20 money tips for 2020

The new decade is here and all your new year’s resolutions are lame. Let a not-so-humble smashed avo enthusiast give you a hand. Here are 20 short and sweet money tips for 2020.

  1. Pay off your (bad) debts: The greatest hurdle to achieving financial independence is most likely to be debt. If your debts include credit card debts or personal loans, these are likely causing the biggest dent. Read all about it in The good, the bad and the suprime.
  2. Budget: Most people think they’re good with money. Most people are wrong. I’m not being offensive here, only realistic. Help me, help you. Draw up an excel spreadsheet, log into your internet banking and look through your last 3 months’ worth of statements. Start with your fortnightly net income and deduct all your fixed-ish ongoing expenses (we’re talking rent, transport, healthcare, utilities etc). Next, average out and deduct your discretionary spending. This will give you insight no financial adviser can give you into your spending habits and how you can best achieve your saving goals.
  3. Credit cards: There’s been a lot of study on behavioural spending which suggests that people are more likely to splurge if they think they’re spending someone else’s money. If the numbers aren’t going out of a savings or transaction account, we seem to think we have greater purchasing power. We don’t. We’ll have to pay the money back, at 20%, and that not-so-shiny pair of birkenstocks just isn’t worth 20%. Have a good, long think about whether those annual perks or rewards programs are benefiting you more so than your additional expenditure.
  4. Learn all of the things: Read this blog. Read other blogs. Read books. Listen to podcasts. Watch tutorials. I don’t care how you do it, just do it. We’re not all materialistic people, but we do all need money and the decisions we make when we’re young have profound impacts on the rest of our lives. Therefore we must learn early. Besides, being a nerd is sexy. Don’t let anyone tell you otherwise. If you can make people crave for the thoughts inside your head, there are no limits to what you can achieve. Why do you think I wear glasses?
  5. Think green: “Only when the last tree has dried and the last river been poisoned and the last fish been caught will we realise we cannot eat money.” There’s no point building a big property or share portfolio if we have no world left to enjoy the returns or to pass our investments onto our children. Our federal government has demonstrated a fascinating insistence in burying its head in the sand. Please, on behalf of all living creatures on this planet, I implore you to stand on the right side of history and pick up the slack. Don’t use plastic, minimise driving, carry a keep-cup, plant trees, install solar panels and… think about ethical investment – see Socially responsible investing.
  6. Discretionary spending: I don’t know who needs to hear this but stop buying unnecessary crap (birkenstocks). Just because it’s on sale, doesn’t mean you need it. A lot of a materialist’s shopping cart is exactly that, unnecessary. These items have little-to-no salvage value. Assets on the other hand can have lots – see Accumulating assets.
  7. Be a savvy consumer: If you absolutely do need to splurge on discretionary items, set aside that instant gratification mentality all millenials have allegedly been burdened with. Wait for that ugly af pair of sandals to go on sale – and beware of marketing gimmicks.
  8. Side-hustle: If you have a desired set of skills that people are willing to pay you for to learn, you’d be silly not to take advantage of that opportunity. This could be anything from tutoring to teaching an instrument to handy-work.
  9. Diversify: Take it from someone who’d previously been over-exposed to a single sector (the coolest one). Putting all your eggs in one basket can really hurt you in the long-run. If you’re long on one or two stocks, have a think about ETFs. They’re the cheapest way you can achieve diversification – see Diversification and ETFs.
  10. Gearing: Learn to accept that no matter how amazing a stock-picker you might be, your dollar value return won’t be all that impressive unless your initial investment was substantial. This is where gearing comes in – see Leverage. Study up on how people borrow to amplify their returns and always remember to borrow responsibly.
  11. Learn your macros: Try to read everything you can about the economy. Not only does this make you super fun at parties (Exhibit A – yours truly), but as you begin to learn about the macroeconomic landscape on a more consistent basis, you start to observe trends which will help you make more informed investment decisions. I’ll give you an example. In 2019, most analysts said that the Australian housing market was not going to look very impressive. However, fueled by three RBA interest rate cuts, home buyers and investors began to turn bullish and the year ended with a promising outlook. Had these analysts paid closer attention to the minutes published by the RBA, they may have reassessed their bearish positions.
