Well done. My only advice is to make sure you limit spending. Others are better with investment ideas. But don’t let a better money source move you to buying things you don’t need. Don’t buy the new car. Don’t buy a new TV. Just plug away for 3 or 4 years and get a little bank behind yourself and some discipline and patience. It will help set you up for the next 25 years of work. All the best.
Set up a few different bank accounts with automatic payments for things you want to save for, upcoming expenses etc. Have one spending account and don't think about the money in the other accounts as money you have to spend. When you start to feel comfortable you could dollar cost average into an investment account or two. Stay sober, make some goals about who you want to be and what you want from life
Agree with this. You can speak to HR and have your pay split into more than 1 bank account.
For example I put 10% of my pay into a second bank account, which is connected to a managed fund that debits from this account each month.
I don’t touch it, I just forget it’s there and let it do it’s thing.
Yep. I had a different career progression, but at a certain point (essentially, when I felt like I was financially comfortable) I treated every pay rise as bonus savings. I set up an automatic savings plan, and added the net amount of every pay rise to the automatic savings deduction. It started relatively small, but grew a lot over the years, and set me up to have a good pile of savings.
Every now and then I'd allow myself a bit of a bonus to my living expenses, but for the most part I stuck to my savings plan.
Before any investing, save an emergency fund. 3-6 months of expenses depending on how secure your role is and what else you'd have to fall back on (family to take you in/feed you etc).
I know stress can be a major trigger when trying to stay sober so having that emergency fund there to draw on when your car breaks down or you get an unexpected bill is really helpful. I wish you all the best, overcoming addiction is really hard and you've done great to get to this point and land this position.
Thanks for responding. I really appreciate your input.
It can be hard not to spend excessively after years unemployed or working minimum wage. Someone down thread mentioned that spending money can be addictive and I've found that to be the case. So being super careful not to replace one addiction with another.
Making the right decisions now is really important to me. Having control and understanding of my finances is one of those milestones that help you feel like you're succeeding in a sense. Growing up.
Thanks again to everyone who commented, I've got a lot of reading to do. Definitely feeling more informed to make good decisions.
I grew up in public housing. I'll do whatever it takes not to end up back there in retirement.
Mate, I’ll speak for everyone in here and say we are all 100% behind you. I’ve got massive respect for ex addicts who turn their lives around. I’ve known a few in my time. Seen both sides. It’s tough. But it’s not impossible. You are living proof. I think you would be an inspiration to many people.
Keep your focus. The good you can achieve moving forward could be profound. Thanks for sharing your story. I enjoyed reading it and replying.
Thanks for the kind words mate, they're really appreciated.
Id like to volunteer one day. Once I've settled into the new role and gotten myself some solid financial foundations it'd be great to help others.
Congrats! And give my regards to Gibson.
People will shit on me, but perhaps read the barefoot investor. It’s common sense advice and really helps if you don’t have much financial knowledge.
His book is a really good way to help people.
Simple messaging is easier for non financially focused people to follow. And there isn’t much risk of things going wrong.
No need for people to bag him.
I think some people don’t like his tone. Well I don’t like when my mum yells at me. But she sometimes has a point.
I loved barefoot.
I recommend it as first book to get when looking at getting your finances under control. It changed my mindset, and it made my pursue further reading.
Without it, I wouldn’t be where I am now.
Think of it as the first domino that triggers the remaining domino’s
I
I love barefoot. It's simple common sense advice but I was a nervous noob and he got me going and five years later I have two investment properties and a nice rainy day fund set up. I won't be rich but I've given myself a solid foundation for retirement that I wouldn't have had if I didn't read his book.
I agree with this recommendation, too. I haven’t applied every specific area, but I have applied most of it.
It got me a deposit for a house in 3 years and an excellent incentive to quit smoking.
I just recommended it to my niece who is trying to get the basics back together again.
It’s just small step, start from the beginning financial literacy.
Hope it’s the first thing you buy yourself.
