If you’re part of Gen-Z you would recall a simpler time that revolved around Spongebob Squarepants reruns and getting your very first copy of Harry Potter and the Prisoner of Azkaban.
Fast forward 10 years and your priorities have certainly changed to uni parties, the new season of Game of Thrones and (hopefully) getting your personal finances in check.
Unless you’re Taylor Swift your earning potential is probably at the lowest it will ever be, therefore your late teens/early 20s are an important time to kick start a financially savvy future.
We have put together the ultimate financial report card for Gen Z, so read on to find out whether your current financial habits get you an A+ or will send you to the principal’s office.
A-Grade: Saving at least 20% of your income
You take advantage of lower living costs (particularly if you’re living at the Hotel eu Mum and Dad) and you save at least 20% of your income. You make saving a no-brainer by opening up a high interest savings account and set up an automatic deposit for pay day.
Top of the Class:
ING DIRECT Savings Maximiser – 4% ongoing interest as long as it is linked to the Orange Everyday bank account and you deposit $1,000 each month.
RAMS Saver Account – 3.91% ongoing interest rate as long as you make no withdrawals and deposit at least $200 each month.
Fail: Living paycheck to paycheck
You act like Queen bee Regina in Mean Girls donning a matching hot pink mini and cardy or Justin Bieber in his latest street threads. But your living paycheck to paycheck is not going to get on the young rich list. Duh!
2. Credit Cards
A-Grade: Choosing debit over credit
You get the right kind of plastic by opting for a debit card over a credit card so you can still shop online and party just as hard, but by using your own money not the bank’s you stay out of debt. Some debit cards even give you cashback like:
ME Bank Everyday Transaction Account – 5% cashback for using “tap and go” for purchases under $100, as long as you apply by 1 May 2015.
Fail: Spending beyond your means
You say hasta la vista to a good credit history by using a credit card to live beyond your means and get deep into debt. You get into the habit of only repaying the absolute bare minimum each month or missing a payment on your credit card.
3. Car Expenses
A-Grade: Paying off the loan early
You maintain a good habit of repaying car loan debt and set up a direct deposit from your bank account to ensure you never miss a payment. When you can (like when you get your tax refund), you repay extra to be free of the loan earlier. Your sparkly clean credit history thanks you for it when you are approved for your first home loan down the track.
Fail: Not having an emergency fund
Rather than having savings set aside, you use quick cash loans from payday lenders for things like car rego or emergency repairs. The interest rates charged on these short-term loans are astronomical, reaching as high as 288% p.a., and you soon find yourself in a cycle of debt.
A-Grade: Having just one super account
Each employer may have a preferred fund but you diligently maintain only one fund, ensuring your balance has a better chance of growing in the long run. Your fabulously retired self thanks you for your (unusually) good judgement by sticking to ONE super account.
Fail: Losing track of your accounts
You erode your retirement nest egg by paying high fees on multiple superannuation accounts. And you can’t be bothered to track down your lost super.
Mozo tips: This is easier than you think, just head to the Government’s FindMySuper website.
A-Grade: Avoiding overseas fees and charges
You minimise overseas bank fees and maximise your holiday spending budget by searching the travel money market for a competitive travel card with low foreign exchange fees and overseas ATM withdrawal fees.
You prepay most of your travel expenses rather than putting them on a credit card because you know a little planning can go a long way. It could even take you all the way to the Champs-Élysées on your next European vacay. Bon voyage!
Fail: Funding the trip on a credit card
You assume your holiday will be funded by your parents or you put it on a credit card which is charging you a pricey 20% interest and it takes you until the next semester break to pay it off. Think Alan from The Hangover -the least cool one in the wolfpack.
So, how did you score? Straight A’s, a pass or a big fat “F”? Well, the good news for Gen Z’ers is that, even if you are failing you’ve got time to learn the art of savvy money management and get back on track. What are you waiting for?