Iona Bain on Owning our Finances and Millennial/GenZ Investing

Kriti: [00:00:00] Hey guys, welcome to WhyFI Matters!

I'm super excited for today's episode on the importance of investing for younger generations, but also how financial education as a system can improve. Today's guest is the UK's leading millennial money expert, Iona Bain. Iona is an award-winning speaker, author, and broadcaster, and she's the founder of the Young Money blog, which is Britain's first blog established in 2011, to help people get a grips with their personal finances. Her newest book "Own it! - How our generation can invest our way to a better future" guides, her readers on the taboo and often anxiety provoking world of investments and finance. And today, hopefully she might guide us through this as well. So I hope you enjoyed the interview.

Hi, Iona. Thank you so much for coming on the podcast today. Like I was telling you before we started recording, obviously I've been waiting for this interview for quite a long time. So I'm super excited to learn more about what you do at the Young Money blog and also more about the power of investing for young people and how it can really help us in our lives. So, yeah. Thank you so much for coming.

Iona: [00:01:33] Oh, it was great to join you Kriti and yeah, I hope that I can share some useful stuff with you.

Kriti: [00:01:39] Can you tell us a little bit about your life as a teenager and what eventually made you interested in money and personal finance?

Iona: [00:01:50] That's a fantastic question. Well, I grew up here in the UK. I'm from Scotland originally, and I didn't know anything about money, really when I was growing up. My parents were very frugal and thrifty. So my mum in particular, because she came from what you might call a working class background. You know, she wasn't born into money. Therefore she's always had a very conserving mindset. So when we grew up, we were, we had it instilled in us not to waste money, to look after whatever money we are to make sure that we could find bargains to make our money go further.

And I was also very fortunate in that my father before he retired a few years ago was a business and finance journalist. So it might start to make sense as to why I'm doing what I do now. But in all honesty, my dad never talked to me about money when I was growing up. In so far as he never, he never encouraged me to go down the same path as him.

We didn't really talk about business and finance in the house. I was encouraged to pursue my passion, which was music. And so I was a trained musician through most of my youth. I spent most of my teenage years getting to a very high standard as a classically trained musician. And then I went to university and studied music. And it was only really in my early twenties when I was out there in the big, bad world, just a few years after the financial crash.

And I, it was only at that point that I realized that I knew very little about money. I felt very insecure about my finances. It was proving to be a really tough environment for all young people. And I knew I had to do something about it. And as my musical career stalled, I decided I had. Very little to lose and so perhaps a good way to learn about money would be to start a blog. So that's when I started Young Money blog in 2011, and I suppose the rest is history.

Kriti: [00:03:55] You and I are very similar. So, you started like your whole business, everything you do, because you were curious and wanted to learn more for yourself. And that's the same reason why I started doing the podcast cause I realized I'm very ignorant of what I spend and things like that. So definitely it's helped me, but it's great putting it out there for the world to see. You can help other people as well. So that's cool.

Kriti: [00:04:21]And also I play an instrument. I play classical guitar. So what did you play?

Iona: [00:04:28] I cello and piano, but I was also a singer songwriter. So I moved from classical music to pop music. I love most kinds of music. I can't say I love absolutely all kinds of, but I am more or less a music lover.

Kriti: [00:04:44] I love music too.

And I have an interesting question. Do you think that a lot of musicians have poor financial knowledge? Do you think that societal like judgment on musicians prevents them from even wanting to educate themselves on finances?

Iona: [00:05:02] I think that's a brilliant question. Kriti. I've never been asked that before, I would say that there has been a stigma attached to money in the musical and creative world, like art gone by in the arts more generally. Yeah, I do definitely feel like that there was a stigma and when I was a musician, it was hardly ever discussed.

And in fact, my brother is also a musician and still is one. And when he went to music college , I think he was really surprised at how little practical advice and guidance was given to him, despite the fact that he would be going out into an incredibly competitive world where the chance of success is

Kriti: [00:05:43] so small.

Iona: [00:05:44] Exactly. And so therefore people need to be very entrepreneurial. They need to hustle. They need to potentially find lots of different income streams. And they have to learn all this pretty much on their own without any help and advice, even when they go through formal institutions, which in theory could be helping them and giving them that support.

But I think things are changing. There are some really interesting organizations out there. I just came across one the other week actually. It was it's called the "Hell yeah! group". And they're providing financial advice and information for people who consider themselves to be creatives. And they're doing it in a really fun, imaginative and artistic way.

Kriti: [00:06:25] And that's awesome.

