Finance Tips For Young Investors

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Here are some finance tips that we wish we had taken to heart when we were young. Hopefully they can help you young (and older) people out there.
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Resources Related To This Episode

The Power In Paying Yourself First

2 Properties To Financial Freedom

The Lean Start Up By Eric Ries

Rich Dad Poor Dad By Robert Kiyosaki

The Barefoot Investor By Scott Pape

Transcription:

There’s a lot of young investors out there or young people who want to get into the property market or start saving for their first property and so today I’ve got with me Simon Everingham from pumped on property and we’re going to give some of our financial tips or advice, things that we wish we knew when we were younger or things that we’ve learnt, um, you know, as we’ve progressed that we think could help you younger investors out there. So. Hey Simon, how’s it going today?

Yeah, good guys. Good. Really excited for today’s conversation. It should be interesting. I know I look really young and I am really young. Said he’s going to be a different one. But yeah, some of the things that I’ve experienced throughout my journey, I’ve definitely made an impact that the person that I am today and yeah, can’t wait to share those things with you.

Yeah. And I think this is going to be a good one because me and Simon have kind of taken different approaches to our finances. I’m quite young as well. I’m 30, I’m not quite as young as Simon at 25, but rather than, you know, going to uni, getting a job and saving that way, I kind of like stepped out of all of that and started my own business and achieve financial freedom that way. We’re a Simon himself, has gone to university, is getting a job and is now working towards achieving financial freedom through property rather than through business life. I did. So we’ve got a couple of different approaches so I feel like there’ll be a bit for everyone, enhance some of the things we might disagree on, which we’ve talked about before the video, so that’ll be a bit of fun, but hopefully you guys can walk away with this and have some advice and for those older people out there who aren’t, don’t feel like spring chickens anymore. Some of this stuff will still be relevant to you as well and you can assess, okay, am I doing this? Am I not doing this in my life? You might not take everything out of this, but then she’ll be something good for you in there. So. Well, why don’t you start Simon and give one of your first tips.

Great. Yeah. So my number one tip number one thing that I’ll wish I did as a younger investors understanding the difference between an asset and a liability and it’s something that I wasn’t taught in school. I’m not sure if you were Ryan, but no teacher ever told me the difference between an asset or liability. My parents never told me what the difference between an asset and a liability was. Um, it was something that I had to learn, learn the hard way in. Um, what I did as a younger kid. Obviously you save up to get your first car and that’s the sort of the first thing that you do. And um, then you know, we all know that a car is an asset. It’s definitely a liability. And um, I, I kind of wish that I had had that understanding from a younger age of what, what an asset is and what a liability is and how, why can actually utilize that from a young age.

So what, what do you classify as an asset and what do you class? I classify as a liability,

I’d classify an asset is something that’s going to appreciate in value over time and I see a liability is something that depreciates in value over time. In simple terms.

Yeah, and for me, I see it differently. I use like the rich Dad, poor dad approach to asset and liability. So if you were to google asset definition, it wouldn’t be this definition, but Robert Kiyosaki, Rich Dad, poor dad says an asset is something that generates passive income or puts money into your pocket and a liability is something that takes money out of your pocket. So he tells people that their house is a liability because even though it’s appreciating in value, it’s actually taking money out of their pocket because they’re paying their mortgage or even if it’s paid off, they go to pay their rates, insurance and stuff, etc. And so for me, my approach, I agree with you, but my approach was always looking at jet generating ways of looking at like building things that generate a passive income and then reducing things that took money out of my pocket. So rAther than going for the value appreciation, I was always going for the passive income.

Yeah, that’s a really good way to look at it. Definitely. And it’s what I’m working towards now. Obviously trying to create a passive income through properties, really important for myself. Um, so then I can have the freedom of choice in the future, um, as a young person as well, which is going to be really beneficial. Um, so I can definitely see how that approach would work in today’s society and like 100 percent agree with you as well.

Yeah. And so will. My point was, my fIrst tip was to focus on your skills. And so something that I found really valuable on my life is rather than focusing on how much money am I going to make from this one particular job, focusing on building skills in an off myself. And I really do believe that education, yes, but actually building the ability in and of yourself to do things that are going to be valuable to other people, to other businesses, etc. Can really lead to you creating more money in the future. Being able to save easier, being able to get better jobs, so like an example of that is like one of the skills that I’ve built over my time is the ability to generate traffic to a website to create content and to generate traffic so everything from property investing to product reviews and all sorts of random stuff and so I have a skill where I understand internet marketing and I know how to do it and I could then take that skill and apply that to any business.

