I am currently in Townsville visiting my sister, who is a couple of weeks away from giving birth to her first child. I booked my ticket way back in February and, since then, my younger brother has also moved up here. He is in the Army and lives in the barracks but I have been able to see him over the weekend and catch up on how he has been going since the move.
According to my sister and brother-in-law, not very well. They informed me that he has been having some financial issues. He has been spending his fortnightly pay in about a week, and spending the remainder of the week unable to buy food. A couple of times, they have had to bail him out by buying him dinner. He is spending his money on silly things like Lego and getting a new tattoo. I like Lego as much as the next person, but I prefer to eat much, much more.
They both suggested that I sit him down while I was here and go through his finances with him. He obviously needed some help as he was starting to overdraw on his account. Thank goodness he doesn’t have a credit card, or that could be disastrous!
So last night, I met him at a local restaurant and bought him dinner. Over some delicious Italian fare, we discussed budgeting, how spending money has nothing to do with happiness and we even discussed investing briefly.
At the moment, he has a budgeting issue and needs to get this under control. The best thing is, that he recognises this and acknowledges that he could use some help. We discussed various methods of not wasting money and of automating savings so that he doesn’t have to think about it and making sure that money isn’t easily accessible. We talked about different ways to deal with boredom that didn’t have to cost a lot of money and the importance of not spending more than you earn.
He is in a great position in that he lives at the barracks for very little money and this is taken out of his pay, so he can never be “late” on rent. There is also the option of signing up to eat at the mess and again, this money will come directly out of his pay. He will be doing that today so he never again can’t eat. If he has spent all his money, he can still go to the mess for three meals a day.
We discussed what he should be saving toward, including things like a replacement vehicle and a home deposit. While these things are for way in the future, I encouraged him to put a little bit aside each pay and one day, he will wake up and have a lot of money set aside (hooray for compound interest). He is interested in learning more about investments, particularly index fund investing. Once we have his budget issue sorted, I will help him learn more about that.
All in all, it was a really great night. I got to enjoy a nice dinner with my little brother and I also got to impart some knowledge on him that, if he listens, will pay great dividends (pun intended) for the rest of his life.
Italian dinner for two: $43.
Helping to set my baby brother up for a great financial future: Priceless!