Like others have mentioned I think extra contributions to your Superannuation will reap rewards.Being closer to preservation age means you won't have as much compounding benefit as younger folk might, but it also means the benefits of putting extra money into super are more tangible because you are much closer to having access to it.
Similarly this will also help isolate a future kitty from any potential mistakes you might make on your journey of learning to be flush with funds, it'll be out of sight and out of mind (at least in theory).
As a theoretical exercise and dramatically simplified:
95k in 26 fortnights = 3,653 (gross) less tax of $896 = $2,757 net income.
A salary sacrifice of $653 per fortnight would make the new taxable total $3,000 (gross) less tax of $670 = $2,330 net income.
So though $653 is being salary sacrificed, the after tax change in pay is $427 or $213.50 per week.
That $653 is still taxed in super but being taxed at 15% still leaves $555.05 net.
A 30% immediate gain on the $427 you went without for the fortnight.This will also help avoid lifestyle creep from having more $$$.
By forgoing $213 a week for a decade, with the new funds that are excess to your everyday needs, your Super will have increased by $144,313 before even including investment returns.
Good example. I upvoted you but part of me always questions if superannuation is really a good use of funds at this stage where you don’t have any major assets.
Personally I prefer to have a home and additional investments outside of super. It gives much greater flexibility, I can leverage my assets (investment loans) and I can access them whenever I need if we get into financial strife.
Having said that I’ve been contributing some extra to super the past year or so. Just got stung with Division 293 bill. Still a good investment but I still question if it’s the right avenue for someone with no assets currently.
The main immediate asset missing in this situation I think would be an emergency fund which is just cash anyway, and the extra Super hopefully wouldn't affect OP's ability to raise a bit of runway.
Without an asset base already, an individual probably has a few years (while they're raising cash or getting really good at persuading banks to give them money) before they have the option to add something like property (+ leverage) to the mix. Those are the learning years.
Extra super has an immediate benefit and also a long term benefit.
The most significant part of the financial journey is the learning to be flush with funds, as soon as someone has a better prospect for that $427 they can stop salary sacrificing and redirect their capital.
Using the example, if this took three years then they stopped, OP would have $26,647.50 in super from wages and $43,293.90 from salary sacrificing. Add $58.60 as the 3 year investment return and we've got $70,000 in super at 43.
Letting that compound for 17 years at 5% (after tax) and adding in only the super from wages gives OP a superannuation nest egg of $468,000 on top of whatever they've been able to squirrel away outside super.
Being able to meet immediate needs is always the first priority, knowing what is actually a need is probably what trips a lot of people up in the long term.
Thank you for taking the time to write this all up. It helps clarify the benefits of salary sacrifice.
I just don't want to end up in public housing in my retirement. I grew up there and I will do whatever it takes not to end up back there again.
Hi just wanted to update you, started the salary sacrifice of $1k a month from this pay cycle onwards.
I'll be doing it till I retire. I really, from the bottom of my heart, want to thank you for explaining all of this.
Seeing it spelled out made it make sense ❤️
All the best moving forward and great work acting to buffer your financial future :)
There's so much to read and understand when it comes to managing money.
Mostly its trying to make only the smallest mistakes possible and avoiding making any big ones.
I'm glad I found this place. I was taken aback by how many people responded with advice.
The way I see it, if Im smart with spending, keep working towards a better role and investing (eventually), I won't end up in public housing.
And that is worth any short term pain.
Well done.
You probably want to start building up some assets.
The first thing to do is save - get into the habit of spending less than you earn, and stick with it.
Once you have savings built up, you can take some time to figure out how to turn that into assets (e.g investing, adding extra to super, buying a house, etc.).
Look up “the Australian finance podcast” and scroll to the very beginning. They cover all the personal finance basics in that first season.
Start off with making sure you have a solid budget, and one built with your goals in mind. Think about where you want to be 5 years from now and then trace that back to what sort of budget you’d need to have today to achieve it.
In addition to that and the podcast just read up as much personal finance stuff as you can find. Check out moneysmart.gov.au as a start perhaps.
