A leading behavioural economist has encouraged young business owners to consider their long-term future while embracing the exciting experience of young entrepreneurialism.
Evan Lucas, a renowned financial commentator, independent analyst, author, and money expert, recently visited Adelaide to present to the South Australian Business Chamber’s ThirtyNiners group.
During his visit, Evan participated in a special edition of the ThirtyNiners podcast, where he was able to discuss investing in your thirties, planning for the future, and what makes the economy tick.
Evan, a business owner himself, runs an investment and media company as a sole trader and fits the demographic of the ThirtyNiners group. He emphasised that for many business owners, their thirties are not just about starting a business but also about making significant long-term life decisions.
“Embrace your thirties, I’m still loving my thirties,” he said mid-interview.
“Kids change your life, and getting a house, this is why my thirties have been one of the most fantastic times.”
He added that these life changes make you realise that your life is no longer just about you. With a partner and a family, “me becomes we.”
Evan highlighted the importance of prioritising personal finance and future considerations during this pivotal time for many young entrepreneurs.
He said that many business owners don’t consider paying themselves a wage, especially in the early years when they’re focused on establishing their business, investing, and making payroll for their employees.
“You do need to fund yourself. Your business doesn’t have to necessarily suffer, but your business does need to be flexible with it,” Evan advised.
“You will make decisions for your business and your family. It could mean that an investment in new technology, which could accelerate your business by two or three years, might be postponed because of the personal financial impact, and that’s okay,” he said.
From an economic standpoint, Evan argued, “If you want your business to move, you need to do that.” However, he also stressed that it is perfectly reasonable to prioritise personal financial stability even if it means slower business growth: “A decision to invest in your personal circumstances is a correct decision for you.”
When asked about long-term personal sustainability, particularly the importance of business owners paying their own superannuation, Evan responded passionately.
“Albert Einstein has been credited with the term, the eighth wonder of the world is compound interest,” he said. “The reason why I say this, and you learn it in year eight maths, compound interest is extraordinary over time.”
“Every employee under 39 has earned superannuation every single day of their working life. The first 62% of your retirement money at 65 under current conditions will come from the first 15 years of your work, while the remaining 40% comes from the last bit. Compound interest will actually offset the smaller amount you were contributing at the start.”
Evan explained the importance of young business owners making the minimum 11% superannuation contribution. “If you’re not contributing to your super now, the compound interest power will not be there,” he warned.
“The average super fund in Australia is returning about 7% per annum. On that basis, over 15 years, you will have doubled your initial investment, not including the compounding of additional contributions. If you can increase your contribution to 9%, you will double your money every eight years.”
“If you are aged between 30 and 39 and not contributing to your superannuation, you may miss out on doubling your money,” he added.
To listen to the full interview with Evan Lucas, where he discusses superannuation, future planning, investment, and the jawboning rhetoric used to influence economic behaviour, tune in to the ThirtyNiners podcast. You can find it wherever you listen to podcasts.
*Please note that the advice shared in this interview is based on general experiences and may not be suitable for everyone. It is important to seek personalized financial advice tailored to your specific circumstances before making any major financial decisions.
