73. No student loan for me!

PODCAST TRANSCRIPT: Episode 73 - OCT 5, 2022

Today I’m excited to share the story of Pipi, a 20-year-old wahine from Auckland who got in touch with me when I did a shout-out looking for younger people to share what they have learnt about money. Pipi got her first part-time job at the age of just 13, and now that she is a second-year nursing student, she continues to work part-time during term time to keep income rolling in. The extra special thing about Pipi is that she is fiercely determined to complete her three-year degree debt-free, and today, I’m going to share with you how she is achieving that. I think this episode will be particularly useful to NCEA students and anyone who knows one!

It turns out that Pipi has listened to every single one of these podcasts. They have created a talking point between her and her Mum, Pipi’s partner and whānau, and amongst her friend group. So, it’s safe to say that over the last couple of years, she has been taking a snippet of information from each and every one of my guests and cobbling together a financial strategy of her own to get her through three years of university study and beyond.

Pipi was born in the West Auckland area, somewhere near Murawai and Piha beaches. She grew up with her two younger brothers, her Mum and her Dad, until she moved out to go and study nursing at AUT in 2021. She spent a lot of time and created a lot of special memories in the bush and at the beach, and because her Dad, who sadly passed away at the beginning of this year, was a lifelong surf lifesaver, it sounds like the great outdoors was a place she just loved to be. And still does. 

She said that her Mum and Dad were incredibly active together and were an unusual pairing in that he was about 30 years older than her Mum. Losing your Dad when you are so young must be really tough, but Pipi said he had lived a good and full-on life before he passed away in his late 80s. 

Her Dad sounded like the right character who had a tonne of interesting jobs and had many and varied interests throughout his long life. On Pipi’s birth certificate, he declared his job description as “Adventurer”, which was pretty cool, I thought. Pipi is actually surrounded by brothers and has four more older siblings from her Dad’s first marriage. So, there is no shortage of whānau to turn to for help, guidance and support if ever she needs it. 

Her Mum, who works as a school guidance counsellor, has always been the one that dealt with the family finances. An incredibly hard worker, Pipi has never known her to take a day off and said that her Mum has consistently set an excellent example of how to work hard and be frugal. 

Over the long summer school holidays, Pipi’s Mum often picks up a second job and, during Covid, has stepped in to work on crisis helplines. She gardens for payment as well, and that ticks another two things off her list at the same time: exercise and good living. Pipi said of her Mum that she is an active relaxer and always on the go, something I can very much relate to. 

She said her parents have always been very open about their household finances, about KiwiSaver, their mortgage, and just about the family financial situation in general. Her mum always talked to Pipi about how, when she was young, she had no idea what was going on with money and that she didn’t really understand finances until she was in her mid-20s. 

Now in her mid 50’s, Pipi's Mum is making sure her daughter gets a head start on understanding just how money works now. And the more we spoke, the more I could see that these two are very much learning together, which is pretty cool.

Pipi thinks she learned a lot of habits from her parents about how to live frugally and spend her money wisely. And how to weigh up options about how much buying a particular item will add to her life. Her Dad worked into his 70’s and only retired when Pipi was about ten years old, so on a single income, plus a superannuation payment, they never had heaps of money flowing into their whare. Instead of overseas trips, they were more inclined to travel much closer to home and given the part of the world they live in; it wouldn’t be hard to have a good time. It sounded to me that they lived in the kind of place that other people come to have holidays in during the summer months. 

Apart from a few attempts from her Mum to pay Pipi pocket money, which like many of us, ended with the parents forgetting to get the cash out in time, Pipi decided early on to make her own money. Her parents were supportive of giving their kids autonomy over their own lives, so for Pipi, her understanding of how pūtea actually works came from experiencing it first-hand through working from the age of 13.

Around Muruwai there were, she told me, two cafes, a surf school and a swim school, so limited job options, but she was approached by the owner of the fish and chip shop, who she had already done a little babysitting for, and they were looking for someone to help on a Friday night between 4 pm and 8 pm. She worked the front counter for a couple of years, earning a minimum wage which was probably about $17 an hour, then moved to a local cafe, doing front of house, and it was there that she learned how to make coffees, which has turned out to be an incredibly useful skill to have.

