Top 5 Financial Tips for Generation Y – Given to A Current Affair
- Save before you Spend – Building Wealth
Create an automatic transfer of 10% of your salary into another bank account (such as a high interest account).
It is important to do this when you get paid. You should pay yourself first.
When the gym takes their fee directly from your bank account – do you manage to survive – Yes. Put in an automatic transfer and don’t ever stop it.
Even if you get a credit card debt. Pay off your credit card debt after the 10% (OK this part is debateable- some prefer to pay credit card debt first).
Saving 10% of your salary is like your parents getting you to eat your vegetables – you will enjoy the financial dessert some day.
- Book: The Richest Man in Babylon by George S Clayton (click on Right hand side to buy through Amazon.com)
2. First Home Saver Account – Saving for A Home
If you are 18 and plan to buy a home -start a First Home Saver account with your local bank. It is a special account – Commonwealth Bank 4.25% & ANZ have them 4.5%
You need $1,000 to start, and $1,000 a year deposited over 4 non-consecutive years.
You get 17% contribution from Government + Bank Interest and only pay 15% tax (automatically deducted & sent to ATO).
The Traps (MAKE SURE YOU READ THIS) – you need to have deposited $1,000 into the account for 4 years- otherwise it goes into your super fund. So if you buy a house after 2 years then the money is transferred to super.
So start off slow – You could transfer $100 a month into this account for the first few years then up to $5,000/yr ($416/month) to get max Gov contribution benefit.
Note that can still get FHOG if it lasts!
Fido main site http://www.fido.gov.au/firsthomesaver
ATO re: First Home Saver http://www.ato.gov.au/content/downloads/MEI00155253n72406082008.pdf
First Home Saver accounts
(Westpac & NAB probably have them too but I couldn’t see when I flicked through their sites – maybe someone from Westpac and NAB want to email me email@example.com and I’ll update this blog with your links)
First Home Owner Grant -NSW $7k still available until 30/06/2010
http://www.osr.nsw.gov.au/benefits/first_home/ (Other states check go through fido links)
3. Spend less on having a good time
Watch what you drink -if possible buy first round or avoid rounds of drinks altogether
If you are not feeling it – go home or don’t go out
So many fun things don’t actually cost that much
-Hanging out at a friends house, having a few (a few!!! like 3) drinks at the pub.
-Going to the beach
4. You can live cheap without being a tightarse (not sure if they’ll say tightarse on Channel 9 – but I’ll say what I want on my website!)
A few quick ideas - Buy items on sale or 2nd hand, Sell unwanted items on www.ebay.com.au, Bring your lunch to work
5. Clear that debt & don’t make stupid decisions
If you have a credit card debt make it a priority to pay it off. As credit cards charge 20% that is better than almost any investment.
Pin your credit card statement to your fridge and look at it whenever you are about to go shopping.
Don’t enter flexirent, etc.