🍌🍌Why Houses are Like Bananas + 🤷🏻‍♀️ How to Choose A Bank Account + 🚲 Bike for Bucks

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

• 🚲 Bike for Bucks

• 🤷🏻‍♀️ How to Choose A Bank Account

• 🍌🍌Why Houses are Like Bananas

🚲 Bike for Bucks

Q. “How do I sell my bike to buy myself a new laptop?”

-Noah T, 13, NSW

Answer

Hey Noah! That’s an interesting one. So first I’ll tell you what the most effective way to sell your bike is likely to be. Then (if it’s ok with you) I’m going to explain why selling your bike might not be the best way to get to that laptop you want.

🚲 Selling Your Bike

• The best way to sell your bike is likely to be ‘Marketplace’ which is part of the Facebook app. That’s because it’s the place where there are the most buyers, which means that it attracts the most sellers, which means that more buyers go there, and so on. That’s something called a ‘network effect’.

• Another option is a website called ‘Gumtree’. It used to be the biggest buy/sell website until Facebook Marketplace came along.

• In both cases, you’re going to need to get a parent or other responsible adult with a Facebook account to help you out (that’s important so that you stay safe online and in person). The adult can be the one who lists the bike and talks to people about when and where to meet to make the sale.

• Really really important: as a 13 year old, you SHOULD NOT under any circumstances talk to strangers online OR EVER arrange to meet them. Sorry for using the caps (I’m not yelling), but this part is REALLY important.

🚲🙅🏽‍♂️ Not Selling Your Bike

So here’s the other option. Don’t sell your bike.

Because unless it’s a truly top of the range bike what’s going to happen is that you’re going to sell your bike and you still won’t have enough for the laptop. And you won’t have a bike anymore either. Kind of a lose-lose result 😕.

Here’s my suggestion. Use your bike to earn the money you need. Here’s one way you can do that.

• Go around to the local businesses in your area (again, take a parent with you).

• 📫 Ask them if they have flyers / catalogues / other marketing materials that they need delivered to local letterboxes.

• Offer to do it for them (and use your bike to make the whole thing more efficient).

• And then ask them to pay you a fair rate to do it.

• 💻 Save the money up. Repeat until you have enough. Buy your laptop.

Real estate agents offices, your local Councillor / member of parliament and charities that work in your area are some examples of organisations that might be able to offer you work delivering their print materials to houses.

Hope that’s given you another option to think about!

P.S. If you’re not sure what to say just write in again and I’ll think about a script you can use (and some other tips that might help!).

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🤷🏻‍♀️ How to Choose A Bank Account

Q. “I read your answer last week about choosing a savings account. I want to get one. But I don’t know which one to pick? There’s so many choices?!”

-Lil, 16, NSW

Answer

Hey Lil, that’s awesome that you want to get a savings account, nice work 🙂. And you’re right - there are a lot of choices out there. That’s always the case with money stuff: lots of businesses offering really similar products.

I’m never going to recommend a company or bank (that means I can be 100% independent, which is a good thing for you guys). But what I can do is show you how you can make the right choice for you.

💻 Step 1 - Prepare a Doc

Open Microsoft Word, Google Docs or whatever you use for word processing. Or Excel / Sheets. Create a table. It should have these column headings:

• Name of bank / company

• Type of bank (e.g. traditional or online only)

• Transaction / everyday account name

• Interest rate for transaction account (this will be a percentage. For bank accounts that have your savings in them a higher interest rate is better).

• Savings account name

• Interest rate for savings account (including any bonus rates that might apply, how long they apply and any conditions for getting them)

• Account fees and charges (look for ‘zero’)

• Banking app (yes / no)

• App rating (from App Store or Google Play Store or both)

👩🏻‍💻 Step 2 - Online Research

Now jump online and do some research. You can go direct to the bank websites and find the information from there. Or you can use ‘comparison websites’ that list a whole bunch of options. Just be aware that some of these websites have ‘sponsored’ results which means that companies can pay to appear at the top of their comparison tables.

🤔 Step 3 - Decide and Apply

By lining up all of your options and the key info side by side, you can choose much more simply. You can also figure out what’s more important to you. Those column headings I suggested don’t have to be the only ones. If there’s another factor that is important to you and how you want to use your bank account, then you should add it and compare.

This might seem like a lot just to choose a bank account. But the process of doing this is the important part. Because you can copy-paste this process for just about any financial decision you make in the future too.

I’ve used something like this to compare bank accounts, credit cards, flight costs and my mortgage over the years.

Hope that’s helpful!

P.S. If you, or anyone else, wants a copy of a comparison table like I’ve described above to fill out, just reply to this email with ‘Comparison Table’ and I’ll send you a copy.

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🍌🍌 Why Houses are Like Bananas

Q. “Why are houses so expensive?”

-Jackson, 17, NSW

Answer

Hey Jackson, you’re not wrong - houses are expensive in Australia. Here’s the most recent stats for how much the average dwelling costs around the country:¹

• Australia: $896,000

• New South Wales: $1,150,000

• Victoria: 898,000

• Queensland: $752,000

• Western Australia: $651,000

People love to debate the exact question you’ve asked. And for some weird reason, some get really emotional and passionate about it. Lots of people have lots of opinions.

But I’m going to answer this as simply as I can for you, using research and data.

3 Reasons

The data indicates that there are three main reasons for high housing prices in Australia:

1. Demand - Australia is a fantastic place to live. We have rule of law, stable institutions, democratic elections and great services. There’s also a wonderful climate (ok, granted, it can get a bit hot during summer) and a strong economy which means most people who want to get a decent paying job can get one. So people who are born here, mostly stay here. And many people from overseas migrate here. All those people need places to live. And that equals rising demand for housing as our population grows.

2. Supply - We just don’t build enough homes or apartments every year to keep up with the demand. Simple as that.

3. Interest rates - We recently had historically low interest rates. Banks price mortgages (the loans we get to pay for houses) based on these rates. Here’s something that is going to be worth remembering your whole life:

   1. 📉When interest rates are lower: mortgage repayments are lower and house prices go up.

   2. 📈When interest rates are higher: mortgage repayments go up and house prices stay the same or fall.

🍌🍌Why Houses are Like Bananas

When there is more demand than supply, prices go up.

This is true of any good or service. Here’s a random example for you. Back when I worked at Woolies, there was a cyclone in Far North Queensland. Most of our bananas are grown up there.

• 🍌 Bananas usually sell for between $2 - $4 a kilogram.

That summer, there were way fewer bananas because the trees had been destroyed in the ferocious wind and rain. But people in Australia love bananas. They’re a lunchbox and gym bag staple. So demand was the same.

What do you think happened?

Prices went up. A lot.

I remember people coming in, taking one look at the price I was putting up and being appalled (and occasionally outraged).

• 🍌 That’s because that summer, we were selling bananas for $14 - $16 per kilogram.

Lower supply. Same demand. Prices went up.

I hope that explanation helps explain what’s going on with house prices (and that the slightly random example helps you remember it 😂).

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.

People are still sending in suggestions for charities so I’ll wait another week before putting the poll up. If you’re not sure what I’m talking about, the explanation is here.

Oh, also, 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.abs.gov.au/statistics/economy/price-indexes-and-inflation/total-value-dwellings/latest-release