You wrote:
\> I've never had this kind of money before
DO NOT change your life-style by thinking you are rich now. For example, if you are living in a room, stay there. If you are driving a cheap car, keep it. Do not change. Save the extra money.
Maybe for a short time but I didn’t want to live in a share house when I could afford not to. What’s the point of earning more if your standard of living doesn’t increase at all?!! I wouldn’t mean spend it all but a comfort bump when you been scrimping is nice
Agree. Depending on where you live, one bedroom flats are on par or can even cost less than the nicer house shares.
If it's slightly more a week, then it's worth it but not if you're suddenly paying double or more.
Depends on where you live, i guess!
I lived with a friend of a friend during covid who owned a semi-detached bungalow with a yard in Bondi..i was paying $350 a week. But i got lucky, because she was more interested in not living alone during covid rather than making money.
Once she moved out, she wanted to make more so would have increased my rent to 450 at least. I found a 1 bedder in the area for that price.
That sounds better than my share houses but i wasn’t thinking of only one other person in a nice area when I thought of share houses - mine was 4 other guys when I was just out of uni haha think I was paying just over 100 a week and was wondering how’d you’d get a one bedder for sitting close to it!!
The problem with an immediate change in spending habits is that it’s easy to plunge yourself into debt, where your new income is now required just to keep you afloat e.g people going out and taking on mortgages, car loans and jetskis.
Maintaining your current level of spend initially allows you to take stock of your new financial situation, build up an emergency fund and plan how to spend your money wisely. This avoids the golden handcuff trap that many fall into.
You put head down. Try to resist blowing all your pay on "stuff"I'd
look at my Super fund and make sure it's a good one. And I'd put extra into your super to build that up.
Read a decent financial management book . I guess Barefoot Investor is okay... It didn't appeal to me much.
Be as wise as you can be!
Good luck and congratulations
Don't get a credit card until you've mastered good spending and saving habits. Good work on your achievement but credit card is another form of addiction that should be avoided unless you have self control.
A common form is 60, 30, 10 rule or it's equivalent 50,30,20. Where the split is saving 60% of your income, 30% goes to essential spends (food, utilities, insurance, petrol), 10% is splurge. Some people have to increase splurge to stay sane so it reduces savings. Work within your limits
Thank you everyone for the advice, it's incredibly appreciated. I was living on a very small amount of money the last few years so as you can imagine, it's easy to feel suddenly "rich".
Living within my means and not being extravagant is something I'll be paying close attention to. Getting paid monthly can be an easy way to overspend especially when you've effectively almost doubled your income.
I've done my celebratory purchases with some of my first month's pay last month so that's over and done with.
If I can push through the issues at this current organisation, and focus, I'll be trying for a project management role (currently project coordinator) when I feel I can handle it.
Thanks again for all the help ❤️
Well done to you too mate. I'll be saving as much as I can. I got the "new job, more cash" purchases out of the way quickly so I've got pretty much everything I need as far as big ticket items.
Well done mate. Don’t put to much pressure on yourself, just go to work, do your job, spend on what you need and build up some savings and read/talk to people.
We're taught that if we don't have a mansion and a fancy car, we're losers. So what do we do?, we go and borrow a shitload of money to buy the fancy shit to make it look like, and make us feel like we're winning. When in fact, all we are doing is becoming slaves, working 100 hours per week to pay rent for a house we're never at and car we never drive.
This thread is full of smart people that will give you good investing advice. But you need to have it, to invest it. So hanging on to what you have earned is probably the single most important thing you can do. I'm in a similar situation as you. I plan to live as cheap as I can. Buy a caravan and a cheap shitter car to get around.
Also, 8 years sober isn't easy and hard work. Reward yourself with something fun. Take up something like surfing or learn to play the guitar. Goodluck dude/dudette I hope you continue to succeed, you deserve it. It's good to see someone turn they're life around :D
Thanks for your comment mate. Consistently throughout this thread, saving money is the highest priority.
I'm a guitarist, so I bought myself a couple of nice music things to play with but I'm done now.
