Looking back at your 20s, you probably had all these grand plans about how your 30s would be.
We all think that at some point, we’ll grow up and start being financially responsible. “By 30, I’ll have it sorted,” you told yourself. “I’ll be a homeowner, I’ll be married, I’ll have kids, I’ll be in a job I love.”
Then, before you know it, you’re 30, then 35, and 40 is creeping closer by the day. The truth is, many Australians in their 30s don’t have their own families or own homes. Times are changing, folks.
The most recent census indicates the number of Australians who own their home outright - at any age - declined from 32.1 per cent in 2011 to 31 per cent in 2016. Meantime, renting increased from 29.6 per cent to 30.9 per cent over the same period, and the median weekly rent jumped from $285 to $335.
There’s only so many times real estate moguls can tell you to stop buying avocado (thanks, Tim Gurner) before you look around and think that saving a deposit is always going to be out of reach.
Budgets have gone out of fashion
According to Gemma Pinnell, director of strategic engagement at Industry Super Australia, a lot of people aren’t sure where to start with their finances. They keep putting it on the backburner, thinking it’s “too hard”.
“In your twenties, your goals tend to be more short-term such as finishing university and travelling. You will only just be starting out in your career. By the time you enter your thirties, your goals may switch to a longer-term focus including buying a house and starting a family. You may also have accumulated debt through loans and credit cards,” she says.
“However, it’s never too late to start making the most of your money and working out your budget in your thirties is a great way to begin.”
Putting a budget in place will help you allocate your income to your expenses. That way, you can work out how much you should be spending on each thing and how much you’ll have left to tuck away.
Question: How many of us have unpaid super?
Answer: 1 in 3 Australians are missing super they're entitled to, which is a total cost of almost $6 billion per year.
So how do you actually stay on top?
Gareth Gumbley is the founder of smartphone application Frollo, which tracks spending to help users see where their money is going every day. He says tech can be hugely beneficial to understanding your cashflow and anticipating expenses.
“I agree that budgets have gone out of fashion. What we’ve replaced them with is buckets - breaking your spending into bigger chunks that are easier to understand. They help us focus on the next steps, which are short-terms goals and long-terms goals. If you’re breaking it down line-by-line, it just creates noise and people give up. Creating some kind of automation to track your spending will help,” he says.
“Apps allow you to see the pace of your spending and recognition of what expenses are coming up so you can start understanding your cash flow.”
The other key factor, he says, is spending more thoughtfully.
“When it comes to expenses, living expenses are the biggest and they can be wasteful. With groceries, for example, about 20 per cent ends up in the bin. That can add up to a lot over a year. Shopping online can actually reduce impulse buys, you could easily cut spending by stopping impulse purchases.”
Question: How many of us have multiple super funds?
Answer: Approximately 39% of us have more than one super account.
Overhaul your superannuation
When it comes to super, most people don’t understand what insurance they’ve got or where their money is invested. It’s easy to check - all you have to do is log onto your MyGov account.
You can ask your superannuation fund to help with this process by filling in an online form.
If you’ve had a few jobs in your 20s, it’s possible that you may have several superannuation accounts, all of which may be charging you fees. Consolidating your accounts will help you streamline the process, maximise your account growth and reduce fees, but it’s important to make smart choices.
Question: What's our lost super actually worth?
Answer: There are more than 6.2 million lost superannuation accounts. Their total value is $17.4 billion.
Finally, it's time to get real about insurance
In your 30s, it’s possible you will be promoted and your salary will increase. When this happens, it’s especially important to keep your superannuation in mind and also take a closer look at your insurance.
Many funds come with income protection options. If you don’t know what’s going on, call your fund and find out - especially if you’re planning to start a family.
“When life changes, and we get promoted and progress our careers, sometimes the unthinkable can happen. You need to be covered,” says Will Barsby, superannuation law expert at Shine Lawyers.
“It’s just devastating for people who have made an investment to look after their income and families. Super is our second biggest nest-egg we have, apart from our homes, so it’s important to have a regular annual health-check and make sure the balance is growing.”
This article was first published by the Herald Sun on 12 April 2019. The information referred to may change from the date of publication and care should be taken when relying on such information.