The Explore Careers Intro to Money Management (That Actually Makes Sense)

Throughout high school, you’ll hear a lot about ‘literacy’ – usually around English and Maths. But there’s also something called Financial Literacy.

It’s a valuable life skill, and we’ve become increasingly aware when talking with young people that there isn’t enough to support them develop this skill before they really need it.

So, we’re launching a new series focused on financial literacy and money management – this blog’s the intro.

First Things First; Financial Literacy vs. Money Management

We don’t want to make things overly complicated here, and there are crossovers between these concepts.

Here’s a little definition to help:

• Financial Literacy: Financial literacy is the knowledge and confidence that you understand key financial concepts, including savings, debt, credit, and investing. This knowledge is the foundation of how you interact, use and utilise money. It helps you have a sense of financial well-being and trust in your abilities to look after yourself financially. It forms the foundation of ongoing money management.
• Money Management: Money management is the practical application of your financial literacy. It allows you to manage your finances appropriately. It includes monthly budgeting, debt management, sensible use of credit and loans, paying bills, managing your superannuation, paying taxes and achieving saving goals.

There’s often an assumption we’ll just ‘know’ how to be good with money and that being ‘bad’ with money is unavoidable. The truth is we learn financial literacy and money management all the time without realising it – usually from our parents and how they manage finances.

Both financial literacy and money management are primarily knowledge-based, which means you can learn how to improve them with the right education and set yourself up for financial success.

You don’t need to be a pro from the outset, but it’s worth spending time working on your financial literacy as soon as possible.

Why Are They Important?

When we’re young, we don’t have any outgoings – we don’t have to pay bills or rent (most of us). So, it’s easy not to think about financial literacy or money management when you get a part-time job or pocket money.

There’s nothing wrong with enjoying what you earn, but it could lead to habits that don’t support successful money management as you get older. That’s why it’s worth thinking about these things early.

Money management helps you plan effectively for your financial future. Without a plan, you can easily overspend and miss opportunities to save money or develop good budgeting skills.

Planning helps you avoid financial problems and puts you in control of your money.

Key Topics to Explore

As part of this series, we’ll focus on a few key topics we think are essential (which we wish someone had taught us about when we were younger!).

Here’s an overview:

1. Choosing a Bank

Probably the first important step! Not all banks are the same, and it pays to do a little research.

We’ll aim to cover:

• What to look for when choosing a bank.
• How to open a bank account
• How to get the most out of your daily banking

2. Setting Up a Savings Account

When you’re young, it feels like you’ve all the time in the world to start saving and thinking about bigger life ambitions. Creating savings early helps you not only develop vital money management skills but achieve saving goals faster.

We’ll be covering:

• Why savings matter and how to get started
• Understanding interest on savings
• Some good saving goals to consider
• Top tips for reaching savings goals

3. Thinking About Tax

We know – yuck. Tax isn’t many people’s favourite thing. While it might seem tedious, it’s crucial to get right as there are many ways to maximise your tax returns to support your ongoing financial plans.

We’ll cover:

• What tax is, and why we pay it
• The basics of completing a tax return
• What you can claim on a tax return
• Top tips for managing tax

4. Understanding Superannuation

Superannuation is the dedicated savings account you’ll tap into once you retire. We know it feels a long way off, but your employer will directly contribute to these savings for you once you start work. It’s good to have some solid knowledge as you start work.

We’ll talk you through:

• What superannuation involves, and how it works
• The different superannuation providers and how to choose one
• What contributions look like, and how you can keep your super healthy

5. Credit, Debt, and Credit Cards

There is ‘good’ debt – mortgages, student loans, car loans – that serves a purpose. And there is ‘bad’ debt – maxing out credit cards with high interest on stuff you might not need. Credit and debt require set management skills – the sooner you learn to make credit work for you, the better.

We’ll go through:

• Why credit can be good and how it aids your financial health (when used properly)
• What to avoid when taking out credit
• The impact of debt on your financial health
• Tips for managing credit and debt the right way

6. The Basics of Budgeting

Budgets are a great way to help you clearly understand what money you have coming in and going out. Budgets allow you to ensure all your financial priorities are taken care of (helping to reduce stress) so you can focus on enjoying life.

We’ll talk about:

• What a budget is and how to set one up
• Some great tools you can use to create and manage a budget
• The types of things you can use a budget for
• How to adjust budgets when you have bigger financial goals (like buying a car or going travelling)

7. How Investing Works

Investing is a way to build on your finances and maximise your financial goals – it can often seem confusing, and many people don’t bother with it for this reason. But it’s not all ‘Wolf on Wall Street’ style intensity! Your superannuation, for example, is an investment.

To help, we’ll cover:

• What investing is and how it works
• Tips for starting with investing
• When it’s a good time to think about investing
• How things like bitcoin and cryptocurrency fit in here

Getting Started

Now you see why we’re breaking this down into a series! There’s a LOT to cover, and we’re super excited to start on all this with you.

As always, we love your feedback, so if there’s a money management question burning away in the back of your mind, get in touch and let us know! We’ll cover it in a blog or do a dedicated post on Insta for you: hello@explorecareers.com.au

Just for Fun: Test Your Knowledge

And lastly, just for fun (and to ensure you were paying attention), here are a few questions to test your knowledge of what we’ve covered so far!

No scrolling up and cheating!

1. What is financial literacy?
2. What is money management?
3. Who do we initially learn financial literacy and money management from?
4. What is superannuation?
5. Is all debt bad?