Learning About Money

Coming up, I was never taught about how money works. Not how to save it, not how to manage it, not even how to invest it.

Imagine (Saving) Dragons

I had a St George Dragon account through my primary school where I could save what few dollars I forgot to spend on chips (just to get the Space Jam Tazos inside). I’d put my 5/10c pieces in a green plastic dragon.

From this savings account I learned:

• I should bank with St George — my school said so,
• St George green plastic dragons do not like being dropped while full of 5/10c pieces.

I did not learn how to save my money.

Cheque this out

The following year, not to be out done by their draconic competition, we had the good people from the Commonwealth Bank come in and teach us how to write cheques and how to manage a cheque book. They showed us chequebooks with Road Runner & Wille E Cyote, Porky Pig and, Bugs Bunny on them — they looked so cool! We were even told that for every cheque we wrote to spend our money from Commonwealth Bank, they would deposit up to $10 in our chequing account.

From this series of classes I learned:

• I should move to CommBank — I want the Road Runner chequebook,
• I should buy more things, more expensive things; with cheques!

- I reckon my friends and I could write cheques to each other for $10 and get the ‘free’ $10 in our accounts: infinite money! (I asked a teller once, that’s not how the offer worked.)

I did not learn how to manage my money.

Taking Stock

In high school I took 4 years of business studies — surely I’d learn about money there, right?

At the start of one term we would be given $1000 Monopoly money and would buy stocks from the newspaper. We only got one chance at this, armed with the information on the back pages of the AFR. The person who ended term with the most money ‘won’.

While others in my class bought BHP, Qantas or Rio Tinto shares — I bought the cheapest shares I could get for $0.003 per share. My plan was simple: hope that the price went up to $0.01 per share so I would make a 3x profit. Unsurprisingly, my plan failed as the stock price plummeted to $0.001 per share. I was financially ruined.

The person who won made a total of $2,500. They bought up 2 stocks: one was $0.13 per share, the other was $0.21 per share. One of the stocks tanked, the other rose. They did the same trick I pulled except they got lucky.

From this I learned:

• you only get one chance to invest in anything,
• investment was to be decided in a 45min period just before lunch when you’re at your least engaged,
• the only way to make any money was dumb luck and,
• the person with the most money at the end wins.

I did not learn how to invest money or generate any revenue.

Real Education

Around this time, just after I lost everything in the great Monopoly Stock Market Crash of ’04, the canteen at school had stopped selling all drinks and foods with processed sugars in them. As if only to compound my misery, I couldn’t even drink my troubles away in Coca-Cola.

On the short walk home from school one day, sugarless and depressed (possibly from withdrawal symptoms, still not sure) I stopped off at the local Woolworths. I grabbed a can of Coke and a Mars bar and as I was on the way out I saw that a 30 pack of coke was going for $15. “50c a can” I thought.

“Hang on. The school doesn’t sell soft drinks anymore. They used to sell them for $2 a can… But here I can get 30 of them for 50c a can…”

I’ll admit It did take me longer than I care to admit to connect all the dots, standing in the drinks aisle staring intently at a crate of Coca-Cola as though I could force it to spontaneously combust if I thought hard enough.

The next day, I was selling coke (the soft drink) out of my locker for $1 a can. I couldn’t keep them cold, but they were here. I sold out before recess.

I bought 2 cases with me the following morning and sold out by the end of the day.

On the third day, I bought 2 cases with me again and kept the profits from the day before.

The fourth day, I was shut down by the principal and a very angry canteen lady.

From this I learned:

• profit is found when you buy, not when you sell,
• allocating revenue toward assets which can return more than you paid for them is investment,
• paying yourself a portion of all you earn is saving,
• businesses that operate outside the law can expect to get shut down by the law.

I learned how to make money: I learned how save money, I learned how to manage money and, I learned how to invest money.

I am still looking for ways to apply these lessons in life. I just hope my business empire didn’t peak when I was 15.