Let's talk about finances and taboos

Despite our lives being ruled by the things we do to get money and the places we spend that money, getting people to talk about their income and outgoings seems impossible. Discussing investment strategies is either considered really boring, or some hush-hush back room conversation that can only be had with your closest confidants. I was in a 5 year relationship where bringing up money was met with avoidance, hostility, and a pretty derisive attitude that made me feel worse than Scrooge McDuck because I was thinking past next weeks pay.

This isn't to say that when you meet someone you should shake their hand and say "Hi, My name is Jane Doe, I make $32.37 p/hour working 35 hours a week and ascribe to the '50% on Needs 30% on wants and 20% savings' strategy. Personally I like the low risk nature of index funds but I'm keen to branch out into flipping houses when I have enough capital." That's a little bit overshare, but I think this conversation needs to be opened up.

There's no reliable statistics that say talking about money solves the worlds money problems but financial literacy can't be underestimated. My first 'job' was as a paper-girl. Once a fortnight the newsagent would drop the bills, a stack of envelopes and $40 on my parents doorstep. It was my job to fold up the bills, put them in the envelopes and deliver them to the right houses. It probably took me 2-3 hours of sorting and 3 hours to deliver. So I was on roughly $7.20 p/hour ($20 p/week) and I had no concept of financial literacy or saving that money. I remember blowing $20 on lollies at the local deli. I remember buying Red Bull at the supermarket most days. I remember my phone bill being $30 a month, which was a terrifying 37% of my income!

When the newsagency switched to digital delivery of bills (I guess, one day they just stopped delivering the money) I picked up a job at a supermarket. For 3 hours a week, at about $8.70 p/hour.  So after tax, it was still taking me more than a week to earn enough to pay my phone bill. It sucked, the job was terrible and I hated it. Twelve months later I picked up a job at Hungry Jacks, for $7something an hour, but closer to 12 hours a week. Suddenly I had spare money! And like every teenager in their first job, I had no self-control. And suddenly a lot more stuff.

Thankfully, somewhere in my early years I had an exciting 'investment' moment. My parents had set up Dollarmites accounts for my brother and me when we were young. They were pretty terrible, with some horrible fees and low interest rates that meant money in those accounts was pretty much stagnant. But I had a savings account, and I knew those numbers slowly going up were kinda cool. Then a couple of things happened.

• My parents moved my money to an account with a better interest rate. I seem to remember getting 6+% p/a
• My grandad needed to unload some money and gave all the grand-kids a rather excitingly large gift. Seeing that jump in 'my' savings was amazing.
• I got a bank statement and saw my interest payments for January, February and March. I was outraged! Why was February's payment less than the others! So I got my first lesson on how banks calculate interest.

I don't remember any other serious Financial Literacy lessons. But I knew money was pretty cool to have. And I knew there were ways to get it other than work. And I really hated seeing money go into my account one week, and be completely gone by the next. It felt like a huge waste, I was doing all this work and all my money was dribbling away into pointless snacks and soft drinks.

Getting it together

I started a budget. It was a crappy paper budget that I've redrafted a few times, but stayed with me for about eight years. At first I just tracked what I spent. Then I started tracking what I earned against what I spent. And added what I saved. Nowadays I use a big elaborate spreadsheet stored in Google Sheets so I can access it anywhere. I track my spend month to month, and my income and savings / investments year to year. I even have separate spreadsheets at home for more in depth savings and spendings tracking. It has become an ingrained habit to know how much I spend, and how much I saved. I've just opened a new credit card for travel hacking and they delay reporting expenses for almost a week, which is driving me absolutely batty!

When I was 17 my father started buying investment properties. For as long as I can remember I was keen on buying a house and having someone pay me so they could live there! Wow! It was a solid, visible investment that paid back hundreds per week. When I was 18 I put in an application for a home loan and was unsurprisingly laughed at by the banks. So I dumped all my money into a high interest term deposit and came back next year. Thanks to a huge pile of luck, a great property mentor and my parents confidence in me, I bought a house. At 19.

For the next few months I read everything that came my way about real estate and squirreled as much money away as I could. I don't want to do things in halves so I tried to buy another. And was again solidly laughed away. This time I had no out, I had a borrowing capacity of $1 including my personal income and my rental income. So I switched tactics, dabbled in the share market, mostly sticking to low risk bonds.

What's the point of this story?

