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Finance: A Young Person's Guide

Ready to move out of home and start being responsible with your money? Here is your go-to guide.

Posted on: May 18, 2017

Ready to move out of home and start being responsible with your money? Here is your go-to guide.

With the ratio of minimum wage compared to market value of life’s wants and needs so off balance, it can be pretty hard for a young person in Australia to break into the property market let alone start paying off their HECs debt in their grad year. From new cars to holidays to a move across country, all these luxuries seem slightly out of reach for Australia’s young workers. It may be a hard trot to begin with, but that is why there is such a thing as finance. When used responsibly, it can introduce you to a whole new world of being responsible with your finances rather than spending up big on something you can’t afford and hoping you get enough shifts at your casual job to afford food the next week. Here is your limited, but essential guide to finance for young Australians.

The big move

So, you’ve gotten yourself a job, a few friends are in the same boat, and you’re ready to move out of the comfort of your family home and make it into the big, bad world of the Australian rental market. Not to worry though – it is actually far easier than one who has lived with the assistance of their parents for the last 18 years may think. Not only will you have to start paying your own bills (go you!), but you’ll also have to start cooking your own food, doing your own washing and god forbid cleaning your own house. Usually you’ll band together with your mates who are in the same situation, so at least it won’t be too embarrassing when you breakdown because you don’t know how to cook rice – they will surely be in the same boat.

Bills

And they are multiplying! This is your first look into the world of an adult. Sure, you may have had car registration and insurance or the odd phone bill, but you more than likely paid for those by transferring to your parents and they would handle the rest. Now, it’s your turn to be responsible for your bills. Keep track of your bill due dates with reminders on your phone or handy B-Pay payments where the bank does the hard work for you. The only thing you need to remember is to not blow all your money before hand, so that there are actually funds available to come out of the account. Don’t get caught with late fees or overdrawn accounts as they’re a hefty price to pay for a momentary lapse of responsibility. By establishing and maintaining credit responsibility, you will be on the road to a fine financial future.

Personal Loan

If you can avoid it at all costs, then do so! Personal loans and credit cards may seem good at the time when the bills are stacking up and you aren’t quite breaking even, but it is risky business for a new worker who is feeling on top of the world with all this exciting money. Not only do personal loans carry a high interest rate, they also show you have trouble handling your finances which isn’t looked upon favourably when you apply for vehicle finance or a home loan. Heaven forbid you default on your loan, you will more than likely be put in the ‘too hard’ basket for the next five years as it lingers on your credit file like a bad smell.

Vehicle Loan

Besides a monthly phone bill and maybe having your name on the electricity account, a vehicle loan is your first introduction into the world of a credit history. In most cases, you would have just graduated high school or university and have been working at your very first full-time job for a few months and racked up enough savings for a deposit on a car (whether it be new or used) in the hope you will get assistance with the purchase in the form of vehicle finance. Luckily for you, with a good credit record and consistent work, you could be a shoe in, but always be sure to weigh up your options first, because you’re usually locked into these repayments for the next three to five years!

Home Loan

Now this is the big one. Normally you’ve hit your late twenties, ready to settle down, and it’s time to make your entrance into the property market. The only downside is that the Australian property market is currently more difficult to enter into than an exclusive restaurant on a Saturday night. Finding the right property at the right time is like the holy grail, but it isn’t impossible. Start saving for a deposit from the get-go of your first job and you’ll be surprised that in no time you’ll have enough for a deposit and a vacation by the time you start to feel physically ill at the thought of another year in a share house.

So, the thought of finance at a young age may have been absolutely terrifying, but if you start young and continue a responsible money handling trend you will be on your way to the top in no time! But honestly, try and milk the easy living at home for as long as possible – you’ll be envious of the freedom, but not so much of the bills.

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