Tag Archives: Money Management

Many people have quite vague goals for their future, a good car, a nice house, some overseas travel and so on, but often don’t spend too much time thinking about how they are going to achieve their goals. To be achieved, goals should be:

Specific: Rather than saying ‘I want a car when I turn 18’, be specific about the make and model. Collect all the information you need and write down the reasons why you want that particular car. Specific goals help us to keep us motivated and on track.

Realistic: You may want your first car to be a Ferrari, but that’s unlikely to happen for most people. Goals should be realistic and achievable.

Time framed: Saying ‘One day I want to travel overseas’ is not as useful as saying ‘I will work full-time for two years, save $10 000 and spend 6 months backpacking around Europe’. A concrete time frame will help you organise your money so that you will have saved the $10 000 by the time you need it.

By writing down our goals it is much more likely we will achieve them.

Short and long term goals

It is best to have a mix of short term and long term goals and recognise that choices have to be made at times between our goals.

Short term goals are much more easily achievable and give us the confidence to achieve the longer term ones. A short term goal could be saving $10 a week for three weeks to buy a DVD or CD.

A longer term goal might be saving $20 a week for a year to pay for a  holiday at the end of Year 12.

Generally, short term goals are less than a year, and long term is anything longer.

We can also have different financial goals for different times in our lives. For example 15 to 17, 18 to 21, 22 to 28

Mind Mapping

Preparing a concept map or mind map outlining our financial goals for each stage of our lives is a useful process. A mind map can be prepared on paper or online. There are some excellent free online mind mapping tools. One that I use is Mindmeister. The attached mind map was prepared using Mindmeister and is for a person in the 18 to 21 age group.

The content of this post is based on information from Consumer Affairs Victoria.

A large part of the Year 9 Commerce course is aimed at helping you understand basic financial information and to develop wise money management skills. This is called financial literacy – the ability to understand finance. More specifically it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions through their understanding of finances.

There are some really great Australian websites that provide useful financial literacy resources for young people. Why not take some time to explore these sites.

Dollars and Sense website from Commonwealth Bank

Consumer Stuff website from Consumer Affairs Victoria

Money Smart website from Australian Securities and Investments Commission

Teaching Financial Literacy website from Australian Securities and Investments Commission

At some point in our lives most people will have a need to borrow money. Individuals and families may need to borrow money for major purchases such as a house or a car. Some people also borrow money to purchase consumer items such as electrical goods and holidays. Borrowing money to finance consumer purchases is not a good idea as these items do not hold their value. If you got into financial difficulty and had to sell the item to repay the loan, you would not be able to cover the cost of the loan.

The main lenders of money include:

1. Banks – provide savings accounts as well as mortgages, personal loans, credit cards, overdrafts. Eg. Westpac, Bendigo Bank, Commonwealth Bank
2. Building Societies – mainly lend money for long-term loans to purchase land and/or new or existing homes. They also offer a range of savings and transaction accounts. Eg. IMB, Newcastle Permanent
3. Credit Unions – similar to banks but usually set up to service the needs of a particular group of members. Eg. Ed Credit, MECU
4. Finance Companies – personal loans, consumer credit contracts, commercial hire purchase. Eg. GE Finance