Good habits for financial success

cards, Apple Pay and financial attractions, are easily ignored and forgotten.

BY PAWAN LUTHRA

Over the next few months, a large number of university graduates will finish their degrees and find their first full time professional job. Likewise, those from TAFE and those entering the work force directly after their HSC will also find themselves in the ranks of the employed. Of course, there are others who may choose to undertake further education or travel or join the ranks of the self-employed, but at some point in their life, they will find themselves looking at that first pay cheque.

There is no better time than this, to set up those habits for financial success.

The 1926 book The Richest Man in Babylon is one of the best books on personal financial advice: the secrets of wealth accumulation are discussed here through a set of parables. That these examples are still applicable is the reason that even about a 100 years later, this book is still available in the stores. The stories and knowledge dispersed are practical and simple, but in today’s world of 24/7 online shopping, credit

Thanks to cheap international flights and the travel bug and those brunch places with the smashed avocados, money is always in short supply.

In fact with the availability of easy finance through home equity loans, redraw, line of credit, credit cards with bells and whistles and pay day lenders, most people find it difficult to not only live within their income but within their credit limits.

Two personal finance habits can mean the difference between financial success and financial failure, especially for the youngsters just starting out.

The first one is rather simple. To secure the long term future of its citizens, the Australian government has mandated an employer to contribute 9.5% of a worker’s salary to superannuation (provident fund, as you probably knew it in India). Great. This is the money which most do not receive directly during their working life but gets squirrelled away in a fund which should grow over time. A new worker, who has never received a pay cheque before, can easily add a small amount before tax to this superannuation fund. So, be it $20 per week or $50 or $100, the trick is to tell your pay roll to do this before tax so that part of this superannuation contribution becomes your tax savings. The habit here is to add to your long term savings and then allowing the magic of compound interest on your investment to work. For those earning for the first time, having a few dollars less can be built into your lifestyle rather than getting into the habit of spending every last dollar. This habit can be particularly helpful to females, who may need to take time off later in life for family reasons: having passive investment work for you can be a valuable asset.

The second trick is to actually save before you spend. Most people are in the habit of spending and whatever is left over, goes into the savings account. Perhaps, those starting their working career and expecting their first regular pay cheque, can do a rough budget – rent/food/entertainment and other expenses. Then allow the pay to be credited to a high interest account such as UBank or ING and transfer monies budgeted to the everyday spending account. This way there is planned expenditure and yet, money is being saved before it is spent. Over time, monies can be used for travel, or buying your first car, or even as a deposit for your first home.

It’s your money and you are in control. Simple options to grow wealthy – and still have that smashed avo.