Money and the future
Around Australia many thousands of secondary school leavers, uni and TAFE graduates are celebrating the end of their formal education. It's a chance to let your hair down, for a while at least, before making plans for what will hopefully be a bright future. 
Today’s school leavers enjoy a wealth of options in terms of further education, maybe a gap year, and a variety of career paths.
I am a great believer that personal skills are one of the best assets we can invest in. So if you’re a school leaver thinking about further study through TAFE or university, I reckon it’s definitely worth a shot. Research continually confirms that additional qualifications lead to improved incomes during our working life and even into retirement.
Interestingly, one question I’m often asked is what young people, especially those 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 focused on saving to buy a first home. That’s still a worthwhile goal but it’s no secret that high property prices make it very difficult to get a toehold on today’s property ladder.
Investing in shares isn’t a bad option for young people. Unlike property, shares come with low purchase costs; they are extremely low maintenance; and you don’t need to take out a substantial mortgage to become a shareholder.
Getting into the habit of investing a little in the sharemarket at regular intervals means you don’t have to worry about picking the ‘right’ time to invest. If you’re not sure which stocks to choose, there are plenty of professionally managed funds and exchange traded funds offering exposure to many underlying shares.
All this sounds good on paper however young Australians can be excused for putting formal plans to invest on the backburner for a while, and just enjoying life.
You see, one of the key game changers between the current generation and previous generations of young people is life expectancy.
Baby boomers - like me, are likely to live, on average, to 80-plus. That’s fantastic! However today’s 20-somethings are more likely to live to around age 100. That means today’s 20-year old could have 70 years or more to grow wealth.
My suspicion is that with a long life ahead, for those in their early 20s, exploring the world, before knuckling down to the business of building financial security, sounds like a good idea.
Paul Clitheroe's 'Making Money' is provided on the condition that the following sentence accompanies the published column:
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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