careernav.

By Careernav

Over the years, I've tried to teach my kids the basics about being good human beings, knowing right from wrong and always do the right thing. Financially I told them, it’s all about living within their means, safeguarding their financial information and understanding that just because people have a lot of things doesn't mean they're rich. There is ‘financial rich’ and ‘human asset rich’. Not having had the former, I have taught the latter.

Some lessons have stuck. They know if something sounds too good to be true, it's probably a scam. But there are so many things students should know that they may never learn at home or school. So here are 11 essential tips on money management for senior secondary and tertiary students starting with the best piece of career advice of all.

1.    Get a part time job

No matter how humble or modest it is, a part time job plays a vital role in your life. The type of job is irrelevant and the pay can be ordinary but because you’re not wedded to it for life, it is simply a means to an end. 

A part time job:

• Gives you financial independence
• Signals to your parents you’re financially responsible and growing up  
• Gives you the flexibility to save, indulge or spend
• Boosts your self esteem and gives you a more balanced perspective on life
• Teaches you first hand experience of relationship management skills with your supervisor, fellow workers and customers
• Most of all a part time job starts your money management program:
  • You earn income, pay tax and start contributing to superannuation.
  • You can apply for a modest loan 
  • Helps you establish a credit rating 
  • You submit a tax return 
  • You learn about living within your means

So, finding a regular source of income, even a couple of shifts a week, will help lift your financial situation from dire straits to somewhat bearable. It can also improve your chances of getting Government assistance, since you have to be actively job-seeking or working to be eligible for particular allowances.

There is a good blog on the Top 5 jobs titled ‘Career Advice - Top 5 jobs whilst at university’ on the Careernav website. Click here to check it out.

2.    Government Allowances

There are a number of assistance schemes provided by the State and Federal Governments to help you financially while undertaking study or training, or if you are unemployed.
The various types of assistance schemes offered by Centrelink are:

Youth Allowance – You must be a full-time student, and aged between 16-24 years.

• Austudy – You must be a full-time student, and aged over 25.
• ABSTUDY – You must be an Indigenous person, and studying either full-time or part-time at secondary or tertiary level. 
• Assistance for Isolated Children Scheme –You and your family must live too far away from an appropriate government school for you to attend.
• Low Income Health Care Card 

Go to www.centrelink.gov.au , then click on ‘Individuals’, then ‘Studying or Training’ and see if you qualify for any of the Government Allowances. Information on the low income health care card can be found by clicking on the ‘a-z index’ then click on ‘H’ then ‘Health Care Cards - Low Income’.

Financial assistance is available to help you pay for your tertiary education. When applying for your course, also apply for a Higher Education Loan Programme (HELP), which is available to all students enrolled in Commonwealth supported places. For students who are enrolled in non-Commonwealth supported places, FEE-HELP is available, which also enables you to defer payment.  If you attend University you will begin to accumulate a HELP debt on every subject you take. If you fail the subject and have to redo it, you incur a HELP debt again.

3.    Student Concessions

As a student, you are entitled to a range of concessions. These can include reduced prices on public transport, movies, computers and software, books, airfares, and at restaurants, pubs, clubs, and specific retail outlets. To be eligible for many of these concessions, you are required to be a full-time student and flash your card when required.

For public transport concessions, you will need to either carry your student card, or get a government approved student concession card. You can get one of these by filling out an application form, generally downloadable on your state’s public transport website.

If you wish to get student discount rates on travel in Australia or overseas, then you will need an International Student Identity Card or an International Student Exchange card. These can help you save on airfares, accommodation, museums, food, shopping, movies, and cultural venues. The web link for this card is http://www.isecard.ccm.au/

4.    Use debt sparingly

Never borrow more than you can repay and think twice before you plunge into a credit card. If you must, start out with one credit card or better still choose a petrol card or department store card that can be used only at limited outlets. Or consider a debit card from a bank, which is still convenient and paid for in advance.

Save your credit card for emergencies as they are a monetary loan. They supply us with short-term finance, a convenient method of purchasing things at stores, over the phone or on the internet and allow us to reduce the cash we carry. It can be very easy to pull out your credit card to pay for something, without considering whether you have sufficient money to pay back the loan, or whether you really need to make the purchase in the first place.

Here are some tips to help you successfully manage your credit card;

• Keep it safe – Thieves are out there and would love to use your credit card details. Make sure you keep your card safe, and watch out for phone and internet fraud. Never enter your credit card details on an insecure server! (The ‘s’ in https:// indicates a secure server. Any sites without this ‘s’ are not to be trusted)
• Pay off the whole balance every month – On cards that have interest-free days this means you are using the bank’s money for free - how often does that happen! Make sure you pay it before the due date.
• Avoid cash advances – You pay interest immediately even on cards with interest-free days. These interest-free periods will halt until you repay your cash advance balance.
• Avoid incurring fees – Don’t exceed your credit card limit, fail to meet the minimum monthly repayment deadline, get roped into rewards programs you don’t need, or allow your payments to be dishonoured. 
• Payment methods – Choose the low or no fee payment method. It is usually cheaper to use phone or internet banking to pay off your card, rather than over the counter. Try to pay off your balance in full each month, or before your debt begins accruing interest.
• Leave it behind – Don’t take your credit card with you if you know you might be tempted to buy something you don’t need.   
• Just one card – You only need one credit card.
• Cancel it – If you are borrowing right up to your card’s limit, then consider cancelling your card and changing your shopping behaviour.

