As the world grapples with the economic fallout of Covid-19, young adults are having to reconfigure their expectations of the future. Whether it’s putting travel plans on the back-burner, studying remotely, or entirely rethinking a career path or source of income, Australian teenagers will have to make some tough choices in the years to come.
To assist in this task, we’ve unpacked some of the most relevant skills young adults will need to adapt to the unprecedented economic conditions.
Knowing your entitlements when applying for a job
Whether you’re in school looking for a part-time gig or searching for a full time job, options may have changed recently as many industries have been affected by the pandemic. The most important thing to remember is that all work entitlements still apply. You shouldn’t accept any concessional rates in order to secure a job right now.
Once you do land a role, ensure you’ll be paid at the correct rate and work type (like full-time or casual). Investigate what this means within your industry and for your role through the Fair Work Ombudsman website.
If something doesn’t add up, look through your payslips, contract or agreement you signed upon employment. Make sure your pay meets or exceeds minimum wages, that you’re being granted the correct leave or breaks, and that all your tax and superannuation is being processed correctly. If there are any issues and you don’t feel comfortable talking to your employer or haven’t resolved the problem doing so, the Ombudsman is there to help mediate and resolve the problem.
Managing your income
You’ll need to have your bank account details, Tax File Number (TFN) and super information (if you’re signed up to a fund) ready before you can start receiving income. If you don’t have these set up, it’s time to do some paperwork!
Compare bank accounts where your pay will be deposited – a lot of providers offer fee-free accounts to kids and students – and also consider a savings account so any cash you squirrel away can grow. You may want to sign up with a superannuation fund to contribute to your retirement savings. If you’re over 18 or work more than 30 hours a week, an employer is required to pay the super guarantee (an additional 9.5% of your wages) to your nominated fund.
You need a TFN to legally work in Australia, so head to the Australian Taxation Office (ATO) website for info on how to apply. Employers will ask you to fill out a TFN declaration explaining your financial situation, which asks if the job is your only source of income so they know how much tax to withhold each pay cycle.
Saving for personal goals and emergencies
As unemployment increases across the country, it’s more apparent than ever that a safety net of savings is essential. According to Mozo’s data, you need to be able to cover at least three months of living expenses in case you lose your job. For the average Australian adult, this is between $7,000 and $10,000. Learn how to build up this savings pool with Mozo’s emergency savings fund guide.
But beyond saving money to rely on in a crisis, you should also develop other savings goals. Perhaps you want to buy a car or move out of home – these goals require some cash. Get prepared with this comprehensive guide to setting up a savings plan.
Knowing how to budget effectively
Putting money away for a rainy day is a great habit to develop, but once you’re living independently, having a solid understanding of all your expenses in relation to your income is paramount. But with fluctuations in wages, rent and energy bills, as well as one-off costs like buying uni textbooks or visiting the dentist, this calculation can get more complicated.
The golden rule is to budget for a little more than expected, then pop that extra dosh into savings. If you want a step-by-step outline of how to create a budget, check out Mozo’s budgeting guide. Then use the budget calculator to input all your spending or anticipated future expenses and make sure your income can cover it.
Learning to use credit and pay off debt
Debt may seem like a scary word, but it ain’t all bad. Some life goals or necessities will require you to take out a line of credit. For example, if you want to buy a house one day, you’ll likely need a home loan to do so.
Always remember, lenders can charge fees and interest rates which increase the amount you have to repay over a set time. So whether you take out a car loan or set up a credit card, it’s important to consider how much these factors could enhance your debt, and to learn some of the options to help minimise this. You might consider using an asset as collateral for a secured loan to access a lower interest rate, or paying off your debt sooner so you pay less in interest.
If you want to go to uni or TAFE and can’t pay the tuition as you go, you can take out a HELP or VET loan. This kind of debt works a little differently from the rest. You’ll only be required to pay it back once your taxable income reaches a certain amount, and there are no fees or interest applied. However, the amount is indexed annually by the Consumer Price Index (CPI), meaning it’ll increase by the same percentage as the cost of living does.
If you’re feeling frazzled by all this information, take a breath, then start with the basics and read Mozo’s guide to changing bank accounts for a better deal.