She really enjoyed having a purpose; it felt like quite a grown-up thing having an after-school job when many of her friends didn’t have that yet. This job prompted her Mum, and the fish and chip shop owner, who was very business minded, to help Pipi navigate setting up KiwiSaver and getting an IRD number and bank account sorted for her pay to go into. Pipi remembers enjoying the experience of filling out the appropriate paperwork, as it was interesting to see what else was required as part of working. Her Mum encouraged her to check her bank account to see the money coming into it, and from there, Pipi started to earn, save and spend.

So, she has been in KiwiSaver since the age of 13. She said that it is only recently that she realised the importance of it and is grateful to have made a start. She is with an actively managed provider called Juno, in a growth fund and currently has a small balance of around $5,500, BUT it is a good start. 

But because Pipi has started so early, she gets to see first-hand how an actively managed fund performs and how compounding returns work over time. No part of her has ever thought that being in KiwiSaver is NOT worthwhile. She just saw it as a saving strategy that was a good idea and has always set a small portion of her income aside. When she moves into full-time work, she has a foundation to build upon. If you start as early as you can with your retirement savings, you need to save less over your lifetime because your money has the potential to compound for so much longer than someone who doesn’t make a start until their 30’s, 40’s or 50’s.

Until she got a car, most of her jobs were very local, and she could walk to them. She started at her local cafe at the age of 15, in front of house, and over time, when it was quiet, she would ask someone to teach her how to work the coffee machine. When she was about 16 and competent enough, her manager got someone from AllPress coffee to come on-site and teach a hands-on barista course to Pipi and a few colleagues.

I am pretty sure that a course like this can actually count towards NCEA credits; she didn’t need the credits, so didn’t take that option, but it is worth thinking about for others. When you are young and starting to work, taking advantage of any training that will grow your skills is valuable. It makes you more employable, and I’d imagine makes your job more interesting as you get to do a wider variety of jobs at work.

So, how many hours did she have to work, and how did she juggle school, study and working? 

During winter, she would do Sat or Sun 7 am - 2 pm or something like that. But during summer in the holidays, she worked 4 - 5 days a week. Good, long hours in terms of pay, but if anyone listening has worked in hospitality, it is very tiring work dealing with the public all day. Pipi learned to enjoy customer service, but she said people would describe her as quiet when they first met her, but all this customer service work increased her confidence when dealing with others and these are skills she is now taking into her nursing career. 

Alongside her work was her ongoing involvement in surf lifesaving. She said that the leadership camps she did and all the opportunities to grow as a person really helped her social skills. And they are such good skills to have, to be bubbly, helpful and outgoing; you can take those skills into so many different parts of your life.

Cafe work was good for her for quite a few summers, but the summer she turned 17 she applied to become a paid lifeguard. You get paid to be at the beach during the summer, and what could be better than that? She left the cafe with a great reference from her boss and patrolled Mon - Fri for a six-week season as a junior guard on patrol on local beaches. 

The bulk of her earnings has always been throughout her summer time, as there is more free time and more availability of work.

What was she doing with her money, though? 

She didn’t really spend much at all, up until the point she bought a car and started eating into her savings, that is. Until then, the money just accumulated, and given her location, she didn’t have many places to spend it. She thinks her bank account got up to about $10,000 at one point. 

This to me is a relatively common scenario with teens who start to work. If they are good savers, which they become because their parents teach them to be, the money does start to grow. But the next step that I want to get across to those listening to this, is that your money needs a purpose and that will aid its growth.

What I mean by that is parents need to help their tamariki think about the years ahead and what they might NEED money for. If they want to leave home and start a job, they might need money for a car, for a bond on a flat, for furniture for when they move out. Or, they might want to head overseas and need money for that. In Pipi’s case, she needed money to study, and had they costed out the price of this for the years ahead, it might have given her money a bit more purpose. Now, don’t get me wrong here, as you will hear, she has done, and is doing exceptionally well, but she said herself that some putea was wasted along the way, that might have been useful now.

