FINANCE: Top Finance Tips Not Taught In School

‘Top Finance Tips that Nobody Taught You At School’ by Miriam Clappis published in Great Health Guide (Sept 2015). Miriam discusses the five top money saving strategies that you can implement immediately so that you can start saving today.

Read other Finance articles on Great Health Guide, a hub of expert-inspired resources empowering busy women to embody health beyond image … purpose beyond measure.

FINANCE: Top Finance Tips Not Taught At School

written by Miriam Clappis

When it comes to money, the earlier that you start, the better off you’ll be. Sometimes I hear people say, ‘when I save some money, I will come and see you to seek your help.’ The whole idea is not to wait until then, but get help and develop strategies now for you to start saving.

School…. everyone has their own memories. It’s probably more about the people and events rather than the life-long skills acquired (maybe besides reading and writing).  I asked myself and my sister the question. ‘What did we learn at school that we’re applying to our daily lives?’   Hmmm…. I drew a complete blank, but my sister was full of learning takeaways. She learnt how to dissect a frog, an important life skill for the modern woman. She struggled her way through algebra, another vital skill for managing our money and she also wore a great homemade Xena costume for a Year 7 project! 

As you can see, it’s clear that the things we need to know now were somehow completely missed in the school curriculum. As a Gen Y Accountant, I advise a huge range of clients of all ages, but I’m most passionate about helping people around my own age or younger, to set themselves up financially for the future. The best time to start making your money work for you is when you are young, but the problem I keep seeing is that very few people know how. At school we were forced to learn crazy maths formulas but not the basics about managing our money.  

 

Top 5 Finance Tips that nobody taught you at school

 

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1. Save More Than You Spend

You might think this is basic, but the main key to making your money work for you, is to save more than you spend. If you’ve got a credit card that you’re not paying the whole balance off at the end of each month, then you need to seriously think about ditching your credit card completely. There seems to be two types of people when it comes to credit cards – the ones that can manage their credit card and the ones that max it out constantly and pay off whatever they can afford when they have spare money. These people are losing out big time with their money with all the additional interest and fees charged over time.

If you’re the type of person who gets worried whether your credit card is going to be declined when you’re making a purchase, then it’s time to get rid of the cards as they are not helping you get ahead with your financial future.

You should be aiming to save at least 15% of your gross income from the age of 20 onwards. Interest rates are now at an all-time low, which means interest rates on savings are too. You should be speaking to a financial adviser about the most suitable investments for yourself and make sure you’re getting a higher return on your savings than the rate of inflation. 

2. Set Financial Goals

Now I don’t mean set crazy goals such as, by the time you’re 30, you’re going to be a multi-billionaire and retire with your family to the Cayman Islands. I’m talking about small financial goals that will stretch you, but are achievable. It’s good to have long term financial goals, which can be broken down into shorter goals, so that you can celebrate when reaching the shorter milestones.

3. Insuring Your Most Important Assets

We learnt that one of the first things to do when you purchase a car or home is to insure the car or the house and contents, but what a lot of people don’t insure and is actually the most important  thing to insure is themselves. At least 60% of Australians lack the insurance cover to pay their mortgage if something unexpected happens. 

These families do not have sufficient life insurance to financially care for their family for longer than 12 months, should the main breadwinning parent die. The question I pose to you; if something were to happen to yourself or your partner, would you prefer to lose your home or your mortgage? This is not a trick question. If you have appropriate insurance, then if something such as a serious illness or accident were to happen to you, there are insurance products which would actually provide enough to pay off the mortgage. Accidents and terminal illnesses are not something people like to think about. However, at least 20% of Australians between 21 and 64 will suffer some unfortunate event in their lives that will leave them incapable of working.

There are a range of different insurances available, some are tax deductible or can be paid from your superannuation. Most people have a small amount of insurance within their super fund, but it is generally only minimal cover and it may be unsuitable or not nearly enough for the specific circumstances that you may face.

4. Your Super is Your Money

In one of my earlier tips I said that you needed to be saving at least 15% of your income. The good news is that if you are an employee, your employer is actually helping you out and contributing 9.5% of your income to your super fund. Often, I see clients whose super is in a complete mess and they have no idea what’s going on. They have lost super and have super in so many different funds that they’re getting ‘stung’ with multiple fees on all these super accounts.

A lot of younger people don’t really want to think about how they’ll survive financially in 30 to 40 years.  It is essential to start thinking about it now and not wait until you are in your 60’s to find out it’s too late and that you are in a huge financial mess. A lot of people are now getting closer to their retirement age with huge mortgages and very little money in superannuation. The reality is that a lot of people are not going to be able to comfortably retire at the same age their parents or grandparents did. If you want to have some financial freedom when you get older, then you need to start planning today and part of that process is making sure your super is working for you. 

5. Get a Good Financial Adviser

The main key to finding a good financial adviser is finding someone you can trust, that understands your position and is committed to helping you achieve your financial goals. While school couldn’t possibly teach you everything you need to know, an expert in this area will be able to help you develop financial strategies that match your needs and are suitable for you. The earlier that you start, the better off you’ll be. Sometimes I hear people say, ‘when I save some money, I will come and see you to seek your help.’ The whole idea is not to wait until then, but get help and develop strategies now for you to start saving.

Author of this article:

Miriam Clappis is a CPA and founder of Flinders Accounting, dedicated to providing quality and affordable accounting, tax, superannuation, savings, home loans and insurance advice to people across Australia.  Connect with Miriam on Facebook or email

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