It’s said that success isn’t a straight line and the same can be said for the state of my personal finances. Having been quite strict with budgeting and saving, over the past six months I’ve found myself falling asleep at the wheel. I became more relaxed about using a credit card and found myself dipping into my savings as I began living paycheck to paycheck. We always had more than enough to pay our bills and mortgage and my superannuation funds continue to grow, however I wasn’t actually saving anything in immediately accessible funds, which made me feel like I wasn’t making any progress. (more…)
Numbers don’t come to me as naturally as words do and this partly explains why I jumped on the personal finance bandwagon a bit later into my twenties. Luckily, many of the basic and sound personal finance concepts can be powerfully communicated using various online calculators.
I was looking at my budget and realised that after the mortgage payments and utility bills, insurance premiums were my next largest expense. I thought it would be a useful exercise to consolidate the various policies and tally up the premiums to put things into perspective and to show what my breakdown of insurance coverage looks like in my twenties. (more…)
My tax return has never been anything special. I vary between owing $500 to the Australian Tax Office (ATO) or having $500 credited to me, meaning that generally my employer has withheld the right amount of tax and I haven’t had any major deductions.
I had always used HECS-HELP (a loan scheme to help eligible Commonwealth supported students to pay their student contribution amounts through a loan or upfront discounts) to pay my university fees, which is not deductible for tax purposes regardless of whether you pay upfront or not. Therefore, I foolishly assumed that my MBA fees were also not tax deductible. Luckily, a friend of mine set me straight over dinner recently.
Because my MBA fees are covered by FEE-HELP rather than HECS-HELP (I have blogged about the difference here), they are eligible to be claimed as self-education expenses provided that the following criteria is met: (more…)
For the last four to five years, I have been proudly credit card free. Similarly, my partner has been credit card free for at least three years now. I had terrible experiences with credit cards as a young adult, starting from being approved for multiple credit cards at age 18, not really understanding how exorbitant the interest rates were and proceeding to live from pay-check to pay-check with a large credit card debt. When I began to become more financially aware, I paid off all of my credit cards at the first opportunity and avoided them like the plague. I understood that there were benefits in having a credit card, if you used them as a financial tool, and with restraint. For example: (more…)
Although I don’t believe in ‘keeping up with the Jones”, now and then I do like to compare how I am tracking financially to the average Australian, whether it is salary wise, savings or spending. It helps to give me perspective and motivation and is an interesting benchmarking exercise. So here are some average balances I have compiled, to help Gen Y Australians see how they’re tracking. I’ve compiled the balances from several sources, since they all differ due to the underlying assumptions, inclusions or exclusions in the data. The numbers I have included cover averages Australia wide, in addition to breakdowns by age. (more…)
As the regular readers of my blog will know, I’m about to turn 27 soon which means that I have been mentally preparing to turn 30 for the last 6 months. Part of this mental preparation involves ensuring that I get my financial house in order. My early twenties were about getting rid of consumer debt, developing basic financial habits such as budgeting and salary sacrificing into my superannuation to make the most of compound interest. My partner and I also bought an apartment last year and since then I have been trying to build up 3 months worth of savings again. I haven’t quite yet gotten on the investing bandwagon outside of superannuation, but I can’t get trauma insurance out of my mind. I know, it’s a weird thing for someone in their twenties to say. I also would like to start this blog by stating that I do not work for an insurer and this is not a sponsored post, I’m just a twenty-something who happens to be passionate about trauma insurance (this is concerning even to me). (more…)
So, I’m turning 27 in August which basically means I’m turning 30 in 5 minutes and it’s never been more clear to me that I’m well and truly on the bus to grown up town. For one thing, in my new workplace, I’m no longer the youngest employee in the department. I’ve worked full time in office environments for over 7 years, and I’ve always interacted with older employees only. This was something I tried to hide at first, starting out as an 18 year old and keen to earn the respect of those around me, and then entering my early twenties it was something I embraced. But now there are at least 3-4 people I interact with who are my age or younger, I’m finally amidst my generation in the workforce and it’s making me realise that we’re all well and truly ‘adulting‘. Another example of this is meeting with a financial planner who was my age. Call me an age-ist but we were both sitting in this meeting room having a professional conversation and in the back of my mind I was thinking, ‘wow, it’s like we’re both pretending to be grown ups, but he’s my age, he knows that I’m not!‘.
I don’t know about you, but I and the majority of friends my age don’t feel like we’re bona fide adults yet. There are things in life that shouldn’t have to change with age if you don’t want them to. For example, how much fun you have, how passionate you are about what you do, your hobbies and the time you spend with family and friends. However, the looming prospect of 30 does motivate me to get the boring and basics of being a responsible adult in order. Here’s my guide to feeling like a responsible adult who has their shit together. (more…)
I seem to have a lot of readers from the United States, so I thought it would be useful to provide a brief and generalised overview of Superannuation arrangements in Australia before I launch into my musings.
Superannuation in Australia
In Australia, it is compulsory in most circumstances for employers to pay a proportion of an employee’s salary into their superannuation fund, which is effectively their retirement savings. The minimum proportion is 9.25% as at July 2013 however this is set to increase incrementally and very gradually, to 12% by 2021). Employees are encouraged to make additional payments into their superannuation funds, which can be done either before or after tax, each approach having their own pros and cons. The employee’s date of birth dictates when they are able to access their funds. As I was born after 1964, I won’t be able to access my retirement savings until I’m 60, 35 years from now.
Why should a 20-something bother thinking about their retirement?
This was my mentality up to the age of 23. I wanted to live in the ‘now’ and being 60 was simply unfathomable. Anyway, what if I get hit by a bus next year? Then I would have been squirreling away extra money for nothing. My employer already makes contributions to my retirement, so that will be fine. (more…)
It’s never too early to start being sensible with your finances. I am not the best example of this. As soon as I turned 18, I took out credit cards and a personal loan, racking up thousands upon thousands of debt dollars like there was no tomorrow. The economy was strong back then and the banks had no issues with lending out say, $10,000.00 to an 18 year old who is earning $32,000.00 a year. This behaviour continued well into my early twenties. It didn’t matter that how much more I earned as I progressed in different roles, because it was all feeding my credit cards.
Even at my previous job, where I was earning a reasonable amount of money, I was living from payday to payday, sometimes shortsightedly leaving myself with under $100 to last a few weeks. I was a professional. I had an office. I scrutinised cash flow statements and P&Ls all the time, yet there I was, 22 years old, 5 years of full time employment under my belt having sacrificed uni life and free time, yet nothing to show for it. The turning point was when I took a new job with my current employer. There was a significant pay increase and suddenly I had the means and mindset to right my financial wrongs. I should note however, you are always better off starting NOW. Do not wait until some future event. I was silly to wait that long, however I also feel incredible relieved that I saw the light. I’m now 25 years old and have saved the equivalent of 5.5 months of my current income.
I have personally found these tips most effective.