“Oh to be Young Again”
Skills all young adults need before they leave home…
Unfortunately, personal finance has not yet become a required subject in high school or university (here at KMT we have no idea why!?), so there’s a fair chance you’ll be fairly clueless about how to manage your money when you’re out in the #RealWorld for the first time.
To help you get started, we’ll take a look at some KMT Tips to help you understand your money if you want to live a comfortable and prosperous life.
If you’re lucky, your parents taught you this skill when you were a kid. If not, keep in mind that the sooner you learn the fine art of saying #NO to that new designer skirt, the sooner you’ll find it easy to keep your finances in order. Although you can effortlessly purchase an item online the minute you want it, it’s better to wait until you’ve actually saved up the money. Do you really want to pay interest on a pair of jeans or a box of cereal? You could set a 24 hour rule: you found those Country Road jeans and add them to your wish list for 24 hours before committing.
If you make a habit of putting all your purchases on credit cards, make sure to always pay your balance in full when the bill arrives, and don’t carry more cards than you can keep track of. Or avoid them all together!
Take Control of Your Own Financial Future
If you don’t learn to manage your own money, other people will find ways to (mis)manage it for you. We’re all not experts in everything and the 20 minutes you spend chatting to someone to establish your financial goals will be money well spent!
Relying on others for advice even as a young adult is NOT a silly prospect and not something only ‘old rich people’ do. As young adult you have the most to learn, and therefore probably need the most advice! Take charge of your personal finances and seek the advice you need. Understanding how money works is the first step towards making your money work for you.
Know Where Your Money Goes
Once you’ve empowered yourself with some financial knowledge, you’ll realise how important it is to make sure your expenses aren’t exceeding your income. The best way to do this is by BUDGETING. Once you see how your morning coffee adds up over the course of a month, you’ll realise that making small, manageable changes in your everyday expenses can have just as big of an impact on your financial situation as getting a pay rise. There is no need to starve yourself or restrict social time; just be aware.
Keeping your recurring monthly expenses as low as possible will also save you big bucks over time.
Start an Emergency Fund
One of personal finance’s often repeated mantras is “pay yourself first”. No matter how much you owe in HECS debt or credit card debt, and no matter how low your salary may seem, it’s wise to find some amount (any amount) of money in your budget to save in an emergency fund every month. Make it ‘untouchable’ if necessary!
Having money in savings to use for emergencies can really keep you out of trouble financially and help you sleep better at night. Pretty soon you’ll have more than just emergency money saved up: you’ll have retirement money, travel money and even money for a home!
Don’t just tuck away this money under your mattress; put it in a high-interest online savings account, a term deposit or dabble in some shares. Otherwise, inflation will erode the value of your savings.
Start Saving for Retirement Now
It was not long ago you headed off to kindergarten with your parents’ and it won’t be long before you’ll be retiring so you need to prepare for your retirement well in advance. The sooner you start saving, the less you’ll have to invest to end up with the amount you need to retire and the sooner you’ll be able to call working a ‘choice’ rather than a ‘necessity.’
Get a Grip on Taxes
It’s important to understand how income taxes work even before you get your first pay. When a company/business offers you a starting salary, you need to know how to calculate whether that salary will give you enough money after taxes to meet your financial goals and obligations.
Keep track of your deductions and as the year progresses with the KMT APP so you don’t pay money in tax that you don’t have to. Ask your tax agent what people in your profession can claim so you know what you can possibly claim.
Protect Your Health
If meeting monthly private health insurance premiums seems impossible, what will you do if something horrible happens to you? If you’re uninsured, don’t wait another day to apply for health insurance; it’s easier than you think to be in a car accident or trip down the stairs. We can help save you money by discussing your options to find best policy at the lowest rate.
Guard Your Wealth
If you want to make sure that all of your hard-earned money doesn’t vanish, you’ll need to take steps to protect it. If you rent, get contents insurance to protect your place from events like robbery, flood or fire. Disability insurance and income protection protects your greatest asset – the ability to earn an income – by providing you with a steady income if you ever become unable to work for an extended period of time due to illness or injury.
If you want help managing your money, get in touch with our financial planning staff to provide advice that’s in your best interest.
The Bottom Line
Remember, you don’t need any fancy degrees or special background to become a guru at managing your finances. If you use our KMT Tips in your life, you can be as personally prosperous as the guy or gal with the high paying job who squanders their money on designer skirts.
“Oh to be young again!” Don’t let this be you – have no regrets!
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