6 pieces of financial advice from my mother

Recently, I was watching a ‘documentary’ about terrible savers receiving financial counselling to mend their ways. One man who was up to his armpits in debt said, “My mum told me, you’re born into this world with nothing, so if you go out owing, you’re ahead!” This amusing but dreadful advice made me grateful for the sound financial advice my own mother has given me over the years.

My mother has worked her whole life, she’s done everything from working in a pea factory (didn’t last long), to apprenticing as a hair dresser (which meant she cut our hair growing up and saved herself hundreds of dollars), to senior management roles in the public service managing multi-million-dollar budgets. She successfully navigated her financial way through two divorces (read re-mortgaging the same house twice) whilst raising two children and has been able to retire in comfort.

I consider her a sound person from whom to take advice, and I’ve tried to follow this advice as best as I can. Here are six of the best financial lessons I’ve learned from my mum.

1. Never buy a new car
Cars lose value the second you drive them off the car yard. You can always find a near new car if you really need that new car smell in your life and you can save yourself a few thousand dollars if it’s had at least one previous owner. As an accountant I’d also advise that unless your car – a depreciating asset – is earning you money, don’t borrow money to fund it. Live within your means and buy the car which reflects your current financial health.

2. Always shop around to renew your insurance
The first step when you receive that insurance renewal notice is to ring up and complain about the premiums being too high. You’ll always get an immediate discount; mum’s discount comes with a lecture on the prangs she’s claimed for in the previous year. So be prepared to be stubborn about it. But don’t underinsure yourself, have hospital cover, contents cover (and accountants will tell you to have income protection insurance). However, self-insure your pets. Pet insurance is usually not worth it because of the exclusions and once your dog turns 8, the premiums skyrocket. Instead put the premiums aside each payday and use them to cover the trip to the afterhours vet when your dog steals a piece of chocolate cake.

3. Save at least 10% of your income
This one is simple. Treat it like a tax imposed by your future self. Taxes are good.

4. Buy the worst house on the best street
The old real estate adage ‘location, location, location’ is true. Mum was quite pleased when I bought a ‘fixer-upper’, but in the interest of full disclosure it’s meant I spend a lot of my spare time doing back breaking renovations, but think of the returns! Mum also had flatmates to help subsidise her repayments and she didn’t over extend herself by looking to buy her forever home the first-time round.

5. Always ask for a discount and read reviews when buying appliances
Buying quality goods means they should last and you won’t have to buy a new one every three years. And always ask the sales person for a discount. Sometimes you can get a discount just by paying in cash. You might not always get a price reduction but you could get free delivery. Don’t be squeamish about it, mum always starts with, “What’s your best price?”

6. Budget for holidays
How is this financial advice you ask? Well it’s to make sure you don’t burn out, can be more productive and motivated at work which will lead to promotions and pay rises. We’re playing the long game here. After all, why work so hard when you don’t get a chance to spend some of that hard-earned money?

Bonus tip: Don’t waste your money on pedigree dogs. Sorry mum, I’ve willfully ignored that one, I have allergies.

-Claire Thornett