I was talking with a young lady in her early twenties who had never seen the great Aussie film ‘The Castle’…

“What do ya call these things again?”

“Rissoles, Everyone cooks rissoles darl.”

“Yeah, but it’s what you do with them.”

I recited the above lines only to be met with a blank stare. I went straight to the bit about jousting sticks. Still nothing. Not even a polite chuckle.

After going away and composing myself, I realised that this – one of the most enduring quotes of Australian film history – could be the ultimate metaphor for financial prudence and living within one’s means. No not the jousting sticks quote, the other one… “It’s what you do with it.”

Since financial literacy isn’t a mainstay of school curriculums in Australia, and since children are missing out on the cultural enrichment that is The Castle, I wondered what else this classic piece could teach the young adults of today about the world of money…

It’s what you do with it

With money comes choices. If you’ve just started working and received your very first pay, you no doubt feel excited and empowered. That’s good, you should feel proud of yourself. You can go out and buy clothes, party with your friends, go on holidays etc. Hopefully you’ve managed to save some of that money too. Just remember as you get older your responsibilities will change and there will be times when discretionary expenditure (i.e. the fun stuff) will have to be put on hold to accommodate necessary expenditure. Learn how to do a weekly budget for yourself, there’s plenty of good examples online.

This is going straight into the pool room

1. The Kerrigan’s pool room was a repository for special keepsakes and mementos. In a similar way, a savings account is the perfect repository for special things like tax refunds, a performance bonus from work, or gifts of money. Of course you should still strive to save a portion of your regular income too, but the point is this: Savings are to be celebrated! Here’s three great reasons why you should have a savings account:
2. You will almost certainly encounter unforeseen expenditure early in your adult life. Savings will help you ride out the bumps
3. Save for big ticket items. Your education, a car, a deposit on a property are all great examples.
4. Guard against inflation using compound interest. You’ve probably noticed by now that the price of things rises very slowly. This is called inflation. It basically means that in the future, your money will be worth less. A savings account is a simple way of combatting inflation because it earns interest. (Interest and Inflation are loosely connected)
   • Lets say you put $1,000 into a savings account that pays 2% interest per year. At the end of the year your savings account will contain $1,020. The following year the bank calculates interest at 2% of $1,020 and so forth. If you’d put that money under the mattress it would still only be $1,000 and worth less due to inflation

 Tell ‘em they’re dreamin’

Finding out you’ve overpaid for something, or that you’ve been duped is a truly awful feeling.

Make sure you do plenty of homework before making any significant purchase, compare products, brands and retailers. Read the fine print of any contract and if you’re not sure what it means, consult a legal or finance professional. There’s nothing wrong with your money – so make sure there’s nothing wrong with your purchase. The ACCC website contains information about your rights as a consumer.

Dad, I dug a hole

Folks who have too much debt often feel like they’ve dug themselves into a hole. How much debt is too much? It depends. But part of the answer lies in point 1 … “it’s what you do with it”. Whether debt is good or bad depends what past action gave rise to that debt. Did you borrow money to invest it wisely or did you go on a round the world trip? Did you finance a sensible car for commuting to & from work or did you rack up a huge credit card bill? Credit cards in particular can be dangerous. Always spend within your means and pay back every last cent before the due date to avoid any interest charges.

Debt is nothing to be afraid of if you can comfortably make the repayments on time, and you’ve borrowed the money to produce a tangible and measurable economic benefit for yourself in the future.

I could go on with the quotes but I won’t. If you’re a young adult reading this, there’s two main takeaway points to all this.

1. Watch the Castle when you get a chance. It’s chockers with culture.
2. While finding a higher paying job or starting a profitable business might give you a financial boost, how you use your money is just as important as how you earn it. And how you use your money now will set the tone for the rest of your life.

ANTONY MONALDI

Senior Accountant – OPTIMA PARTNERS