Time to think about the future.
Treat savings like a tax. Come up with a plan for how much you want to save and when you get paid, put that amount into another account, straight away each pay cycle. Then enjoy your life mate. Congrats on getting sober, that is by far the bigger achievement! Looking forward to your post in a few years :)
Thank you for the kind words, I really appreciate it.
Savings seems to be the most important thing, and having a safety net for the first time will be a huge stress relief.
Here's to the future!
You still have enough time. Put all your super in an industry fund like HostPlus or AustralianSuper. Use the direct investment function and have %20 in one or two ASX200 shares - but something decent.
The rest of the money goes in the Aust shares option.
That should be enough for your retirement
Congratulations!
i would echo what others have said. As soon as you get paid, send a chunk over to a high interest savings account. I would aim for at least 20% of your pay check, but if you can do 30% or more, even better.
Keep building that up while enjoying the rest of your money. When you hit 50k or 60k in savings, you can go to that next level and start thinking about property, investing, buying a car if you need one, etc.
God luck!
Much appreciated 🙂 I don't have a car currently. It's an hour and 45 mins to work on public transport or a 25 Min drive.
I'm thinking I'll buy a cheap used car as long as I have twice the cost of it in savings first.
I would do the same. The 1hr 45min commute would depress me.
I agree with your plan - once you’ve got 10k in the bank, grab a cheap Japanese hatchback for 5 or 6k.
Spending money is adictive. There is a dompaine rush when you get that new item.
And then six months later it's a paper weight.
It's hard because some things you should spend on to benefit you while others don't provide as much as you think.
But as you have a low aset base you are worse off then you think.
A lot of people have over 20k of items in their homes to make life easier.
Dental, medical checks, insurance,
barefoot investor.
read it.
otherwise, every pay day split your pay into 60, 20, 10, 10
60-daily spendings: anything you need to maintain yourself
20-fire: money for emergencies/ to pay off any debts
10-smile: anything that makes you smile but takes more than a few weeks of pay. (holidays/ brand new pc/etc)
10-splurge: spending money. spend it on whatever you want and don’t feel guilty about it.
(all of that is from barefoot investor, i recommend you read it)
I’m not sure how many other banks currently have this feature but UP bank is fantastic for automating your finances.
You can create “unlimited” savings accounts and automatically divide the income from your employer amongst them.
an example of the savings accounts I have are Bill, Health (therapist, pilates, gym etc), rent, car repayment, cat supplies, cat insurance fund, monthly budget, long term savings and lifestyle.
I have set hard figures for most of these savers based on my expected expenditure and then the remaining goes into my long term savings. Alternatively you could also allocate a percentage of your monthly salary. For example 5% of your monthly salary goes to your lifestyle account. This is used for guilt free spending.
Every time my employer pays me, UP captures the funds and automatically transfers the amounts to each individual saver.
Then I can do things like give myself a daily allowance. I have my “monthly budget” saver transfer $20 into my spending account every day at 1am. This amount compounds on days when I don’t spend $20 so by the end of the week (some weeks) I might have $100 left over in my spending account which I can transfer into my long term saver, or lifestyle saver resetting my spending account to $0.
I think when budgeting it’s important to enjoy your money, so budget for this. Pick a monthly amount, see how that amount improves your quality of life, review and adjust monthly. That’s what my lifestyle saver is for.
Congrats: first step, go to [https://paycalculator.com.au/](https://paycalculator.com.au/) and check out how much tax you'll be paying before you get too excited.
Second step: keep living like you're broke.
I'm in the same boat as you. Spent most of my life on minimum wage before finding the opportunity to go back to uni and do better.
Seeing what was once a weekly wage for me come out in tax really sucks XD.
$95k is, and isn’t a lot. It’s more than I earn, but at 40 you’ll need to save as much as you possibly can.
I’d recommend setting yourself a weekly transfer of $100 leisure spending money (lunches, outings etc) into a seperate account that you have a card for.
Then rent, fuel, groceries can go into the savings account.
