35yo who still gets ‘pocket money’
TWO years ago, Emily Power sparked a national debate, and a fair amount of disbelief, when she wrote a column titled, "I am 33 and my parents give me pocket money".
The property journalist and fashion guru revealed how, due to her inability to manage her own finances, she had handed over total control to her parents. Only they have access to the bank account where her wages are paid. After bills and major expenses are deducted, they give her just $200 a week in cash to live on.
The so-called "Pocket Money Savings Plan" was Power's solution to the millennial dream of getting onto the property ladder. The column quickly went viral, with reaction blowing up on talkback radio, social media, and even Channel 10's The Project.
"Her name is a total oxymoron," one online commenter wrote. "Empower? Not in this instance. Grow up!" Another said, "Most of [this] generation have not been taught to handle money. It just burns their hands."
But Power has had the last laugh. The now 35-year-old has stuck to her parental-supervised savings plan and is on track to achieve her dream. She's even written a book, How to Buy a Home, combining savings advice with step-by-step information for first home buyers.
Power said after the strong reaction to the column, it took her a year to muster the courage to pitch the book idea to Penguin. "I hadn't expected the reaction to it," she said.
"Some people called me a twit, I got trolled online. I wouldn't call it abusive, but I was shocked by the strength of the negativity.
"I think people were appalled that somebody who was working in the public eye, and who was a young woman of an age I could be married and have children, wasn't able to handle her finances and needed her parents.
"That was unthinkable to some people, and I think [they] were embarrassed on my behalf. But I did get social media messages from other young people thanking me for talking about money in a frank way and not being embarrassed.
"There are a lot of people my age in their mid-30s who feel behind the eight-ball getting into the property market. For as many people who trolled me, there were just as many [who supported me]."
Power said many people in her age group were getting married and having children much later. "Having your head around those things like running a household budget, [those] life milestones feel further and further off," she said.
"I was in my early 30s when I enacted the plan. I didn't have any milestones in front of me to encourage me to clean up my act. When I became a property reporter I was living hand to mouth, pay cheque to pay cheque.
"I had $14,000 in credit card debt and didn't even know where to start. My parents are very good with money. I was fortunate that I have parents who I could rely on to have these frank conversations about money.
"I wish I'd had some schooling. I had to really go back to school and learn about finances in my early 30s through my parents."
Power said she still didn't know "the exact number" she had in her savings, which was a "very deliberate decision". "In my original column I said I didn't want to know until I had enough for a deposit - I now know I have enough for the worst house in the worst street in the worst suburb," she said.
"The average mortgage has now cracked $500,000. By spring I could afford a 10 per cent deposit on a $400,000 property. I could jump into the market at the end of the year, but the savings plan is going very well for me."
Power said the most surprising and important thing she learned while researching the book was "understanding what having debts would do to your borrowing power".
"I discovered that a bank or credit provider triples the value of your debt, and that would be how much less they loan you," she said.
"For me when I was $14,000 in debt, that was $42,000 less on a mortgage I might be allowed to get. When you're a first homebuyer, 40-odd-thousand is the difference between one suburb and another.
"That was the most surprising aspect, was how past behaviour would dictate my future success in getting a mortgage. Thankfully I had tidied up my debt at the beginning of my savings plan.
"I hope those who read the book will understand it's worth chipping away at those debts now to get them as low as possible when you apply for a loan."