🌎👩🏻‍🎓 “Should I Travel After Year 12?” + 🚗💵 Car Washing Cash + 🏡 A House Before 30?

The money stuff that you wish they taught in school

You know when you’re in class and someone asks a question and you go:

• “Oh, I was going to ask that” or,

• “Oh, I didn’t have that question before, but now I want to know the answer to it”

That’s what this is supposed to be like (but with money stuff, not English or Biology).

The format of this newsletter is simple:

• 3 questions from teenagers and young adults like you (and my answers).

• Got your own question about money that you want to ask? Nice! You can submit it here.

• To find out why this newsletter exists (and a little about me), you can read the FAQs.

Now let’s get to your questions…

Your Questions & Answers

• 🚗💵 Car Washing Cash

• 🌎👩🏻‍🎓 “Should I Travel After Year 12?”

• 🏡 A House Before 30? Seriously?

🚗💵 Car Washing Cash

Q. “Hey, I am 13 and the only one in Year 7 with no phone, any ideas on how I can get money, I already wash cars and mow lawns. Cheers.”

-Taj, 13

Answer

Hey Taj, thanks for your question mate.

It’s not great when it feels like you’re the only one without a phone hey?

I’m going to suggest a few things for you to try and to think about.

But first I just wanted to say something: congratulations! You’re working hard to get something you want. That’s really important and it’s very impressive that you’ve already got that figured out 👊🏽.

📱 Some Phone Stuff Explained

1 in 2 phones in Australia are iPhones so I’m going to guess that‘s what you’d like.¹

• A brand new iPhone currently costs between $1,049 and $1,749 (depending on the model).

• Then you also have to pay to connect it to phone services and data. That’s an extra monthly cost. Let’s say that’s another $30 per month.

But did you know there are things called ‘plans’ that you can get for phones? The way they work is that they ‘bundle’ the cost of the phone and the phone services together. Then you pay a smaller monthly bill instead of a big up front one.

Here’s an example using some real dollar amounts.

• A company will sell you a iPhone + the services + the data for around $100 per month.

• You have to pay this amount for 24 months in total.

That’s obviously a lot less than having to save over $1,000 ‘up front’ to pay for a phone.

🚗🧽 Saving Up: Some Ideas

You’re already doing what you need to do, which is working. The car washing thing is a great idea. I asked around and most adults would be happy to pay a teenager $25-$30 to wash their car if they did a good job. So if you’re charging less than this then think about increasing your prices.

Next thing to do is to try get repeat business. The best way to do that is to do a great job every time. And before you leave ask two things:

1. ‘Would you like me to come back in 4-6 weeks for another wash?’

2. ‘Do you have any friends or family in the area who you think might want their cars washed? Please feel free to send them my parents phone number to get in touch to book in a time.’

📱Phone Math 1: Buying Outright

If you try and save the whole amount (let’s just use the $1,049 amount) then you’ll have to wash 42 cars (42 x $25 = $1,050).

If you do the things above then you should be able to do (on average) 2 cars a week on weekends during school terms. Remember, your most important ‘job’ at the moment is putting in your best effort at school.

You should be able to do 4-5 a week during school holidays though!

That means that by the end of the January holidays you should have washed enough cars to afford that phone.

• 2 a week during term 4 x 10 weeks = 20 cars

• 4 a week during December / January holidays x 6 weeks = 24 cars

• Total: 44 cars washed.

Then you’ll have to keep washing at least 2 cars a month to pay for your phone services and data.

📱Phone Math 2: Getting a Phone Plan

But if you go on a plan instead you can get your phone much sooner. You’ll just have to wash at least 4 cars a month for 24 months (4 x $25 = $100).

Which leads me to a question for you…

👪 Talk to Your Parents

Do your parents want you to have a phone?

Because lots of parents would prefer their kids to only get a smartphone when they’re a bit older. There’s lots of different reasons for that. But to delay when that happens some might say ‘well, you have to save up the money first’.

So just have a talk to your parents about that too. Because since you’re 13, they will need to be the ones who actually sign up with the phone company to connect your phone up to phone services and data.

I hope some of that helped you out Taj, keep working hard and saving - you’ll get there!

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🌎👩🏻‍🎓 “Should I Travel At the End of Year 12?”

Q. “I really want to travel overseas at the end of year 12. My sister graduated during Covid and she didn’t really get to do anything before she started uni and wishes she had. But I’m in year 11 next year and I’m kinda panicked I won’t have enough time to save. And I still want to get good marks so I don’t want to be working all the time. A bit confused about what I should do and how much I need.”

-E.H, 16, NSW

Answer

Hey E.H., thanks for writing in - there’s a lot going on there!

Let me try help. Let’s simplify it into just two parts.

😕 The ‘What Should I Do’ Part

There’s a really short answer to this part.

Save. Go. Have an incredible time.

I get that this might be a bit of a surprising answer from a ‘money’ newsletter.

But this isn’t your parents or grandparents money newsletter. Basically all the financial and money stuff out there is written for that audience. They make it seem as though the only point of money is to save it up so that you can spend it paying bills or when you retire 🙄.

That’s not how I think about money. And I don’t think it’s how many teens and young adults think about it either. That’s why Money Chats exists.