I wondered if there was a structure to her banking other than a bank account and KiwiSaver. Was there any talk of investing and planning for the years ahead? I often note that parents are good at getting their kids earning and saving in the bank but not so much when it comes to investing and financial planning for the years ahead. 

The bank account structure had just two accounts. Her pay goes into one account, and she then transferred to her savings account all the money she knew she didn’t need to spend. So, the bulk went to savings. The savings account was not locked though, so it was easy to move money back out again; which, in hindsight, she said, was not the best idea.

It was not until the lifeguarding job where she worked a good six week stint and she started getting $800 - $900 a week that she began to think, “what am I going to do with all this money”? Her intention has always been to save, and have some financial freedom, even when still at home. 

So, her first big financial goal was to buy a car to get her to work. She was pretty particular about what car she wanted and she had her heart set on a Subaru Legacy. One of her brothers helped her scout one out, and she paid $4,000 cash for it. That bit into her $10,000 savings quite a lot, but it also showed how important it was to have a good grip on her finances. As soon as she found it on Trademe, she knew she could afford to pay for it and it gave her a good sense of achievement to have done so. 

I asked her if it was common amongst her peer group to get a car loan, plus she had referenced the fact that her family had recently paid off their own car loan. Not really, but she said the majority of her school friends still don’t actually have their licences. A couple do have their own car, but they had been working and saving up to buy them, just a cheap car, below $4,000. The rest just use their families' cars to get around. This was good for me to hear as I worry about teens and car loans. 

As soon as she said Subaru Legacy, I got worried as I know they are hungry on fuel and some are prone to break down. So, I was not surprised when she told me that she was so set on that car that she didn’t think fuel costs through. Plus, after just nine months, it blew a head gasket and was uneconomic to repair, so that was $4,000 down the drain, It was a real kick in the guts as it was in 2021. She was in her first year of uni, an expensive year at the best of times.

Because she was studying some distance away from her whānau and girlfriend, and because she needed to work, she needed another car; there was a lot of driving involved. Her lifestyle genuinely requires a car. So when she bought her second car because she had so much money now flowing out of her account to pay for her study, she just didn’t have the cash to buy the car, and she actually got a family loan from an uncle to pay for it. Still not done with Subaru she got another one, this time an outback, and it seems to be going just fine! She still owes her uncle $1,000 and is paying that debt down over time and has a structure in place to do so; plus he has refused to charge her interest. She has promised herself that if this car dies, she is done with Subaru.

So, yeah, you know it already, as much as she loves the look of a Subaru, it is a bit of a financial regret, and she knows she would be in a different financial place without those car costs. So far, those two cars have cost her 9K plus. 

I think about that cost in regards to her time. How many weekends and summer days did she have to work to pay for that one expense. And was it worth it? If you have a teenager hell bent on buying a car, please teach them to think well beyond the cost of just the purchase price. I know in my town there are many teenagers who buy a car as soon as they are legal to drive it who are currently now walking to school due to the cost of fuel. In many cases, they have failed to think beyond the cost of purchase.

We didn’t even talk about the cost of servicing and repairs for Pipi’s vehicle but she did say that her advice to you is don’t get a car until you absolutely have to. If you can borrow your parent's car or catch the bus, do that.

She went straight to uni from school, starting uni at the age of 18.

Due to no fault of her own she has managed to head into tertiary study during an incredibly unsettling time, with covid majorly disrupting her traditional study route and I have to take my hat off to her for adjusting course every time she needed to, so she could adapt to a lockdown or illness or what have you.

The first year of tertiary study, is thankfully fee-free. But because she lived in a Hall of Residence there are costs associated with that. For her, in 2021, it was $12,640. A scholarship of $6,500 paid the first half of the year and in the second half of the year, she split the remaining $6,140 payment for the hall in half with her Mum. 

But because of a covid lockdown she couldn’t remain in the hall at various times and they got a lot of that money back. She didn’t work in that first half of her first year as she didn’t know what the study workload would be like, and she worried that trying to work as well as study would just be too much. But in hindsight, even with covid, she could definitely have handled that workload she said. What it meant was that she really started to eat into her savings. What felt like an enormous sum of money, $10,000, is actually pretty easy to spend.

