Frances Cook: What I wish I had known about money sooner


After four years of talking and writing about money for the Herald, it’s time for me to take the first significant break.

Weekly interviews for the Cooking the Books podcast, alongside a weekly column, have kept going through Christmases, a pandemic, and more than one market dip.

Listen to the Cooking the Books podcast here:

I’ve been sent curly listener questions that remind me how differently we all live our lives. I’ve talked to regular New Zealanders about the changes they made, and experts about the latest trends. I even wrote a personal finance book.

Over that time I’ve changed my mind on more than one subject, and only solidified my views on other areas of money management.

It turns out that a baby is one major life change I won’t be working through, though.

So before I step back for a few months, here are the tips I’d give my post-university self if I could go back in time.

Money is simpler than you think

There are many wonderful people in the personal finance world, but there are also those who make money from you being confused, and paying them to do it for you.

Long, jargony words are used instead of simple ones, complicated strategies are hinted at but never explained, and the average person just shrugs and goes back to trying to balance the many other things already in their life.

It doesn’t have to be that way.

You can get complicated with your finances if that’s what you find fun, but learning how to save, run your KiwiSaver, and invest, is shockingly simple and will greatly improve your quality of life.

I personally found it easiest to marinade in money chat until it began to seep through the edges.

It’s why I found myself drawn to personal finance podcasts in the first place.

There are plenty of podcasts where it feels like you’re listening to a chat between two smart friends, explaining personal finance concepts in a way that finally connects to the reality of your life.

A little bit, often, is a great way to learn about a subject that we sometimes expect to be intimidating.

Time is a bigger weapon than how much money you have

The more time you have, the easier it is for you to invest your money, and become wealthy with very little effort

That’s thanks to compound interest, where you earn some money, put that money back to work, and soon you’re earning profits on your profits.

This strategy is what allows people to put money into the sharemarket and double it in about 10 years, without doing anything else, assuming we keep getting the average return of 7 per cent.

It means that when you’re young and broke is a great time to start investing, because you have so much time up your sleeve.

Sometimes I tell people this, though, and rather than take heart they become defeated. Some assume that if they didn’t start investing as a teenager, it’s too late.

That’s absolutely not the case.

In your 20s and 30s it’s a wonderful time to make even $5 a week turn into a big nest egg for the future.

In your 40s and 50s you still have decades up your sleeve to invest and reap the rewards. As you are probably earning more than you used to, you can balance out the shorter timeframe by investing more money.

In your 60s, well, you’re younger today than you will be tomorrow. I truly believe that it’s never too late.

If you can’t afford a house, you’re not doomed to be poor forever

Obviously, buying a home is something that many of us want, both for personal security and our financial future.

But if skyrocketing house prices have put that out of reach, that doesn’t mean you’re out of options.

Investing in assets like shares means your money will grow, giving you a source of income in the future that you could use to pay your rent, giving the same financial benefits as a paid-off home.

Over a period of several years that money could even help you build a house deposit, if you still want to buy.

Shares have traditionally increased more in value than property, there’s just not as much public attention dedicated to breathlessly watching and debating the prices.

If this appeals to you, don’t forget that shares should be for long-term money, meaning you leave it alone for at least 5-10 years.

Fashion trends may make you cringe when you look back, and so will money trends

The super-low-rise jeans of the mid-2000s, where you couldn’t bend over to tie your shoe without showing the world your butt crack, were a mortifying choice given the benefits of hindsight.

Jumping in on the pump and dump of the latest hot stock, cryptocurrency, or over-leveraged housing investment, is likely to feel the same way in a few years’ time.

The best ways to invest your money are, unfortunately, rather boring.

Paying off debt. Investing what you can afford, regularly, into proven investments like index funds. Leaving your investments alone to grow, rather than jumping in and out to try to game market cycles.

There can be a compromise for those who desperately want a little fun sprinkled through their money management, even if it means they risk losing money over the long term.

The core-satellite strategy means you put about 80 per cent of your money into proven wealth builders, like index funds. The other 20 per cent can go into riskier bets, like brand-new companies that could fail, or cryptocurrencies.

That 20 per cent is likely to take heavy losses, but maybe one will take off like a rocket and make it all worthwhile.

If it doesn’t, you’ve still got 80 per cent of your money securing your future, and making sure you don’t have to work until you die.

If you do nothing else, maintain a savings account

Investing or buying a house can sound like a goal that’s just too big to ever be achieved.

But really, the point of managing your money is to create a decent quality of life where you have less stress.

For that goal, you just can’t go past a simple savings account.

Many studies have been done that show a savings account has the biggest impact on your money happiness, and it works whether you earn a little or a lot.

It gives a sense of security that is much bigger than the amount of effort it takes to put together.

A fund of $1000 squirrelled away will protect you from a car breakdown, and cushion the blow if you unexpectedly lose your job.

Saving just $20 a week will get you there in less than a year.

Even better if you can save up three months of your barest living expenses, for rent, basic food, utility bills, in case of a bigger crisis.

Whatever you can pull together will be worth it.

That’s it from me for at least the next six months – let’s see how we go.

The Cooking the Books podcast is still here for you while I’m away.

I’ve pulled together the best episodes from the past four years, filled with timeless advice, and some nuggets of wisdom that, frankly, even I had forgotten about.

They’ll roll out automatically while I’m on maternity leave. See you on the other side.

This column is general information only, and not individual financial advice.

Get all the tips whenyou listen to the latest Cooking the Books podcast here:

• If you have a money question you’d like answered in the future, come and talk to me about it. I’m on Facebook here, Instagram here and Twitter here.

• Hear more on the Cooking the Books podcast. You can find new episodes in the Herald, or subscribe on iHeartRadio, Apple podcasts app,or Spotify, or wherever you get your podcasts.

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