The transition from going to school to entering the workforce can be scary. The following tips can make things a little bit smoother and less traumatic and can help set you up for a fulfilling career and a secure financial future.

1. Be the best employee that you can be.

Every new job requires a period of adjustment and learning. If you go in with the attitude to work hard, please customers, and please your boss you will find that it gets easier and rewards will come your way. Those rewards might be financial, or they may be just someone telling you, you’ve done a great job, well done!

2. Get your workplace habits right.

Habits such as punctuality, reliability, getting jobs done on time and appropriate dress and grooming will get you a couple of steps ahead in the eyes of your employer. Regularly having some initiative to do a job that needs doing, even without being asked will get you on your way to management!

3. Know where your money goes.

Monitoring your expenses is the first vital step in securing a financial future. If you know where you are spending your money, you will realise that making some small manageable changes in your everyday expenses can have a big impact on your financial situation.

4. Budget for recurring expenses.

The next step after monitoring your expenses, is to start to make allowances to enable you to pay those expenses without stress. A simple budget will identify when major bills like electricity, insurance, or car registration will be due. We suggest establishing a separate “Bills” bank account and depositing the appropriate amount in to that account each pay period to ensure that there is enough money there to pay the bills on the due date. You should transfer this money in from your pay before you use any money for anything else.

5. Save for your retirement.

Your employer should be contributing 9.5% of your wage into superannuation for you. Over your working life, this will accumulate to a sizeable sum, however, financial experts calculate that between 12 to 15% is a more appropriate figure to provide for a comfortable retirement. So, right from the beginning, start making additional contributions to your superannuation and let the power of compounding grow your money exponentially over time. I’ve calculated that if you can contribute up to 20% of your income to superannuation for the first 5 to 6 years of employment, then, due to compounding, you can ease back later on when your living costs increase as you are purchasing a house or incurring the costs of raising children. That early kickstart can set you up for life.

6. Place a value on money and allow for tax.

Money doesn’t buy you happiness, but it can certainly make you more comfortable. You just need to understand what it’s worth. For example, if you are paid $22 per hour, working full- time, then your actual take home pay after-tax is closer to $18.50 per hour. This means that if you want to buy that new pair of shoes costing $185, then that will take you 10 hours of work. You may decide that it is worth that, or you may decide to rethink the purchase. The
same philosophy can be applied to all purchases. A tank of petrol each week is essentially about 3 hours work, Friday night drinks and a restaurant meal might be all of Friday’s work. Your rent might be 10 hours work, groceries another 6. By thinking about purchases in terms of hours worked helps compare the benefits of the purchase to the effort required to pay for it.

7. Save for a rainy day.

Having money in savings to use for emergencies can really help you out of trouble financially and help you sleep better at night. One of your first costs each payday should be to allocate an acceptable savings amount to a bank account that you do not touch. This money can accumulate and be used for things like holidays, unplanned bills (like the fridge breaking down or a bingle in your car), as a backup in case your job becomes redundant, or the start of a deposit to buy a house.

8. Guard your health and your wealth.

Insurance premiums seem like a nasty cost. However, we recommend that you take out appropriate insurance to ensure that your hard earned savings and the assets that you are accumulating are not lost in the case of an unfortunate event. Fire, theft, accident and flood are obvious loss causing events, however, less obvious ones are illness, loss of job and expensive medical costs. Make insurance a must have expense.

9. Become a millionaire.

Most school leavers, commencing work now will be millionaires when they retire just via their superannuation contributions. The fact is though, $1m in 50 years time won’t buy as much as $1m dollars today. So, get into the habit of not spending as much as you earn. Long- term wealth isn’t so much about how much you’ve made, it’s more about how much of what you’ve made you’ve been able to keep. So, savings is the key. Once you have savings then investing that money wisely to help it grow effectively over time is the next step.

10. Get the balance right.

If you work at it, you’ll have plenty, but remember it’s not all about money. Reflect on the other important things in your life and make sure you make time for family and friends, recreation, fitness and good eating. Don’t forget to take a holiday, unplug from the workplace and be thankful for all the good things you’ve got.

At Potts & Schnelle we help people every day with their financial affairs. That’s what we do! If you would like to discuss any matter as a result of reading this article, give us a call.