She was observing this though and she kept re-evaluating her work-life balance. But it did have me wondering how much she knew about the costs of studying full-time and living away from home.

Pipi had work sorted, she knew how to work, she knew she wanted to do nursing, but I asked if any person at school talked her through the ACTUAL costs of study: like the course costs, accommodation costs, social costs, the real costs of the three years ahead. 

She said that apart from saving money, she didn’t have a financial plan as she headed to study. Which, as I said earlier, is the bit that I often see missing when I talk with people.

No one, apart from her Mum, explicitly went through those costs. Pipi does remember her mum sitting her down to create a budget on a spreadsheet, but ultimately it didn’t get used. They tried to create a one-year plan but didn’t look at years two and three. And she said that all the lockdowns didn’t really help as it was quite a mixed-up time. When her car blew up, she remembers a large jolt where she became aware that she needed to have more understanding of her finances to prevent something like this from throwing her off track. 

Hearing her talk through this actually reminded me of episode #57 of this podcast when I spoke with Janet who spent a lot of time educating her daughter how to budget and pay for her uni course and living costs. So, if you are interested in this area, just go back and take a listen.

Pipi went out and sought more barista work in the second half of her first year, finding a job that would work around her classes, allowing her to work in the morning and go to class in the afternoon, while studying at night in her room. That got the cash flowing again and halted her savings from being drained. I love how each new challenge had her correcting the path she was on and that when she realised the financial squeeze she was heading for, she didn’t hesitate to find work.

So, what advice would Pipi give to the school leaver or younger workers who know they are going on to tertiary study? A large reason why she has been able to get to almost two years in is that she got two scholarships. She said there are a lot of scholarships that just don’t get applied for, and it is worth your time and effort to apply. In her first year, she applied for seven and got one. In her first year she received $6,500 and this year, her second year of study, she applied for and received $7,000. 

Her advice is to contact your school careers advisor, they should have access to lists and databases of scholarships that you can apply for. Also, contact your tertiary provider as they will have a branch dedicated to scholarships and can provide a list of scholarships that are only available to the institution you are studying at. There is a NZ Scholarship database called GiveME which is a really useful tool. It has a huge database of scholarships available to those in NZ. You should be able to gain free access using your tertiary email address, but, she said, just ask your tertiary provider to help you if you're struggling to gain access. 

She encourages young people to get budgeting sooner, get planning and work out all your weekly costs in the year ahead. What will rent, electricity, food, transportation, and course costs be? Had she put more thought into that, it would have stopped her splurging on things that, in hindsight, she could have held off buying.

In my mind, budgeting is a weird word for young people who have never heard it. So what has she put in place now, how could she explain what budgeting actually is?

What are the simple steps she could share with teenagers? And how did she develop a simple plan for her own money?

Although she wishes she had learned to budget sooner and is still definitely a work in progress, her first year away from home was her trial run as she was working out how to become financially independent away from her parents, and she learned a lot. 

This year she has started apply her new found life experience and tighten up her spending. She has made a conscious choice to know and understand where her money is coming from and going to. That is the first step. To decide to take an interest.

Also, she has decided that it means a lot to her to not have to ask her Mum for pūtea, and not need to rely on her. That is just part of becoming a mature adult, but also because she knows that money is tight at home with her Mum, with two younger siblings to care for and a mortgage to pay. Through openly talking about money, she has become more aware of the financial situations of others around her and to me, that is a really good lesson to learn. Her Mum is fabulous and helps out where she can, but Pipi wants to forge her own path, and each time she learns something new about money, she gets better and better at doing that. 

So, back to my original question, this year, her second year out of home, how is she budgeting, and juggling paid work and academic work? 

She keeps a physical diary and good time management is key. Although she is not perfect at it, she writes down when all her assignments are due, and then she works back from there, writing herself notes like “assignment due in five days”. Given she is a nursing student, she triages her study if you like, which tells her when and where she can fit in paid work. She tries as best she can to get assignments completed by Friday, if they are due in the following Monday, which frees her up to both work and socialise.

