"It's not a bargain unless you need it" eBook

“It’s not a bargain unless you need it” and 49 other life lessons and financial advice to live by

Everybody needs advice from time to time. Advice can be good or bad; it can be professional or personal, sought or unsolicited; and – most importantly of all – it can be followed or ignored.

But there’s one thing you can count on: quality advice is not easy to find.

Sound, high quality financial advice – so who couldn’t use a bit of that? But traditionally it has only been the super-wealthy, or perhaps those on the verge of retirement, who’ve had ready access to quality financial advice.

At Yellow Brick Road, we’re looking to change all that. Our vision is to allow all Australians the opportunity to receive accessible, quality financial advice through our network of trusted local advisers.

Wise advice is rarely brand new. Much more likely it has been handed down in the richness of life’s experiences.

We asked our advisers to tell us how they came upon their favourite words of advice.

Here’s what they had to say…

“Often the best financial advice we receive is drawn from small moments which are easily brushed off as insignificant. This collection of real life experiences is a tribute to the lasting impact these moments can have if we choose to listen.�

- Mark Bouris

Budgeting is important but cash flow is king How often are we told that timing is everything? My father knew this. He had been in finance for many years, and had risen to CEO of a major finance company. When I began studying at university I had to budget my money very carefully, and I was quite proud of myself, and knew this would make him proud also. Nevertheless I still had a lot to learn about making ends meet – and, better still, grow. I remember my father said to me “Budgeting is important, but cash flow is king.”

The budget may be fundamental to managing one’s affairs – be it running a household, or a business, or for the purpose of investing. However it is every bit as important to understand the timing of your cash flows. This is what will determine what you can actually spend, and when. Ensuring that the cash going out is at least matched by what is coming in, whether it be from wages, customer receipts, well-structured borrowings or existing cash reserves, is the key to financial independence.

Matthew Sweeney

Money can’t buy you happiness.

My mother gave me a great gift for the Christmas of 1987. It was Noel Whittaker’s “Making Money Made Simple (1987 edition)”. I was just 12 years old, and I remember starting to read the popular book – the “Da Vinci Code of 1987” according to one reviewer – while I was still sitting under the Christmas tree.

Mum was extremely good with money, and always knew where every cent was being spent, and she was intent on setting me on a prudent and happy path to financial security also. On the flyleaf of the book she had written: “I hope you find what you’re looking for in this book, son. Just remember this: money can’t buy you happiness, but it can provide you with peace of mind.

And then you’re free to discover your own happiness.”

Although she had given me a whole book on managing personal finances, Mum’s real and lasting gift to me was the wisdom of her handwritten comment – possibly the most extraordinarily memorable piece of advice I have ever received.

Andrew Lowe

Don’t complain about bank fees, buy the bank.

Many years ago I had a memorable chat with the managing partner of an accounting firm. The firm specialised in liquidations, and suffice to say there had been plenty of financial mistakes and disastrous consequences come across his desk.

I was about 25 years old, and sick to death of banks ripping me off with fees and charges that seemed exorbitant to me. His advice that day turned my complaint on its head: “Don’t complain about the fees the bank charges you for holding your money. Take your money and buy shares in the bank instead.”

It’s true, of course. If you look at people who have built really substantial wealth, they rarely keep their money in the bank. I only wish I had followed this advice back when I was young, when there were plenty of blue chip stocks available for the taking. I don’t like to think about what the money from my modest bank deposit could have become by now …

I often tell my story to my clients to help them see the importance of investing, not just depositing, in order to build their wealth.

David O’Reilly

It’s not a bargain unless you need it.

This is a simple and rather old-fashioned principle, but I would challenge anyone to deny its wisdom. It came to me from my grandfather, when I was visiting him in his home in Bathurst where he was a school teacher. When we went out shopping together I noticed how deliberately he avoided all the really interesting sale items and just stuck to his shopping list. “It's not a bargain unless you need it,” he would say.

Although it wasn’t very appealing to me at the time, these days I often reflect on the universal truth behind my grandfather’s advice. I’ve lost track of all the unnecessary “bargains” I’ve spent my money on since then, and it is indeed a sobering thought to reflect on how much I would’ve had to invest in the things that matter, rather than the long-forgotten trifles that seemed like such a good deal at the time.

Barry Lindbeck

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the bes

t

When I looked at everything she had achieved I thought she had already made it, and surely she could sit back and enjoy her success. But no. She kept at it, always looking to improve, forever seeking out the experts, learning from their example and broadening her own skillset. It was a simple yet powerful work ethic, and her success was the proof. Later in life I came to realise that it’s often the case that successful people are those who continually look to others for inspiration and support. This has been a life lesson for me – in my own career I’ve been driven to surround myself with those who hold a passion for success, and will be a positive influence on me. I only have to look around at the network of like-minded and talented people I have around me today, and I know I have followed the recipe.

Hung Chuy

l f wi t

und

When I was a university student, I paid my way by working full-time for a major franchise. The most valuable thing I took away from that experience was my employer’s recipe for success. She was a highly successful franchise owner, and I remember her telling me “in order to achieve success, you should surround yourself with the best”.

yo u

o

surr

r se

TURN TO OTHERS. So they say no man is an island.

No person has been born who can’t gain something from the assistance and goodwill of another person. No one person is going to be able to achieve every possible thing on their own, and so it makes absolute sense to “turn to others, when you can”.

Particularly in the business world where experience is everything – why would you pass up the chance to learn the lessons from a fellow traveller’s journey? This advice came from my boss when I was about 26 years old, still young and brash and certain I already knew it all.

Well of course it took some time for me to realise the wisdom in these words. But once I got it, it stood me in good stead in my business endeavours, and I now make a point of passing on this same advice to others – particularly those who are standing on the starting block of their careers as I was back then.