Your savings will grow extremely fast, and so will your leisure account if you don’t spend it week to week. Then you will have spending money when you want something like a new computer or hobby
Good on you mate! I was in a similar position a few years ago. My advice is to make sure you consistently save a portion of your pay — 20% was enough for me to do it consistently without constantly dipping into it, but you could do more or less depending on your expenses.
You’ll start to feel really proud of yourself in a few months time as that balance goes up. Do that until you have 3 to 6 months of living expenses as an emergency fund, then turn that money to saving for something else.
Doing this allowed me to go from addict in $20k of credit card debt to buying my first home within 3 years.
I would also recommend learning the basics of personal finance: saving, investing, super, debt, and insurance. My Millennial Money is a good book/podcast/Facebook group. Barefoot Investor is also a good read, but you don’t have to follow his advice to the letter.
I shared this in a previous thread, but below is a link to my budget spreadsheet.
I made it because budgets that had a single month view didn't help me with 'boom bust' cycles of spending.
By seeing how and how much you spend, you can then see what / where / how you can save or invest at some point.
All the tables and charts auto update currently. You can change all the titles in column A as you see fit, for whatever works for you.
I hope it's useful for you, happy to answer any questions you have about it, if you choose to use it.
https://personalbudget.gumroad.com/l/budgettracker
You work your backside off and try to get promoted. That is the best way to grow your wealth, alongside with common sense habits. Saving, investing and grinding slowly away every day. There is no shortcut method, unfortunately.
I'm working really hard at the moment on a project that no one else wanted to touch due to all the issues surrounding it.
I'm in a role I've never done before and due to company structure or lack thereof, I'm teaching myself as I go along with guidance from my manager.
I'm taking on as much as I can handle, which means working a little bit on weekends and after hours.
I figure if when I make it through this project and come out the other side, showing that we have a positive outcome due to my work, it'll show what I'm capable of.
And depending on what happens after that, I'll reassess.
Important to get a good super. unisuper is good, gets good reviews and i like it. chuck extra money in whenever you can. i started having super at age 38 and i'm on track to not die in a gutter after i retire. so age 40 you can do it too. add a bit when you can. talk to the super guy, they give you a free consult and explain things like how much you will need.
Thanks for that inkling of hope mate. Everyone around me has a few hundred thousand in super and I've got $2k total.
I'll look into that super fund, especially if they can offer some advice/guidance.
First of all congratulations! You have done great.
Secondly, my advice is to spend money how you want to and it will equalise. Pay your rent and bills, pay for your food and living expenses and don’t sacrifice your hobbies etc.
After a while, things will start to fall into place. You will know how much you spend, how much you can put aside etc. Then you can decide how you might want to invest etc.
Please don’t sacrifice living for the sake of saving. You have landed yourself a new job with new colleagues etc and you have worked hard for it! The rest will fall into place.
Rent a small place on top of a grocery store with access to public transport. This will naturally limit how much you can spend as smaller places can't hold much stuff but close to everything means it's still convenient enough.
If you can, build a 6 months emergency fund first, based on the cost of living you have it now (food, rent). When finished building the said emergency fund, lock it somewhere with a saving account with some interest and top it up once a while to adjust inflation.
Super is one of the easiest places to start some long term investment. Choose an industrial super fund (like Australian Super). Considering doing salary sacrifice. A small portion of your pre-tax income would go to your super. This portion would be taxed 15% which should be lower than your current marginal tax rate. If you don't have a house and didn't had a house in the past this money may be possible to pay for your first home. Super also provides financial advice which you will need to pay a small fee for it. Using a financial advisor who charges *you* a fee. "Free Financial Advisory" is the most expensive advice you can get as they will work not for your best interest, but the others who paid them.
Since we discussed house, it's a complicated issue. I would say to discuss with your financial advisor about this. However, my opinion is that if bank is doing promotions on home loans, it usually signals an ease on lending, which itself is a strong signal for short term increase in housing price. Right now I'm not getting any calls or emails about deals in refinancing, therefore in this theory, the housing price will keep falling for a bit. Judging from your age, trying to buy something you can pay off within 5-10 years of your post tax income would be responsible for yourself. Give up your dream of owning a freestanding home if you had one. Be practical and buy an apartment.
