Inside the simple money habits of the rich that you can do too
Before they were rich, these entrepreneurs forged lifelong money habits they swear by | Here are their eight top tips
They built billion-dollar empires from scratch, disrupted entire industries, and made investment calls that turned millions into hundreds of millions.
And yet, behind the headline-grabbing deal-making and risk-taking, Australia’s wealthiest entrepreneurs across tech, retail and property share one mundane money habit.
They honed the money basics well before making their millions, and just because they’ve forged fortunes big enough to put them on The List – Australia’s Richest 250 doesn’t mean they’ve let things slip. Far from it. They maintain simple money habits to this day.
Most Australians could implement them tomorrow. The catch? While these principles are easy to understand, the discipline needed to follow them consistently is what separates those who dream about wealth from those who actually build it.
Budget
Tony Walls, the billionaire founder of software group Objective Corp, picked up savings habits from his parents and maintains a laser-like focus on his finances.
“I still budget every year and I report to myself every month to ensure I am on track with my investment plan and my spending forecast,” Walls says.
He finds the time in his demanding schedule, where he’s driving strong returns at Objective, of which Walls owns 65 per cent. Its shares have gained more than 50 per cent over the past 12 months.
Nigel Satterley, estimated to be worth more than $500m, sits down at the start of each year to set the family budget. Then he tracks it.
“You need to know where your money is going,” he says. “Have a budget and stick to it.”
Precision Group founder Shaun Bonett, whose fortune is forged in suburban shopping centres, says he has always believed in the discipline of budgeting.
“Even as circumstances have evolved, the core habit of regularly reviewing personal and business finances remains fundamental,” Bonett says.
“Making simple cash balance statements and liabilities/outflows statements is a great way to keep in touch with where you are at.”
Live within your means
Michael Heine, the patriarch of a $3.58bn fortune, built wealth management platform Netwealth with only three staff. It is now listed on the ASX, with son Matt at the helm.
Heine admits he could have been better at budgeting in his youth. He remembers he would run out of petrol in his car because, cash-strapped, he’d put in the bare minimum and it didn’t stretch far enough.
He remembers his dad, a successful commodity trader, never tried to impress people with money.
“I remember when colour TV came to Australia, it took a very long time to convince my father we needed one,” Heine says.
One of the biggest errors he believes people make with their finances is the need to have new things.
“I think the biggest mistake people make is to want it all now instead of being able to defer gratification to a later time when they can better afford it and have built a successful career or business,” Heine says.
“It is understandable that we all want the nice house and the nice car or two and the nice holiday as soon as possible. But this often lends to over-committing financially and forever being in debt and paying large amounts of interest, making it hard to ever get on top of it all and get ahead.
“I would advise people to live within their means and look to save for the important things, and only when one objective has been achieved move on to the next. Maybe the neighbours won’t be impressed if you drive an older car or don’t have the biggest house in the street, but in years to come they will admire your achievements.
“Think about the things that are most important to you in the early days and reach those goals before expanding your horizons too far.”
Don’t lose track
Cathie Reid and husband Stuart Giles, with an estimated wealth of $540m, are building investments via their Arc31 family office after the sale ofIcon Group, a chain of cancer care centres.
Reid thinks it is too easy for people to lose track of their expenditure.
“In this era of tap-and-go and one-click online purchases, it can be really easy to lose track of how much is actually going onto your credit card balance if you don’t keep a watching eye,” Reid says.
“It’s also easy to sign up for a myriad of subscription services – or have the kids do that on your behalf – and it’s only when you sit down and go through what’s being charged to your card each month that you realise how they all add up.
“I don’t mind paying for things that I ascribe value to, but I do have a big objection to wasting money on things that are unnecessary or not delivering value.”
Flight Centre co-founder Graham “Skroo” Turner is a big fan of the simple principles popularised by Scott Pape, which allocates spendings and savings to various “buckets”.
Turner, who grew up on an apple orchard and remembers being paid about 2½ shillings an hour for jobs around the farm, didn’t have much money in his early years.
When, in his 20s, he co-founded a tour business in Europe, he learnt how to grow a business with few resources. “If you don’t manage your cashflow, you go broke, so it becomes obvious fairly quickly,” Turner says.
Being able to manage your money when you may not have much is an essential skill. It’s one Turner’s Flight Centre tries to help its staff master. A program, called Money Wise, offers money coaching and tips to employees.
