Uncensored Money: Ask Mel Anything – Young People & Money
Melissa Browne: Ex-Accountant, Ex-Financial Advisor, Ex-Working Till I Drop, Now Serial Entrepreneur & Author, Financial Wellness Advocate, Living a Life by Design | 21/04/2023
Welcome to the ‘Ask Mel Anything edition’ of Uncensored Money.
In the ‘Ask Mel Anything’ series, Mel answers your questions in the hope you realise you are not alone and that it helps to increase your financial literacy and confidence. In this episode of ‘Ask Mel Anything’ Mel answers questions about tips to put young women on the path to financial stability and how to invest for your children.
Resources mentioned in this episode:
If you know you need more help with your finances make sure you join the waitlist for the next round of the My Financial Adulting Plan.
If you're not already, come play over at insta at Mel Browne.Money and make sure you are signed up to Mel's Money Musings and Monday Money Moments (yep, we love us some alliteration) for more tips, tricks and ideas on how to best work with your money.
Finally, if you love this episode please make sure you subscribe and leave us a review.
Welcome to Ask Mel Anything, which is the special edition of the Uncensored Money series where I've sought questions and then I sit down and I answer one or two, or even three of them at a crack. Sometimes I'll bring in experts to help me. But today there are two questions and they're all about young people and money.
So the first question says, I work with young people, many of whom come from low income homes where financial literacy would not be high. What are your top three tips for young women to put them on the path of independent financial stability? What financial knowledge is of critical importance?
And if you are older and you're thinking, oh, this one's not for me. Can I just say that it doesn't matter how old you are, what I'm gonna talk about today is going to be relevant for you as well. So yes, it's through the guise and the lens of a young person, but if you are someone that is feeling like, you know what? I didn't have high financial literacy. I potentially came from a low income home. I wanna go on that path of independent financial stability. I don't really know where to start. Then stick with me because this question is for you as well.
And part of the reason that I pulled out this question is cause this was really me. You know, I came from a low income household, or certainly I thought I did for many years it was that. My dad retired at age 53, but we didn't know how he did it. He never shared that. He talked about it when we were adults and I asked questions, but growing up I one hundred per cent believe we were incredibly poor. And it was this strange thing where, we would go to the thrift shop to buy clothes. I'd always have hand-me-downs from cousins. We had sausages and the cupboards were full of black and white tins and if on the very rare occasion we went out for a meal, we would dumpster dive for vouchers. I remember going out with one of my first boyfriends and we went out to the Chinese restaurant and I remember thinking that was just the fanciest thing and they must be so rich.
So I really get this cause I am with that western suburbs chick. I didn't have wealth modelled to me. And also I'm the first born in my family, so I also have that people pleaser, 'I just wanna be the good girl' drummed into me. So I really understand this. I also understand coming from that place where sometimes, and I don't think it's just relevant to low income places, but certainly for it was also that inconsistent, somewhat violent household. And for me, I came from that place, I had an incredibly traumatic event that happened to me in my teenage years as well that really shaped me. And I think if you add all of that complexity and history, you can come from that place where you just simply believe you're not enough. That you just need to be happy with your lot in life. That this is simply what it's gonna be. You didn't go to the right school, you weren't brought into the right suburb or the right family, and this the success that you see others having or that they see on social media or God forbid, do you see on a reality TV show is just not for you.
And so I wanted to tell that story to start and to set the scene because I feel like I get this. I understand this question and it's really hard to distil it down to three things, but I'm going to do that. So my top three tips for young woman or any woman to put them on the path of independent financial stability if you come from that low income place where financial literacy wasn't high.
The first one is to understand your money story and to break that cycle of believing you're not enough, or it's not possible, or, I didn't go to the right school, or I didn't have the right education, or that's just not possible for me. Because breaking that cycle of simply believing that is so hard and so important.
So the first thing to do is to recognise that money story, to recognise those beliefs, to pull them out like weeds if you will, and to really study them and to ask the question, are they serving me or sabotaging me? Are they hindering me or helping me? If you've pulled that out by the roots and you've realised actually this could help. This could be helpful. I could use this as fuel. Then you might choose to replant that in a different way. But if it's something where you're like, no, this is hindering me. This is holding me back. This is something that's gonna stop me from achieving what is potentially possible for me, then it's about discarding that and planting something different, writing a different money.
