My parents were not great savers, subsisting from pay to pay in the way that many workers do. Thus I did not learn much about saving as a child.
By the time I was 21 both parents and all grandparents had passed away and I had lost contact with the few remaining older aunts and uncles. Both of my parents died intestate leaving me to sort out the disposition of their few assets for the benefit of my younger siblings. I was left to look after the family finances, leaving university and geting a job to help support the family.
Settling my parents few debts, arranging for the sale of their house and investing the proceeds for the maintenance of my youngest siblings was done by the Public Trustee.
All went well as I repeated my parent’s habit of living from pay to pay. Then a bank offered me a credit card which I accepted. It was like all my Christmases had come at once and I shopped happily, buying all the clothing and accessories I’d always loved.
I dutifully paid off the minimum balance every month and all remained well. But then I lost my job, laid off due to a downturn, and was only able to find lower paid work. No longer able to afford to pay both my rent and the credit card bill I was in trouble.
How did I get out of this problem?
- Borrowed money from friends to pay the rent.
- Made a payment agreement with the credit card provider (it took me years to pay that debt off).
- Setup a budget and followed it religiously.
- Ran my life on cash only for the next five years.
- Built up a savings buffer so I did not have to borrow money from friends again.
What did I learn from all of this?
Everybody needs a will – those you leave behind have a hard enough time of it without dealing with intestacy. In Australia the Public Trustee in each State can help you with this (for NSW click here).
Having a household budget is important – knowing your expenses and income & keeping them in balance reduces stress.
A savings buffer brings peace of mind – a few dollars in the bank for an emergency makes all the difference during stressful times. I found an an automatic savings plan that takes the money right from my pay directly to the bank works best for me.
Parents need to share good financial habits with their children – you will not always be around to help them and it is better for them to learn good financial habits from childhood.
Some more useful information is at Febusave.