A millennial’s guide to managing money

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The proactive pay-off for young investors


At just 23, recent graduate Hubert Xiao has already established a solid financial safety net. He’s put down a deposit on his first property, and hasn’t had to touch the investments he first started trading in high school. By saving and investing small amounts from a young age, he’s developed some smart financial habits quickly.

In contrast to public perception of impulsive, spendthrift millennials, Hubert is committed to making good choices with his money. His financial goals include buying a new car and ski trips – and maybe furthering his education with study overseas. But he’s willing to wait while he builds his financial security.

He admits that living at home with his parents, and the values they have instilled in him, have certainly helped.

“They saw that it was worth making some lifestyle sacrifices to get into property, even though it was a lot harder for them as first generation migrants,” he explains.
 
Hubert tries to put aside 50% of his income every month, and says, “I can feel confident about managing that money right now because I don’t have any responsibilities: I don’t have kids, a mortgage or even rent.”

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Hubert was interested in the financial markets at a young age, so his dad helped him set up an account to trade stocks in Year 9. “I saved up all my Chinese New Year ‘red packets’ to start it and I picked some good ones – but it could just be luck.”

He learned quickly to buy low – and not to regret selling even if it climbs even higher.

Money is not what drives me – I want to make sure I’m doing things for the right reasons.

“I read everything I could – from Motley Fool to the Harvard Business Review. I even enrolled in a Level 1 CFA (Chartered Financial Analyst) course. I haven't finished yet but the material is gold.”

Those investments allowed him to fund a study exchange in the US and a car, without going into debt.

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Hubert started working full-time while at university, with a cadetship for his civil engineering degree giving him flexibility to attend classes. He moved his money into a managed fund. But he still invests in some higher risk opportunities, applying a combination of intuition and what he finds interesting.

“My ‘high risk’ now is cryptocurrency – I spent time researching the technology behind blockchain and think it has potential.”

Hubert admits he doesn’t like having money sitting idle in a bank account. “I’m willing to take a bit more risk – a risk-free reward is a bit boring for me.”

This, along with his parents’ belief in the value of property, encouraged Hubert to buy an apartment with his sister. Again, it’s a calculated risk.

Hubert’s parents gave them a personal loan to help them make the deposit, meaning he didn't have to touch his investments.

“We’re paying them back at the same interest rate; I created an excel spreadsheet to track what we need to repay them.”

When it comes to managing his day to day banking, Hubert – like most millennials1 – doesn't see much need for physical branches or even cash. So when he looked for a new transaction account, he wanted a bank that “really cared about their customers”, and offered a fair, competitive, simple and transparent product.

Macquarie’s digital platform impressed him – and so did the ease of setting it all up.

Macquarie’s digital platform impressed him – and so did the ease of setting it all up.

“The banking app was the most important feature when weighing up which transaction account. The addition of Apple Pay has been incredible. I use it on my watch, so I can go for a run without my wallet and get a coffee just by touching my wrist. I can't do that with my phone or PayPass.”

Other features, including natural language search and being able to add his own data to transactions, make everything easier to manage.

“One thing I find quite old-fashioned is holding onto receipts for warranties or tax. So with the Macquarie app, you can click into a transaction and upload a picture or tick a box to say it’s tax-deductible. And it’s easy to filter and find the important things.”

He says he was most surprised that he could open the account in just a few minutes. “That was very cool – opening a savings account was one button. You don’t have to submit any documents, they do all the checks.”

Although Hubert admits he might be seen as ‘naturally ambitious’ he emphasises that money is not his main motivation.

“I’ve set myself goals but it won’t kill me if I don’t achieve them. Money is not what drives me – I want to make sure I’m doing things for the right reasons. So, to the extent I’m capable, I want to make a positive difference. It’s not about power, money or a better lifestyle.”

And in that, he is more like his millennial peers.2

Next year, Hubert plans to borrow a bit more to buy a car. He also hopes to do more study – perhaps overseas, having learned so much on his university exchange with University of California, Davis.

“Looking at the longer term, it’s just thinking that one day I might have other commitments; family and all that scary stuff. That’s when I think I actually have to be wiser with my money. But I don’t want an extravagant lifestyle, just a comfortable one.”

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