She said that YES, you could work AND study. And doing both motivates her to be wiser with her time management. In fact, she thinks that if she didn’t work, she would have too much free time. So, her first two steps are to decide to pay attention to her money and then to manage her time well which allows her to both study and work.

She looks at her outgoings and all the things she knows she would spend money on, and she is realistic about these costs as she bases them on what she has spent in the past. She looks at her actual costs such as rent, course costs, food, petrol costs, phone costs and socialising. She also keeps a close eye on the income she has coming in.

And she shared with me some figures:

Her rent is $210 a week. This year, due to the death of her father her Mums income is now lower and means she is entitled to receive $204 as a student allowance. This is money she does not have to pay back, and it is massively helpful, paying all but $6 of her rent. 

As is normal, she had to sign a 12-month lease for her flat. In her case, her tenancy starts and ends in February. And she has to pay it, even though she knows she won’t be there for a third of the year over the summer as she will live and work from her family home. 

She is already trying to find a way to sublet her room over the summer and offset those high rent costs. She pays $210 a week and has three flatmates, who either pay slightly more or slightly less depending on the size of their bedroom as is quite normal in a renting situation. 

She is lucky in that one flatmate is a commerce student so they have taken on the flat organisational role which is awesome. Everyone needs a flatmate like that, and her flatmate is great at sharing with them all what is owed when and by whom. She flats in the city, but her campus is a 20-minute drive away on the North shore, but with covid, most of her work is now done online, and she only needs to go onto campus once or twice each semester. By living more centrally, she is better located to do nursing placements in hospitals she said. 

She buys her own food and cooks her own meals. She has been vegetarian and cooking since the age of ten and just prefers it this way. She had budgeted $40 a week for food but currently spends $50 due to the cost of food really rising this year. She offsets her costs by regularly raiding her Mums garden and also adjusting her food cooking plans and looking for deals at the supermarket. She does not eat out much, perhaps just once a month. And given she works in cafes, she actually prefers the coffee she makes at home. If she wants a coffee out and about, she would much rather sit down in a cafe and enjoy the whole experience, but at $5 a pop, this is a luxury she generally goes without. 

Petrol costs her about $70 a week, her biggest cost other than rent, but she said she is getting savvier at using public transport. She drives to her weekend cafe work and drives to visit family and her girlfriend, who is currently finishing up her schooling before she too heads into nursing training. And when she is on a placement, she has to pay fuel to get there, plus she often also has to pay for parking. As best she can she works out all these costs so she can plan the weeks ahead. 

She pays a to be a member of the AA in case that car breaks down again, plus she pays for health insurance. She has a Spotify subscription but makes sure to get the student deal, and it costs her $1.87 per week. Her phone is on a prepaid plan, costing $4.70 per week. 

She sets aside $30 a week for socialising with her partner and friends. Some weeks she spends it all, sometimes not.

Importantly, she is not huge on buying THINGS, she made the conscious decision to only buy secondhand clothes, and even then, she does not buy many.

Very roughly, it costs her a maximum of about $470 per week to live, which is about $24,000 per year, and she feels fortunate to receive a student allowance to offset some of those costs. And the living, particularly the high rent, is the expensive part, not the course costs. Her course costs were free in the first year and $7,500 per year for the next two years, so $15,000 in total. Her total costs for 2022, including course fees are about $31,000 per year.

What is tricky to budget for is the fact that her academic year is 40 weeks spread over the year, with semester breaks, summer breaks etc. It is difficult to get paid work when your time is structured in this way. Plus, the student allowance only pays out November to March, scholarships are paid out at different times, you may be unable to work due to heavy course work loads and exams etc. So, Pipi is learning that it is more important than ever to try to even out your expenses and income over the year. She has to plan for this intermittent income and ability or inability to work.

She said that her mindset was that a student loan is the last resort, just in case her planning doesn't quite work, and her savings run out, but the difference between her and others is that they have the mindset that the student loan is the first option. So, that is a huge difference in thinking there. Students can wander into student debt like it is a foregone conclusion; she has actively decided it would not be for her.

