Money isn't widely taught in schools, nor is financial literacy or investing.
Many people also have a bad association with the word "money". Some of this may be due to their upbringing, maybe both parents worked 50 hours a week or more just to make ends meet. A wide range of learned behaviours and beliefs, over time, may lead many to have a terrible association with it.
Most people will work 40+ hours a week from leaving school until they're 65 and still have very little, apart from - maybe - their own home.
What about the people who don't even get that far? With high prices now, saving for a deposit is more difficult than ever. KiwiSaver is helpful and forces saving, which works well.
Saving is a big subject in itself. Lots will save for something, such as a deposit for their first home. This is a good use of savings. Others will save to spend, such as on a holiday, a car, etc. It's not really saving as the end result is still to spend it. Then there's saving for retirement, so "saving to save" and then spend it many years later.
Understanding the concept of money, investing and leverage makes a lot more sense to put these financial principles into action, as opposed to only saving. Learning and putting the fundamentals into action will likely be far more rewarding than saving.
If you don't understand leverage, you work too hard and most likely will work your entire life. Most people do this as they see investing, owning a business, buying rental properties, etc, as too risky and stressful. That's fine, we're all different.
Those who do want more can still work at a job they love or tolerate, as well as understand about money, leverage and investing.
As an idea of the saving dilemma, let's say you had a fairly good paying job and were able to save $1000 a week. That may sound like a huge amount of money to save every week, regardless of expenses.
After a year, you would have saved $52,000 which sounds okay, but it's not really that much.
After 10 years, that's a little over $500,000 and just over $1 million after 20 years of serious saving (you'd have the same result with saving $500 a week for 40 years, an entire working life, almost).
That may be enough to live on for quite a few years, but how many people could save $1000 a week for 20 years?
By putting into place the financial principles I mentioned over the past 30 years, my financial position now is equivalent to saving $1000 a week for 500 years (over $25 million).
Or the same as saving $500 every week for 1000 years.
No one is going to even live to 500 or 1000 years old, but it shows the huge difference between saving and investing.
Saving is better than doing nothing but there are better options if people want to learn.
As a basic overview of one of the principles, four things can be done with time and money: you can spend it - self-explanatory; you can save it – save money, also save time by doing things faster; you can invest it – invest time into research and invest money in various ways; and lastly, you can leverage it – doing more with less.
For example, people who run a business leverage their time by having employees do work for them, so they don't have to do it all themselves.
Charging their time or making them more productive than what it costs to hire them is "time leverage". Rental properties, whether residential or commercial, have tenants helping pay the mortgages. This is also time leverage.
Money can be leveraged by using a small amount of money to borrow a larger amount from the bank. This may be used to buy a property to live in, or a residential/commercial/industrial property, business etc that someone else helps pay for.
Understanding these concepts and using them correctly is well on the way to a better understanding of money. You want to be a good custodian of money, not an enemy to it.
Learning about money and finances can be very rewarding for those motivated to want to understand more. It may mean going outside comfort zones, taking a few risks and possibly making a few mistakes.
To me, however, the negatives are very small compared to the potential rewards from educating yourself about money and finances.
• Graeme Fowler is a property investor and author of NZ Real Estate Investors' Secrets and more recently, 20 Rental Properties in One Year.