Tuesday, 21 June 2016

8 Really Important Things To Know When Starting Out


Whether you are starting your financial journey out of Uni, getting your first job, climbing the career ladder, jumping into a relationship, buying property or starting a business, you need to take control of your financial future. Here are 8 really important things to know when you are starting out.
One: Live without a credit card
Did you know that Australians owe approximately $32,673,480,146 in credit card debt as of this morning. Here’s an easier number: Thirty-Three Billion Dollars. Personal debt per credit card holder is $4301.00 with an average of $723.45 in interest per annum. Yikes!
For many of us refusing to use a credit card is simply not an option. Without one it’s difficult to pay bills and even make reoccurring payments. So use it for that and not for shopping. What should you use for shopping and spending I hear you murmur sarcastically? Use a debit card. You can’t spend more than you have in the bank that way. You’ll find you will spend less and when you next look at your bank statement you’ll even question what you are buying and maybe start to budget.
Two: You don’t have to keep up with the Joneses
Keeping up with your peers is dangerous. Just because they have the latest model of car or go on the holiday that you’ve always wanted to, doesn’t mean you should too. You don’t know what their situation is: they may have inherited some money, or they may be so far in debt that you don’t want to follow. You are you, they are they, don’t get confused with that. Live within your own financial means not your peers.
Three: Choose your partner very carefully
Business or personal partner, this is relevant to both. Don’t be impressed by a showy display of money or wealth, it may just be a fa├žade and have a bucket load of debt supporting it. Be careful and be aware. When a business starts making money it’s very tempting, particularly if it is a new concept to your partner. There are so many horror stories of partners who get all consumed by newfound wealth and blow it all. Money can bring out greed in a person… very easily. Keep your finger on the pulse.
Four: Start Saving
More than 40% of a recent survey said they were able to meet their normal monthly expenses, but a third admitted they were worried about their ability to do so. The report said that the results clearly showed there are a large number of people who struggle to cope financially, and the problems are not always linked to the size of their pay-cheque. In many instances people are living in the hope that they will achieve their goals rather than planning for a fulfilling and secure future.
57% of those surveyed had no regular savings plan, and peaked among 45 to 54 year olds, who are often nearing the peak of their earnings capacity. Close to 40% of people would be unable to maintain their current lifestyle if they lost their income for three to six months, thanks to not enough savings.
So how do you counter that? Put a simple budget in place, as you never know when your financial situation can and will change. We like to call it Your Spending Plan as that is what we are all working around: Spending.
Five: Develop a budget
Don’t spend more than you earn. It’s hard to keep track of spending if you don’t have a budget. Putting a simple budget in place lets you know what you have to spend, and what you don’t. We like to call a budget a Spending Plan as that is what we are all working around: Spending.
Six: Get yourself health insurance
Without health insurance, you may not be able to afford expensive medical services when you need them but there are many more reasons why you need health insurance: Shorter waiting periods for elective surgery, choice of doctor, extras benefits to name a few.
You could end up paying more for private health insurance over your lifetime if you don’t take out hospital cover before 1 July following your 31st birthday. If you join after this time, you may be required to pay a 2% loading on top of your premium per year for every year you are aged over 30 and do not have private hospital cover, up to a maximum loading of 70%. For example, if you take out private hospital cover at age 45 you may pay 30% more than someone who took it out at age 30.
Do you really want to be significantly out of pocket when you are sick?
Seven: Keep track and set some goals
If you don’t know where you are it’s often hard to know where you are going. Hopefully you establish your budget, then revise and review. Your budget is a living document, it keeps changing so you need to keep assessing and adapting to these changes.
Put some realistic goals in place and try to stick to them. You’ll benefit in the long run.
Eight: Understand Superannuation
If you want enough money for a comfortable retirement, spend some time learning about superannuation. Taking a few steps now to boosting your Super will make a huge difference to your lifestyle in the future.
Superannuation is a way to save for your retirement. The money comes from contributions made into your super fund by your employer and, ideally, topped up by your own money. Sometimes the government will add to it through co-contributions and the low income super contribution.
Your employer must pay 9.5% of your salary into a super fund. This is called the Super Guarantee and it’s the law. The Super Guarantee will gradually increase to 12% in coming years.
Over the course of your working life, these contributions from your employer add up, or ‘accumulate’. Your super money is also invested by your super fund so it grows over time. When you retire, you will have money to live off – a nest egg. Super is a lifetime investment that has many benefits. Super can be a minefield of information so ask an expert for help, It’ll save you money in the long run.
So if you are starting out on the career path, in a budding relationship, a new business or “it’s just time”, get a grip on controlling your overall financial situation. Here’s a great Free e-book from Your Money Sense6-steps to Financial Security It’s a good starting point to get you in the right mindset when you are starting out.

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