After all those years slogging it out as a frugal student, you’re finally cashed up after landing your first job. Now is the time to take care of your new found wealth, with our ultimate mix of tips for financially surviving your first job:
1. All work and no play makes you a dull kid!!
It’s your first job, so of course you’re going to want to spend that first pay packet. For the first month give yourself some freedom, just don’t get into debt! Go enjoy yourself. Shop around for some funky new clothes (chuck in some professional work attire), buy that cool iPad and hit up your trendy local bars and clubs. But have an end date in mind for when the spending stops and the savings begin (no more than one month).
2. Good habits, mean a great time on the weekend
Forget the idea that budgeting is all about what you can’t have. It’s actually about planning for what you can have! Put aside money for those ‘meh’ daily expenses like food, drinks and transport and for those living out of home, rent, groceries and utilities. Of course you’re still a young 20 something-year-old and need to have fun, so set aside some cash for the big things AKA Saturday nights out. Use Mozo’s budget calculator to get a personalised summary of your spending!
3. Avoid the big bite of ugly debt
But you’ve always wanted that super fast car. Well, before you go out and get that car loan, consider the amount of interest you’ll be paying on that hot ride. Car loan interest rates can reach up to 15%! A car only decreases in value, and the interest on top of this will mean you’re paying big bucks over the life of the car loan. One of the golden rules, according to Colin Williams from Humble Savers, is avoiding getting into debt for purchases that fall in value. He suggests saving for your big purchases, to give yourself time to really consider what you’re buying.
4. Build up your savings for something big
Set up a regular savings plan and you’ll be closer to that dream holiday with your BFF’s. Using Mozo’s Savings Goal Calculator we found that if you deposit as little as $25 a week into a savings account with an ongoing interest rate of 5%, you’ll end up with a balance of $1,337 after one year. Hello Koh Samui!
Establishing a regular savings habit will especially come in handy later on down the track when you decide to move out of home or buy your first pad. Most home loan lenders and landlords now require ‘proof of savings’ as part of the application process.
5. Put money into an emergency fund
While your savings is important to give you that much deserved pleasure time (mojitos at sunset), it’s wise to start a rainy day fund in case of an emergency. Make sure you choose a savings account that you can gain access to quickly because you never know when your car will need repairs or when you might need to move out quickly (escape that annoying housemate!). Most financial experts recommend putting aside around $1000.
6. Use credit cards with caution, seriously!
You may be able to buy those sexy Jimmy Choo shoes online from Bloomingdales but it doesn’t mean you should! Credit cards could get you in real trouble before you even receive your first pay check. If you really need a credit card get one with a low standard interest rate and a low credit limit so you’re not tempted to spend big. To avoid the slap of credit card interest rates and fees, you can opt for using your own savings on a MasterCard debit card or Visa debit card.
7. Check when you need to start paying HECS
It’s so easy to finish uni and forget that you actually have a $20,000 debt. If you’re earning over 45K you’ll have to start making regular repayments. So make sure you inform your work, so you won’t have to pay anything back at tax time! Even if you don’t earn over this amount you can still reduce your HECS debt. If you make a voluntary repayment of $500 or more, you will receive a bonus 5% off the payment towards your debt.
Money is an essential part of enjoying life, so don’t expect to save every penny in your first job after uni. But get into some good financial habits and you’ll have the best of both worlds. Money for play time and money for the future!