5.    Live frugally

Many students expect their lifestyle to continue on unchanged. Others expect to replicate the lifestyle of their parents, who have worked for years to get where they are. If you’re in these categories it’s time to adjust and learn to live frugally.

Consider these tips:

• Don’t be addicted to caffeine, at $3.50 per coffee it adds up.
• Visit the library instead of the bookstore.
• Find a cheap hobby like hiking.
• Consider using public transport instead of buying a car. A car is more convenient but the initial purchase price could vary between a multiple preloved $2,000 gem to a brand new $25,000 beauty.
• Irrespective of the type of car, your ongoing costs will range between $6,000 and $8,000 per year. Rent one when you need one. You'll save a fortune.
• Instead of buying a meal at uni, college or TAFE pack a homemade sandwich.  Put an apple or muesli bar in your bag.
• Try vegetarian options, they are cheaper and you will notice the healthy difference.
• Take advantage of ‘Tight-arse Tuesdays’ for meals and cinema.
• Go to BYO restaurants and get a copy of the Cheap Eats 2009 guide.
• Home-cooked meals are free at Mums and less expensive to cook yourself.
• Shop early evening and take advantage of marked down items close to their use by date and shop at the markets for fresh fruit and vegetables.

6.    Manage your mobile phone

Mobile phones will cost you money and if you’re not smart about it, a lot of money.
When buying a phone, consider exactly why you need it. Remember a mobile phone is for your convenience, not the convenience of others. If it’s just to make short phone calls and texts, then don’t get sucked into spending hundreds of dollars on a complex phone plan or on a phone with functions you’re never going to use.

To avoid mobile phones being a financial millstone, here are some tips about managing them;

• Check out a number of providers to find a phone and deal that will suit you
• Be sceptical of cheap deals. It’s likely they aren’t all that cheap. Ask for the contract you’re being asked to sign and take it home to read the fine print carefully. If the salesperson won’t give it to you, this is the first signal to not buy
• Consider pre-paid credit. Your decreasing pre-paid credit will remind you to keep an eye on the duration of calls, lengths of messages, and so on.
• Set a financial boundaries and stick within the capped plan that suits you.
• Texting is cheaper than talking.
• If someone is calling you take the call, rather than calling them back. This way they pay for the conversation not you.
• Watch out for extras, like sexy ringtones, wallpapers, games, music, and videos. They are all great, but again make an informed decision before you download.
• Don’t subscribe if you don’t know all the costs, how you really intend to use it and the cost to the break the contract.

7.    Start an Emergency or Holiday Fund

Start saving immediately even in small amounts. Establish an ‘Emergency fund’ via an automatic weekly transfer from your working account to a term deposit with a drawdown  facility. You will not get rich doing this but it will pay for emergencies such as a major car repair or if nothing goes wrong, then you have yourself a holiday fund. Set yourself a target sum equivalent to six months living expenses. The alternative is to borrow money, which will cost more in the long run.

Did you know if you deposited $5,000 into a term deposit and added $20 per week to it, each week, for 20 years at a compounding interest rate of 6% per annum, then your bank balance in 30 years would be $117,736? And let’s face it, you can find $20 each week.

8.    Budgeting and Cashflow

Being aware of your income and outgoings is not as straight forward as you think. Many expenses are irregular. That is they come annually, half yearly, quarterly, or even at random intervals. You need to cover tuition fees, annual vehicle registrations, insurance premiums, maybe council rates, drivers licence renewals, holidays, birthdays, Christmas expenses and so on. You need to foresee when these expenses will occur, and ensure you have savings to cover them. Budgeting can successfully change the way you manage your finances, and if used correctly will significantly reduce the financial stress in your life. We reckon http://au.finance.yahoo.com is a relevant site

9.    Think long term

If, after doing all the above, you still have money left over there are a number of long term (as in over 20 years) options such as:

• Contributing more to your superannuation fund. Now you’re working, your employer is compelled by law to contribute 9% of your gross wage and deposit it into a superannuation fund of your choice. Superannuation works by collecting money from individuals, pooling it into a large account, and then investing that money into portfolios like property, shares, government bonds and cash deposits. This invested money increases in value over the long term and so your superannuation account increases accordingly. This money is transferrable from one fund to another as it follows you from company to company. In time you can elect to have your own super fund but as a student you are unlikely to be at that point.
• Regular buying of blue chip shares such as BHP, Rio Tinto, any of the big 4 banks, Telstra, or any of the ASX Top 20 companies. Manage your own portfolio of shares - but like you turn to Careernav for career advice, always seek financial advice before you invest. 
• Invest into a managed fund. They have a range of risk options that you can choose which depend on your objectives. Again, always seek financial advice.

If you start investing in your 20s, thanks to the miracle of compounding, you will have far more than if you wait until your 30s or especially your 40s. The trick is to get started early and don’t stop.

10.    Be sceptical

A wise man once said:

• Attention to detail saves you money.
• Don’t sign anything unless you read it carefully.
• Never believe anything a salesperson tells you.

You have to work too hard to throw it all away unintentionally or without sufficient care.

11.    Take Careernav advice

Make an informed choice about your first career. Careernav are experts in career advice.

• Don’t only focus on money and financial rewards.
• Focus on acquiring knowledge, personal development, professional development, further education and commitment to hard work whilst you’re young.
• The competitive marketplace will ensure the money will be there.
• Make a commitment to have the flexibility to retire at 50 years young. Sounds a long time away. Open your eyes for tomorrow will soon be here!

So good luck and remember what Warren Buffett said;

‘Rule No.1: Never waste or lose money. Rule No.2: Never forget rule No.1.”