So if I found myself where my online businesses were suffering rather than going on seek.com or whatever to try and find a job that’s advertised. I feel like I could just walk into a business and say, here’s what I’ve done. Here’s the skills I have. I can do this for your business. And so I feel like rather than just job hunting, looking at how can you build skills in your life and that’s something that you can do in your spare time for not a lot of money. But as you build them up, you could. You become a more valuable asset. Whether you decide to work for someone else or to run your own business and the longterm payoff of that is going to be huge.

Yeah. It’s really interesting that you say that, ryan, because it’s obviously really important to build up your personal skills so he can go out and get the job that you really want or start the business that you really desire. And I came into that sort of understanding from going to university and I know there’s some differing opinions about university in today’s society, which is totally cool. Then for me, I walked away with it with a huge benefit and that was the ability to learn how to learn. so what I mean by that is, um, I can now go away and read a book or listening to a podcast or partner up with somebody and utilize the skills that they have to apply to my own life so that I can, I can move forward and become a better person and increase those skills. And um, I think university of paid a huge part in an acquiring that type of knowledge of learning how to learn.

Yup. And I would argue that you can learn how to learn with the outgoing to uni or you can learn, I feel like learn stuff easier, but that’s probably not an argument that we need to get into some people like on any, some people email me and they’re like, I’m going to uni, what do you think? This is what I really want to do and it’s not in line with a unicorn. And like, dude, just drop it out, go and do what you actually want to do. start a business. I always recommend the lean startup to people, which is a really great book on learning how to learn in business in particular and how you can really build a successful business or get a startup off the ground. Um, but one of the things that like I want to add onto that, you did uni, I just read a heck ton of books.

Like I read so many books and that was a huge influence on me. Rather than go to university, I remember I would stay home and I would read books. And so rather than going to a job at the time, I would stay home and I would read books on finance and at the time it was really stressful because we, me and my wife was pregnant. We weren’t really making enough money. We were pretty poor. But the longterm payoff of that has been absolutely huge. And the major books that really changed things for me was like the rich dad, poor dad books in the series by robert kiyosaki because that just taught me to shift my focus to what we talked about at the start, which is that focus on generating passive income and everything that you do, building that passive income. And so he says the rich don’t work for money.

and so what so many people do, I find is they go to uni or they just enter into the workforce and they focus on how to make more money or how to earn more per hour. And for me, rather than that, I was like, rather than working, how do I make more per hour is like, how do I spend more time building assets and building that passive income? And so reading books is a really good thing, I think, but also not focusing on just working for money because that can become a trap in and of itself. Sure, earning more is great, but only if you then going to take that money and use it to purchase assets that will generate you passive income that’s going to lead to financial freedom. Otherwise I feel the people get so trapped by they’d get a better job so they get more credit card debt, they get a car loan, and then they just trap themselves in this lifestyle where they need to earn x amount. They’ve got no free money left over to invest. And so they’re not moving towards financial freedom. They actually moving backwards and trapping themselves in a life that they may not want in the future.

Yeah, that’S the, that’s a really interesting point. And we do see it happening all the time. And I say a lot of my friends that go down that path, they get a job really quickly or they go to university and they study something different. But for myself, um, I went in and did a management and marketing degree because I felt as though that was going to give me the most, I guess the broader understanding of, of the way that life works, but you’re still kind of held back by the old school approach to learning and development. Um, and it’s really important to follow in the footsteps of people that have done it before. Like the robert kiyosaki’s. I’m like a number of different entrepreneurs and, and focus on how you can do it for yourself because when you’re spending the majority of your life for us from, from 20 years of age pretty much through to 65, we’ve always been told that we need to work forever and 45 years is a large proportion of your life.

For myself, I want to be doing something that I enjoy. I want to get up and be excited and passionate about going to work. And I was lucky to land a job that provided me with that joy and that happiness and that drive every single day when I go to work. And if you’re not getting that type of satisfaction out of the majority of your life, then what are you doing? Like it’s time to it’s time to get out there and, and to read those books and to start figuring out what’s gonna make you happier and what’s going to provide you with the choices in your life that you want.

Yeah. One of the things like on that I think, well a couple of things. One is like recognizing the societal pressures that are going to be put on you as a young person, as you enter the workforce, the desire to have a better car, to have better clothes and all of that sort of stuff. Like recognizing that ahead of time and that’s going to happen and you can’t actually control that. Like it is a big influence on us and there’s only so much you can do to remove that influence. But putting things in Your life that can help mitigate that. So one of the things, I don’t know if we’ve talked about it before, but I think we did another video which is pay yourself first. And I wish that I started doing that when I was young. So for pay yourself first, for those who don’t know is when you get paid and you take a portion of your money and you put it into your savings, or you put it into your investments and you pay that first before you pay your rent, before you go out to the pub and drink beers or whatever it may be, you pay yourself first.

