The Footnotes

FINANCIAL GODDESS

Money must knows for anyone under 30

Make 2016 the year that you make a budget, get rid of debt and save. Dictate where your money should go, instead of wondering where it went.

House, car, holiday home, menagerie of dogs and cats that love you despite your desperate need for their love/affection? Affording that is future you’s problem right? After all, you’ll be earning the Big Bucks in a few years, so why save now?

Yeah. Not so much.

We’ve all heard of interest (the money version, not the, ‘I’m super keen on a cheese pizza’ interest) but what might amaze you is that interest is so much more than a math problem you’d rather not solve.

In fact, interest has real world meaning and gravitas. For example, if you’re 23-years old today, every dollar you save will be worth over $15.00 by the time you’re 65. That’s a 1500 per cent increase. It could mean the difference between renting and buying property, it could mean living comfortably or always wondering where your next dollar is coming from. It could mean hand-crafted goat’s cheese over Kraft Single slices.

Now that we’ve hit you with the mic drop. Let’s rack up some scary stats:

1. Only 32 per cent of Aussies between 25-39 have a savings account (aka where that sweet, sweet interest is generated)

2. Two-thirds of the above group are on Struggle Street when it comes to meeting day-to-day expenses

3. When asked about their brunching habits 65 per cent visited a cafe more than once a weekend (blessed be thy avo toast)

Ask yourself, are you in that group of people that truly can’t save due to means, or are you in the group whose ‘right now’ consumption has prevented them from seeing the future (it is there, we checked).

What are you waiting for?

Make this the year you make a budget, get rid of debt and save. Dictate where your money should go, instead of wondering where it went.

If you’re a full-time worker in your 20’s you have the gift of time. The single most valuable thing you can realise going into this year is just how valuable that is. On average, you have 10 whole years to put some money away before those big expenses start cropping up – so do it, not in 10 years… but every year until you are 35. We don’t want you to look back and ‘Coulda, woulda, shoulda’ and the best way to fix that? Budgeting.

Make this the year you craft a budget (and stick to it).

Step One: Be proactive. This step requires you to stop assuming innocence and acting like you don’t control how your money is spent, you’e not guilty by association – you’e guilty because you’re shout happy. And while this is okay every once and a while (Here’s looking at you, bestie’s bday), it shouldn’t be a regular occurrence.

It’s hard to stick to a budget when you and your friends sit down to a $100 a head lunch, so we recommend initiating a spending freeze. Let your friends, work colleagues and partner/flatmates know that you’re trying to reign in your inner big spender. If they’re keepers, they’ll help you out and even suggest cheap or free alternatives for your next hang. This way you can avoid FOMO.

Step Two: A plan B to a credit card is a must. Your financial situation can easily spiral out of control when taking reactionary steps to handle money problems. A typical example is, using one credit card to pay off another to avoid a late fee – and bargaining with yourself that you’ll have both paid off next month. Always aim is to have at least three months of expenses saved in your account by the end of the year. This will give you the freedom to save, without the excuse of unexpected one-off expenses standing in your way.

If you’re 23-years old today, every dollar you save will be worth over $15.00 by the time you’re 65.

How do you get to this magical land of savings?

Step Three: We’re going to toe the hard line here (we’re equal parts dreamers and realists). If you want a comfy cushion of dough, you can’t get stuck in a dead-end job. Simple. If your current workplace doesn’t have the capacity to take you where you want to be next year, be realistic and move on.

Step Four: Altering your perception about what is ‘essential’ is critical. A $100 a month Foxtel bill, even divided by a share house, will accumulate to over $500 a year. Eek. Ask yourself, is it essential? Cull where needed but give yourself a little ‘me’ money too. After all, a good haircut every now and then never hurt anyone (and will help with presentability at work).

Step Five: Make a savings plan and put money away each month (and then leave it there). You can sign up for an automatic savings deposit, which will drop a set amount of cash into your account each month and eliminate any wayward ‘But maybe I need that’ thoughts.

Bonus tip: After pay-day, sit down and work out how much to allocate to your ‘social slush fund’ and then take it out in cash. Once the cash is gone you’re beach bound or dedicated to the at-home movie marathon.

Step Six: Put everything into real terms. If you’re making $50,000 a year, you’re making under $20 an hour after tax. Are you willing to work two hours during the week for a 20 minute cab ride…? If not, get that train.

Step Seven: How much is your rent? If you’re living in Sydney, we can understand your woes, but a good rule of thumb is to not spend more than 50 per cent of your pay check on rent. Living in luxury now might prevent you from doing it in 10 years. So pick your moment. Are you living for right now or saving to build something that will last for the long haul?

Go out there and slay that budget. We believe in you.

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Money must knows for anyone under 30
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