The point of telling you this isn't to brag. I stumbled drunkenly through my personal finance journey. At 26 I own a rental property and have a comfortable cushion of investments. But, honestly, despite the amount of time and research I poured into all these things, I was lucky. I was lucky to have a cashed up benevolent granddad. I was lucky to have a savvy father. I was lucky that the day I first saw a bank statement I was in the right mood and the sun was shining, and it was exactly 11:23am or whatever it was that caused some tiny something to tick in my brain.  I was ridiculously lucky that I met my property mentor who jumped through rings of fire over a shark tank to get my first property. And I've been crazy lucky ever since that my tenants have accepted all the rent rises, taken care of the property, that the house hasn't flooded, that the stock market hasn't crashed, that I've fallen from job to job and ended up somewhere that pays me quite well.

Having my successes with my finances so heavily based on luck scares me. Since buying my first property I have done a lot more research on my investments, but the basis of my success is the luck of having the right random childhood experiences that shifted my mindset. Which leads me to my point, no one ever spoke explicitly to me about finances unless I asked first. And watching those big responsible adults umm and ahhh and shuffle their feet was pretty nerve wracking. I am immensely grateful that my father and property mentor were willing to talk to me about money and answer my questions, even if the answer was occasionally "I don't know".

When was your last money conversation?

Here's the thing though. Money is integral to our lives. Even if you ascribe to a minimalist lifestyle, that minimal still costs you money. The freedom to go home, turn on the lights and have a nice hot shower is driven by money. So refusing to talk about it baffles me. It is a taboo subject, and that needs to change.

I asked on Twitter who you could talk to about money and a scary 38% of people are only able to talk to their family. Almost 10% of people can't talk to anyone. While @DiligentDividend is happy talking to anyone about how much he earns @FatherWithCents thinks it might be shame that keeps people quiet. @indie_finance doesn't like talking about making more than others - although having those conversations might lead to pay rises for everyone if you lean on your boss hard enough.

Talk to your kids

I'm not a parent so I can't say much about parenting. But if you don't talk to your kids about money, where do you expect them to learn it? Primary school taught me how to count money, and the difference between dollars and cents. High school, the time when children enter the labour market and start earning, had work experience but no conversations about spending, saving and budgeting. School isn't designed to teach us how to cope with cash.

I can't talk about general parenting, but if I wanted to go back and teach young me about personal finance, I'd do it with games. Monopoly was initially designed to show you all the problems with capitalism. The Game of Life gives you a job, an income and expenses. Cashflow 101 is about collecting enough assets that you have a passive income, can quit your day job, escape the rat race and achieve 'life goals' like traveling the world and starting a successful charity. It also comes in a kids version.

The games all have varying levels of realism but they all make a good starting point for getting your brain switched on. At worst they're a bit of fun, at best they can open up that conversation.

While you're playing Cashflow 101, you should read "Rich Dad, Poor Dad". Robert Kiyosaki recounts the difference lessons his Rich Dad (his friend Mike's father) and his Poor Dad (his real father) taught him about money. The book is accessible and easy to read, I found it on Dad's bookshelf in primary school and I loved it. If you asked me about it I would probably ramble for ten minutes about how great it is.

Talk to your friends

You probably already do this. If you ever chat about that super cheap recipe that you made, or complain about the crazy big electricity bill you just got, then you're discussing finances. I find that most people tune out when I start talking about intangible things, interest rates, stock markets, diversified funds. They're scary unfriendly words. But personal finance is just as much about your day-to-day choices. About cheap nutritious meals. About looking for a cheaper electricity company.

The first and, I would argue, best step towards financial literacy is knowing how much money you get in and where it goes. Talking to my friend and co-workers has turned up a wealth of information about rebates on gas, where to find a cheap conveyancer and house hunting tips.

Diving headfirst into a conversation about  insurance, or investments is pretty daunting, but chatting about a new house is exciting. If you push past the taboos, those exciting conversations can turn up a wealth of knowledge. And knowing that the guy you sit next to at work owns eleven properties is pretty interesting too.

Money is considered a measure of 'success' in society. It's hard to get people to open up about their income because we're all afraid of being judged. At the same time it can be considered uncouth to talk about your financial success. After all, if financial success is 'life success', it comes across as bragging. I'm not suggesting that you start comparing dollar figure incomes with your friends, but knowledge shared is knowledge gained. You help yourself by solidifying what you know. You help your friends by sharing. And when you talk about the big scary topics, they start to feel smaller and easier to manage.

