Advice for money rookies

THE world of personal finance has become very complex. While the internet has created more opportunities for sensible money management, there are also plenty of avenues to spend without using hard cash, and that can mean getting caught up in mounting debt. With time, most of us recognise what works and what doesn't with money matters. But without that experience under their belt, it's easy for money rookies to make expensive mistakes.

That's why it's good to hear ASIC has launched a new online initiative called 'MoneySmart Rookie'. It's designed to help 16 - 25 year olds avoid costly errors when they make those first key financial decisions.

I took a quick tour of MoneySmart Rookie and was pleased to see it features plenty of relevant, easy to read information with ideas on things like how to check your pay packet is accurate, what to consider when buying a car and moving out of home. The site has videos, case studies, information and tools to help young people make smarter financial decisions. There is also a series of guides that teachers and parents can use.

ASIC recognised the need for a site like this following research showing 16-25 years olds face some unique money challenges. In particular there can be gaps in awareness of things like how contracts work, prioritising saving over spending and knowing what rights and responsibilities we have as consumers and where to go for help if things go wrong.

Actually, while there are lots of adults who could benefit from some of this information, for young people starting out in life, having access to straightforward hints and tips on money management is a real plus.

While online information is great, don't forget it doesn't replace the role of parents in teaching kids about money. Parents remain powerful role models for personal money management, and even once your son or daughter has left home or school it's still important to provide sensible advice so that your kids aren't handicapped by mistakes made at a young age.

The same ASIC research noted some common money errors made by 16-25 year olds. These included running out of money for essentials, turning to dodgy, non-mainstream lenders for credit, which can mean paying unnecessarily high interest charges. Like plenty of older adults, many of those surveyed had missed payments. The problem here is that defaults and even late payments can be recorded on your personal credit file, potentially limiting your options for securing credit through a regular lender further down the track.

I believe that the more we understand how money works at a young age, the less likely we are to run into financial difficulties during our adult life. An early understanding of money is really valuable.

Check out MoneySmart Rookie on the MoneySmart website at

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit for more information.

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