- Karl Arns is a 24-year-old authorised financial adviser.
- He says young Kiwis should focus on getting out of debt and creating savings, not buying a house.
- He says most millennials are comfortable talking about the property market, but not the share market.
- He has paid off his student loan and has savings in a managed fund.
A young finance expert says millennial Kiwis should stopping stressing about buying a house by 25 and focus on getting out of debt and having emergency savings.
Karl Arns, a 24-year-old authorised financial adviser, who works as a derivatives broker, says criticisms of his generation for being high lifestyle spenders are partly true, but it doesn't change the fact that it has never been harder to get on the property ladder.
"I think there is some truth to that.
"There is a trend and I see it among my friends; it is easy to overspend."
He said many had grown up in comfortable, middle class homes where it was normal to go on an overseas holiday and get takeaways once a week.
"They have entered the workforce and expect that to continue.
"I think a lot of us are trying to hang on to that lifestyle and we can't."
But despite that, Arns said suggestions that people cut back on dining out on avocados on toast or Sky TV subscriptions were not going to be enough to get a house deposit.
"Is that going to get you there? No. But it might help you get there faster."
Arns, who grew up in Tauranga and moved to Auckland at 21 after finishing his commerce degree in Wellington, says he has focused on paying off his student loan in recent years despite it being interest free.
"I've been in debt in the past and I didn't like it. I hate the feeling. It's like having a monkey on your back."
He paid off his loan in four years; half the average time it takes.
Arns said the key was just setting a budget and sticking to it and rather than swiping his eftpos card constantly, he took out a set amount of cash and that was it.
"You can see when you are getting close to the wire."
He is also an advocate of shifting money into a savings account as soon as you are paid.
Now Arns is investing the money he had been using to pay off his loan in to a managed fund, a pool of money similar to KiwiSaver which invests in shares.
"For me I am young and at a point in life where I can accept some risk."
But he says most young Kiwis aren't keen on shares.
"Young people don't take a lot of interest. They don't have that discussion at parties. Whereas you do talk about houses."
"There is a real fear of anything stock-market related. I think it is a lack of education."
The key thing to understand about saving and investing early is to make the most of compound interest, Arns says.
I have been in a situation where I have had less than a couple of hundred dollars in my account for an extended time.
"People just don't think about it. When you are young you are living in the moment. Which is great, what you should be doing.
"You have got your whole life to save. That is a completely fair approach to take but you should be aware of the opportunity costs of splurging when you are young.
"It might mean it takes five or 10 years longer to save for a house or have to push out your retirement for longer."
In his job Arns speaks to a lot of older people and he says many who were reckless spenders in their youth wish they had been more careful.
But the reverse is not true, the penny-pinchers don't wish they had spent more.
Outside of the student loan and investing, Arns has focused on having emergency savings: three to six months worth of expenses put aside should something go wrong.
"I have been in a situation where I have had less than a couple of hundred dollars in my account for an extended time."
He said when that happens you inevitably don't take the best option when there is an emergency and you need money.
Don't worry if you can't afford a house at 25 but there is no reason why with the right steps and approach you can't do it at 35.
"But having an emergency pool of savings, which is a tough amount of money to put away knowing that money is there if you lose your job or your car explodes, you are covered.
"That was a massive thing for me."
At the moment he doesn't have a savings goal in mind.
He says buying a house, particularly in Auckland, is a bit hard to contemplate.
"The average Auckland house price is $1 million so that means you need about $200,000. It does not appeal to me. That is a pretty scary proposition."
But he says it might be something he does want if he has a family in the future.
"I think it is really important. It is a cornerstone of lots of people's lives. It is a really nice thing to have. Our parents and grandparents have had that."
But he says it shouldn't be something that happens at all costs.
He says young people should remember their pay will increase and their financial situation will improve from where it is now.
"Don't worry if you can't afford a house at 25, but there is no reason why with the right steps and approach you can't do it at 35."