Data from the Australian Insolvency and Trust Service shows that one in five bankruptcies in Australia occurs before the age of 30. Some journalists say it’s because our brains aren’t fully developed, others say it’s because we don’t fully understand the consequences. I think you don’t need to look beyond the facts to understand that Generation Y as a generation suffers from the same problem as our debt-laden parents; lack of proper education.
Over the past 10 years, the household’debt to income ratio‘ increased from 56% to 125%. This means that the average family spends 25% more each year than they earn. Australian households currently have debts worth $530 billion. And it’s not just our good parents who spend what they don’t have.
CPA Australia, one of the largest accounting groups in the world, has published a study stating that the average debt per person aged 18 to 24 is $21,000. CPA Australia spokesman Peter Mulqueen pointed out that HECS debt, mobile phone bills and credit cards are the main sources of debt for Generation Y.
This is a problem, especially for young people. Given that the average Australian earns $57,000 each year $21,000 in debt before age 24 is a bad start to an even worse career.
The finger was often pointed at Centrelink when the issue was reported in the media, and Centrelink repeatedly called for an increase in the youth allowance paid to students. I think this is a short term solution to a much bigger problem and it will be counterproductive to what we are trying to achieve. Giving us more money is the last thing we need, especially now that the vast majority of the population has shown that we don’t know how to use it effectively.
With companies like Telstra allowing you to pay for taxis, a can of cocaine, some groceries and movie tickets with our mobile phone, the need for effective financial education is becoming increasingly important.
I think an important distinction for many Gen Yers is to understand the difference between spending and investing. For example, owning a house or investment property is usually considered an investment because it increases in value. Owning a car is often considered an expense because usually they go down in value, they are a depreciating asset.
Often the best result of effective financial education is the enthusiasm that comes from knowing how to create real wealth beyond the usual 9:00-17:00 hours. High schools and universities don’t teach simple strategies that anyone can take to start building their personal wealth. By using smart investment strategies that are readily available, the vast majority of people are able to earn more from investments each year than the average Australian working all year round.
Since the current education system is doing very little to address this problem at any level, it is important that we Gen Yers address debt and investment. If you can start developing your financial understanding at a young age and learn how to make money from investments and not just from work, I believe this will be the most important skill set you will acquire in terms of building your own wealth and enjoying the level. financial success.
Y Don’t start now?
- Investment companies will contact you free of charge. You can schedule a 60 minute consultation with most financial services companies and they will be happy to chart a strategy that will work for you based on your current financial situation. They do this because they want to build a relationship with you for you to use in the future.
- Find mentors. Talk to people who own investment property or invest in stocks. These people understand how to make money from assets without working. This may require a financial commitment up front, which is great because it gives you a reason to save.
- Go to seminars. Every major city in Australia hosts many financial seminars, most of which are free. These workshops are great for getting a basic understanding of what you can do.
- To read. It is said that if you have read 20 books on a subject (not textbooks), you are proficient in that subject.
- Don’t seek help from people who aren’t actively investing. Learn only from people who make money in the field you want to learn about.
- Believe me, it’s possible. This.
Jack Delosa is a Gen Y Media spokesperson and a leading entrepreneur in Australia. He was named one of the top 30 entrepreneurs under 30 by the Australian Anthill 30Under30. He is the founder of Entourage, a movement of young entrepreneurs (18-35 years old) drawing on the experience of leading entrepreneurs from around the world. [email protected]
