Paul Clitheroe
Paul Clitheroe

Invest in living your life, too

IT'S that time of year when thousands of Year 12 students complete their final school exams.

It's a real milestone in a young person's life - and one that often brings relief to parents and other family members.

For students in particular, the end of school means some key decisions need to be made.

After a well-deserved break, some school leavers will start looking for jobs. Others will continue their education in the New Year either at TAFE, university or a private college.

Acquiring additional qualifications is one of the best investments we can make. Sadly, youth unemployment remains very high - around 17% based on the latest government figures.

That's almost three times the broader unemployment rate of 5.6% and the reason lies largely in structural changes to our economy.

These days there are far fewer jobs available to unskilled workers. Most roles call for some sort of post-school qualifications or training.

So, yes, after 13 or so years at school it definitely pays for today's school leavers to head back into education in 2014.

Getting some skills to your name isn't just about enjoying better job opportunities and higher pay. It can also lead to improved job satisfaction, and that's every bit as rewarding as a fatter pay cheque.

But what about once those tertiary qualifications have been completed, what then?

One question I'm often asked, is what people in their early twenties should be doing in terms of wealth creation - buy a home, invest in shares or pick up a backpack and explore the world?

Previous generations would have focused on buying a home. But the big game changer these days is increasing life expectancies.

Life expectancy figures show that baby boomers - like me, are likely to live, on average, to 80 plus. That's good news for us; bad for anyone in their twenties because it means an inheritance could be decades away.

On the plus side, demographers tell me that today's 20-somethings could live to around 100.

That sort of extended life expectancy is quite extraordinary, and it has significant implications for younger generations.

You see, even if you are aged in your mid-20s, you could have 70 years-plus to build personal wealth.

My suspicion is that with a long life ahead, for those in their early twenties, exploring the world, first up, sounds like a terrific idea.

As a young adult you still have plenty of time to make up the money spent on a trip and of course travel is a form of education in itself - theoretically bringing you greater experience, knowledge, awareness, maturity and hence, I believe, employability.

Also, as we move through life, acquiring a home, growing a family and progressing with a career, it's lots harder, or realistically impossible, to simply drop everything, pick up a backpack and head overseas.

So, enjoy the opportunity while you can!

For those more focused on saving and growing wealth from a young age, the government's MoneySmart website offers some useful tips on things like buying a car, moving out of home and managing money while you study.

Go to moneysmart.gov.au and click on 'Life events and you'.

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.


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