Iona: [00:06:26] And also I'm doing some workshops even though the next month for an organization called "Creative Edinburgh". And that's all about getting self-employed people who work in the arts to understand that money is a subject that they need to understand and engage with, and it doesn't have to be scary and daunting.

Kriti: [00:06:45] I think that's amazing.

And I want to talk about financial education in this narrative. Like in even in a lot of different schools, financial education is not a part of the curriculum even though it should be, or they say it's in their curriculum, they don't really teach it well. So, how do you think that we can change this narrative? What you think are the next steps to make this something interesting for us?

Iona: [00:07:12] So about financial education and what the situation is regarding financial education, I can answer that in relation to the UK. Since 2014, here in England, financial education has technically been a compulsory part of the curriculum. And in the other three nations of the United Kingdom, it was on the curriculum a little bit longer than that. However, that doesn't mean that all young people are being taught about money. And even when they are being taught about money, the approach might not be very effective. And there are lots of different factors can explain that weird contradiction there. One of the factors is that we've got different types of schools here in the UK. For instance, we have academy schools which don't follow the national curriculum. So it's down to the teachers to decide how they approach the subjects. If they choose to approach it at all. Another reason why financial education tends to be pushed off the end of the priority list is because it's part of a very big subject called citizenship. And that encompasses a huge number of other subjects. And therefore it, especially if you don't have any exams on a subject here in the UK, we're a very exam driven culture. If in the education system you have a subject that doesn't require any exams, then teachers in schools tend to neglect it and it ends up being an afterthought. So that's the reason why whilst financial education is in theory being taught in schools, it's not always being done very effectively. And also teachers aren't getting training. They're not getting resources to help them to do this effectively from the funded, by the government. They're funded by charities and financial institutions. And you have a situation even where someti

mes banks are going into the schools. And they're providing the financial education. And also often that ends up with them talking to young people about bank accounts that they can open. And so it ends up just being a sales opportunity.

Kriti: [00:09:14] Sales pitch!

Iona: [00:09:14] That's it no financial education. So clearly we've got a lot of real flaws and shortcomings, even with our approach where financial education is on the curriculum.

How do we make it more engaging and effective? And more, more interesting for younger people. Because I think that it's getting better, but money still has a big image problem.

And this image problem is down to various perceptions. Firstly, that money is boring. Secondly, that it's very grubby and that it's only the concern of people who are quite greedy. And thirdly, that it's complicated. So I think to be fair, there's only one of those three aspects. Only one of those three beliefs that I think has any truth in it, which is that money is complicated. There is no getting around it. That doesn't mean it's not fascinating. And it doesn't mean that it's not really worth us trying to understand it. And I think that it's about reframing your attitude to money. And it's about understanding that you are potentially forming your beliefs around money at a very early age.

Some of the science out there suggests that you could be forming your attitudes to money by the age of eight.

Kriti: [00:10:26] Exactly. Yeah.

Iona: [00:10:27] And if that's the case, then yeah, you are, well, firstly, if you're not being taught about this, a school that has been left up to your parents and your parents, you know, they may be brilliant and they may be kind of teaching you a lot of really great things in lots of different areas, but money might not be one of their strengths.

Kriti: [00:10:45] Yeah.

Iona: [00:10:45] They may have financial problems of their own. They may be in debt. They may be spending a lot. You're learning from them. You are taking your cues from them at a very early age. And then you are carrying on a lot of attitudes about money into your adult life. And they are really underpinning your whole financial behavior in ways that you haven't ever really fully understood or explored or admitted to.

So I think this is about a mindset, right? This is not just about maths and numbers. And I think my work is all around in all of all the about encouraging people who might be put off the whole subject of personal finance, because a lot of it seems to be about understanding numbers and being good with maths.

But actually that's just the secondary. That's a nice to have. And to be honest, it's, as long as you have access to a calculator then you'll probably be all right. You know we're not talking like PhD level. This is math everyone. Basically can't get their heads right.

For the really important stuff. And the stuff that, that thankfully is also really fascinating, that everybody can take an interest in. The really helps us think about what we want out of life. You know, really demands us to ask the big questions. I should say.

That stuff is to do with our mindset, how we think and feel about money and how it reflects our values and our attitudes. And so that's how we nail financial education. When we talk far more about the psychology of money and far less about the numbers.

Kriti: [00:12:14] I feel like even from, from a student's perspective, like myself, whenever my teachers talk about something like personal or something emotional, I can connect with them more.

Like, even if we're having like a discussion on a history thing. And then my history teacher suddenly talks about her own life and how this could relate to her. Like that's when I sort of get it, you know? And that's how we should be handling money, but obviously it's a very personal thing. So yeah.