But, in fact, things got pretty grim financially this year for Pipi. As a trainee nurse they have to go out into hospitals and work full time for four-week blocks, meaning that while not impossible, it is very difficult to continue with her cafe work. So she took the decision to not work for four weeks, meaning the loss of income. She reached a point near the end of a block of in-hospital training where she looked at her account, had only $6 and was trying to figure out what to do to get through. She knew she had committed to extra shifts at the cafe the following week, but that cash was a week away. She had to ask her Mum for an emergency $50. She was the poorest she had ever been and having been there myself; it is a horrible feeling to look at your bank balance and know that you have absolutely nothing left.

In hindsight, she said that she could have worked in the cafe and at the hospital, but it was her first placement, and she didn’t know how it would go. But I have to say, as someone listening to this, I struggle to see how you can work full-time in a hospital where you are meant to be learning and then work at night. I want my nurse to be refreshed and ready to learn, and I absolutely understand why she wanted to just concentrate on that.

She thought that was it; she literally had no money, and it was time to take out a student loan because it was the only way. She filled out and submitted the documents. But that was right at the time when the Labour Government started paying out the first of three $116 payments, which they called a cost of living payment. Even though she receives a student allowance because she met the other eligibility criteria, she was entitled to receive it. 

This money was meant as a cash injection right when Kiwis needed it, which Pipi desperately did. This small but incredibly useful amount of money directly hit the spot, and tied her over until her next pay. With glee, she phoned up Study Link and cancelled her student loan application. 

By the skin of her teeth, she is sticking to her goal to remain student debt free.

If someone in government is listening to this, well done. I recall all the arguments and politicking around this payment, but I know myself, that sometimes people just need cash. Not a tax cut you never even register receiving. Cash works. And in this case, it worked perfectly. For those listening, if you feel you didn’t need or deserve this payment, but it turned up in your bank account anyway, there is a very simple solution. Just head on down to your local campus, find a student and give it to them.

Now, I admire her steadfast determination, but why the desire to remain debt free? Although I don’t like student debt, I can see that for many students, it’s the only way they can study. Pipi said that in part, it was these podcasts and all the different times student debt was talked about that has made her so set on her goal. 

Her Mum found my podcast and started sharing it with Pipi in 2020, and they both thought that if she could get through her study debt free, when she finished her study, she could just keep moving forward in life.

It was a huge thing to hear the experiences of others, and this very podcast showed her that with hard work, perseverance and the willingness to try, you could study debt free, and the fact that Pipi is doing it with limited parental financial support is incredible. For her, the idea of finishing her degree and being able to just immediately start earning and not have to pay back money will be such a good feeling, and it is very important to her that she try. 

Gosh, I admire this young woman, and I can’t tell you how proud I am to have motivated her to try.

She said that she is now living pay cheque to pay cheque, but apart from that $1,000 owed to her uncle, she is debt free. And she very much intends to keep it that way. 

So, with cafe work during term time, which makes her about $90 a week minimum, but is variable, and a student allowance coming in, getting steady summer work is her priority. As soon as uni finishes for the year in November, she heads straight into full-time lifesaving work through to February when the academic year begins again. 

As a senior lifeguard, she will make $25 per hour; if she becomes a patrol captain, she will make $27 an hour. They are long days, she said, but good money. She needs the cash influx to get her through the coming final year. And she is learning to budget for that mid-year dip when she has a heavier course load and smaller work opportunities, maybe only a five-hour shift per week, mean that money is tight as her savings dwindle.

Already she is hard at work on her financial plan to finance her final year of nursing school. It involves her applying for scholarships, and she is really hoping to get one of those again. The one she received this year paid her $7,000. If she got that again, it would cover most of her final year fees.

Pipi says that while not ideal, she is OK living pay to pay because she knows it is only a short time; just 14 months from now, she will be qualified. And I agree, we can endure a lot if we can see the finish line. I remember when I finished my university degrees, I had $0 in the bank but no debt either, and I just began to build from there. 

So, after all this scraping by, coming out as a qualified nurse, I wondered how much she might expect to earn. Pipi was speaking with a newly graduated nurse recently, and she was making $28 per hour, which is about $58,000 a year. She was also working as a hairdresser during the weekend, and with a family to support, was just scraping by.