Mitchell Murphy

Y$U HAVE T$ SAVE Y $ UR PENNIES

I was just ten years old when my Mum told me “You have to save your pennies to get what you want”, and these words have stayed with me ever since. Do you know, the things I would have spent my pennies on back then seem pretty silly to me now.

But the small amounts that I put away then, became the kernel of greater savings – and of a life-long habit that helped me to financial independence. I look around these days and it seems the art of planning and saving for important things often takes a back seat to instant gratification, and in time this can lead to bad mistakes and financial distress. The best part of my work today is helping to educate my clients, improving their financial literacy, and identifying the common pitfalls which might rob them of achieving life’s real goals – goals like owning their dream home.

Deb Fredericks

YOU

GET

PAID

FOR R!SK. About 10 years ago I was working for a hedge fund in New York. I was fortunate enough to work with one of the world’s most successful investment managers who was not only the founder of the firm but also a pioneer in the hedge fund space.

He was responsible for billions of dollars of pension fund capital and was in possession of an amazing ability to distil incredibly complex concepts down to simple truths that anyone could understand. One of his favourite axioms when articulating the relative performance of different funds and investment strategies was: “You get paid for risk.” Risk and return are two sides of the same coin. You don’t get one without the other, and you should never fool yourself otherwise. It’s a great mantra for any investor, and one which informs my investment strategies to this day, having helped guide me safely even through the financial minefield of the GFC. Campbell Korff

PAY YOURSELF F1RST. I was 18 years old when I read Rich Dad Poor Dad by Robert Kiyosaki on the train travelling to university. It was Kiyosaki who famously coined the phrase: “Pay yourself first.” Like millions of other kids growing up, I had been taught the simple steps to success – like getting a good job, and always giving it your best shot.

But is this enough? Kiyosaki’s wisdom is that no, it’s not enough. There is much more you can do to secure a more successful outcome.

Don’t just work harder, work smarter. And work your money in smarter ways too. When my pay cheque comes in, the first bit is set aside to be invested in my future wealth.

Only when I’ve done that, am I free to use the remainder on discretionary items, travel or entertainment. This is the essence of Kiyosaki’s advice: pay yourself before you pay anyone else. My money works hard for me, and this is what I wish for my clients also, because I know it works.

Clyde Gonsalvez

PAY DOWN # DEBT AND PREPARE TO SPEND MONEY$

I WAS 45, A CAREER POLICE OFFICER, AND WORKING 24-HOUR SHIFTS, WHEN AN INDUSTRIOUS COLLEAGUE GAVE ME THE ADVICE THAT WOULD CHANGE MY LIFE FINANCIALLY. HE SIMPLY SAID, “PAY DOWN DEBT AND BE PREPARED TO SPEND MONEY NOW TO INVEST IN YOUR FUTURE.” HE HAD OBVIOUSLY MADE THIS WORK FOR HIS OWN AFFAIRS, AND SO I FOLLOWED HIS ADVICE. WITHIN A FEW YEARS I HAD PAID OFF OUR HOME LOAN, AND THEN SET TO WORKING OUT HOW TO MAKE THE MOST OF MY SAVINGS THROUGH INFORMED INVESTMENT. I SOUGHT THE ADVICE OF THE MOST RESPECTED INVESTMENT PROFESSIONALS I COULD FIND, AND DILIGENTLY INVESTED MY SAVINGS IN LINE WITH THEIR ADVICE. AS FATE WOULD HAVE IT, I NOW FIND MYSELF WORKING WITH THESE SAME PROFESSIONALS, HELPING EVERYDAY AUSTRALIANS SECURE THEIR FINANCIAL FUTURE. WHAT GOES AROUND COMES AROUND …

PETER BENNET

Dont gamble.

Invest.

One afternoon I was walking to the shops in my lunch break, intent on buying a ticket in the 70 million dollar lotto, when ironically my eyes landed on a local billboard proclaiming a sage piece of advice. In big block letters it read, “DON’T GAMBLE – INVEST.” I won’t lie to you – that billboard changed my afternoon plans.

Every dollar given away to lotto is one dollar less that I have to invest in real property that can appreciate and help secure my future. Needless to say, since that day I have ignored the lotto jackpots and instead devoted my life to increasing my customers’ awareness of the benefits of investing in tangible, bricks and mortar assets.

Tanya Zahra

UTILITY

BILL PHONE

BILL

Treat savings as if it were a monthly bill.

I received some savvy financial advice once from my sister-in-law. I was about 30 years old when she gave me this advice and I’ll never forget it. She said, “treat savings as if it were a monthly bill – as we all manage to pay our bills, but find it much harder to save.” From my experience of customers’ savings patterns, there is a universal truth to this.

We pay our monthly bills because we feel some imperative to do so – to avoid the disaster of losing a service or an asset that we rely on. Now we just need to see our savings “bill” in the same light: we pay it to avoid the disaster of dwindling wealth. I even recommend to some clients that they may consider borrowing money in order to bolster their payments to their savings “bill”.

Or, as I think of it, to ‘indirectly save’. This might be in the form of investing in something like a sound investment property. This way, with a reasonable level of risk, they can sit back and watch their investment grow in value over time. This strategy, if executed correctly, is a tried and true way of generating returns and building wealth in the long term.

John Cross

In business there are h ghs

and

My Dad is an entrepreneur, a self-made man. He never even finished high school, but he wasn’t going to let that stop him from making a success of his life. He wouldn’t tolerate waste, and we lived modestly on a tight budget.

Not easy for my three brothers and myself, growing up in a two-bedroom house. My Dad taught us to be sensible with our money, to never waste it, and to be honest in all our dealings.

lows

He warned us “In business there are highs and lows. When you’re enjoying a high, you need to work as hard as you can to make the most of it and save, so that when the lows come along you’ll be able to weather the storm.”

