Stuff your dad would tell you: How to get your financial life on track

OPINION: There are times that it doesn’t matter how right your parents are about something, they are the last people you want to get advice from, especially when it comes to money decisions. I get it because I’ve been there, and got the scars to prove it, and so has nearly everyone I know.

As Frank Sinatra said: “Regrets, I’ve had a few.” Top of my list was a certain purchase of a Fiat 124 Sport, but we won’t go there as it’s still too painful.

You can’t blame me. I mean, how could anyone as out of touch as my parents possibly know what I was going through, or understand how important the latest must-have item was? Perhaps, because they have been there too.

This column is here to tell you what could really help you, but that you don’t want to hear from your dad (if only so you don’t have to hear him say “I told you so” later).

Motor regrets aside, I was very fortunate when I was growing up that I did listen to my parents occasionally, and particularly when it came to some basic life skills associated with money.

Their attitude to money was, in some ways, very much like mine, but we grew up in completely different environments. Mum and Dad lived through the Great Depression, banks were falling over, there were no jobs and money was very scarce. If you didn’t have the cash in your hands, you went without.

I grew up through the excesses of the 1980s, when you could get anything you wanted by slapping it on a credit card, you could leverage your house to buy shares in the stock market, and everything was disposable.

So our perspectives were quite different, but they taught me some simple tips that are just as relevant today as they were back in their day, and were followed by their parents before them.

In no particular order, these are the things that I remember vividly as topics of conversations around the dining table or when we were sitting in the lounge watching TV.

• Save some of your pay every payday.
• Spread your savings in different banks.
• Put some money away for emergencies.
• Protect your assets.
• Don’t borrow what you can’t afford to pay back.
• If it sounds too good to be true, it probably is.

To the best of my ability, I followed those lessons (well mostly) and to date it’s turned out all right. I’ve had, like everyone, some bumps and life shocks along the way.

But if I was going to modernise the points above from the lessons, experiences and knowledge that I have gained over my career in financial services, then they would look something more like this:

• Save 10 per cent of your salary every payday and let the eighth wonder of the world – compound interest – work its magic.
• Diversify your investments. Take those payday contributions and maximise the benefits of KiwiSaver, then put the rest of those regular savings into other managed funds or directly into long-term growth assets and pay for some advice to help build a plan that’s right for you.
• Build up three months’ salary in an emergency/buffer account, also known as sidecar savings.
• Have the right amount of insurance for your particular circumstances and review regularly.
• Borrow money to buy or invest in growth assets like your home, business etc, and avoid high-interest lending like credit cards and third-tier lenders.
• Watch out for scams. People get up every day, go to work and get paid to try to take your money away from you. That’s their job. Yours is to make sure they don’t.

It’s so hard to understand the benefits of the above points unless you experience them yourself. The trouble is, it can be too late then. You’ve either missed the opportunity or been stung by things going wrong unexpectedly that you were unprepared for.

So I thought it might be cool if I was able to bring some of these topics to life. Think of this regular feature as more like stories from your future self, with things that you can begin doing today, using the lessons I’ve learned, so you can avoid any regrets later on.

They just might help make a difference to your own personal financial wellbeing, which in turn could have a massive impact on your overall wellbeing if you give them a go.