I think it is extremely smart of Pipi to start to speak with those who are actually working in the role so that she can get more of an insight into career progression and what she can expect to be paid because I’m sure, well, I hope that $28 an hour is not all there is.

I actually got in touch with a friend who is a nurse and asked if she had any more insight into pay rates, and she shared with me the following:

Hospitals offer a tiered rate of pay for nursing, starting, she thought, at $57,000 a year and up to $79,000. Plus penal rates for shift work, so annually it is possible to make quite a lot more if your situation allows you to work more.

Charge nurses and managers make $80,000 - $103,000 annually.

Apparently, these are the new pay rates just brought in after recent strike action by nurses.

My advice to you, whatever career you are looking to get into, deeply research how much you are likely to earn. Also, if you are looking to go back into further education so you can increase your income, just do your research and make sure that this will be your reality. I’ve heard of people doing additional degrees at great personal and financial cost, but with no financial gain in the workforce. 

At the end of the course, when Pipi will be working as a first-year grad, she will likely enter a probationary period, doing shift work on a hospital ward. It’s also on her mind to do further study to advance her nursing career, and it is very likely that she will do as many young Kiwis do, head off overseas at some point to do an OE. 

She really likes the concept of FIRE, and finishing debt-free will mean she is already a step ahead on that journey. 

Even while things are financially tight, she is still dabbling with investing. Remember in the lockdown of 2020, where everyone was stuck at home and went mad for investing? Yep, that was her. And maybe you too. Pipi signed up to Sharesies and, on the advice of her uncle, dropped $2,500 into some random company that I’m not even going to mention here because I don’t want to encourage anyone to do the same. The value went up to $4,000 and is now below $2,000. Little did she know that this money would become incredibly useful to her in the years ahead, but I’m sure that if she did know, she might have thought differently.

But that’s all part of learning how to invest, right? Find an incredibly risky investment and bet the farm on it. And lose your money. I honestly wish that is not how the story goes.

I am absolutely in favour of people starting to invest early in life. After all, you do learn by doing, but if you have other things pulling on your money as Pipi does, I don’t think investing such a big sum of money is the right thing to do at this stage of life; it would have been better to invest that money in Pipi’s education I think. A better route, one more likely to encourage a lifelong habit of taking a portion of your income and investing it every payday, would be for someone with so little money to take just $5 a week and develop a habit of steady and consistent investment. 

And avoid stock picking and buying single company shares like she has done. Instead, research what those in the FIRE community tend to invest in, which I’m pretty sure is just one or two broad-based, low-cost ETF or index funds that buy the market of an entire country.

As for personal finance content that she would recommend to others. I’m fortunate in that she sounds like a walking billboard for The Happy Saver, recommending it to any friend who dares mention that they want to use something as financially stupid as AfterPay. Her poor girlfriend gets trapped in the car being made to listen to me, but apparently, she then gets to choose something else for the next podcast. Which sounds fair.

She also follows up on the recommendations that others make on this podcast, and other than that, she just talks to people openly about money. Hoorah, best news ever, that’s what I want to hear. 

She talks to her mum about what she is doing about her finances, and she talks with friends, all of whom are quite different, and they each share their experiences and what they are each learning. She talks with older adults too, and once she realised that her girlfriend's Mum also listens to financial podcasts, that opened up the opportunity to korero about how their family uses money. From all of these sources, there are just so many little things that Pipi has absorbed as she builds up her own financial knowledge.

I could relate with Pipi a lot because from a young age, like her, the thought of taking on debt weighed heavy on me too. She sees how her Mums mortgage weighs on her sometimes; and the reality that she only recently paid off the loan on their family car. So, she sees how debt works, how you can take on multiple debts and how they can restrict you, year upon year.

The point I often try to make about student debt is that it feels harmless because of the allure of being interest-free, we have kind of desensitised ourselves to the fact we are encouraging young people to go deeply into debt, when the majority don’t understand the future implications of doing so. The fact that everyone considers it normal to get a student loan, indeed I often hear parents encouraging their kids to do so, means that once someone has done it, it is now their problem to own, not the problem of well-meaning people who advised them into debt.