My Dad’s simple principles have become the anchors of my life. So engrained are they, that I will often hear myself passing on my Dad’s words to my clients and friends in turn. I know the benefits of his wisdom first-hand, and my job gives me the opportunity to share these benefits with others...

Erny Chia

Stick to what you know

outsource

anything outside of your area of expertise.

Probably the most memorable piece of advice I have ever received was from my Dad. He is 65 years old and funnily enough, just like me, he enjoyed a rewarding career in financial planning.

Dad’s theory was: “stick to what you know and outsource anything outside of your area of expertise”. Fresh from my studies, ambitious and set to conquer the financial world, do you think I wanted to hear this? I was on a mission to master every nuance of the industry, to be the best.

But there’s no louder sound than the whispered words of really good advice.

Over the years as I matured into my role as a financial planner, Dad’s words

saved me from many an overambitious undertaking. Far better to be able to give quality specialised advice that clients can trust, than to try to cover areas that I don’t consider myself expert in. Each day I strive to ensure I can give my full service offering to clients. But whenever a situation arises for which I need to call on outside expertise, I openly acknowledge this to my clients and recommend an appropriate associate.

Jackson Millan

A fool and his money are easily________parted.

How I wish I had a dollar for every time my father told me that. I was five years old when he first gave me that word of advice, and do you know, it is as relevant to the way I manage my life savings now, as it was to my pocket money back then. I am a cautious investor, ever vigilant when it comes to decisions affecting how I maximise, and yet protect, my hardearned savings. My father helped me to realise that saving is a key life skill, especially in an age where there are countless opportunities to lose your savings entirely. My father’s advice is at the heart of my strategies for responsible investment, and in my turn I pass this same sage advice on to clients and associates alike. Especially when they come to me with their latest idea for a ‘can’t lose’ investment. At the end of the day it is usually a safer bet to rely on the less spectacular but well proven methods for wealth accumulation, rather than the latest get-rich-quick thought bubble.

Sze Chuah

SAVE FOR A RAINY DAY. MY ROLE INVOLVES GIVING PEOPLE QUALITY, ACTIONABLE FINANCIAL ADVICE. AND I’VE RECEIVED MY FAIR SHARE OF FINANCIAL ADVICE OVER THE YEARS TOO. BUT THERE’S ONE PARTICULAR PIECE OF ADVICE THAT WILL ALWAYS STAY WITH ME, AS IT WAS GIVEN TO ME BY MY GRANDFATHER WHEN I WAS 15 YEARS OLD. HE HAD MIGRATED TO AUSTRALIA IN THE 1960s TO FIND WORK AND MAKE A BETTER LIFE FOR HIS FAMILY. HE ENDED UP GETTING WORK AS A FITTER AND TURNER AND, IN ONLY A FEW SHORT YEARS, BOUGHT A HOUSE. ONLY THEN WAS HE ABLE TO BRING THE REST OF THE FAMILY TO SYDNEY TO START THEIR NEW LIFE. EVEN AT SUCH A YOUNG AGE, I WAS AWARE OF HOW DIFFICULT IT MUST HAVE BEEN FOR HIM TO LEAVE HIS FAMILY AND COME HERE WITH NOTHING, TRUSTING IN HIS ABILITIES ALONE TO BUILD A LIFE FROM SCRATCH - AND HIS STORY HAS HELPED ME TO UNDERSTAND THE VALUE OF SAVING AND SPENDING MONEY WISELY. “SAVE FOR A RAINY DAY,” HE WOULD SAY TO ME. ALL OF THESE YEARS LATER I REALISE THAT BUDGETING AND CASH FLOW ADVICE ARE THE SINGLE MOST IMPORTANT TOOLS WE CAN OFFER OUR CLIENTS. PUT SIMPLY, THIS THE FOUNDATION OF ANY INTELLIGENT FINANCIAL PLAN. Lachlan Cottee

Dollar today is not worth one dollar tomorrow.

The piece of advice which has been most formative for my career was a word from my first year economics lecturer back during my university days. He was a very good lecturer who made economics interesting with his quirky humour and clever insights. One day he began the lecture by announcing, “One dollar today is not worth one dollar tomorrow.”

It had us scratching our heads, but he went on to explain that we should seize the opportunity today, otherwise the world will move on, and if we try to take up the opportunity belatedly it will not reward us as well. Well that advice certainly has stuck. It often comes to mind as I’m explaining to my customers the effects of such factors as compounding interest, and the cost of living, on their investment dollar.

Vincent Wong

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$ Make $ money $ while you sl p.

George was our milkman. His milk van was clapped out, and he dressed to match.

He had an injury to one eye, and to tell the truth he wasn’t all that easy to look at.

At least not for us kids. With typical schoolyard unkindness I’m ashamed to say we made fun of old George.

I couldn’t believe it when Dad told me that George was really a very wealthy man.

Of course now, with the benefit of maturity, I can see that it was a mix of eccentricity and genuine modesty that led him to eschew making a show of his wealth.

I can still see, with my mind’s eye, George’s face as he looked intently into my eyes one day, and imparted the following gem of wisdom: “Make sure that you are always looking for ways to make money while you sleep”. Such simple and fine advice. But the sad thing is that I just could not understand at the time what he was trying to say. With greater maturity I have come to see the essential truth of his words, which is that you should do what you must to make your daily dollar, but at the same time try to set aside some part of your assets to work away in the background for you, building your wealth even while you go about other things.

Well, today I am a wealth manager with Yellow Brick Road, and I have never forgotten the advice of George the milkman. Imparting the truth of his strategy to my clients is what motivates me – if this allows them to realise the same benefits as I have, I will be happy that I’ve done my part in handing down the wisdom, just as George did to me.

