16 Oct Don't gamble on a Lotto win – Michael Yardney
Michael Yardney talks about the lessons he was taught by his father and how he has educated his children about investing. Michael says that his father’s plan was, like many people, to get rich by winning the lottery.
Kevin: Let’s set the scene for this week’s show because we’re going to canvas the thoughts of a number of people – as many as we can get through in the show, anyway – about the sorts of advice you should be giving your kids now about money and about property and investing generally and probably in fairness, about life. This is a subject that I’ve discussed many times with my first guest Michael Yardney from Metropole Property Strategists.
Good day, Michael.
Michael: Hello, Kevin.
Kevin: I know you and I have talked about the importance of the conversations around the table as we’re growing up and getting kids into the understanding about what they should be doing with money and investment generally. Michael, what were you taught?
Michael: I remember my father’s financial plan. Every Saturday morning, he would sit in the kitchen having his cigarettes and a black coffee, and he’d write out this list of things. I asked him, ‘What is it?” and he said, “That’s what I’m going to spend my money on when I win the lottery.” Because every Saturday night, he took a lottery ticket. He always won enough to buy a few more tickets but never the big prize.
So his financial plan was winning the lottery, Kevin, and I guess I learned that that’s not the right way to do it.
Kevin: Certainly. Many people in fact do that, Michael. Many people are guilty of that. What sort of language should we be using with our children?
Michael: First of all, I think you should be talking about money because a lot of people don’t, and then the things that they do say are often the wrong things, and that’s what sets the scene because you’re not born knowing how to do money and your early mentors are your parents. To be honest, most of our parents weren’t wealthy and they’ve learned their bad money habits from their parents.
So I think one should be talking openly about money, about budgeting, about saving, about not taking on too much credit card debt, but also the positive things about rich people aren’t dirty, greedy robbers, but they should be proud of other peoples’ successes and if somebody else can achieve it, so can you, Kevin.
Kevin: Michael, I know that you’ve studied this in particular and written books about it, and I know you’ve done many blogs and even videos about it, too. What have you learnt from talking to the people you’ve talked to about getting rich?
Michael: I think the first thing is to see how other rich people think and behave, because there are particular ways they do, and if you do much the same, you can also become that way. Find people who you can emulate and you can model.
I think that people should also recognize that you do have to work hard to get money, to become a saver. So the old lessons that they taught years ago of spend less than you earn, save it, invest it, and then reinvest it, are the primary lessons.
The other one is to become financially fluent, to understand a bit about money, understand a bit about credit cards, make sure that you don’t buy anything on a credit card that you can’t pay off by the end of the month.
Maybe there’s one other one, Kevin also, that you have to enjoy the journey, that the person with the most toys at the end isn’t necessarily the winner. So while it is important to talk about saving and investing for the future, also enjoy your life and it’s not all about money, Kevin.
Kevin: No, it’s not. Michael, do you think that this generation… Or is it speaking too generally to say that kids nowadays think differently about these things?
Michael: I think that the way kids think today is very much dependent upon what they see with their parents. I know when I was younger and my kids were younger, because I went without, I probably gave my kids a little bit too much because I didn’t want them to go through the hardship that I went through. Sometimes parents overcompensate in one direction or the other.
But I’m very proud of the way my kids have come out. In my blended family, I have six kids and nine grandkids, and most of them have learned good money habits and good discipline and have gotten into the property market as investors. Because one of the other big lessons to teach them is the sooner you get on the property ladder, even though it’s hard, the better it is because then you have that compounding and time working for you.
Kevin: Michael, you shared right at the start of this chat a great story about your dad sitting around the table and how he was going to spend his money from his lottery win or whatever. What are some of the other lessons you learnt growing up that you’ve taken forward now, or things you wish you’d been told then?
Michael: I did learn a lot of lessons when I grew up, but interestingly it wasn’t from my parents. My mentors were my friends’ parents when I saw that they owned real estate and they took a punt financially while my parents didn’t. I saw that they were able to go away on holidays at Christmas time and we weren’t able to. I saw that they had cars and my parents didn’t have a car until I was about 10 or 11 years old.
I also learned that they invested in real estate, so it was a lesson that I learned and I decided not to be like my parents and have to argue at the end of each month about who gets paid and who doesn’t get paid. I found positive mentors and I was lucky to have those people around me to give the inspiration to move forward.
Kevin: Michael, the three top things that you think we should be doing with our kids now to instill this common sense into them. What should we be doing?
Michael: First of all, talk about money and teach them about financial fluency, about credit card debts, about debt, teach them to save, and teach them to invest.
Number two, give them information about real estate and about property. I remember my kids telling me that I used to drag them to open for inspections and the properties I’d been building and the properties I’d been buying, and that left them a positive influence about it. So talk to them about it positively.
Also, teach them respect for people who are successful, who have already achieved success, and give them the confidence to know that if they work hard and save hard, they also can be successful.
Kevin: Michael, before I let you go, what books should we be sharing with our kids, apart from yours, of course?
Michael: Mine talk about property, but also over the last few years about finance and getting rich. But I think Secrets of the Millionaire Mind by T. Harv Eker talks about the way successful people in all areas of life think, so that’s a great one to teach your kids.
Robert Kiyosaki’s books are very, very good in the areas of money and finance. I don’t think his property strategies work in Australia, Kevin, because the rules in America are very different, but there are some great lessons to be learned from Robert Kiyosaki.
And Tom Corley’s book Rich Habits, where he’s unpacked the way that the rich people act and behave differently to the average person is also a good one to have on your reading list.
Kevin: Great talking to you, Michael. Thank you for spending some time with us and sharing your wisdom. Great talking to you, mate. Thank you.
Michael: My pleasure, Kevin.