Here’s some quick tips to help students from the team at Young Enterprise:
- Always pay off your credit card in full. Why would you give your money away? If you kept $1,000 outstanding balance on your credit card, that’s like giving your bank a pair of very nice shoes. Or a couple of dinners out. Or a couple of grab a seat flights.
- Check out YNAB budgeting software. It’s been a complete game-changer for me and I wish it had been around when I left school.
- Think Big. A lot of young people think investment or strategies to create wealth are for other people – older, smarter, richer etc. Learn about investment now - it’s for everyone.
- Always put away 10% of everything you earn into a special savings account (or 5% if you aren't earning much - I do 10% because it's really easy to calculate!). Move the money as soon as it arrives in your bank account, before you can think about all the stuff you wish you could spend it on! Move 10% of all the gift money you are given too. That will become your emergency fund - for paying for things like rental bonds, unforseen medical costs or emergency travel costs. Mine is called my 'DO NOT TOUCH' account, so I remember never to go near it!
- As an individual, reviewing your financial situation annually is just as important as when a company does it - in fact, more so. Every year, you should conduct a process to ensure that you eliminate your debts where possible, secure where possible the lowest interest rates on any debts you do have and maximise the returns on your investments and savings. Shop around, get the best deals for you – treat your personal finances like a well-run business.
- My advice would be if they get a parking ticket or speed camera fine, to pay it as soon as possible, before it goes to court and has penalties added, as the debt mounts up quickly and become unmanageable – just like any other type of interest. A $12 parking fine can end up costing them hundreds and an $80 speed camera ticket can end up costing thousands.
- Pay off your highest interest loan or debt first. Throw everything at it until it’s gone. Then move onto the next one.
- Buying things on interest-free terms can be helpful when you’re going flatting, but make sure you know exactly when the interest-free terms end. Make sure you pay enough each month so that you don’t get stung with high interest rates after the interest-free period ends.
These tips formed part of article ‘The financial pulse of the Nation’, which featured in the Education Gazette in Feb.