Damian Hoar says millennials can stay ahead of the property game by improving their financial education and shifting mindsets.
While the ‘Australian dream’ model may no longer be viable, Finance And Property Survival Guide podcast host Damian Hoar says young people can still live their ideal lifestyle and find success in property investment.
He joined KnowHow’s Bushy Martin on the Property Hub’s Get Invested podcast to discuss the steps younger Australians, including millennials, need to take.
Improve your education on credit scores
Damian said a lack of education, especially regarding credit scores, is a common cause of financial struggle with millennials.
“People don’t understand the implications to a credit score that ‘buy now pay later’ products have. I’m not the first person to say that it’s not a great product, and I won’t be the last. But the effect that credit cards have on your ability to borrow more or less money is a big one,” he said.
“There’s also an idea that you should get a car loan because the repayments on a car loan will give you a good credit score. And there’s probably an argument for that, but it’s also terrible for everything else. And we’re in a very materialistic society where most people are worried about what others think of them, not what they think of themselves. So they’re going to get a credit card and they’re going to buy things to make them look good. And a car loan is just one of those things.
“Buy now, pay later is crazy. It’s a crazy product. It’s great for some people and it’s great to break up payments, but people don’t understand how it affects your credit score, which will affect everything else. It even affects whether you can get a phone plan. I didn’t actually know that your credit score gets checked for a phone plan up until recently.”
Adjust your mindset
Young Australians and millennials need to adopt the mindset of ‘work smarter, not harder’.
“The biggest thing is working smart, not hard. And there is something to be said about working your butt off. That is, there’s a time and place for that, but there’s also a time and place for working smart and getting ahead with your work or with your investing. It’s about being smart about it and not by just putting the hours in to the point that you’re overworked, really tired and not really being efficient with what you’re trying to do,” Damian said.
Frugality is an equally important mindset to have.
“It’s about being frugal and understanding that it’s about the money you keep. It’s not really about trying to make more money, because there’s so much money, and if you want money there’s heaps out there. But if you spend all of your money, you’re not going to have anything and you’re going to be on the rat wheel trying to escape the rat race,” Damian said.
“So it’s more about being smart with the money you have, rather than always looking for more of it. Because you can spend and lose all of your money pretty quickly. It’s not hard to do in this day and age. For example, we’ve got home loan clients that make crazy money and they spend so much money. In fact they spend more money than I make in a year. And so for some people, the biggest thing is keeping as much of the money you make as humanly possible. So it’s is investing in yourself first, paying yourself first, making sure there’s money for your stuff and the investment you have before you worry about all the expense side of things.”
Consider share housing to save money
Damian said for those who have moved out of their childhood home, share housing is a good option which can allow for better saving.
“I would say renting in share houses is a great way to save money and invest in other ways that aren’t into housing, because I feel like most people realise now, especially young people, they feel a bit priced out of where they live, and I don’t feel like a lot of young people are willing to do what I did to get into the market, and that’s fine. I don’t fault people for that, but I was willing to move to Dubbo to get a property,” he said.
Decide if rentvesting is realistic for you
Damian said ‘rentvesting’ may only be viable for people with a specific set of circumstances.
“If you live at home, that’s a great way to do it. If you live with your parents and they charge you notional rent, but it’s not a crazy amount for you to be able to save as much as possible, that seems to be what a lot of people my age are doing,” he said.
“I’ve got friends who didn’t move out until they were 28 while they went to university and worked a part time gig to be able to buy a house with a deposit, rather than renting. And I feel like rentvesting was super popular when it was very, very, very cheap to rent during COVID, especially in apartment complexes in Melbourne like I did, because your your cost base for renting was so cheap that you could save a lot better.
“But nowadays, with what I feel like is a pretty full blown rental crisis in a lot of the country, I’m just not sure how realistic it is to rentvest. I could be wrong, but I’m not sure about reinvesting for everybody.”