  12. Savings account: Consider opening a savings account which restricts your ability to withdraw or penalises you for doing so. For example, there are a number of ‘high’ interest savings accounts which will only pay you bonus interest if you deposit a minimum amount per month and make zero or limited withdrawals. This will force you to consider making more realistic deposits and you’ll be less tempted to withdraw your money.
  13. Micro-invest: I’ve written about micro-investing before but it’s such an exciting topic it deserves an article of its own (which I’ll write about shortly). Investing can be scary. Stocks go up and down and you have a negligible degree of control over the decisions of the managers of the companies in which you invest. But is it all that scary if we’re talking about $50 or $100? I’ve personally found this to be significantly more effective for my learning than just creating watchlists and tracking their performance. Having skin in the game gets you more psyched and you’re therefore more likely to learn about what drives share price.
  14. Get tax-savvy: Tax sucks. There are so many tax incentives and schemes out there (which are perfectly legal) that I won’t share with you because… well… financial/professional advice laws. But, do your own DD or speak to a trusted professional adviser and consider what options may be available to you.
  15. Government rebates: Many state and territory governments have rebates available to ordinary people (often if you’re on a low income) to help you keep the lights on. Do some digging on your local state or territory website (or literally just google your state/territory followed by the word ‘rebate’) and discover what you might be able to claim.
  16. Ditch the car: This is among my least popular suggestion. Imagine investing in an asset which (for most people) provides no ongoing income, incurs substantial ongoing costs and depreciates at a significantly faster rate than any other asset you’ve ever owned. “A car is not an investment, stop looking at it that way”, you might rebut. You’re 100% right, it’s not an investment, but it’ll set you back as much as one. Besides, carbon emissions from cars take more lives every year than the national road death toll. If you don’t absolutely need it, please think twice.
  17. Fitness: I won’t name names but those classes you pay $50+ per week to practice doing a very ‘interesting’ variation of the pull-up or to practice weighted squats on yoga balls aren’t helping you lose weight. Those $75 PT sessions aren’t working wonders either. It’s the diet that’s driving everything. If your exercise routine requires equipment, consider obtaining a single, low-cost gym membership. YouTube is my personal trainer and guess what, it’s free. Survivor is my motivation. Meals I research and prepare myself is where I get my nutrition – I saw little need in paying a food delivery service $50+ per week to prepare meals I could be preparing myself much cheaper.
  18. Meal prep: If you spend $12 per working day on meals and $4 per working day on coffee, you’re setting yourself back over $4,000 per year. I make a mean tofu stir fry for $6 per week and couple that with tuna and supermarket-branded 7 ancient grains rice (to this day I’ve yet to figure out what those 7 grains are) I spend $10 per week on. Both work meals are gross, but they’re cheap and nutritious!
  19. Change your mentality: Many young people (including myself) spend years complaining about generational wealth inequality (and rightfully so). But generational wealth inequality won’t change by complaining about it. No baby boomer is going to wake up to the fact that they had it so good for so long and raise their hand to help out millenials. Do the best you can with what you have. Be smart, be frugal and make your money work for you because you’ll otherwise be left behind.
  20. Live your life: I’m not some old fuddy-duddy running around trying to tell millenials how to live their lives. I’m 25, I like to travel, I love a good smashed avo and if some boomer tried to take my large flat whites away from me I think I’d start a revolution. I just try my best to do it responsibly. The whole point of this project is to simply jot down suggestions for you to absorb and/or disregard at your discretion. I want you to take in everything you think might be helpful in your circumstances and ignore anything that might be overly burdensome. This is all about you. I have absolutely nothing to gain but the internal happiness it brings me knowing that someone, somewhere is learning and (hopefully) benefiting from my random ramblings.

Thank you to everyone who read this blog in 2019. I’ll continue writing about all things finance in 2020 on a more consistent basis (work-permitting – time is unfortunately not a luxury my job is willing to afford me).