Talk to your partner

For so many reasons, talk to your partner! Communication is key in every part of your relationship, from cooking dinner to travel to sex. If you can't talk to your partner about your long-term and short-term finance goals, you've got a problem. They are going to be the ones comforting you when shares dive, high-fiving you when an investment matures and standing next to you scratching their head when the bills come in. Eventually most couples combine their finances, so when you start investing or making money saving choices, it's not your income and livelihood that is at risk, it's theirs too.

Your financial literacy

Financial literacy isn't just the big 'boring' investment questions. It's the basics, it's starting small and building up. The important part is identifying your goals and working towards them. If your goal is to travel as much as possible, you might be willing to eat rice and beans every night to save the cash for your next around the world extravaganza. If you hate travel and love food, do the opposite. At it's core, financial literacy is understanding where your money comes from, where it goes and making conscious choices about your spending and saving.

Financial literacy leads to financial freedom - which is a vague, loose term that depends on what you want. It can be something as small as the freedom to buy a coffee every day without every worrying if it fits in the budget. For me it means eventually not relying on my employer as my primary source of income. So all that 'boring' investment mumbo jumbo is fascinating to me.

What's your earliest money memory?

Remember this blissful ignorance of youth? When food magically appeared, mounds of toys were gifted every Christmas and birthday and you wanted for nothing? Then at some point you discovered 'money' and things were never the same. Suddenly those toys had a cost, but if you had money you had the power to buy things!

Sometimes discovering money is wonderful, sometimes it's not. I asked some of my favourite bloggers what their earliest Money Memory was, and how it shaped their path to Financial Independence.

LadyFIRE - Me!

My earliest money memory is checking my bank statement in March. I couldn't tell you what year, but I distinctly remember it being March. I got a three month statement for the high interest account my parents had set up. There would have been a couple of hundred dollars in there, and this is back when accounts were earning a lot more than they are now, so maybe 6% or 7%. We'll say 6.5% for the sake of argument. I remember reading how much interest I earned, in December it was $1.10. In January, $1.10. In February 99 cents.

Only 99 cents? Outrage! The banks were ripping me off! My dad sat me down and I learnt that banks pay interest daily, and since February only had 28 days it paid less than December and January. It definitely got me hooked on the idea of Free Money.

I still check my interest payments religiously to this day. I love being rewarded for leaving my money alone for a month.

Mrs. Picky Pincher from Picky Pinchers

My parents never talked about money in front of my sister and I. We didn't have much money when I was a little kid, so I suspect they kept us sheltered from a lot of tough conversations.

Although I didn't know things were tight, I was naturally frugal. I had a piggy bank and saved loose change I found while using metal detectors with my dad. But my earliest money memory happened on the aisles of K-Mart. 

My sister and I both got a very generous $5 weekly allowance. At first I spent my entire allowance each week on candy and cheap toys. However, one day my eyes spied a beautiful My Little Pony doll. But alas! The toy was $10 and I only had my meager $5. It wasn't until this very moment that I realized I could save money until next week to buy something nicer.

I remember walking out of K-Mart with my $5 in my hand, vowing to return later for the My Little Pony. My mom was so perplexed that I didn't buy anything. I explained that I'd rather save my money and buy one nice thing instead of blowing it each week on small things. She realized I learned what it meant to save, so then I got my $20 monthly allowance upfront from that point on.

At the time I didn't think anything of it, but this was genius on my parents' part! I got to learn money lessons on a small scale while I was young and I learned the importance of saving.

1500 Days to Freedom

Learning the Value of Money through a Big Red Wagon and a Little Red Bank

The Big Red Wagon

For my 5th birthday, my parents bought me a Radio Flyer wagon. I had wanted one for a long time and I was filled with joy when I laid eyes on it. I took it outside and hauled my toy tractors around for the entire afternoon.

That evening, I forgot to put it away and the next morning, it was gone. Someone had stolen it. I didn't even have it for 24 hours. When I realized what had happened, I cried. Then, I asked my parents for another new one. Their response was a firm 'No' along with a lecture of how I shouldn’t have been so careless. They also let me know that my dad worked hard to at his job to buy me the wagon.

It was on that day that I connected work, money and stuff. That I still remember the ordeal clearly 38 years later reminds of how powerful that lesson was.