And certainly these are all things that I've had to do personally around my held beliefs around what's possible for someone that's born in the western suburbs, that didn't go to the right school, that didn't have the right networks that grew up having had that traumatic event. I remember I used to sit there and I used to run through, I used to list all the things that had happened either to me or growing up. And I know I've talked to people that have had those experiences before where they say if I wrote a book, people wouldn't believe it. They'd go, come on. And I think when you've had that it can feel like it's okay to be in that place of not enough.
And sometimes it almost can feel safe to be there. And that might seem counterintuitive. But to feel like you don't have to try, cause you've got a really good reason and excuse to just stay there can sometimes be like a blanket. And what we wanna do is get rid of that and to move into that uncomfortableness of saying what if I was enough?
What if it was possible? What would that look like for me? You know, I talked about my experiences, but I've seen that with clients as well. And I think that it's really important that one of the first two weeks in the My Financial Adulting Plan, the first two modules are all about financial awareness.
And the reason we do that is because that's where the transformation happens. And I've had professionals join the program. I've had low income. I've had people deeply in debt. I've had like the gamut business owners. Almost to a person, they'll say that those first two weeks are pivotal and transformational because that's the deep work where you start to figure out, huh, this is why I behave with money the way that I do, and this is where we can start to break cycles. And if you've come from a low income home, or if you've come from somewhere where financial literacy isn't high, or that expectation of this is just what it's going to be for me, then it is really about breaking that cycle.
And how we break that cycle is by recognising it and rewriting that new story. And I would do exercises with those young people to visualise. I would get them to journal, I would get them to whatever medium is right for them. I'd get them to paint, I'd get them to collage do the thing that actually works for them.
And then when they rewrite it, I'd get them to put it as a screensaver on their phone. Put it somewhere, like put it up when they brushing their teeth in front of their mirror. We want that visual reminder every single day to reprogram those neurons in our brain, those superhighways that currently say it's not possible, I'm not enough, to become, it is possible and I am enough. Certainly when I do that. I've got mine saved as a screensaver on my phone. So that it's that visual reminder. And I would encourage them to share those stories, to realise that they are not serving them.
And sometimes it's easier to rewrite someone else's story than your own. So you might even pair them up together and have them challenge what they might be for each other and give them the gift of rewriting what that story might be for their friend. Cause it's like anything, isn't it? How you would talk to yourself, you'd never allow a friend to talk to themselves that. So maybe it's pairing them up as well and doing that exercise where they write that for each other.
The second thing we have to do though, is we have to build financial literacy. And there is no way around this. We are taught sex education at school, but we're not taught financial literacy. And I think that is so freaking problematic because yes, understanding about sex and protecting yourself is important. Seeking pleasure from sex is important. But understanding about finances and protecting yourself is just as freaking important. Understanding how you get pleasure and know your worth for money is important, and how you do that is to get interested. You've gotta get them interested. That might be, again, it's meeting them where they're at. It might be starting with a book. My book is called Unfu*k Your Finances for a reason. It's so that it's a different way of thinking about finances, so that might be a beautiful place to start. I've also got a workbook that goes along with that if they're not so much into a lot of written words, but more into doing and journal.
But it might also be a podcast series. I do one with Mamamia called What The Finance?, where I talked to Pallavi who's an incredible woman where I talked her through moving from not knowing much about money through all the steps that you might want to know. So that might be a great place to go and have a look at. But it might be also following accounts on social. I'm @Melbrowne.money. There's an E on the end of Browne. The Australian share market has got a share game, so it might be signing up to that and actually playing that. Gamifying it.
New South Wales TAFE and I know different other institutions have got free courses such as business courses or other similar courses. You might work through the Money Smart website, which that's an Australian website, but every single country has a version of that where it's just simple financial literacy. And you might every single week pick a new thing and do it.
Or if you work for a not-for-profit, please contact me because we offer scholarships to My Financial Adulting Plan every single round. We used to offer it to our community, but to be honest, we were inundated with hundreds and hundreds of applications and we can't. We can't do it. We can't choose. So now we go to not-for-profits or charities, and we ask them to submit applicants. So if you're working with young people and you're like, oh my gosh, Mel's course would be amazing, but there's no way this person could afford it, please put them forward for a scholarship. Contact us at [email protected] or via my website and we'll let you know when the scholarship's open. And we'll get in touch with you to figure out a plan for making that work.