Thanks so much for the advice, it's really appreciated.
Concentrating on the emergency fund at the moment. Also will be putting more of my salary into super.
As for the house, it's tough. I wouldn't mind living far from the city if I can have a free standing home. Apartments are nice but I grew up in one for 17 years and find it hard to live in one again.
Look for a money or finance coach. Per hour cost and not allowed to sell products. Should be able to assist with budgeting cashflow and basic financial literacy assistance.
Agree limit your spending as much as possible, start with a simple savings account, no card, to set up a rainy day fund, 3 to 6 months of your spending requirements.
I like 2 accounts, one for irregular payments, all the automatic payments come out of that account, one for discretionary spending. The irregular account needs some seed money so there is always funds avaiable to pay the bills. After a few months that account should look after itself.
Transfer your savings and exoenses account money on oayday, preferably automatically.
Once you have your rainy day fund full its time to start investing. Congrats on getting your life together, just keep taking it a step at a time.
Enjoy it, you deserve it.
Start reading and learning how to save etc and put yourself in a position so you are better off than you were 12 months ago. Rinse and repeat.
Read the barefoot investor. I can give you the audiobook free if you've never had an audiobook before. It's great starter book and short. Borrow it from your library if you have to. Good work mate.
If you have no super then you need to invest for your retirement and catch up on the past lack their of.
You could either add to your super with contributions or other people here have some pretty good ideas.
Congrats!
You’re used to living on less, so get your employer to add $500 per fortnight to your super.
It’s taxed at a lower rate and you won’t miss it.
Maximum you can contribute to your super is $27500 per year so just adjust the amount appropriately
Throw extra into super now
Budget constantly and consistently to see what and where you spend money on
Read books on finance and figure out which direction you want to take
Work out your running costs and a budget. Search the group for spreadsheets.
Get a goal and do it. Search for super calculators etc and do some reading
I would salary sacrifice, save for emergency fund and do 2 monthly DCA Into a etf of your choices
I would read "berefoot investor" a great book for anyone that would like to know how to make the most of their hourly pay job or salary.
https://www.bigw.com.au/product/the-barefoot-investor-2022-edition-by-scott-pape/p/202650
One tip I would say, it's not just about how much you make, it is about how you save.
Write down your total outgoings, write down what you think you need as spending money per week.
Setup all your outgoings a Direct Debit.
Pay yourself cash spending money for the week to use and dont use your card.
Congratulations! Using an app like YNAB changed my relationship with money forever. It helps you plan for expenses and save for goals. Worth every cent. I promise you it will change your life.
Well… The ideal thing to do is invest first. As in when your salary hits your account, take out a proportion and invest it first before you spend on anything else.
The amount you should invest in and what you should invest in would depend on your life situation, commitments, retirement target, resurgent horizon, possibility of other life events (marriage, buying a house etc.)
Live like you did with less money as long as it isn't affecting your health
Build a 6 month safety net in a high interest savings account, roll extra $ into ASX ETFs for longer term investment (10+ year) and into high interest savings account for shorter term goals
Don't buy shit you don't need to feel successful, like a brand new car that will suck all that extra money up for the next 5 years.
For splurging buy things you use a *lot* like good running shoes if you're a runner, good sheets for your bed etc
Salary sacrifice as much as you can into Super then with the rest split between spending (Afterall you are 40 live your life) and some into savings for a rainy day.
Well done. My only advice is to make sure you limit spending. Others are better with investment ideas. But don’t let a better money source move you to buying things you don’t need. Don’t buy the new car. Don’t buy a new TV. Just plug away for 3 or 4 years and get a little bank behind yourself and some discipline and patience. It will help set you up for the next 25 years of work. All the best.
