February 14, 2026 — 5:00am
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Hello Nicole,
Would you recommend a strategy to help my 19-year-old daughter to change her mindset / behaviour of spending far too much money please? I also don’t know which app would suit her because she isn’t very interested in this issue. She spent a lot of her teen years with her father / his wife and learnt a lot of bad money behaviour from them. The worst example is they encouraged her to get a car loan at age 17. She bought a $28,000 Mini and she still owes $17,000 and has recently realised that having such a big car loan was a bad decision. I am the opposite … I bought a house (while single) at 23 and have always been careful with my money. Thank you, Deborah
The earlier you start, the longer you’ll have for compound interest to do its work.Simon Letch
Ouch, that personal loan, Deborah! Assuming it was over five years at 9 per cent, your daughter will ultimately pay almost an extra $8000 – the interest – for her first car.
(Eight thousand dollars, not $28,000, is also the total budget some young people stick to.)
But flipping that – it’s positive that she has had an experience of what’s called compound interest, albeit the lost-interest-due-to-a-loan kind.
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Your first step – of three – is to explain how she could instead earn interest/returns.
Begin by telling her that, rather than forgo money, she could get free money.
Then give her this example: At age 19, it would take saving just $6 a day for her to be a millionaire by retirement (at 65). That’s at an 8 per cent investment return – we’ll come back to that.
Better still, of that million dollars, only $100,000 has to come out of her own pocket; $900,000 would be free (more, in fact).
Though so many young people feel disempowered about getting ahead financially, they need to know they have one incredible asset on their side: time.
The earlier you start saving and investing, the easier and cheaper it is to build wealth.
For young people, before the big expenses of life hit, my magic money split involves a ‘fritter, fun and future’ fund.
And this is the example you give to demonstrate, Deborah (with apologies!): Assuming you are 45, to amass the same million dollars by retirement, you would need to save $55 a day. And of your million dollars, nearly $410,000 is money you would have to find.
It – of course – gets more expensive the longer you wait.
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That is the power of compounding when you are young … free money if you simply start saving and/or investing.
Which brings me to step two of your daughter’s economic attitude adjustment: how much she should save versus spend.
Now you don’t say if she lives at home full-time but I will assume she does and that she therefore has more disposable income at her fingertips (although do charge her board for the discipline, even if you decide/are able to give it back to her later, say to help with a house deposit).
For young people, before the big expenses of life hit, my magic money split involves a ‘fritter, fun and future’ fund.
10 per cent for future you … these are very long-term savings.
40 per cent for fun stuff … but think medium-term savings for things like holidays and car upgrades.
50 per cent for frittering … this is for your daughter’s day-to-day living and playing.
With 50 per cent devoted, in this way, to spending for which you have to wait (and delay gratification), the key is to make those medium- and long-term goals specific and terrific.
Get your daughter to come up with targets so sweet she can almost taste them.
So, how do you then make the magic money split actually happen?
Step three – for us all – is to automate away your impulses … or, more accurately, impulsive spending.
Arrange direct debits of the right amounts into separate, clearly named accounts, immediately you get paid.
The working account should be the fritter fund, and when that money is gone it’s gone.
For the 10 per cent future fund, consider investing as this offers the best returns – potentially that 8 per cent I used in the million-dollar example above. Just $6 a day for a 19-year-old, remember.
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Take a look at the Raiz app to automatically invest into diversified exchange-traded funds, which spread your risk because they dilute your exposure to just one stock. You can also set the app to round up all purchases to, say, the nearest dollar and micro-invest that excess, which can be incredibly powerful over time.
And look into Sharesies. This app does the same as Raiz but it also offers what is called fractionalised direct investment, where you can buy portions of specific shares, without having to first save chunks of money. (You can invest in single stocks with Raiz, too, but only the top 50 ASX companies.)
Finally, check out my new money podcast Minted Kids, designed to be listened to by parents with their young people, to help start the money conversations at home.
Particularly, find the episode featuring the 24-year-old who just bought her first home using the government’s newly expanded 5 per cent Home Guarantee Scheme. There’s a lot of helpful chat about investing in there, as well.
And kudos to you for setting such an amazing example for your daughter, Deborah.
Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, X and Instagram.
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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