But it is about building interest and realising it's possible because also the problem for young people now is that there are more and more products and danger than ever before. They have access to buy now, pay later. There's easy access to credit. There's access to payday loans. So there's all this access to money. But we don't understand the danger that is. We don't understand the different sort of debt. We don't understand delayed gratification. So it's so easy to wind up in so much financial trouble when we wanna flick the switch and actually harness that financial literacy to our advantage. So number two would be build financial literacy. And I've given you a whole different ways to do that.
I'm adding this as in as a bonus one, So this is like a little extra. If they are young, I want you to really drill into them that their age is their superpower. They have time to make mistakes, they have time to learn, and they also have time. It doesn't matter how small you invest, as long as you start. You know if you started with 20 bucks a week, you can start with the smallest amounts possible, and that time that you have is your superpower. And that's a really important message to understand.
I've got a free webinar that I'm gonna put in the show notes called 50+ Ways to Find 10k in 12 months. I think that people from low income places can be really creative cause they have to be. So by looking at that, they can figure out ways to find income and then use that to potentially invest or to potentially do things that put them forward financially. But understanding their age is their superpower will absolutely change their game for them.
But the third thing is I think it's really important to put people in place that can model to them what is possible, who have been there and done that. So that might be people they follow on social media because their feeds are probably full so that it's a giant retail mall and they're being fed ads by influencers and brands, and it's just willpower.
So making sure they're putting people in there that they want to emulate, that they wanna look up to, that they can see have gone before them. But also inviting people to speak to them or putting them in front of people to hear from them around what's possible. My husband and I always talk about that we think it's a terrible thing that the dux of the school is always the one invited back, because who can relate? Maybe five people. I think the person that should be invited back is the screw up. Or the person that had a learning difficulty or the person that school just wasn't the answer or they were just really average. And I wanna hear how they went. I ran my own accounting and financial planning firm for almost 20 years. Some of my most successful clients were terrible at school. Were incredibly low income. Came from fractured families, but school just wasn't their place and they used that grit and determination to pull themselves up and to make incredible successes of themselves. So I think that they're the people that our young people should be hearing from. I don't wanna hear from the Kylie Jenners. I don't wanna hear from the Dux of the school or the sporting stars. Bring them in for inspiration sometimes, sure. But I want to hear from the builder that sucked at school and now is doing extraordinarily. I wanna hear from the beauty blogger who was dyslexic or who had ADHD and couldn't concentrate in class and because of what they're doing now is really killing it. Or the person that didn't was just for them, school was okay, but they loved writing or they loved art. And now that they've left school, this is what they're doing and this is how they've been able to make a go of it. Or maybe just someone that has chosen to take a sabbatical or someone that has chosen to look at the FIRE movement, the financial independence and retire early, and is living a really untraditional life. Maybe the person that's child free. Let's bring different, I love diversity. I think diversity is really important in how we look and gender, but also let's bring diversity in our experiences in as well.
The second question, again, is about is not so much young people, but it's about kids and it's what's your advice for parents to set their children up for financial success? Invest in their name? Educate them young?
So this one's gonna be short and sweet. So we've got a bonus module inside the My Financial Adulting Plan that's all about kids and money. So we cover this in deep dive. So I'm gonna talk really briefly on it because I think it's really important.
First of all, it depends what it's for, and it depends on your timeline.
For example, if your kids are five or six and you are saving up for private school and high school, that's only gonna be a few years away. That's a short-term timeframe. The share market is absofreakinglutely not the place for that money. And that's where it's really important to understand about risk and rewards and what the money is for, and the timeline.
So for something that's super short term, it might be a high interest savings account saved for them for their education. Or maybe it's an education account or maybe it's even a bond, like to invest in bonds for them. Being very careful of the sort of bonds that you invest in. And that way it's for that shorter term timeframe.