The Little Red Bank
For Christmas when I was 6 or 7, someone gave me a little bank that looked like a old-time cash register.

You'd deposit a coin into it and pull the lever. The bank kept a running total of money you deposited. The catch was that the bank wouldn't open until you saved $10.

At first, owning the bank was infuriating to my little child brain. $10 seemed like a fortune and it angered me that I couldn't get the money out whenever I wanted. I remember it usually took me months to accumulate $10. One time, I even tried to smash it open.

However, a funny thing happened when I saved the $10 and my money was liberated; I didn't spend it. I like to think that the bank made me appreciate the money. 

J. Money from Budgets are Sexy

My earliest money memory was probably getting an allowance of a whopping $1.00 a week growing up. I'm sure my parents tried teaching me before that, but nothing puts things in perspective until you're holding cold hard cash in your hands :) I learned fast just how expensive all those things I wanted were, and even more so how important prioritizing is. Things went from costing "only $10.00" to "only 10 weeks of allowances" which completely changes your mindset! And all of a sudden I didn't want as much as I used to ;)

The Wealthy Bogan

When I was 14 I managed to rack up a gigantic phone bill. "Are you 18+?" they would ask. Absolutely I am, now let me download things.

Bordering on the line of legality, I had downloaded to a few $5 apps ("games" in those days) on my dad's work phone, unaware that they were indeed subscription based and he would also be charged $5 for the 'Welcome' text, $5 for the 'Unsubscribe' text, and $5 for each daily text. That added up pretty quick. To be honest, after he found out, I considered myself lucky to still be alive.

I was a kid so I had no way to pay that bill. My parents barely had the money themselves, and I wish I hadn't put that kind of financial stress on them.

The only thing I was good for was chores, so that's how I paid them back. For the next 3 years, I washed and dried the dishes after every meal for the whole family. I did this 365 days a year until I moved out.

There was so much guilt over what I'd done. I had offered to empty my bank account to put towards the bill but my parents refused. That money, $500, is what I moved to the city with, I used to set up my life here and to build what I have today.

When I got a phone of my own, I made sure it was pre-paid, and I have learned not to waste money quite so liberally.

Mrs. ETT from Enough Time To...

I have two early money memories, and both unfortunately have negative connotations. When we went on excursions in primary school, we were allowed to take some pocket money to buy something. I remember coming home from a day at the museum with some gemstone chips from the shop, along with my change. My mum berated me because I hadn’t bought home any presents for the family - “you used to be so generous.” I didn’t remember being generous, but I guess it must have been around that time that I became careful with money, which sees me as a natural saver today (Mr. ETT used to comment about moths flying from my wallet when I open it!). My other memory of that time is when mum and dad had to take some money out of the bank. I can’t remember what for, but I do remember excitedly asking to see it in the foyer of the bank once it was withdrawn, and being shushed quite emphatically. It was later they explained to me that it could be dangerous for people to know we are walking around with a lot of cash. That taught me that money was not something to be talked about, and that maybe we were lucky to have money that others didn’t have. Today, left to my own devices, I would keep as much as my money locked away as I could. Luckily, I have Mr. ETT to balance me, and encourage me to spend when it is important, just like mum was looking for."

LadyFIRE note: Mrs. ETT sent this through to me saying "This was an interesting exercise. I tried to think of some positive stories, but honestly couldn't remember anything." I think it's super valuable to include 'negative' memories like these to highlight that not everyone has pleasant money memories, but we can rise above them. Thanks for sharing Mrs. ETT!

Adventures with Poopsie

When I was in grade two, a boy in my class named Thomas told me that he had a share portfolio. I probed a little deeper and it turned out, his dad had started each of his son's a share portfolio when they were born. I thought this was amazing! I didn't know what a share portfolio was, but I imagined that he had a leather bound portfolio that he kept safe at home. I imagined this little seven year old boy walking around with his portfolio, and I knew I wanted one too!

I ended up asking my dad about shares and he explained them to me, showing me how to track the prices in the newspaper. Fast forward a number of years and I now have my very own share portfolio. I don't keep the information in a leather bound portfolio, but I am thankful for the introduction Thomas provided me all those years ago.

A huge thank you to all the bloggers who responded. I'm super chuffed to have superstars like Mr 1500 and J. Money here! Leave a comment and tell me your earliest money memory, and who I should reach out to next time!