Alec Poulsen

GETTING INTO DEBT WILL HELP

YOUR

CREDIT

RATING. THE MOST IMPORTANT ADVICE I EVER RECEIVED WAS MEMORABLE FOR ONE REASON:

Blake Chandler

When I was 18 years old, a banker remarked to me that “Getting into debt will help your credit rating”, shortly before attempting to convince me to take out a sizable personal loan. You know this is all wrong, right? The credit scoring system that we have in Australia doesn’t reward you for taking out a loan that you can’t afford. The only winner there is the banker who has advised you to buy his “product”.

The ill-conceived advice that this banker gave to me back then has stayed with me throughout my career, as an important reminder of the responsibility that rests with any genuine financial adviser.

It must always be the needs and financial objectives of the customer which inform our decisions and our advice to them. We first understand the customer, and then do everything in our power to ensure our advice to them is well-considered, transparent, and above all untainted by any interest of our own.

Put yourself in front of the money queue.

I spend my days giving people financial advice to help organise and grow their personal wealth.

After all, I don’t think anyone disagrees that good financial advice has the potential to change one’s life. One particular piece of advice I was given many years ago certainly reshaped my life. I was about 28 when an older and wiser work colleague told me quite simply: “Put yourself in front of the money queue, make savings first.” In every practical sense it just made so much sense to me instantly.

Like many people, I had tried very earnestly to save what was left over after all the bills were paid. But I just never seemed to have a cent left, once I’d paid the seemingly endless queue of people needing a slice of my income. I had tried budgets but they never seemed to work out either. But the strategy of setting aside a percentage of funds first, and then restricting myself to living on just the remainder, has paid dividends for me ever since.

John Cross

Put 30% of your wages away.

As someone who works in the finance industry for the mums, dads and everyday people, I find myself handing out financial advice on a daily basis. But if you ask me about advice I’ve received personally, it really boils down to just one tip which has had a lasting impact and shaped my personal and professional approach to financial management.

I was 16 years old at the time, and was filling out the paperwork for my very first job. I was about to earn my first, very modest, income and my mum saw the timely opportunity to hand down some valuable financial advice. She advised me to put 30% of my wages away into a savings account, every week, no ifs, no buts, no maybes. As you can imagine, at 16 my first question was: Why? And her answer was simply, that this is how you make sure you have what you need to get what you want. One day, sooner or later, I would want something very expensive – maybe a car, an overseas trip, a home.

Well, we seemed to be talking about things that I wouldn’t be thinking about till way in the future, but I did take her advice on board, and how happy am I that I did. This is how, at quite a young age, I was able to fund a nine month dream trip overseas and then, when I came home, lay down a deposit on my very first home.

These days making savvy financial decisions for myself and my clients is my everyday passion, but you know it all started with one little word of advice…

Andrew Kalogirou

$

30 %

Any idiot can earn a million dollars At some point in your life, you’re going to be offered some profound advice. It will stick with you forever and shape your approach to life. Mine came to me from an unlikely source. I was 19 years old and an apprentice living in Frankston, Victoria, making some money but with no plan for my financial future.

My then girlfriend’s uncle, an extremely successful multi-millionaire who had built his successes as a timber merchant and property investor, said to me: “Any idiot can earn a million dollars, but it takes a genius to keep his first million.” And my own experience bears out the truth of what he told me back then. Early on, I made some good money. But without clear goals or purposeful investment plan, it quickly evaporated. There was no genius in that. Today, I’m diligent and disciplined about having a plan.

Revisiting my wealth process with a clear view and greater awareness has helped me to not only retain, but really grow the assets I have accumulated.

Dave Brewster

Bricks and mortar.

It may be an oldie, but it’s certainly a goodie.

My mother had migrated to Australia from Europe in the late 1950s. Her parents had lived through two world wars and the Great Depression, suffering hardships which I cannot begin to imagine. Like many, their savings had become worthless, and they ended up losing it all. Just one thing kept them afloat, and separated their destiny from that of so many Europeans of the time. And that was the property that they owned free and clear.

This gave them a ridiculous advantage in the economic carnage that followed, and eventually they were able to regain some of the liquid wealth that they had lost. And so my mother, quite rightly, saw property ownership as gold.

I was only 12 years old, and had just received my very first pay cheque for working in the family business, when she impressed this wisdom upon me. I now share this advice with my children, my friends, and my clients. Of course there are risks associated with owning real estate, just as with any investment. But, for my grandparents, property investment was a safety net, and a springboard for their recovery from hard times. I will never forget their story.

Andrew Fortelny

My beloved grandmother and her rainy day

The most memorable advice I ever received came from a woman who was born during World War One and lived through the Japanese occupation of Malaya.

A tough lady who raised seven children, selling cakes and special biscuits to supplement her income during the difficult post-war times.

This was, of course, my beloved grandmother, a woman who lived by her mantra of always setting aside a portion of any money she received, for a rainy day. She passed this wisdom down to me when I was growing up in my early teens, and it has been with me ever since. It has helped me on many occasions. Not the least of which was when our youngest son was born, and I had to take several years off work to help my wife with his disability. It was my dear grandmother’s advice which had resulted in the savings that enabled us to live through those years without a breadwinner. Today, I make sure my kids all live with an eye to the rainy day, and all my clients are aware of the importance a of reserving a buffer before looking to make further investments.

Alan Khaw

Successful investing is not about timing the market.

One of the best pieces of financial advice I’ve ever received came from my manager when I was 30 years old working at a private bank. This manager was a unique individual who had a great passion for his job, and an uncanny ability to inspire others.

His advice was, “Successful investing is not about timing the market, but about time in the market.”

In other words, it’s not just about picking the right time, but being prepared to take the long view.

Great advice for any would-be investor. People routinely ask me, ‘is now a good time to invest?’.

My answer is simple: while timing is certainly a consideration, the most important success factor is to have a long-term mindset. Even a small amount prudently invested now, can grow into a substantial investment down the road.