Here’s how I personally think about money:

Money is just a tool. It gives you options. Like the option to spend some of it on doing the things you like, with the people that matter to you.

And when you’re younger, you have more freedom to do all those things. More financial freedom, more freedom in your personal life and more freedom with your job / career.

So if you really want to travel when you finish school, you absolutely should. How many times have you heard someone say:

• ‘Oh I wish I hadn’t taken that holiday because of how expensive it was’ or,

• ‘That trip I took when I was 20 was fun, but I wouldn’t do it if I had my time over again’.

I’m guessing the answer is ‘never’.

The ‘How Much Do I Need’ Part

There’s a slightly longer answer to this part. But I just need two extra bits of information. Then I can show you how you can work it out:

• 🗺️ Where do you want to go? (just the continent is enough info)

• 📆 How long do you want to go for (just an estimate is fine!)

If you let me know those things, I can take you through how to work it out in the newsletter next week.

Hope to hear from you soon!

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🏡 A House Before 30? Seriously?

Q. “I read on here that you bought a house before you were 30 without help? Seriously? Is that even possible? How did you save that much?”

-Theo, 18, Qld

Answer

Hey Theo, yeah that’s right, we bought a house before we were 30. Everyone’s personal circumstances are different. We were able to do it partly because of good planning and partly cause of some luck.

Anyway, I’ll try to be really honest with you about how we did it (spoiler: it’s not because we’re smarter or heaps better paid than anyone else).

🏡🌃 Some Background + Numbers

• So this is a bit of a weird way we talk about buying property. But when Australians say that they ‘bought’ a house what they really mean is that they a) saved enough for a house deposit and b) got a mortgage from a lender.

• A mortgage is just a (really big) loan from a lender that you pay back plus interest over a long time (25 - 30 years).

• A house deposit is calculated as a percentage of the value of the property. You can have a deposit of as low as 5% or up to 20%.

• Imagine you’re buying an $800,000 home.

  • A 5% deposit on a $800,000 home is $40,000. That means you need a loan (a mortgage) for the remaining $760,000.

  • A 20% deposit on a $800,000 home is $160,000. That means you need a loan for the remaining $640,000.

• Higher deposit amounts are better because it means you get a smaller loan. And that means you pay less in repayments and interest.

👍🏽 Good Planning

• Deposits are hard to save. We had a 20% deposit. 

• We started early. Saving is slow going 🐢. But it adds up over time.

• I have ALWAYS saved 20% of my pay. That started when I earned $15 an hour at my part-time job at Woolworths and continued when I started my full-time job after uni. 

• I still do it. So does my wife.

• We didn’t ‘decide’ how much to save each week. We just made it simple: every time we got paid, we were automatically saving 20% of our money. 

• We didn’t have debt. Not on credit cards, not on car loans. That was deliberate. Debt means that you have to take your money and pay back a loan (and the high interest charges) before you can save.

🤞Good Luck 

• I found the girl I wanted to marry early on. That was incredible luck. That meant that when we were saving for a house, we could do it together. The financial benefit is just simple math. Two people saving for a deposit means it grows twice as fast compared to just one person saving.

• I sort of ‘inherited’ the old, second hand family car when my Dad got a new one. And it served me well. I drove it until it had 225,000 km on it. So I never had to spend part of my savings on buying a car.

• We’ve always had jobs, part-time and full-time. That meant we could save. This is partly good planning - we studied hard, got good marks and got work experience so we learned how to be good contributors to a workplace. But there’s plenty of people who do that. Finding a good job at the right time definitely has an element of luck to it. 

• We were healthy (and so were our families). This is a big one. We never had to take a long time off to deal with health issues (or help a family member with theirs). Not everyone is that lucky. So we never had to ‘pause’ our saving for that reason. 

• I lived at home for longer than some people. I lived at home the whole time I was at uni. That meant that my two biggest living expenses (rent / board and food) were very low compared to what they would have been if I lived out of home. Which meant I saved more. Not everyone has the opportunity to do that. 

🎧 Focus On What You Can Control

What I hope you get out of reading all of that is that there’s no ‘right’ or ‘wrong’ way to save for a house. There’s some stuff in your control. And some stuff is down to luck.

1. Try to focus on what you can influence like how much you save every time you are paid. That’s a habit you can get into at any age.

2. Try not to get any high-interest loans. They make saving harder (car loans, credit cards, personal loans, Afterpay).

3. Try not to worry about what you can’t change or compare your circumstances to others. Everyone has different lives. 

The awesome thing is that you’re already thinking about this stuff. That means that you have an incredibly valuable thing on your side: time.

And that in turn means that you can figure out the habits you can put into your life now that will mean that if you want to buy a house down the track, you’ve taken steps towards that (or having that money for any other purpose) nice and early.

Thanks for Reading

You made it to the end! Congrats. I hope you got something useful from the newsletter this week.

Got your own question you want to ask? Can’t wait to hear it! You can submit it here.

See you next week,

-Ry

P.S.

If you know anyone else who might also like the simple, practical way we talk about money stuff here (teenager, young adult or a parent) feel free to share the link below with them or just forward them this newsletter.

1. https://www.idc.com/getdoc.jsp?containerId=prAP50441823