block out time

Study became less of a juggling act once I worked out a routine that worked for my family, and stuck with it.  It became about time management.  I entered family, work and personal commitments into my calendar.  That way I knew what was coming up and planned my study around it.  I was already doing this for work and family, but overlooked allocating (and blocking) time for study.  I looked at the course content to work out what I had to complete in each study block to ensure I remained on schedule.  I made sure I was realistic about when I thought I would have work completed.  It is also easy to become distracted when studying.  During the allocated times, I made sure I had a space where I could focus solely on study, whether it was a whole room, a corner in the bedroom, or going to the office.

Step 2 – Call in reinforcements

In life, we all have more than enough to juggle.  With studies, family life, work and other responsibilities it won’t be long before you drop one or more balls.  Before this happens it is time to call in reinforcements.  To help eliminate some of the pressures try to outsource help where you can.  Whether that be having a gardener come to your home, or have a cleaner come in to stay on top of household chores.  You could outsource these externally or even look within your own family circle.  You could also look for options that make everyday tasks easier, such as doing your grocery shopping online and having it delivered.  We find it is helpful to plan our meals for the week before the weekly grocery shop so we limit the number of times we need to shop during the week.

Step 3 – Celebrate and reward

It is important to reward yourself when you meet your goals; it keeps you motivated and gives you something to look forward to. Rewarding yourself will also help keep your mental and physical health in order.  There are rewards you enjoy after you’ve achieved your goal, and those you give yourself to reinforce the behaviour along the way to achieving your goal.  Of course the essential ingredient in choosing a reward is something that feels, well, rewarding. It needs to resonate with you in a way that makes you feel great.  It doesn’t need to be extravagant, but it has to be something you don’t usually have time to do, or don’t allow yourself to do.

Bonus Tip – Exercise

Make sure you keep exercising while you are studying.  It is important as a stress relief and I also found that it helped my creativity in solving assignment questions and letting the course content sink in and process.

Studying while working full time is definitely achievable, it just takes a bit of planning, support, organisation and grit.  There was such a great sense of achievement when I completed the last subject towards becoming a Certified Financial Planner^®.

You can read more on how to get the balance right while studying and working here: https://www.opencolleges.edu.au/blog/2015/06/11/studying-and-working-full-time-get-the-balance-right/

I offer a 30-minute financial review session. In this session, I can review your current financial situation. I can see if I can help you achieve your financial goals and the best (and quickest) way to do so.  You can contact our office on 07 3102 4948 or book a time that suits you via the link below. 

If you would care to share your experience with me, please comment below!

I recently came across a news story about a hapless New York couple, who have taken their 30-year old son to court in a last ditch effort to get him to move out of home. My first thought was “only in America”. But here in Australia, high rents and low housing affordability are seeing plenty of parents shelve plans for an empty-nester lifestyle as their 20-, 30- and even 40-something offspring show no signs of leaving the family home.

Research by Finder shows 40% of 20-24 year olds still live at home, and even one in ten 30-somethings, and about 5% of people aged 40-plus still share a roof with mum and dad.

When does the rent-free ride stop?

Many parents relish having their children at home for longer, and there is a whole variety of reasons why multi-generation living is becoming more commonplace in Australia – anything from cultural norms to rising rents. While it can be unfair for one generation to shoulder the financial burden of many heads living under one roof, the issue of whether or not to charge adult children board can be very contentious.

Finder found some parents say the rent-free ride should stop when children turn 19. One in five believe their child should pay board when they land a job, and a similar proportion of parents is against the idea of charging board altogether.

The thing is, parents can be fantastic teachers when it comes to helping kids of any age manage their money and learn to live within their means to enjoy a financially sustainable future. Sure, if your son or daughter is studying or in an apprenticeship, they probably don’t have much cash to spare. But continually providing a free ride when your kids are earning an independent income can encourage an artificial view of how the world works.

More to the point, shelling out for adult kids can prove a drain on parents’ finances at a time when they are nearing retirement.

A stepping stone to independence

Charging your children board – even just a small amount, when they have the capacity to pay, is a stepping stone towards adulthood. And for parents who could be looking at spending 20 or more years in retirement, every bit helps to stretch their own money further. 

If you’d prefer your adult child to start paying their way, try to approach the subject with tact. No one enjoys a surprise announcement that they’re suddenly expected to cough up cash on a regular basis. But be firm. However much you choose to charge, it is important that board is paid regularly. This sends a strong message that bills need to be paid on time, and they need to be paid first, ahead of life’s luxuries. Surely that is an essential life lesson we should pass onto our kids!

– by Paul Clitheroe AM
Paul Clitheroe AM, co-founder and Executive Director of ipac securities limited, Chairman of the Australian Government  inancial Literacy Board and Chief Commentator for Money magazine.

© AMP Life Limited. First published May 2018.  As published in the Massey Financial Advice Winter 2018 Newsletter.

If you would care to share your experience with me, please comment below!

I have been asked what advice I would give a recent graduate, and the more I thought about it the more I realized the advice is basically the same as the advice to an experienced professional.  The benefit to a graduate is that if you implement these ideas, and maintain them through your professional career, you should put yourself in a very strong financial position, as you have time on your side. The keys really are:

1. Spend less than you earn
2. Ensure you are aware of and adequately protected against significant risks
3. Use debt wisely – or avoid it
4. Establish and maintain a cash reserve
5. Save for a goal
6. Get to know your money behaviour
7. Be aware of your superannuation

The benefit of working on these as a graduate is that you can form good habits early and benefit from these habits over time.  If you leave working on your financial position until later in your career, often you will not find the time, and, by starting later means you will have missed opportunities.