Graham Ede

Get a smaller home loan When I was 27 and looking to buy my first home, I received some great advice from a close friend. He was an old friend of the family who was like a second father to me, and I guess he was looking after me just as he would do if I were his own son.

Anyway, he told me, “Do not borrow too much on your first home, you will be able to pay it down much quicker with a smaller loan.” Well it doesn’t get much simpler than this, but do you think I wanted to hear that? I guess we all want the biggest and best that we can get our hands on, and that can mean borrowing up to our eyeballs.

However out of respect for my “second dad” I did heed the advice, uninspiring though it seemed at the time, and I can honestly say that, since then, this very advice has saved me many times from financial disaster. Without thinking, it is easy to overcommit yourself when things are going well, but the thing with good times is that they invariably dry up at some stage. When interest rates rose above 18% there were many struggling to make repayments, but my smaller loan was well on the way to repayment, and I never had that sinking feeling of being vulnerable to the vagaries of the market. How very thankful I was that I had heeded this simple word of advice.

Craig Yew

You should be saving 20 kurus in every lira.

My father was a builder, not a financial adviser. But boy he knew how to build things. And that included building wealth… I remember many wise words of my father, but the most memorable of all was his simple blueprint for building a strong financial future.

There is nothing earth shattering about these simple words, but I have applied the principle to my financial dealings ever since. At the time I was 19, we were living in Turkey and I had just started my first full time job. It paid well for my age. But I was spending it as fast as I earned it. It was then that my father pulled me aside and said, “Son you shouldn’t spend more than you earn, and as a matter of fact you should be saving 20 kurus in every lira you earn.” I was ashamed – I had worked hard and earned so much, and I had so little to show for it. From that precise moment I resolved to follow my father’s advice and now I set aside 20 cents from every dollar, to make sure I will always have something to show for my efforts.

Mehmet Tavli

Eat what you can and can what you can’t.

The most far-reaching piece of advice that I ever received was from my father. My father was a bank manager and the son of a bank manager.

He had a brother who was a bank manager, as well as a brother-in-law who was a bank manager, and he met my mum while working in a bank. So I’ve got banking and finance in the blood. My father’s advice was: “Eat what you can and can what you can’t.” Good advice for avoiding an ever-increasing waistline, you might think. But Dad was on about more than just physical food. Take and use what you need, but not more – any surplus should be saved and put to wise use, not wasted on over-satisfying your appetite. It’s a great strategy for managing money and savings.

Ultimately, less waste means more dollars in your pocket.

Craig Franklin

Don’t bother investing I received one of the worst pieces of financial advice of my life when I was 20 years old and working for a big bank. I was interested in shares and keen to get started early. I even had my eye on some stock that had recently been floated, and which looked like a steal to me.

However, the bank’s in-house financial planner advised me not to go there. He told me that I was young and that there would be plenty of time for investing later in life. To tell the truth I felt a bit silly … I mean, he would know, right? Anyway, I didn’t buy the stock. Big mistake. Those shares at today's price would’ve been many, many times my original investment. Part of the reason I became a financial planner was so that my clients would not receive this type of poor financial advice. One of the most powerful tools of wealth building is the principle of investing early and compounding growth. Truly, it is never too early, you are never too young.

Stephen Goodwin

Would I be happy to never see a cent of this again?

I was offered a very worthwhile piece of advice by my father when I was just starting out. I had just finished my first year in the Army in Brisbane and was heading off to Canada for some winter sports.

Only trouble was, a really good pair of skis cost a bomb, and I had spent every penny I had just making the trip. Although I did have a little bit put away in a savings scheme …

Of course my father put the brakes on that idea, telling me I would be sacrificing my nest-egg for nothing more than a flash pair of skis. Well, I was 19 and I couldn’t be told – I went right out and bought those skis, promising myself that I would sell them and recoup my money at the end of the trip. Well the trip was great, and the skis were amazing.

But when it came to selling them, I couldn’t get more than a tenth of what I originally paid. Not the return I was hoping for.

Now I approach purchases with an entirely different mindset, asking myself before I part with my money “would I be happy to never see a cent of this again?”

If the answer is yes, then I proceed with the purchase, because it can be OK just to buy something for the fun of it. But if, as is more common, the answer is no, then I wait for something better to put my money toward.

My clients hear this from me every day – it’s not about never buying something for the pure fun of it, just so long as you know exactly what you won’t be able to do with the money that you spent on it.

Michael Bysouth

only buy when it’s on special.

One of the best pieces of advice I’ve received came from my father when I was in my thirties. I remember I was home visiting, and out of the blue he told me: “When it comes to your grocery shopping only buy when it’s on special.” Just like that. Well, when I thought about it, it occurred to me that this was a principle that he had followed for as long as I could remember. As a child I thought it was a funny quirk, but now I get it.

He loves doing his grocery shopping on the same day of the week, and at the end he adds up the total savings and I know this pleases him. No impulse buying for Dad, just the necessities – and especially when they’re on special.

It’s a shopping habit that has rubbed off on my wife too, and I think it’s very likely our children will one day do the same.

You know, in this family habit I can see a parable for financial decision-making. Don’t jump in on a whim – take your time, plan your shopping list and consider your options, and with a bit of patience and maybe some expert guidance, you just might come across the right specials.

James Sterndale-Smith

specials

Don't buy the expensive car, put a deposit on the cheap house.

Regrettably I didn’t recognise the most important advice when it came along. My father was a hard working man, and when I was about 23 and only interested in fast cars, he tried to encourage me to buy a property. He said, “Don't buy the expensive car, put a deposit on the cheap house.

One day that car will be cheap but the house will have become expensive.” We were at a property auction together, I remember. I didn’t want to disappoint him, but the thought of turning my hard-earned money into a deposit just didn’t have the same appeal as getting my hands on some good wheels. I learnt my lesson five years later however, when the little house I didn’t buy sold for three times the sale price of the auction. At that moment I realised the wisdom in what my father had said. With a bit of foresight I could have tripled my money, and ended up in a position to buy the car as well as the property.