“It’s mainly to help our frontline people who are on reasonably basic wages with how to save money,” Turner says.
“It’s about setting up different buckets. It might be for the kids’ education or to have a house and mortgage and those sorts of things.”
Turner says it helps employees become confident with their finances, and admits there’s gains for Flight Centre, too.
“A lot of our sales people are on incentives, and so if they know if they can earn an extra few hundred dollars a week, or $1000 a month, or whatever it is to help build up the (money) buckets for the kids or house or whatever, it is motivating for them.”
You must be disciplined
Paying attention and mastering the basics is simple enough. Often, the missing ingredient is setting aside time to do it.
“Let’s face it, not everyone is disciplined,” Turner says. “If you’re on a fairly basic income … set up weekly buckets for savings and spending. Follow a plan and be disciplined.”
Set goals
Another common wealth-build strategy deployed by wealthy entrepreneurs is goal-setting.
“Another particular habit, which is simple but extremely effective, is setting clear goals – short, medium and long-term – and regularly checking progress against them,” Bonett says.
“Both of these have kept me grounded and focused. Another trademark habit is that I’ve also consistently valued taking action, understanding that even an average financial plan executed well can surpass a perfect plan never acted upon.”
Walls thinks one of the biggest money mistakes most people make is “not setting investment goals and sticking to them”.
“It’s no different to not exercising,” Walls argues.
Be mindful of debt
Bonett says it’s easy to sink into debt.
“Australians, like many people globally, can fall into the trap of accumulating debt without fully understanding the medium and long-term implications,” Bonett says.
“My recommendation is to always prioritise clarity around your finances. Know your income, your expenses, and ensure savings and investments are treated as essential budget items, not afterthoughts.”
Reid says to be wary of micro-debts.
“I absolutely hate the idea of AfterPay and the like, especially when it’s used as a way of funding unnecessary purchases,” Reid says.
“If you’re using AfterPay to get your nails done, or to fund expensive beauty treatments, then you would be far better placed in reassessing your spending priorities, not finding yourself still paying for a manicure months after the polish has chipped off.”
Stop procrastinating
The basics are simple enough. The tricky part, according to these entrepreneurs, is executing them. It’s doing the things that are tedious rather than exciting.
“Take action now,” Bonett says. “Above all, avoid procrastination and complacency, act decisively and regularly to stay financially healthy.
“Success stems not from having great ideas, but from putting them into practice with persistence. Even average plans executed well are better than brilliant plans left undone. Waiting for perfect conditions is a trap that leads to inaction and missed opportunities.
“Knowledge without experience is empty, and excessive planning without doing is counterproductive. Fear of failure, procrastination and complacency keep people stuck. Those who succeed are the ones who act, learn from their failures and keep moving forward. Cultivate the habit of doing, act now, act again and never stop acting. That is the key to progress, success and fulfilment.”
Where to invest
So, given what they know now, what would some of the richest in the country do today if only they had $50,000 to invest?
Walls, whose father got him hooked on property investing from an early age, says he would dive headfirst into residential property.
“(Then) wait for an upturn. If you have maximised the leverage, then the return on the $50,000 should be at least 100 per cent to 200 per cent. Then I would probably go again to build up a nest egg to ultimately invest in retail or industrial property. The free cashflow will support it. Rinse and repeat,” Walls says.
Satterley, who left school at 15 and sold Levi’s jeans before entering the property market, says he would purchase residential property.
“I would buy a residential home no more than 12km to 13km from the Melbourne or Sydney CBD and it will double in eight to nine years,” he says.
Heine says he would start a business.
“If I was a young man just starting out and I had $50,000 I would like to use it to start a business. Clearly it is not a fortune, but used wisely it can provide a good start,” Heine says.
“Everyone needs to decide whether they want to be a risk-taker and start their own business or whether they prefer to take up employment and earn a secure and reliable income.
“There is no right and wrong about this, it depends on your self-confidence, ambition and expectations from life.
“The most important thing, whichever path you take, is to follow your passion. I cannot think of anything worse than being in a job I hated just to earn my salary.”
But he notes that starting a business is risky and there’s a chance of “losing it all”.
“If I did not want to risk losing the $50,000 then I might use the money to pay a deposit on my first home and continue to build up equity in my home from savings over the years,” he says.
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