Iona: [00:12:44] Yeah. I mean, your teacher is really brave because I think a lot of people just don't want to be that open and honest, which I completely understand. Yeah. As you say, it's a very personal issue and people can have some very deep problems. And when we think about money, it opens up a lot of potentially quite painful areas of our life that we maybe don't want to think about it.

Um, so. Yeah, you've got to, you've got to be sensitive. You can't make people run before they can walk. You've got to work with, to that timetable and, and make sure they feel comfortable. And that they're not being rushed to ask questions of themselves that they're maybe not comfortable with.

And also, I did talk in my first book "Spare Change" about how maybe you can discuss how you formed your attitudes to money with the people who brought you up. But that's not possible for a lot of people either because they're straight from their parents or their parents have sadly passed on or they never had parents.

They were brought up by other family members. There's so many different scenarios that can determine how, and why somebody is brought up with some dysfunctional financial attitudes. And therefore it's not essential really to go and find out what the source and what the cause of those issues are, or the matters is that you're aware of them and that you're committed to working on them as you grow up.

Kriti: [00:14:01] . And so you wrote your second book called "Own It", how our generation can invest our way into a better future". And this is the focal point of this episode. I really want to talk about investing and the power of investing.

So why does investing even matter? Can you give us like a few benefits and advantages of investing and why starting young is really impactful when doing this?

Iona: [00:14:31] Sure. Well, investing matters because it's you putting your money into the stock market and the stock markets is where companies list i.e., Go out there to find money in order to grow and hopefully solve problems, employ people, and generally give back to society and move the world forward.

And that, that system, which is broadly speaking capitalism, ain't perfect. We know it has lots of floors and problems. And we always have to be alive to those gremlins in the system. However, we have something that can really help make capitalism more accountable and transparent, and that's shareholder culture.

We all have the ability to be shareholders because when companies list on the stock market and put themselves out there, when they go public, then we can put our money in those companies. And when we do that, we have a say, and we can determine how that company behaves in future. For instance, if we think it's not, if we think it's being irresponsible, whether that's with regards to the environment or their own workforce or their supply chain, then we can speak out.

Now, there has been a lot of debate about how much power shareholders really have, especially individual shareholders, because we've seen a lot of companies come to market and list and go public in recent times, which have limited the ability of shareholders to get involved. That have given maybe more shareholder rights to CEOs, things like that, which is a, which is concerning because I definitely believe that investing works best when everybody has the opportunity and the potential to, to invest in those companies.

So that's why investing matters. And it's totally different from putting your money in the bank and you gain that money back at a later point when you want it, or at the end of a certain term. And that's guaranteed. That's great for certain purposes. If you need to save for emergencies, you have to access that cash really quickly.

And likewise, if you've got any kind of short term goals, where you don't want to be putting that money in the stock market and waiting and seeing whether you'll get that money back at the time you need it. Then obviously you should be putting that in the bank and that's your safe bet. But we all need to be engaging with investments. And we need to do that as soon as possible, because it's a long-term game. The longer you can put your money in the stock market, the greater the chance of you growing your money over the long term, because you need time. You need to give companies your time as well as your capital, because they can't work miracles overnight.

They need that time to grow. Therefore if you start as soon as, as you can, as soon as you have the money. And I would say that nobody should start investing until they have paid off expensive debts or built up and built up a little savings pot, there a worth a few months worth of their wages.

But once you've got that sorted, then you should be thinking about investing because it's the most powerful way for you to grow your money in the long term. So you can achieve your goals and your dreams. And I say in the book, the investing is an active, practical hope. We do it because we think that the future can be better, that we think our future can be better. And therefore, by putting money towards it, we can create more options and choices for ourselves.

Kriti: [00:18:09] I like that quote a lot. And so can you talk a little bit about disparities in investing, like the investing gap.

Iona: [00:18:19] Yes. There's definitely been traditionally a gap in investing in terms of ages. Older people, far more likely to have the money, first of all, to invest in. Secondly , to just be much more in touch with the world of investing and engage with investing. For instance, if I think about my dad, he started investing around the two thousands. Lots of people of his generation, I think you could broadly describe it as the baby boomer generation, or they grew up at a time when , shareholder capitalism here in the UK, went through this glorious phase, if you like in the 1980s.

So, Margaret Thatcher who was quite a controversial prime minister, she basically decided that that lots of our state owned companies would be privatized and then ordinary people could invest in them. And so when that happened, they priced the shares of these companies were very low. So lots of people could buy those shares, make money very quickly and feel like they were getting the power of