Adam Sanfilippo

The earlier you get on the property ladder the further you will be able to climb.

My father was very wise. While I was still at university, when studying and graduating and getting a job were number one on my list of priorities, and property and investing were the furthest things from my mind, he shared some of his wisdom with me. He wanted me to start thinking about getting myself a property, telling me “It doesn't matter whereabouts on the property ladder you get on, it’s just important that you get on there as soon as you can afford to.” At that early stage I was never going to be able to afford to buy the home of my dreams, but far better, in Dad’s opinion, to get a toehold at the price point I could afford, than to get left behind.

This advice is no less true today. It doesn’t matter so much where you start, as when.

And the when is now. The earlier you get on the property ladder, the further you will be able to climb.

Often my first priority with clients will be to advise them how best to start saving for that all-important first deposit. As soon as they’ve nailed this, I tell them about the ladder.

Sam Perdriau

As for time, all men have it in abundance.

When I was about 14 or 15 years old, a family friend handed me a book which would change my life and put me on the path of pursuing a career in financial management. I must say, I wasn’t much of a reader at that stage of my life, when sport and video games had much greater appeal. As it turned out though, I was entranced by this book which was a collection of modern financial ‘wisdoms’. One tenet in particular resonated with me immediately, “As for time, all men have it in abundance.” The explanation? In terms of accumulating long term wealth, time is everyone’s best friend ... all we have to do is to get started early enough to give time the chance to do its work.

Well, it’s the best advice that I ever received, and one which anyone can put to use. Take the long-term view to building your wealth, and get it happening NOW. The sooner you begin, the greater the rewards will be over time.

Phillip Segaert

Never sell an investment property unless it becomes too hard to maintain.

When I was, oh about 30, I received one of the best pieces of financial advice from an unlikely source. I was out watering the lawn when my neighbour appeared in his yard, and we took to talking about things, as you do.

As it turns out, he was an astute investor who had many properties, while at that time I was just beginning my investment journey. His advice to me was, ‘Never sell an investment property unless it becomes too hard to maintain.’ Of course every investor needs to balance this principle with their overall personal property and wealth building strategy, but it has been a pretty good maxim that has certainly stood me in good stead, and I feel I owe much of my subsequent investment property success to those simple words. Who would have foreseen that a remark from my neighbour over the back fence would have made such a positive impact, not only on my own investment strategies, but on so many others who have in turn come to me for advice?

Phil Elliott

The key to wealth is to spend less than you earn and borrow less than you can afford.

My dad gave me some great advice on my 18th birthday. I was on a mission to buy my dream set of wheels that I had seen advertised, but he quickly rained on my parade, warning me against borrowing to buy a depreciating asset. “The key to wealth is to spend less than you earn, and borrow less than you can afford.� Of course I bowed to the folly of youth and inexperience, and promptly acted in direct contravention of his wise words, borrowing and spending to the max.

Well, it took a while for that car purchase to lose its shine, but pretty soon it became nothing but trouble and unbelievable expense. I soon realised I may not have backed the right horse, and made a resolution to start putting my father’s good advice to use. I sold the car for a fraction of what I had paid for it, but I was happy just to be rid of the thing. By now I had been more disciplined in my spending habits, and had a bit put away. So much so that I was able to put a deposit on a good investment unit. Unlike my disastrous car purchase, this property purchase really paid dividends down the track, and I now live my life avoiding bad debts and focusing on improving my financial wellbeing.

Matt Caruana

It is not WHAT you earn, but what you do with it.

It was when I had just completed my first year in university studying a business degree that I came upon an enlightening truth. I was being trained as an accountant and worked very closely on matters relating to profit and loss statements.

I think it came about as a result of examining and re-examining profit and lost figures day after day … but it suddenly dawned upon me that it is in controlling one’s expenses that one finds the true key to business survival, irrespective of the prevailing economic conditions. I heard it expressed by an early mentor as: ‘It is not how much you earn, but what you do with it that determines your wealth’. In other words, good incomings are important, but controlled outgoings even moreso. I have stuck by this principle ever since. These days, no matter what my income, I stick to a modest weekly spending budget and save as much as possible.

David Chia

Put your credit card in an ice cream tub.

From the time I first started working at around 17, it didn’t take long for me to discover the joys of qualifying for a credit card. I hadn’t had a lot of financial advice from my family while I was growing up, but I do vividly recall a conversation I had with a workmate at the retail store I was working in. When she heard of my plans to apply for a credit card her advice was, “Sure, get a credit card. Then put it in an old ice cream tub, fill with water and freeze”.

Sounded bizarre, but her logic was this: when the time comes that you want to use the card, you’ll need to go home, get the tub out, let it defrost, and in the meantime rethink whether or not the purchase was actually necessary. In essence, force an opportunity onto yourself to fully consider whatever you’re planning to spend your money on, and avoid getting swept up in the moment.

Well, it might not be the most conventional advice, but it certainly made its point.

And remembering this strategy has resulted in me avoiding quite a few impulse purchases over the years, thereby accumulating some healthy savings in my bank account, not to mention a good share of ice cream.

Luke Shrewsbury

Don't be afraid of paying tax.

When I was in my early twenties my mother gave me a couple of great – if unconventional – pieces of financial advice. My mother is a very intelligent lady, a corporate accountant who knows a thing or two when it comes to tax and property investment. I think I always knew her advice was first rate, although, as is so often the case with young people, I didn’t necessarily have the maturity to act on it right away.

