How to make the most of money from your summer job
Whether you’re still in uniform, studying at college or in between years at uni, the summer holiday stretch can be a great time to get some work experience. Of course, if you are lucky enough to land a job over the next few months, you’ll want to make sure you use your earnings wisely.
Summer job savvy
So, your first job? If this is the first time you’ve entered the world of work, the sudden influx of cash come payday may go to your head a little. Don’t worry, we’ve all been there. Suddenly you have this money that is all your own, the possibilities are endless! That is until your balance is low again and you have to wait until next payday to buy that thing you actually really needed.
Finding your feet in the world of work and budgeting can be tough, which is why we’ve put together a checklist of things to make sure you are making the most of your cash flow.
1. A reason why
Head of Partnerships at money saving app Pocketbook, Freya Hunter gave us her number one piece of advice when it comes to saving: “Always have a goal to work towards and set yourself a budget to help you achieve that goal. Whether this is weekly, bi-weekly or monthly.”
Having a reason to save or at least not spend, can be a great motivator to put money aside. For instance, you may want to contribute a certain amount towards your university or college tuition to reduce your overall student debt. Or you may want to save up for a first car, or for driving lessons, if you don’t have a license yet.
Making sure your rent is covered for the next few months might be your top priority, or you may simply be keen to build up an emergency savings fund. There are plenty of reasons to save, just make sure you have at least one clear goal to work towards.
2. Budget, budget, budget!
Creating a budget - whether it be a strict no-nonsense one or a loose idea - can be a good way to keep on top of your incomings and outgoings. A budget can be as detailed or as basic as you want it to be, as long as it helps you save, that’s all that matters.
Some ways to start a budget include:
- Putting good ol’ fashioned pen to good ol’ fashioned paper and coming up with a list of regular incomings and outgoings. You could write down your average pay, how much you want to save and then figure out what you have left.
- Filling out a spreadsheet, tabs and all with weekly expenses, income and savings. How detailed you go with this and whether or not you choose to make it colour-coded is up to you.
- Downloading a budgeting app to help prod you into savings action. For example, Hunter says, “Students can securely connect their bank account inside the Pocketbook app, which works automatically to set up budgets, categorise their spend and provide a total view of finances.”
- Setting reminders in your calendar/phone to deposit money into your savings account regularly. It could be as simple as that, just remembering to stash money away once a month or every few weeks, depending on when you get paid.
One thing to keep in mind is that it is best to be realistic with savings. If you set yourself a huge savings goal and fail to meet it, it can be all too easy to become disheartened and save nothing. This is why it is best to work out what your ‘non-negotiable expenses’ are. In other words, things that you have to pay for, such as your rent, phone bill or car insurance.
3. Youth savings accounts
Oh, to be young and benefit from a higher interest rate. That’s right, open a youth savings account while you can, because interest rates for youth savings accounts are generally higher than all others. In fact, the average interest rate for a youth savings account is currently 0.92% p.a., compared to 0.46% p.a. for all other savings accounts*.
Some accounts for younger savers to consider are:
- 3.00% p.a. bonus interest rate for balances up to $10,000
- Available to 14 to 24-year-olds
Bank of Queensland’s Fast Track Starter Account comes with an enticing bonus interest rate of 3.00% p.a. for young savers. The full bonus interest rate is available for balances up to $10,000 and the account is open to 14 to 24-year-olds. To achieve the full interest rate you will have to deposit at least $200 per month into your linked Day2Day Plus account and make at least five eligible transactions. This could be card purchases or ATM money withdrawals.
- 3.00% p.a. bonus interest rate on balances up to $30,000
- Available for 18 to 29-year-olds
Introduced this year, Westpac’s Life account comes with a competitive 3.00% p.a. bonus interest rate for balances up to $30,000. The account is available to 18 to 29-year-olds and to achieve the full interest rate you will have to make at least five transactions each month with your linked Westpac Choice account. You will also have to make at least one deposit into your savings account and grow your balance each month.
- 1.80% p.a. bonus rate for balances over $500
- Available for savers aged 13 to 17-years-old
If you’re a high school student with a summer job, then you may be interested in Police Bank’s Flex savings account. This account is open to 13 to 17-year-olds and it comes with a bonus interest rate as high as 1.80% p.a. The full bonus rate can be earned on balances between $500 and $49,999.99. Although, if you have less than that you can still snag a sweet 1.55% p.a. interest rate for balances up to $499. To achieve the bonus rate, you will have to deposit at least $20 into your savings account each month and make no withdrawals.
Or if you have a higher balance and you’re not particularly bothered about getting a youth account...
- 1.35% p.a. bonus rate for balances up to $250,000
- Available for savers aged 13 or over
Available for savers aged 13 or over, MyState Bank’s Bonus Saver comes with a maximum interest rate of 1.35% p.a. for balances up to $250,000. To earn the full bonus interest rate, you will have to deposit at least $20 into your savings account and make five or more settled, eligible transactions via your linked transaction account each month.
4. Keep up the good work
Possibly the hardest part about saving is keeping it up. You can start off with all the best intentions and then life gets in the way and steals your momentum. Our suggestions to keep up the good work include:
- Making money saving into a habit. You could do this by having a regular time and place to check your balance and transfer money to your savings account. This could be over a cup of tea or coffee first thing in the morning, or in the evening when you’re winding down from the day. Whatever you choose, just make sure it’s consistent.
- Set up automatic transfers. If you have a regular pay amount, think about setting up automatic transfers from your everyday account to your savings. You could set this up for the day you get paid, or the day after.
- Schedule reminders in your phone. If you don’t fancy setting up automatic transfers, think about scheduling reminders in your phone. You could make it a recurring reminder to pay yourself.
- Team work, makes the dream work. If you have a friend who’s also trying to save, work with one another. Be one another’s saving buddy and remind each other to stash cash regularly.
Finally, as Hunter says, remember that budgeting isn’t about going without.
“Treat yourself to that meal out or that trip to the cinema - budgets exist to keep you on top of your money so you can enjoy life more.”
If this year has taught us anything, it’s that being financially savvy and prepared for the worst is a must. But also, enjoying the little things in life, like eating out at your favourite restaurant once a month is also good for the soul.
Check out our savings guides for more tips on building up your rainy day fund.
*Averages calculated from information available in the Mozo database, correct as of 7 December 2020.
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