Young Singles Getting Ahead Financially
When you’re young and single, what should your saving priorities be?
When you’re young, single and working, having the right financial strategy can really help you get ahead.
While for many young Australians the dream of owning property is alive and well, the reality is that it’s getting harder to achieve. But that doesn’t mean Gen Ys and Millennials should give up completely. Saving, whether it’s for property or not, should be a priority once you begin working.
Sure, it’s fun to spend money – and after all, life should be enjoyed – but when you’re single, without big financial commitments (like mortgages) or dependents (a spouse and children) you can really maximise your earning power and get ahead of the game, setting yourself up for the years to come, whatever they may bring.
BT Financial spoke to a range of young people and asked them their financial priorities. Their responses in the video here are interesting – keeping in touch and spending time with friends and family is a priority for most, for others, travel and excelling in their chosen career is top of the list. And for some, securing their future is more important than anything else.
It is not always easy to think 10, 15, 20 years into the future – sometimes it seems like a sort of abstract concept. But without some planning, a goal is just a wish. So, if saving to buy property is not something you’re aiming for, what should you be doing with your money?
1. Paying off your debts: This is, absolutely, number one. Student loans, car finances, personal loans, credit card debt – whatever you owe, get on top of it. It’s only when you’ve got debts under control that you are in charge of your destiny.
2.Building an emergency fund: Putting whatever spare cash you can away for a rainy day. An emergency fund should equal at least three months’ worth of living expenses.
3.Adding to your super: The Government recently introduced a new initiative that encourages young people to save through superannuation for a first home, with tax incentives. Even if a home is not your priority, you’ll never regret having more in superannuation when the time comes to retire.
4.Checking your insurance: A lot of people make the mistake of haemorrhaging money on a policy that’s not really going to suit their needs. For insurance to cover you when something goes wrong (and it’s not just about the money, it’s about peace of mind too), it should be tailored to your lifestyle. Work out what you have already, shop around, and consider getting professional advice to work out what’s right for you. No matter how young, fit and healthy you are, it pays to be prepared.
5.Considering an investment. You can start a share portfolio with as little as a couple of thousand dollars. And with the right shares, or a managed fund, you can watch that investment grow over time. It’s an effective way to make your money work for you, and with banks currently paying low interest on products such as term deposits, you can be guaranteed a better return.
Post GFC, a lot of people have shied away from the share market, but it has since then, delivered solid, consistent returns.
Of course, as with any investment, there are risks. Share prices can fall as easily as they can rise, but with the right investment strategy in place you can mitigate big risks and reap significant financial benefits over the medium-to-long term. The most important thing to consider when investing in shares is to get professional advice.
Life is meant to be enjoyed and saving doesn’t have to be so hard that you must sacrifice the things you enjoy. On the contrary, being mindful about how you spend, as well as how you save, can actually help you plan – and accomplish – life goals (like travel) at the same time as putting funds away for the future.
The right financial strategies will not only help you to create a solid financial base to build on, they can help you get into healthy financial habits that will serve you well throughout the whole of your lifetime.
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