The advice that surprised me most was when I first told her I was about to buy this great investment property. I would set myself up to make a killing by negatively gearing my investment in the property, pouring money into it every month, and making a tax loss for myself. That way I’d have a fabulous investment property that was losing money and saving tax. Everyone (except Mum) thought it was a brilliant idea. But Mum’s word of caution was: “Don't ever believe it's a good idea to spend $1 to get back 50 cents”. To this day I have never heard a clearer warning of the potential danger of negatively gearing a property. Of course, negative gearing is effectively used by many wise investors, but it is not a silver bullet for every individual case. And at that particular stage in my life it was definitely not the right strategy for me.

The other piece of great advice my mother passed along to me was “Never be afraid of having to pay tax. If you have to pay tax then it means you are doing well, and you’ve been successful in what you’re doing.” At the time I had been hit with some capital gains tax, and also needed to pay tax on the income from my cash flow positive properties. Contrary to popular wisdom, the tax was proof that my investments were doing well.

So now my husband and I are well on the way to building a property portfolio that will give us a substantial passive income and allow us to have the kind of work-life balance that few enjoy these days – how could anyone argue with the wisdom of the advice that brought us to this point?

Kara Collins

If you want to get ahead, you have to be the engine that drives your financial future…

I owe much of my success to a home truth told to me by my father when I had just turned 21. At the time I was in Adelaide working in the warehouse of our family business. Things were pretty easy, but I wanted to get ahead – better job, better pay – and so Dad suggested to me that I should try my hand working in his Melbourne office. Moving interstate wasn’t really what I’d had in mind. But he told me: ‘If you want to get ahead you have to be prepared to go and grab the opportunity with both hands.

You have to be the engine that drives your financial future.” So at 21, I packed up, and off to Melbourne I went, determined to drive my own future. The lessons my dad taught me about working hard, and taking charge of my own future rather than sitting back and expecting it to happen, have influenced my career and my life ever since. My wife and I both have our own businesses now. My dad’s words of truth stand behind so much of our success, and the proactive approach we have always taken to wealth creation. Moreover, with a lifetime of understanding what makes small businesses tick, we now share our insights with others embarking upon a self-employed path.

Darren Williams

There’ll be property highs and lows, so, be patient.

When I was purchasing my first home at 23, my dad tried to explain the property cycle to me. He said, “There will be property highs and lows so the key is to be patient”. Well, frankly, what 23 year old wants to hear that it won’t happen overnight? Anyway, I purchased my first home in 1993 for $135,000 and at the time there was some talk of the property cycle being seven years.

I impatiently waited out the seven years but then, and with my second child on the way, I decided my dad's advice wasn’t that good after all, as I had not seen any real increase in the value of that property over the time that I’d had it, and so I decided to get out of it in order to increase the cash flow for our growing family needs. Over the six months after selling, I watched in horror as my old house doubled in value, and then followed up with a further substantial increase the following year. I had purchased in a 'high' and sold in a 'low'. Now I could certainly see the truth in dad’s earlier words explaining the cyclical nature of the property market, and impressing upon me just how crucial it was to have patience. Luckily, I subsequently got a second chance in the property market, and you had better believe I was smarter the second time around.

Suzy Macdonald

Ironically, the most valuable lesson I ever learnt came from some very bad advice.

An adviser once told me I didn’t need superannuation.

In 1988 I was working on oil rigs when I approached an adviser for some advice on planning my finances, only to be told by this adviser that I wouldn’t need superannuation since I worked for myself and my wife was a schoolteacher.

Can you believe that? Luckily it sounded pretty short-sighted to me, and so I was very wary of taking this advice, and how glad am I now. Superannuation is an easy and well-rewarded way to build savings for retirement, and it has been the backbone of the plans that my wife and I have made for a comfortable life after full-time work.

This is the most valuable lesson: the advice is only as good as the adviser. I am now, myself, an adviser to many clients, and I am always determined to give them the best and the most appropriate advice possible. I do my homework, ensuring my facts and knowledge are correct and up to date. And I listen to my clients, so that I’m sure I understand their needs and objectives. Whether they are seeking assistance in ensuring their loan is protected, in setting up their superannuation, doing an insurance review, or any other financial matter, my brief is always to help them to prepare and plan for their future success.

Roger Thornton

Pay your bills first, invest next and live on what’s left...

My grandmother had two rules to pass on to me.

One - look after the pennies, and the pounds will take care of themselves; and two - pay your bills first, invest next, and live on what’s left.

I loved that second rule, it really struck a chord with me. It’s a simple matter of priorities, but very few people get it. You need to use your money firstly to pay bills, that’s a given, or otherwise your life will be disastrous. But how many of us go on to the next step, and set aside some money to invest, ahead of buying the things we feel like consuming?

Think about it. It may not be popular, but it’s a key to building wealth.

Ian Birtles-Crute

THE DANGERS OF NON-ADVICE. This piece of advice comes from my life experience, and it may be the most valuable lesson I have to pass on. I will be happy if by reading my account, even one person is spared the financial and emotional pain I lived through.

You may think it ironic, after all the time I have worked in banking, retail and lending, when I tell you that not once during that time did I, myself, seek or receive any expert financial advice.

When I was in the retail industry, managing a small business, I decided to purchase my partner's share of the business. I did not seek any advice on this matter; all the pointers from the business conditions at the time, and my own experience, suggested it to be the right move. However nothing in business is a certainty, and over the next four years the industry declined at such a rate that it became necessary for me to close the doors.

If I had sought the assistance of a financial adviser at any time during that terrible period then I might not have made some key mistakes with my business. At the very least I would likely have diversified my investments, as some measure of safety net. However, without seeking any such advice, I blundered through, and incurred the penalty of financial disaster.

The ‘non-advice’ sought and received, and the pitfalls of just doing what seems right, rather than the hard work of branching out and exploring new and different avenues, took my business beyond saving. I earnestly advise any person embarking upon self-employment to make sure they have researched their chosen industry, and also to speak to as many people as possible currently in the industry. And above all, please, establish a relationship with a trusted financial adviser and accountant.