However, if you wanna give them something that you hand to them at 18 or 25 and is theirs then to do with what they want, then you may look at something like an Exchange Traded Fund or shares or a managed fund that you hold in trust. So that's where you probably wanna have a chat to an accountant or to check to really look into it before you do it, because if you set it up in your own name with the idea that eventually you wanna give it to your kids, you'll have to transfer it to them, at which point there will definitely be tax implications where versus if it's in trust for them, yes, there still might be tax implications in the short term, but it'll be far less tax implications further on and far easier to hand them onto them. And so many platforms now allow you to hold shares in trust for your kids. It's kind of them being the beneficiary. So make sure you look into that.
The other thing that I would look at is to really be aware of the money story that they're picking up. And I talked about money stories earlier, but I know that as adults often we haven't picked out those money stories. We haven't recognised them. And I want you to understand that even if you are not talking about money in your home, your kids are already developing a money story, your kids are listening and you know that, right? You know that even if you think they're not listening, they're listening. I know my parents used to look at me and call me big ears cause, as soon as they started talking about something I wasn't supposed to know about, it's like I had a sixth sense to it.
So I would say start to talk about money with them. Don't shy away. If you are stressed about money, if interest rates are rising, just sit down and go. So like you're not gonna scare them, but you might say, so kids, you might have heard in the news, and I'd even have chats with them as young as 10. You might have heard in the news stuff about interest rates. Have you heard that? Tell me what the kids are talking about at school. Has anyone said anything? And if they say no, say interest rates are going up. And all that means is that there's gonna be a little less money in our house now. So what we wanna do is let you know that. We still wanna be able to do go on holidays, but it might only be once a year and it's only gonna be camping. We still wanna be able to have takeaway on a Friday night, but it's gonna be X and not Y. We still want you to be able to do an afterschool school activity, but you're gonna have to pick one, not two.
By including kids in these discussions, it removes the fear. Because they can see that you're stressed. They can see that you're worried. But also it's an education for them. They understand delayed gratification. Kids don't see notes and coins anymore. They think you're carrying a magic card around with them. So it's a way of bringing them into that conversation.
And the third thing is to absolutely educate them young. Definitely. And you can do this in a number of ways. I'm a fan of doing it digitally because I believe that by the time - well I don't have kids, but by the time young people are - notes and coins will almost be a thing of the past.
So the problem with digitised payments is the research shows that our pain region doesn't light up in our brain when we don't use notes and coins. Meaning that digitised payments, and I've described it before, is being like lube for your spending. So what we wanna do is get kids used to using digitised payments sensibly and safely.
Because if we teach them notes and coins and when they're young and then they never use that again and they have to learn how to use digitised payments, that's problematic. So sure, you might do a hybrid approach of doing some notes and coins and some digitised payments, but I think digitised payments should be part of if you're choosing to give kids pocket money. It needs to be part of it.
So you can research. Lots of banks have kids accounts, lots of banks have fee-free accounts. And there are also different apps and things like that, that are coming up that allow you to use that as well. Just be careful of some of them because there are fees on them so choose the one that's right for you.
But you can also teach your kids about investing. And that's where I mentioned earlier in the previous question, the Australian Stock Exchange has a share game. And that way you use fake money and it teaches you about investing in shares. And it's a beautiful way where you are quite literally competing with people all around Australia. And there's all different versions of this game worldwide in different countries I'm sure if you're listening from somewhere else where that can be a way to get kids interested in investing through gamification.
So that can be a beautiful way, but also explain what you are doing. If you're looking to buy an investment property, if you're looking to buy a home, if you're looking to buy shares, explain what you're doing. Start to teach your kids. And if you are looking for ways to save money or to whatever, involve them in that. I had a client, she had a young son and things were a little bit tight for them as she was growing her business. So she said to him, I want us to have a challenge. You can use three things from the pantry and 10 bucks you have and we're all gonna have a go on a Friday night. You have to be able to feed all of us dinner with 10 bucks and three things from the pantry. So you're teaching kids about literacy. You're teaching kids about budgeting, you're teaching kids about cooking, all of these things, but you're doing it in a social way as well, andå you're doing it creatively. So invite them and involve them in these things as well, because I think it can be a beautiful way.
And if you are giving back and donating as well, tell your kids about that as well. Let your kids know what you're doing. Share those insights so that they can see that money's not just a bad thing, money's not just good or evil. It's simply a tool to get us to the life that we wanna design.