This post is based on an interview we conducted with Otto in February 2020.
Real Money Talk is our series where we interview Australians from all walks of life about their personal finances. The views expressed are those of the interviewees, based on their experiences with money, and as such are not necessarily representative of Spaceship's views.
We have changed the name of the interviewee for their privacy.
Name: Otto
Age: 18
Where do you live?
Mudgeeraba, on the Gold Coast.
Please tell us a bit about yourself.
I was born here on the Gold Coast. All my family is from Germany though, so it was quite nice being able to speak two languages growing up! I’m passionate about filmmaking. In fact, ever since I was a kid, I’ve always been super infatuated by it. Ten years later and after countless short films made, my latest short that I completed this year got into the Academy Accredited and BAFTA qualifying FlickerFest film festival down in Sydney which was a great achievement and milestone for me!
What is your current net worth?
$8,148
How does it break down?
Savings: 90%
Shares: 5%
Super: 5%
Any debts? (including HELP from Uni)
Yep, last year I bought a new(ish) car, which came to about $15,000 after trading the old one in. After a bad run with my last two cars, I decided that it would probably cost more down the track if I keep the old one instead of trading it in for something newer.
I’m a bit of an OCD fanatic, so I like everything clean and neat, which helped me out in this case as I got a lot more for my old car when I traded it in, as it was not visibly broken but was in perfect condition (even though it had a lot of issues). Apart from that, I don’t have any other debt, including uni. I hate it and want to stay as far away as I can from it.
How did you accumulate your net worth?
Save, invest, and save. My wise dad once told me that it’s not about how much you earn, it’s about how much you save. So much truth to that.
Earn
Tell us a bit about your career:
I work as a Marketing Assistant at a distance education firm. That gives me my 38 hours and Monday-to-Friday work. On the side I work as a freelance cinematographer and editor working on features and shorts. I also do a bit of video editing at work, which is really great. I went to Singapore last year also to interview a few people there on the education industry, which was an eye-opening experience.
Do you have income sources outside of your job? If so, how much do you earn from each and how did you develop them?
A little bit. It’s not regular and it’s usually working on films or corporate projects and promotions for clients. I couldn’t give you an exact number.
What advice do you have for people who want to earn more money?
Read books, do short courses or online courses. Learn new skills and aim high for better jobs, but in saying that, as I said earlier, it’s not about how much you earn, it’s about how much you save. If you’re not earning much, try and cut back on expenses. Try going for more a minimalist approach or even move in with friends or move back home until you are stable (if you can do that).
Save
What is your savings rate? And how has it changed over time?
When I first started work here, it was my first proper job. I had lots of previous jobs, but they were only like 10 hours a week max in a restaurant or riding a delivery bike for Domino’s or something. I mean, you can’t get much else if you are under 18.
Anyway, I really did not know how to manage my money. Every weekend I would go out to the shops out of boredom and just buy clothes. I mean it's good now because I’ve got a nice selection of high-quality clothes, which is important to me. But I don’t think I went about it the right way. I spent money just because it was sitting there in my account. Then after making each purchase I would complain weeks later that I’m not saving anything.
Then came an interest in real estate. I don’t know why but I wanted to get into the real estate industry. The idea of financial freedom and an uncapped income potential turned on that light bulb in me, so I just did a heap of research into it, then fell into watching so many videos about all things finance.
After a good few months my savings started to go up. I had a better handle on what shares were and how to invest in them and so on. I truly believe that mindset is everything.
Do you have a budget?
Yes, I give myself about $50 a week. Everything else goes away for bills, savings, holiday accounts or for a new film.
How much do you spend per year?
This is only my second year working my first proper job but last year I’d say around $25,000.
Do you make purchase decisions carefully, or are you loose with your money?
I used to be a loose goose but now I definitely take my time when making a purchase.
How is your work-life balance?
I’d say it’s quite good. I get time after work usually to just chill or catch up with friends.
What is your favourite thing to spend money on?
Film projects, clothes, and tech products.
Invest
How do you invest?
I have a portion sitting in Spaceship Voyager, a good chunk in Colonial First State, and a few others. I currently invest with a few different platforms. I haven’t been going for that long yet, so the balance is quite small, but everyone starts somewhere! I usually split my money up and invest it on different platforms and apps. It’s good to diversify.
What has been your best investment?
Nothing yet.
What has been your worst investment?
Thank goodness, nothing yet.
What's been your overall return?
Not completely sure. Probably not much. I’ll get to that in a few years!
How are you building wealth?
Cutting back on things I just don’t need. I’ve sold quite a lot of things recently and have gone for a more minimalist approach. That works for me.
What are your main roadblocks? And how are you addressing them?
Boredom. During the week, I’m busy with work but when I get bored, I tend to spend money to make that boredom go away. I know it sounds ludicrous, but it’s true. Now what I do is spend more time with family and friends, and get my mind off it.
Do you have a target net worth you want?
My short-term goal is to get 10k into my savings by the end of 2020 and try and double that the following year.
When did you make your first significant behavioural shift towards wealth building?
When I took an interest in real estate, that’s when I found out about all things finance. That really changed my mindset. You see, they don’t teach you about this stuff in school. It’s quite sad that when we graduate we know what a cell in a leaf looks like, but we don’t even know how to manage money or the importance of it.
If you could start again, what would you do differently?
Self educate yourself about all things finance because it’s just so important to know how to manage it. If you don’t take care of it, it won’t take care of you!
What mistakes have you made along the way that others can learn from?
Don’t buy things just because the money is there.
Do you have any worries about retirement? If so, how are you planning to address them?
Not now, it’s still some time away. Ha.
How are you learning about building wealth?
Books are great, yes, but everything you need to know is on Google and YouTube! That’s how I did it and I’m glad I did.
Do you give to charity? If you do, what percent of time/money do you give?
Not currently. But I’d love to in the future.
