If you’ve recently finished year 12, TAFE or university, you’re probably starting to realise that the world out there is a big place (especially now that the borders are opening again). You may also be starting to realise that the place you’ve been spending the last few years of your life, hasn’t exactly prepared you for the reality of being an adult.
Paying taxes, superannuation, insurance, buying a home, investing, being financially prepared for an emergency – it’s a lot!
For many of us who didn’t learn about money growing up, aside from having a sense that we either had more or less than our peers, it’s something that we need to take into our own hands.
Thankfully these days there are more than enough fantastic resources out there through websites, books, podcasts and videos to give you the knowledge you need, if you’re willing to learn.
But as I think back to my 17 year old graduating self, there’s a number of things I’d love to tell her about the big wide world she’s about to step into.
1) Money is a tool and gives you choices (but if you don’t learn how to use it, it’ll start using you)
As you start gaining a better understanding of how money works and how you can use it to give you greater choices in your life, you’ll realise that it’s just another tool at your disposal.
It’s not sentient, as much as the world likes to tell you otherwise. It can be used to do great things and terrible things, and for the vast majority of time, mundane things like buying groceries or paying the water bill.
The more you understand how your personal finances work, the more you’ll be able to view money as simply another tool in your toolkit (rather than an idol or something to be feared).
2) Self-education is worth every dollar and minute you invest in it
Spending money on your education and personal development is a valid investment that will pay off in leaps and bounds over your lifetime.
Paying for a course or taking time off work to add new skills to your resume, is a great way to increase your income over time.
3) An emergency fund is damn important
Your emergency fund is your get out of jail card in a sticky situation. A basic emergency fund involves keeping 3-6 months of basic living expenses in a separate savings account. This should be one of your first money goals to set and work towards.
You’ll be grateful you did when you need to book a last minute flight to see a sick family member, leave a toxic job or your heater gives up the ghost in the middle of winter.
4) Stay out of debt (it’s a slippery slope)
Given you’re young and hopefully starting with a clear slate, I encourage you to avoid any form of harmful debt like personal loans.
Even credit cards and BNPL products, like Afterpay, which can be used as financial tools, can lead you onto the slippery slope of using other forms of debt to fund your lifestyle.
Buy what you can afford, save for the things you can’t and use your emergency fund in a pinch.
Don’t let our materialistic society lead you financially astray.
5) Talking about money is a positive thing and should be encouraged
Treating money as a taboo subject can be harmful to your financial future and impacts those around you as well.
Keeping silent about money issues and worries, super funds, salary negotiations and financial goals hurts everyone, in ways you don’t often realise until you grow up.
Normalise the conversation about money with your friends, colleagues and family.
Start with small topics like savings goals or getting a better deal on groceries, before broaching the bigger conversations like getting out of debt, negotiating your salary and planning for retirement.
6) Super is a good thing to get sorted in your 20’s
You don’t really want to think about retirement when you’ve got the whole world at your fingertips, but trust me, learning a few things and making a number of good choices early on, will set you up for a much more comfortable retirement.
Learn about super funds, consolidating funds, investment options, fees & insurances in Rask’s free Sort out your Super course. It’s worth way more than the sticker price (which is $0 I might add), and it could be the best spent hour of your life (financially that is).
7) Manage your money in line with your values and how you view the future
You have more choice than you realise when it comes to your money. You don’t have to keep your money with the bank account you got as a child. You can choose where your super goes, and you can most definitely choose how you invest.
As you learn more about your personal finances, you’ll start to realise just how much choice you really do have (and how to use it).
8) Tax is inevitable, but it can be managed
Unfortunately, one of the realities of being an adult and working, is that you’re going to have to pay tax. There’s no escaping it, it’s part of the role we play as members of a society that has things like education for all, public healthcare and public transport.
To make your life easier, learn more about the main taxes you’ll pay as an employee and investor, things you can deduct when doing your tax return (like donations) and putting money aside for tax if you’re running a side hustle.
9) Being financially independent is possible
Another concept that can completely change the way you view work and money, is the idea of becoming financially independent. For some, financial independence is having enough money to freely choose what to do with your time, without relying on one single source of income.
Whatever it means to you, reaching financial independence is a good overarching goal to guide your finances over the next few decades.
Try out the ASIC MoneySmart Calculator to see exactly what is possible with a long timeframe and regular investments.
If you’re interested in the idea of financial independence, check out my free Financial Independence, Retire Early course which explores these ideas in more detail.
10) Money isn’t everything (don’t forget to enjoy the journey)
This seems like a funny note to end on, given the whole article is about money, but it’s important not to let it control your life.
Money buys choices, time and freedom, but it doesn’t buy long-term love, purpose and happiness.
That’s something you’ll have to find on your own by really living.
Money doesn’t stop all the bad things in life happening, but it can be helpful when they do. So keep it all in perspective, and balance the future with the present when it comes to spending money and investing (it’s hard, but it can certainly be done).
With that all said and done, it’s time to make a choice.
Will you take control of your financial future now while you have time to make mistakes, and start setting yourself up for an amazing life?
Or will you leave figuring out your finances until you’re getting so close to retirement, that you don’t have much time to turn things around?
Make a few good choices early on, and you’ll never have to stress about buying a latte or having a smashed avo brunch.
If you’re interested in learning more about your personal finances and get started investing, be sure to check out our awesome range of free independent courses on Rask Education.