So, in a little more detail:

Spend less than you earn

This would seem to be very basic however in my experience is not always practiced.  As our income rises professionals will often find a way to spend the extra income.  If the habit of saving a portion of your income is not established as a discipline, then expenses rise to meet the new income level.  By establishing a budget, I know that sounds like a dirty word, but in reality it will help you to get ahead, you become aware of your regular spending and allow some money for extras.  Even the simple matter of preparing a budget will give you a greater awareness of your expenses.

Ensure you are aware of and adequately protected against significant risks

There are a number of risks that you really should take into account as a recent graduate.  Some of the simple ones are the risk if you drive a car of damaging your car, someone else’s car or property or injuring someone.  A simple way to protect against this risk it for some form of car insurance.  There is also the risk that you become unable to work due to illness or injury. This is something that could have significant ramifications for the rest of your life.  You also need to consider the risks when you share a house or unit, and when you enter a relationship or buy property together. What about if you decide to travel Australia or overseas, if you are left stranded somewhere or break a foreign law that you may have been unaware of.  Another risk is professional negligence but as a recent graduate hopefully this will be covered with professional indemnity insurance by your employer.  If you choose to start your own business, there are a whole range of other risks you will need to consider.

Use debt wisely – or avoid it

I have come across a lot of people who have used debt ineffectively and are now struggling with repayments.  If you are planning to buy a car consider what is realistically affordable and whether you need an expensive car now or whether it is better to start with a cheaper car.  Image is important, however so is being able to afford the repayments! In fact, if you are able to save enough money to buy the car outright that will leave you in a stronger financial position.

There is also currently a big push to readily available finance for smaller purchases, including interest free.  Be wary of deals that are “too good to be true” or “never to be repeated” offers.  You need a plan to fully repay the loan within the interest free period or the penalties may be high.  You also should make sure that you are living within your means, not stretching yourself too far.

If you plan to use a credit card, be aware of your money behaviour and avoid the ever increasing limit.  Credit cards can be helpful when used correctly and with discipline, but with a lack of constraint will easily lead to financial trouble.  Having a credit card with an ongoing balance may prevent you from getting your first (or subsequent) home loan.

Establish and maintain a cash reserve

Perhaps your first saving goal should be to establish a cash reserve.  I know that as a recent graduate nothing could go wrong, however it is still worthwhile having an amount of money available to you in case of an emergency.  For example, what would you do if you need to replace a household appliance (like a fridge or television) urgently?  By having some savings that you can call on, you can make the purchase and then work out how to top up your savings again, rather than being forced into some form of debt or borrowing money from family and friends.  Also, if you happen to enjoy a few too many drinks one Friday night and get into trouble and lose your job, you will have some money available to keep paying your expenses until you secure a new job.  How much should the reserve be?  This really depends on your lifestyle and living expenses but as a starting point I would aim to have enough money saved so you could pay all your bills for 3 months, including any loan repayments and groceries etc.

Save for a goal

Once you have built a cash reserve, work out what you would like to save for and set yourself the goal.  This could be a car, or a holiday, or a house deposit, depending on what interests you and what you are trying to achieve.  Set yourself a target amount and date to achieve it.  If you like a visual aid, you can try something like my saving thermometer that you can download and put somewhere that you will see it at least monthly, but as often as weekly to ensure you stay on track.  For bigger goals, if you break down the goal into achievable pieces you can enjoy the feeling of achievement as you progress towards the larger goal.  If you are working towards a larger goal, also include little rewards for achieving milestones along the way to help maintain the discipline.

Get to know your money behaviour 

At a basic level, people are either spenders or savers.  Spenders get joy from spending money, either on themselves or others.  They will typically be best not having a credit card and setting up automatic deductions from their everyday account to limit the amount of money they have available to spend.  Savers on the other hand will only spend what is required and squirrel away money.  They are typically good at budgeting and enjoy seeing their savings grow.  Whatever your money behaviour, by being aware of it, you can establish your accounts in a way that you can make the most of your income by creating forced discipline with automatic transfers.  If you don’t see the money sitting in your everyday bank account you will be less likely to spend it.

Be aware of your superannuation 

For a recent graduate, retirement, or the need to not have to work to pay your expenses can seem like a long way off.  Even though you are not able to access it for a long time, superannuation is still your money and you should at least take some interest in it.  By making good decisions about your superannuation now, it could build to a significant lump sum by the time you are ready to stop working and support your lifestyle at that time.  If you ignore it, you may miss the opportunity to make a good return over time.  You may also be paying for life insurance that is not appropriate for your requirements which will reduce your superannuation balance.

There are a lot of issues to consider and an adviser can help by working out what is important to you and giving you some structure to put you on the path to achieving it.  An adviser will look at all the issues and work with you to ensure your financial focus is in the right place.

Please share your thoughts and comments by leaving a reply below. We’d love to learn from your experience and help in any way that we can. If you have learnt a financial lesson through experience, please share it so others can also learn from your experience.