And even if when you’re younger and you’re not earning as much, you can only afford $10 a week to pay yourself first. That habit of paying yourself first and locking that away. Then when you had the societal pressures that, okay, I want to buy this new pair of jeans or whatever it may be, you paid yourself first, locked it away. If you don’t have enough money, then you can start to step outside of your current income and say, okay, well how can I earn an extra $150 to be able to pay for that new pair of jeans that I want? And then you start expanding your world because you’ve decided to pay yourself first. I think that is like a huge thing that I wish I starteD earlier because I literally only started that this year.

fish or like I wish I wish I knew that from a younger age, but I did pick it up relatively early as well. Um, but my dAd’s been a pretty avid siva and his whole entire life. And when I got my first job at 13, he did kind of give me the headline yet, get a little money 10 until I’m put 10 percent of you. Why do I every single week? And I’m just like a 13 year old kid. I’m like, no data natIve by new black canadian new skateboard. Like I’m not doing that, but it’s a. I wish I did really adopt those things early. But I was blessed to have somebody in my life that told me money is, is valuable in. And if you aren’t earning a certain amount of money for you to progress through life, it’s really important to start saving. And I did that from a relatively young age, which gave me the opportunity to go away and travel and blow $20,000 on a trip when I was 19 years old and and now actually helped myself put purchase of property as well, like having the discipline and having the skills to put that money away and understand why you’re doing it. And I guess that’s an important point as well as having something to work for a makes it much easier to pay yourself first.

Yeah, and I think as well, anOther skill that I wish I learned was learning how to budget in a way that worked for me. I tried a lot of things that didn’t really work because you know, people recommend them. They say this is the way to budget. I did it, it didn’t work. And so then I start budgeting. I wish that I kept trying and worked out the way that works best for me and the way that works best for me is really after reading the barefoot investor, that strategy and it really is a pay yourself first strategy because you’re paying your investments first, but then you’re also putting money aside into different buckets to say, okay, this money’s for holidays, this money is to pay down debt. This money’s for bills, etc. So I think like taking the time to practice, like look at budgeting as a skill that you need to practice and again like start with small amounts. Don’t put huge pressure on yourself, but just like slowly build up that skill over time. Even if it takes you a couple of years. If you then have the skill of budgeting, then once you start earning more money when you finish uni or when you move up and your career path or start your own business, once you start making more money, then that skill will really come into play a lot more.

Definitely. I think a really good tip for budgeting as well as we’re working off percentages of your income as opposed to a dollar figure because you as, as you grow up, your wage is going to increase and your income’s going to increase. So understanding that you know, you don’t have to always get that nice to car or get the nicer pair of jeans or go to the nicer restaurant. You know, if you work on percentages, you know that as your wage increase is, yeah, your lifestyle is going to increase, but your savings is going to increase at the same time. I think that’s really important.

Yeah. So rather than saying, I’m going to save $100 a month saying I’m going to save 10 percent of my wage per month, and then as your wage goes up, then you’re still saving 10 percent, but that 10 percent is like a larger dollar amount.

Exactly, yeah.

Yeah. Well the next thing that I had would be invest for the long term and think about the longterm. I feel like so often, and it’s not just young people that do this, it’s everyone that does this. When it comes to property, they’re like, okay, I’m looking for that qUick capital growth, make that quick 100 k, etc. But I feel like young people have this huge opportunity with building their foundatIonal properties and building their financial freedom at a young age a lot. When investing in property, you can invest in property where the property, we’ll do the majority of work for you and we’ve talked about this in the episode of two properties to financial freedom and so if you haven’t checked out that strategy, go ahead and watch that video. I’ll leave the links in the description down below or you can go to on-property dotcom, w four slash five slash eight to watch that episode over there, but the idea that you purchased the properties and then those properties and the people renting them basically pay off that mortgage for you and then generate the passive income for you.

So I think recognizing at a young age that you can invest in things that they will then go on to do the work for you and achieve financial freedom for you. If you can understand that at a young age, get those foundational properties and then you can spend the next five, 10, 15 years focusing on, okay, well how can I pay them off faster rather than, you know, just trying to make a quick buck here and there. Like if you’re young, so you’re 20, if you’re looking 15 years into the future, you’re going to be retired at 35 like that is so young to be retired or even if you’re 30, 15 years in the future, 45 years, still 20 years ahead of when everyone else is going to retire. So having that long term strategy and that long term mindset and seeing how those properties can pay for themselves and like paid off for you. And then just like taking advantage of that opportunity would be a huge one for me.