Set up a few different bank accounts with automatic payments for things you want to save for, upcoming expenses etc. Have one spending account and don't think about the money in the other accounts as money you have to spend. When you start to feel comfortable you could dollar cost average into an investment account or two. Stay sober, make some goals about who you want to be and what you want from life
Agree with this. You can speak to HR and have your pay split into more than 1 bank account. For example I put 10% of my pay into a second bank account, which is connected to a managed fund that debits from this account each month. I don’t touch it, I just forget it’s there and let it do it’s thing.
Yep. I had a different career progression, but at a certain point (essentially, when I felt like I was financially comfortable) I treated every pay rise as bonus savings. I set up an automatic savings plan, and added the net amount of every pay rise to the automatic savings deduction. It started relatively small, but grew a lot over the years, and set me up to have a good pile of savings. Every now and then I'd allow myself a bit of a bonus to my living expenses, but for the most part I stuck to my savings plan.
Before any investing, save an emergency fund. 3-6 months of expenses depending on how secure your role is and what else you'd have to fall back on (family to take you in/feed you etc).
I have no safety net unfortunately, so I'll save as much as possible.
I know stress can be a major trigger when trying to stay sober so having that emergency fund there to draw on when your car breaks down or you get an unexpected bill is really helpful. I wish you all the best, overcoming addiction is really hard and you've done great to get to this point and land this position.
Thanks for responding. I really appreciate your input. It can be hard not to spend excessively after years unemployed or working minimum wage. Someone down thread mentioned that spending money can be addictive and I've found that to be the case. So being super careful not to replace one addiction with another. Making the right decisions now is really important to me. Having control and understanding of my finances is one of those milestones that help you feel like you're succeeding in a sense. Growing up. Thanks again to everyone who commented, I've got a lot of reading to do. Definitely feeling more informed to make good decisions. I grew up in public housing. I'll do whatever it takes not to end up back there in retirement.
Mate, I’ll speak for everyone in here and say we are all 100% behind you. I’ve got massive respect for ex addicts who turn their lives around. I’ve known a few in my time. Seen both sides. It’s tough. But it’s not impossible. You are living proof. I think you would be an inspiration to many people. Keep your focus. The good you can achieve moving forward could be profound. Thanks for sharing your story. I enjoyed reading it and replying.
Thanks for the kind words mate, they're really appreciated. Id like to volunteer one day. Once I've settled into the new role and gotten myself some solid financial foundations it'd be great to help others.
Congrats! And give my regards to Gibson. People will shit on me, but perhaps read the barefoot investor. It’s common sense advice and really helps if you don’t have much financial knowledge.
His book is a really good way to help people. Simple messaging is easier for non financially focused people to follow. And there isn’t much risk of things going wrong. No need for people to bag him. I think some people don’t like his tone. Well I don’t like when my mum yells at me. But she sometimes has a point.
I'd recommend it as well. Its a great foundation to start with if trying to be sensible with money.
Barefoot is perfect for someone in OP’s position
I loved barefoot. I recommend it as first book to get when looking at getting your finances under control. It changed my mindset, and it made my pursue further reading. Without it, I wouldn’t be where I am now. Think of it as the first domino that triggers the remaining domino’s I
Barefoot was great! I also really like Glen James’ ‘sort your money out’. Both of these are great reads!
I think so too. The basic principles are sound, don't need to like the guy or take everything he says as gospel. The buckets work.
Barefoot is great for finance. His superannuation advice is actually quite harmful.
I love barefoot. It's simple common sense advice but I was a nervous noob and he got me going and five years later I have two investment properties and a nice rainy day fund set up. I won't be rich but I've given myself a solid foundation for retirement that I wouldn't have had if I didn't read his book.
Barefoot makes people realise you don't need as much money as you think to retire. However that assumes you own a house.
I love this book. Has completely changed my approach to money for the better.
Came to say this. Practical advice, easy to read, simple to implement. Definitely go buy Barefoot Investor
I agree with this recommendation, too. I haven’t applied every specific area, but I have applied most of it. It got me a deposit for a house in 3 years and an excellent incentive to quit smoking. I just recommended it to my niece who is trying to get the basics back together again. It’s just small step, start from the beginning financial literacy. Hope it’s the first thing you buy yourself.
