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Let millennials use super to start a business


What if we could start putting superannuation to better use? The internet has changed the way we view and treat money. Paypal pioneered the idea of sharing money online, while services like ApplePay allow consumers to ditch their wallets for good.

Yet when it comes to superannuation, we may be leaving some benefits on the table. Certainly we’re better off with super – millennials who contribute to their super today will have the comfort of knowing they won’t be burdened financially in retirement.

But at the same time, it would be fair to say that young people are a little disconnected from their super. Many know it exists, but not how it works. Most don’t even know their balance, or care a great deal at this stage of their lives, truth be told.

And the bottom line is that it doesn’t matter how effective a financial instrument might be for creating wealth, if that financial instrument simply isn’t actually used to effect.

So what if there was a way to put this particular financial instrument to better use – a use that made more sense according to the entrepreneurial approach of the growing millennial generation?

A new way to build wealth

Young Australians as a whole may not yet be interested in saving money for their retirement. But they have been found to be interested in innovation and creating new ideas.

It’s no surprise that the brightest and most successful entrepreneurs on the planet are young people – and Australia’s “ideas boom” needs more young people who are willing to take a risk and create something great.

Despite this, most young people have limited access to business funding. They usually don’t have the connections necessary to pitch sophisticated investors, and banks usually won’t lend to them because they don’t have a house to put up as collateral.

So, what if Australia could combine super and entrepreneurship by allowing millennials to tap into their superannuation in order to start a business?

Super for businesses

It isn’t such a far-fetched idea. Our politicians have already discussed the idea of letting young people tap into their superannuation to borrow for a home.

So why not broaden the scope of this proposal to include starting a business? This could encourage young people to put their money into an investment that could generate not just wealth, but new, skilled jobs – a definite positive for the wider economy.

Young people looking to break into the start-up ecosystem are seeing more competition than ever before. Even attempting to gain funding is almost a full-time job, and the lower barrier to entry for anyone looking to start a business means competition is fiercer than ever before.

Imagine a young person finishing university. They would already have a few years’ worth of superannuation savings, even if it were as little as a couple of thousand dollars. Instead of immediately looking for a job, why not take that small amount of money and use it to buy the tools to help them start their journey as an entrepreneur?

After all, startup costs are lower than they ever have been. Digital tools like web hosting, ecommerce platforms, analytics tools, marketing pipelines, online advertising, and even application development are now much cheaper. You can even learn to code for free and release a digital product on your own, if need be. Getting a massive loan isn’t necessary when even just a couple of thousand dollars may be enough to get you up and running.

The government has created co-contribution efforts before. It could possibly do so again to encourage entrepreneurship and the “ideas boom”, perhaps by replacing some of the money taken out to start a business venture.

We also need to consider that young people today are going to live much longer than people who are retiring today. Taking a few thousand dollars out of retirement savings could easily be put back in within a year or so. In fact, this could potentially be a requirement of the policy.

Although we tend to tinker around the edges of superannuation, it’s never been given a massive reform. Perhaps now is the time. In order to transform the economy, we need to be able to be nimble and agile. Locking money away doesn’t do that.

Let’s change Australia’s future by allowing young people to access superannuation to start a business. They might not all succeed – but even a handful of success stories could drive growth and positive change throughout Australia.

About the author

Clayton Howes is the CEO of digital consumer finance firm MoneyMe. He’s an expert in personal finance as well as small business and start-ups.