Pay Day with finance content creator Michael Ko: 'Painfully, about 50 per cent of my income goes towards the mortgage'

Michael Ko says he’s invested a lot of time into educating himself about all things finance.  (Supplied)

It’s Pay Day! The ABC’s new column where we ask Australians the money questions we don’t like to talk about. We aim to demystify personal finance and normalise conversations about what we earn and how we save it — or spend it.

Michael Ko is a finance content creator who has more than 15,000 subscribers on YouTube. His channel focuses on how to create and grow passive income streams via the stock market, real estate and other methods.

For Pay Day, Michael shares the money advice he would give to his younger self — avoid any form of “bad” debt and invest early and consistently to secure a financially comfortable future.

I would broadly say my financial situation is quite good and comfortable. I’m able to access all of the necessities and most of my desired non-necessities.

We didn’t really directly talk about money much in my family. I do think I was lucky though that there wasn’t any really “bad” financial practices that I observed or learned growing up. I was mainly told to not waste money and save as much as possible, and to work towards getting a house as quickly as I could.

My first job was as a casual worker at Woolies and my pay cheque wouldn’t have been very much. I probably ended up spending some of it on lunch, or a movie ticket.

Painfully quite a large portion. It’s about 50 per cent of my post-tax income that goes towards the mortgage these days.

We recently moved into a new home and have definitely splurged on getting nicer furniture and on convenience-based renovations and upgrades.

A good example of something we splurged on as part of the home renovation was spending quite a bit on motorised blinds and curtains, which can be set up to open and close on timers and schedules. A definite nice-to-have and one we have thoroughly enjoyed!

The most common secret I probably keep about money is not talking about specifics related to finance or salary at work. In my experience I’ve found there’s very little upside associated with discussing these topics and mainly only negatives.

Which I actually think is a little bit unfortunate as I believe more transparency overall would probably lead to everyone having better financial outcomes in the long run.

I really only have three bank accounts: a transaction account that I leave only $100 or so in at a time (this is the account connected to my debit card), I keep this low as I run all my transactions through a rewards credit card and only really use my debit card to withdraw cash once in a blue moon; a high-interest savings account that I leave the majority of my cash in; and an emergency fund account where I leave around six months’ worth of living expenses in.

At the moment, for the emergency fund account, I just use my mortgage redraw, but in the past I would just use another high-interest savings account.

For me, it would be thinking that I need nice things to be happy. I am definitely guilty of spending money on items that don’t really have any incremental utility or value, like nicer clothes or new phones.

An example of this? I upgrade to the new iPhone every year just to have the latest tech (almost out of habit at this point). And to be honest there are barely any changes each upgrade, and might be interesting for a week or two, but otherwise I never think about it again.

I think my biggest financial achievement has been the time and effort I put into educating myself around all things finance, investing and money. It’s unfortunately an area that doesn’t really get much time allocation in school, and realistically for most the best (or only) way to get more financially savvy is going to be through self-education.

If I can only pick one thing, it would be to avoid any form of bad debt (e.g. credit card debt, payday loans etc.) If I can add one more thing, I’d suggest investing early and consistently to secure a more comfortable future.

You can subscribe to Michael’s YouTube channel here.