It’s my observation that in the beginning, the numbers also feel small because most people don’t budget out the complete cost of both the study costs and the living costs for the full course length, which is 2 - 3 years plus. 

What feels like the easy path at the time, just borrowing the money, suddenly gets harder when the study ends and the quest for work begins. That is when the problems come along and the reality sinks in that the debt is large, and then life begins to pile on other financial pressures as well: car loans, marrying someone with student debt of their own, a mortgage, wanting to travel. 

Basically wanting to do anything that requires money. 

And don’t get me started on people who finish a degree and then decide to do something completely different with their life that they could have done without it. They will now spend years paying back something they will never use. These people deeply regret taking out loans. If you have pre-committed your future income to pay off something you have already completed, you are tying up your future income.

Student debt is not harmless and thankfully we talk in this country about the mental health of our young people. I’m telling you that I’m witnessing first-hand what it feels like to be someone like Bella from Episodes #61 and #52 who wandered into student loan debt, and then suffered the crushing reality of what finishing study owing $85,000 actually FEELS like. 

Personal finance is not just math, it is mostly emotion. I can see how upsetting it is for young people when they realise the implications that student debt has on their future. But, if you can wrap your head around how money works earlier in life, like Pipi is doing, debt is 100% avoidable. But as parents and caring adults, we need to teach our kids the skills to be able to make this their reality.

What I liked so much about Pipi is that although she is very much learning on the fly, she has worked this out. She has thought to herself, what’s the harm in trying to pay for as much of my education in cash as I can? There is no downside. A teenager with a work ethic can earn a lot of money in the years before they leave home, and if, like Pipi, they save as much as possible, they have a decent crack at a debt-free degree.

One of her biggest successes with money is that she has always been willing to have a job, and from the age of just 13, she enjoyed the responsibility of going out to work and has always valued making her own money. Like her parents, she has had many jobs and is rarely idle. At times she worked as a swim teacher, at the surf shop, and worked briefly on a film set as a safety person. She has always been willing to say YES to lots of different jobs to have an interesting experience and bring in bursts of extra cash. And she loves that feeling of adding that cash to her bank account and rationing out how to spend it. Sure, already hindsight is showing her that she has made a few missteps, but she is not giving up on her goals.

Pipi said that she is willing to take every work opportunity she can get, but at a young age, she also knows how to have a life and enjoy life. Wise words for a 20-year-old.

Take it from me; I don’t think there is a single book you can read which will categorically explain how money could or should work for you. We are all so very different, but Pipi's approach of having lots of conversations and being curious enough to learn from others about what they do with their finances will let her, through trial and error, work out what is best for her. Her determination to remain debt free will set her up for success because as soon as she completes her course, she can just get on with life, never having to take part in a single conversation about the curse of student debt again.

I could hear in her voice that she was a happy young woman. Her determination to hustle and grind has its down days, I’m sure, but all in all, I think that when she qualifies at the end of 2023, she will look back at this brief, covid interrupted three years and think that she smashed her goal to stay debt free out of the park. I’m absolutely cheering for her. Then she can just get on with her profession of choice, and if her partner also completes her nursing degree, what a powerful nursing duo they will be!

In case you have not worked it out, getting an education in Aoteroa is expensive, and the financial weight of study is no joke. 

It is extremely difficult for someone to save up enough money before they begin their course; they have to do it as Pipi has done, by cobbling together money from various sources: scholarships, savings, ongoing work, student allowance, and parental support. And while it can definitely be done, sometimes all a student needs is a helping hand and some pūtea to get them through. If you know someone as hard-working as Pipi who is studying and you have the financial means to do so, I encourage you to be generous and donate some money to their education. Your $100 might arrive in their wallet right when they need it most, just like it did for Pipi when she received the $116 cost of living payment.

And finally, thanks, Pipi, for being so open about your financial situation and your journey. I’m pretty confident that other young people listening to this will take some nuggets of wisdom away from it. And hopefully, any adults listening to this who have or know of people heading off to study will also think deeply about how they can help them prepare financially for the years ahead.