Oh 100 percent agree. And as soon as you switch that mindset from short term to long term, your life is gonna change and you’re gonna put yourself in an amazing situation and as you were saying, for 20, 25, even 30 year old, 35 year old person to know that you’re investing for the long term and that you’re acquiring assets that are going to provide you with financial freedom in the next 15 years is so powerful, um, and get getting rich quick. It just doesn’t exist in wherever is trying to tell you that you can get rich quick. They’re lying to you. So just follow, follow the fundamentals, follow the things that have worked, learn books and understand the data. Surround yourself with people who are on the same path or have done it themselves already, and just feed off all the people that are around you that can help you get to that place. And, um, sometimes it can be difficult. I know we grew up in an, in an area or community that nobody likes to talk about their wealth at all if they had any. And um, it makes it really hard to break through those barriers, but there’s so many different avenues that you can go down. You can talk to people for free, you can watch podcast, you can read books. There’s so many different ways to get an understanding about these concepts and really understand them and use them to your advantage as well.

Yeah, and that’s the thing that’s so many resoUrces for young people now that didn’t use to exist. There’s so many podcasts out there that are awesome to listen to. So when you’re doing your commute to uni or your job or where the girlfriend’s house, wherever it is that you’re goIng, rather than just spending that time listening to spotify or listening to music, spending that time, listening to podcasts about investing or about finance or about business or about whatever industry you’re in and skills that you want to build rather than just spending that time listening to music build into your life with that knowledge. And that was something that I did really early on that paid off massively for me. I used to catch the train to work an hour each way and each of those times I would have podcasts downloaded that I would then go ahead and listen to.

Then I was a pharmaceutical rep driving around a lot and so I was always listening to podcasts and it got to the point where I was driving so much and listening on two times speed. I would always run out of things to listen to, so I’d be hunting for new content, but it’s so much easier now with long form content on youtube with the quality of podcasts that are out there that that is just like a slow burn sorta thing that you can do when you’re young. That’s not gonna like have a massive immediate impact on your life and the next day. But if you consistently listening to stuff that’s going to educate you, that’s gonna make you smarter. That’s gonna, you know, make. Yeah, you’re just going to build yourself up over time and it’s gonna have a huge difference over the years. As you listen to that stuff, like the amount of knowledge in my head now from listening to podcasts for the last 10 years is insane compared to people who only listened to music

and it provides a really good avenue for people that aren’t as as well disciplined as you might’ve been brian when you were reading all of those books and forcing yourself to do that because not everybody likes to read books. Nobody likes to do that, but podcasts are really easy to listen to and most of the people that are doing interesting guys that have got an amazing story to tell that it makes it interesting to listen to these people as well. So, um, you’re not forced to sit there and read page after page after page, just sit there with your headphones in and acquire a whole bunch of really great knowledge.

Yeah. And you can even, like I used to listen to podcasts when I was brushing my teeth when I was cooking, like going for runs, like whatever it may be. There’s so Many opportunities to build yourself up. And so is there anything else that you’ve got? I’ve kind of gone through my list now. Yeah, I’ve. I’ve pretty much covered most of the things.

Obviously capital of the main point would definitely be paying yourself first from a young age and acquiring the knowledge that you need to make the smartest decisions. What do you think?

Yeah. Well I think that’s it. Like learning how to budget, paying yourself first, investing into your skills and your knowledge at a young age is going to pay off massively long term and then also investing for the long term rather than just the quick fix right now. Like that might be a quick fix being a car right now or it could be a quick fix being some like magic money making opportunity, looking at the longterm, projecting into the future. If I invest in this property, what’s it gonna look like in 15 years as it pays itself off versus just focusing on the now and because if you’re young and you’re investing in young, you don’t realize it like 30 sounds old to young people or 40 sounds old to young people, but it’s once you. Once you get thAt, you’re like, yeah, I’m still super young, and so investing for the long term and thinking about that would be a really big thing for me for sure. Sweet. Well, that wraps It up for today. We hope that you got some tips in here that can help you as a young investor or even if you’re an older investor, you can still listen to podcasts, like you can still do a whole bunch of this stuff. Pay yourself first, et cetera. So hopefully, yeah, hopefully this has helped a whole bunch of people out there. That’s it from us today. Guys, don’t forget to subscribe to the channel if you haven’t already. As we do release new episodes every week, day, and until next time, stay positive.

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