Kenneth Dixon

Write down what you want...

This advice seems so simple that I’m almost embarrassed to pass it on. But it’s amazing how many people don’t think to do it. I was just 19 years old, and trying to distil some gems of wisdom from a management workshop I had been told to attend. I hadn’t been paying a lot attention, but then the facilitator came out with: “If you want to achieve your financial targets, use lists. Write down what you want to achieve and by when, and how much it will cost. Keep the list somewhere visible and revisit it often.” You know it’s pretty difficult to hit a target you’ve forgotten you’re aiming for, and so this simple technique for reminding myself what my targets are, has really been a life-changer for me. Keep your targets in your sights – that’s how you hit them.

David Hayes

Buy a plot of land.

In 1973, I was given a shot at gold. And I didn’t recognise it. I had just got out of school and secured a job. I had the world at my feet: there was food to be tasted, wine to be drunk, places to be seen. And by far least of my concerns in those heady days, was tying up my money in real estate. But my Dad was convinced there were fortunes to be made in property. He tried to persuade me to buy a plot of land and build a home on it – would’ve cost a song in those pre-boom days, and, well, I don't need to tell you what happened next.

My property-windfall opportunity had been the enormous fish that got away. But it wasn’t all bad news. The lesson it taught me has formed the bedrock of my own investment strategy, as well as the advice I’ve been able to pass on to my customers, as well as each of my four kids, who all now have property portfolios of their own, and are experiencing first hand the exhilaration of capital appreciation.

Paul Sinclair

The shine on the shoes of the wealthy man…

I grew up in a large extended family – my mother was one of thirteen children and my father one of seven. They were diligent workers, and even more diligent savers, having arrived in the 1950s from a foreign land, eager teenagers intent on making a better life for themselves in this land of opportunity.

Do you know, they never gave me an actual word of financial advice when I was growing up. Instead, they told me stories.

I didn’t hear advice about saving in preparation for tough times, but there was a story about “picking for the winter months”. I wasn’t lectured on the need to look after your assets, but then there was that favourite story about “treating your cattle well” ... And no-one ever had to tell me about the importance of the small details; my father’s voice still rings loudly in my ear, telling me the story about the shine on the shoes of the wealthy man.

Life’s big lessons were encapsulated in practical stories of the everyday.

As I’ve made my way in life, I’ve searched for my own guiding story. I have been financially successful, and have had a personally rewarding life filled with family and children, and academic and personal fulfilment. But my story was still not written … At last I took on this role as accountant, educator and financial adviser in inner city Clifton Hill, an area full of people from foreign lands. And in this role I have discovered the joy – not of writing my own story – but of being a skilled and sensitive listener to the stories of my clients. Of being able to build solid, tangible and concrete advice that works for each of them, because it is based upon understanding their own unique story. In the end, this has been the gift my parents gave me via their endless storytelling: the ability to really listen. It is the cornerstone of my success as a trusted adviser.

Arthur Ioannou

LISTEN TO YOUR PARENTS.

What’s the most memorable piece of financial advice I’ve ever been given?

Well that’s easy. My grandfather, Papou, had a whole laundry list of advice that he would rattle off at every opportunity. He had migrated to Australia from Cyprus in the late 40s and built a life here from nothing, and of course what he wanted most in the world was for us kids to achieve the same success as he had. “Listen to your parents, stay in school, get good grades, work hard and save every penny, be successful, buy property and invest everything into your future.” It was his prescription for success, and he was going to make sure we didn’t forget it.

Well of course I wasted no time in putting the good advice to use. You just didn’t thumb your nose at Papou. I bought my first block of land at 18 years of age, and had a house standing on it by 19. I've worked two jobs throughout my entire career, and I know I made him proud.

Papou has gone now, but I feel fortunate and indeed blessed to have had him helping me, from such a young age, to build the strong foundations that underpin my current financial comfort and security. These days my passion is sharing his excellent advice with my friends and clients. And if they hear it when they’re young, then all the better. Build the foundation in your youth, and you are setting yourself up for life-long success.

Stephanie Nichols

think about awareness, balance and peace of mind.

Financial advice is not so very different from life advice. When I was about 18 I received a piece of advice from my father, which would resound throughout my life and inform every important decision I have made.

My dad, in his day, was a very respected banker in Newcastle and one of the wisest men I have known. After I left school, I started my first job straight away without much thought.

Another opportunity came up in a different field several years later. It appealed to me, but I just wasn’t sure what I should do. Should I stay in the work that I had become comfortable with, or should I take the risky leap into a new field? I went to my dad and asked him to help me make up my mind. He could see I was torn between the competing alternatives, but he reassured me that it wasn’t really all that complicated. All I had to think about was just three things: awareness, balance and peace of mind. Awareness of all the facts and whatever details I could lay my hands on (that is, do my homework); balance of cost, benefits and compromises of the proposed alternatives, and, once the decision has been tentatively made, ensure it passes the peace of mind or “sleep on it” test. Terrific advice.

John Fernance

Don’t let your youthful enthusiasm get the better of you when it comes to investing. I made a big investment mistake in my twenties.

A stockbroker friend of mine put me onto a ‘hot stock’ and I put a lot of money on it. It tripled in price quickly and then crashed to 0.3¢.

My friend was bemused that I’d left all my money in when the share price rose so fast. He – like other professional investors – sold down parcels of the shares as they took-off, so some gains were locked in as the shares increased.

There were many lessons that I learned from this episode that I wish I’d been told before such as you get returns from time and risk. If you want sustained returns from investments, over long periods, you must diversify. Shares, property, fixed interest and your own business may all be good investments, just don’t put all your money into one of them.

Mark Bouris

DON’T PUT ALL YOUR EGGS IN ONE BASKET