Paridhi and her family moved to Australia more than two decades ago. Her earliest childhood memories are of when they had just moved to a new country and were trying to establish themselves.
“The first few years were tough as you try to get a job, build a career, survive and settle. Those early days were characterised by simplicity as we made do with what we had, and mum and dad worked hard to establish themselves in a new country.”
“So, in some senses, I witnessed how important financial security is from a young age and what a big impact it can have when you don’t feel secure financially. My parents went back to university to get local qualifications for professions that they’d already been pretty established in, back in their home country.”
Paridhi spent much time volunteering in non-profits and learning about international development and social justice.
“Early in my career, I worked at the Cancer Council with people who were experiencing financial stress due to a cancer diagnosis. There are so many unexpected events in life that can create much financial strain if one is not financially prepared, and chronic illnesses like cancer can be such an event.
That role was a bit of a wake-up call for me. I saw first-hand how many people of all ages, professions, and education levels struggle with understanding their finances. I saw the severe consequences of not having your financial life in order. For the most part, people are doing their best, but they don’t know what they don’t know and haven’t learned how to manage their money correctly.”
“The inspiration I had was to find a way to make money simple, to help fix the financial pain that I had seen so many people in during my years of volunteering and social work. So I started trying to figure out why the ‘financial illiteracy epidemic’ exists and how we can solve it.
“As a society, we put a huge emphasis on earning money. So people tend to focus on making more money, whether getting a better-paid job, starting a business, or making more sales.”
She learned that hiring a financial advisor can cost thousands of dollars, making it out of reach for many. A significant portion of people has no idea what they’re doing with their finances, as only a handful receive any financial education during their school years.
“So, I saw a need for a more accessible and affordable solution to help people learn how to save, invest and manage their money correctly. That’s when I started SkilledSmart and created our Mastering Money program.
SkilledSmart was founded in 2017 with the goal of developing an educational platform that would provide people with the practical skills and tools they need to live a financially successful life. Like every business owner, Paridhi’s journey has been much more adventurous than anticipated.
“I think on some level; I’d always been interested in entrepreneurship. In university, I was passionate about social impact and making a difference in the world. Those explorations ultimately led me to learn about social entrepreneurship. I loved the idea of using business as a vehicle for positive social change.
“So even back in university, I had been exploring different opportunities in that space. I remember starting a social enterprise with friends and going to the USA to pitch a social enterprise idea. Driven by that same interest, I became a management consultant after university, feeling like that would give me a better insight into how to solve business problems. I got to work on some great projects but ultimately felt like I wasn’t making the impact I wanted.”
“So, I knew that I wanted to start a business and give entrepreneurship a go, and I also knew that I wanted to be doing something that would help people and make a positive difference in people’s lives.
“As a first-time business owner, I was learning everything from scratch. I had studied business at university, but I still felt grossly underprepared. I don’t think anything can teach you business except for the experience of actually starting one yourself.”
Financial literacy and business owners
Regardless of the industry, most business owners prioritise acquiring and keeping clients and customers, especially in the early stages. Although business owners do not have to manage all of the financial aspects of the business, gaining a degree of financial acumen means that you will be able to manage some of the business’s finances, giving yourself the best chance of building a thriving business.
According to Paridhi, business owners are often so focused on growing and running their companies that they neglect the financial side. Financial education is likely even more important for business owners because they manage two financial entities: their personal life and their business.
“We don’t emphasise learning what actually to do with the money that is earned. A huge part of financial success is determined by what you do with your money, not just how much you make.
If you don’t know how to save, invest and manage the money that’s coming in, you’ll never be able to create sustainable financial success long-term. You see this all the time when lottery winners lose all their winnings or celebrities and businesses worth millions file for bankruptcy.
“So, being financially confident and competent are absolutely essential if you want to run a successful business. Otherwise, you can spend years hustling to create, grow, and run a business but never experience the freedom and stability you hope to create for yourself through entrepreneurship.
“We often see business owners who get financially educated can translate those skills into their business, so it is a bit of a double-win.”
The grim picture
Timely new research into trading and investment trends has found that nearly one in every five Australians (17%) has lost substantial sums due to poor investment or trading decisions.
The research, commissioned by online trading provider Global Prime, also found that only 27% of Australians say they’ve generally never made a wrong financial decision regarding investing or trading.
Furthermore, the study investigates the main reasons why people lose money trading or are duped by fraudulent scams in the first place. Worryingly, nearly one-third (29%) of those who had lost money trading stated, “I was unskilled and didn’t realise I was in over my head.”
Another one-fourth (23%) blame their failure on failing to limit their losses quickly enough, and almost one-fifth (19%) blame poor advice. Nearly half (45 per cent) of women who had made a terrible trading or investment decision stated it was due to inexperience and a lack of knowledge.
Paridhi believes that starting open conversations about money at a young age and modelling good behaviour is a great way to move forward.
“Whether you realise it or not, young children are already learning money lessons from you just from observing how you behave with money and how you talk about money. So, when children are young, we don’t need to sit down and give them formal lessons about finance,” she says.
“It’s more about having open conversations about money as a normal part of life from a young age and modelling good behaviours. This helps to create an environment where they can get curious and ask questions.
“The problem is that since money is a taboo topic, most parents never really talk about it openly in front of their kids, besides saying things like “we can’t afford that”, “money doesn’t grow on trees”, or “it’s rude to talk about money.” This creates an environment where children feel like money is a touchy topic that shouldn’t be talked about openly.
“I think we’ve seen some positive changes in the finance industry over the last decade, which has increased accessibility to financial products and services across the board.
Without question, technology has aided in the reduction of the cost of goods and services, lowering the barrier to entry for many people. That has indeed allowed us to reach so many people who would not have been able to purchase traditional financial advisory services otherwise.
“Finance has traditionally had a male-dominant culture that hasn’t always been very receptive or easy for women to navigate. Having more women in the finance sector is certainly something positive to work towards and is a great untapped opportunity. After all, women drive most of the purchasing decisions in households, so having more women in finance can help inspire other women to become more financially confident as well.”