Travel, finishing uni, getting your first full-time job and moving out of home are all big events that can happen when you're in your 20s. This is often a time of change, figuring things out and general adulting in pretty much every area of your life.
Money plays a big role in helping you do what you want in your 20s and beyond. So here’s a look at five steps you can take to get your money working for you now and in the future.
Get an everyday account that suit your goals
The bank account you opened as a kid may not be as useful once you start earning and spending more money. In fact, some kids accounts will automatically change to everyday bank accounts when you reach your mid-20s or stop studying – which could leave you with monthly fees or limits on the number of free transactions you can make.
While there are many everyday accounts that offer fee-free access to your money, you may need to deposit your wages or a set amount of money to meet the fee-free requirement. So make sure you shop around, look for student options if you're studying and set up a bank account that gives you the access you want. And don’t be afraid to look at other options in the future.
Find out where your money is going
If you’ve ever been that person who has to scrape together change right before payday, you’ll know it’s not a lot of fun. The good news is that you can often avoid this situation by making a few tweaks to your spending habits.
A really simple way to do this is by finding out where your money is going – this could mean looking at your transaction history for a couple of weeks or using a free online budget tool.
Whatever you use, this gives you an opportunity to decide what spending is worthwhile and what spending you could change. Keep in mind that this doesn’t have to mean giving something up completely. If you love buying coffee before uni or work, go ahead and keep doing that. But if you’re buying 2 coffees a day at $4 each, cutting back to one could save you $1,460 a year. Do that with a few other regular expenses, and you could have heaps more money to play with before and after each payday.
Start saving (and make it work for you)
Now is a great time to start squirrelling money away for future travel, a car or a home loan. It’s also handy to have a bit of cash tucked away for the unexpected costs that can come up when you’re adulting, such as the bond for a rental property, insurance payments and student fees.
Even if you only have a few bucks in your account before payday, putting some (or all) of your spare change into an account with a high interest rate – say around 1-2% p.a. – can help you earn a little extra as you save.
For example, let’s say you have no savings right now and can afford to put $20 aside each week. If you put that in a savings account with a high interest rate – such as Greater Bank’s Life Saver – you could have around $1,076 in savings after a year, with about $16 earned from interest (the actual amount may be a bit different if, say, it’s less than 52 full weeks or if you used some of the savings).
If you kept saving this amount for 5 years, you’d save around $5,632, including interest earnings of $412. We got these numbers by typing the details into Greater Bank’s Savings & Deposit calculator, which gives you a simple way to estimate how far your money will go over time.
Obviously, the more you can save, the better. But this example shows that starting small and playing a long game with your savings can really pay off.
Consolidate your super
Even though retirement is years and years away, if you want to live the good life, it pays to get your super set up properly now. You can find details of your super account/s by logging into MyGov and heading to the ATO section. There are also many free online search tools that can help you find lost super, although these are often linked to separate super companies or other businesses.
Getting your super consolidated is as easy as filling out a request form. But before you do that, make sure you're happy with the fund you’ve chosen by checking the fees and account structure. And make sure your current employer has up-to-date details for your chosen fund.
Choose financial brands that fit with your values
Where you put your money can make a difference. Banks and other financial service companies use profits to invest in different industries, organisations and communities – not to mention paying shareholders in many cases. But there are financial institutions and brands that also have an ethical and/or green focus.
For example, the Greater Charitable Foundation provides funds to support families and communities. So if you’re passionate about the environment or any other cause, making a switch now means you can start making a difference as soon as possible – and you won’t have to deal with the hassle of changing providers when you have more accounts later in life.
Your money goals and options usually change a lot when you’re in your 20s and beyond. Taking these steps gives you more control over your money. And going through the process now can also help you build up the skills you need to make other financial decisions in the future.