When Nicholas Muscat was 16 years old he set himself a personal goal to save $100,000 by the time he reached 21. At 19 years old, he’d done it.
Muscat said he knew money was important very early on, and was determined to achieve his goal.
“I realised at a young age that although money isn’t everything, it does affect most things in life,” Muscat said.
“Money allows you to do what you want in life.”
He reached his personal milestone, $100,000 in savings, two years ahead of schedule through what he said was a combination of being responsible with clothes purchases, eating out, and dabbling in the stock market.
But Muscat’s story isn’t like those of many other Aussie teens. A new report from financial advisory and accounting firm Findex found that half of Aussies under 25 don’t feel in control of their finances.
For 16-24 year olds, mum and dad remain the go-to for financial advice, with 71 per cent saying they turn to their parents or guardians for support on how to manage their money, the study found.
But Muscat learnt not to take money cues from his parents.
“Lots of people turn to their parents for financial advice, but I learnt early on that mine didn’t always have the best financial habits,” he said.
“They would often buy new things unnecessarily, throw out items that were still in good condition, or not compare products and services before purchasing to make sure they were getting the best deal. Instead, I turned to experts online.”
Muscat said without sound financial knowledge from his parents, the lack of financial education in schools was another hurdle he had to climb.
“I think financial education is incredibly important, because education allows for independence, and independence allows for freedom – the freedom to enjoy life to a larger extent.”
“You have to be careful what you read. It’s easy to fall for fake news, and a lot of the credible advice is for US markets and doesn’t always apply to Australia.”
Muscat would spend a lot of time researching various financial topics and collating the information together to form a go-to guide.
And he doesn’t see age as a barrier, but instead views it as part of the reason for his success.
“Being young is the biggest advantage,” he said.
“My advice to young Australians wanting to achieve greater financial freedom is to start small and start now. It all adds up, everything from saving a little bit to learning the basics of tax and super,” Muscat said.
The Findex report found young Australians demonstrated aptitude on how to save for medium-term goals, with over half (53 per cent) of respondents identifying the best tactics to save for a big purchase like a new car or long-haul holiday.
But when asked how they manage their day-to-day finances, they were less likely to practice financially sound behaviours.
One in four said they never or rarely set a budget, and only 32 per cent manage their finances by calculating their monthly ingoings and outgoings.
‘Read, read, read’: Mark Jay’s story
When Mark Jay moved from his country hometown of Coleambally to attend university in Wollongong, he found managing his finances was difficult, but luckily his school had provided some form of financial education.
“I moved from a stable job in Coleambally to no work in Wollongong. There were lots of unexpected costs, like public transport, university amenities fees or fixing broken furniture, which added up over time,” Jay said.
Jay said, like Muscat, he was motivated early on in life to achieve financial independence which is what pushed him to take control of his finances once he started university.
Due to having at least some background in financial literacy, Jay was able to finance his first year through university without any help from his parents.
“I’m very proud of the financial independence I’ve achieved so far. I believe financial education is essential,” Jay said.
Having taken a commerce and business studies class during high school Jay has the building blocks to further develop his financial goals, but noted that not everybody is so lucky.
“If you didn’t take this class, financial education didn’t feature elsewhere in the school curriculum,” he said.
He is now studying a double degree in commerce and communications, but much of his financial knowledge stems from reading books and free educational resources online.
“The most important piece of advice I’d give to other young people seeking financial independence or wanting to learn essential financial skills is to read, read, read,” Jay said.
Take advantage of all the free resources available and educate yourself on financial concepts if you want to improve your current financial situation.”
Findex chief financial officer Matt Games said sound financial decision-making is strongly linked to financial well-being later in life, which is why financial education at a young age is essential.
“While there are some encouraging signs in the data that younger Australians are financially savvy, there are also some real areas for concern,” he said.
“While half of young Australians feel in control of their finances, this means almost one in two feels in the dark.
“It’s a shame that young people are still reporting that financial education is not featured on the school syllabus,” he added.
“A heavy reliance on parents and guardians to educate the next generation on financial literacy is misguided and potentially harmful.”