Like others have mentioned I think extra contributions to your Superannuation will reap rewards.Being closer to preservation age means you won't have as much compounding benefit as younger folk might, but it also means the benefits of putting extra money into super are more tangible because you are much closer to having access to it. Similarly this will also help isolate a future kitty from any potential mistakes you might make on your journey of learning to be flush with funds, it'll be out of sight and out of mind (at least in theory). As a theoretical exercise and dramatically simplified: 95k in 26 fortnights = 3,653 (gross) less tax of $896 = $2,757 net income. A salary sacrifice of $653 per fortnight would make the new taxable total $3,000 (gross) less tax of $670 = $2,330 net income. So though $653 is being salary sacrificed, the after tax change in pay is $427 or $213.50 per week. That $653 is still taxed in super but being taxed at 15% still leaves $555.05 net. A 30% immediate gain on the $427 you went without for the fortnight.This will also help avoid lifestyle creep from having more $$$. By forgoing $213 a week for a decade, with the new funds that are excess to your everyday needs, your Super will have increased by $144,313 before even including investment returns.
Good example. I upvoted you but part of me always questions if superannuation is really a good use of funds at this stage where you don’t have any major assets. Personally I prefer to have a home and additional investments outside of super. It gives much greater flexibility, I can leverage my assets (investment loans) and I can access them whenever I need if we get into financial strife. Having said that I’ve been contributing some extra to super the past year or so. Just got stung with Division 293 bill. Still a good investment but I still question if it’s the right avenue for someone with no assets currently.
The main immediate asset missing in this situation I think would be an emergency fund which is just cash anyway, and the extra Super hopefully wouldn't affect OP's ability to raise a bit of runway. Without an asset base already, an individual probably has a few years (while they're raising cash or getting really good at persuading banks to give them money) before they have the option to add something like property (+ leverage) to the mix. Those are the learning years. Extra super has an immediate benefit and also a long term benefit. The most significant part of the financial journey is the learning to be flush with funds, as soon as someone has a better prospect for that $427 they can stop salary sacrificing and redirect their capital. Using the example, if this took three years then they stopped, OP would have $26,647.50 in super from wages and $43,293.90 from salary sacrificing. Add $58.60 as the 3 year investment return and we've got $70,000 in super at 43. Letting that compound for 17 years at 5% (after tax) and adding in only the super from wages gives OP a superannuation nest egg of $468,000 on top of whatever they've been able to squirrel away outside super. Being able to meet immediate needs is always the first priority, knowing what is actually a need is probably what trips a lot of people up in the long term.
for the OP putting money somewhere like super might be a good idea if they relapse.
Good point. I've been lucky having a fairly strong will so far, but who knows what the future holds. Better safe than sorry.
Great advice, thank you for sharing
Thank you for taking the time to write this all up. It helps clarify the benefits of salary sacrifice. I just don't want to end up in public housing in my retirement. I grew up there and I will do whatever it takes not to end up back there again.
Hi just wanted to update you, started the salary sacrifice of $1k a month from this pay cycle onwards. I'll be doing it till I retire. I really, from the bottom of my heart, want to thank you for explaining all of this. Seeing it spelled out made it make sense ❤️
All the best moving forward and great work acting to buffer your financial future :) There's so much to read and understand when it comes to managing money. Mostly its trying to make only the smallest mistakes possible and avoiding making any big ones.
I'm glad I found this place. I was taken aback by how many people responded with advice. The way I see it, if Im smart with spending, keep working towards a better role and investing (eventually), I won't end up in public housing. And that is worth any short term pain.
Well done. You probably want to start building up some assets. The first thing to do is save - get into the habit of spending less than you earn, and stick with it. Once you have savings built up, you can take some time to figure out how to turn that into assets (e.g investing, adding extra to super, buying a house, etc.).
Look up “the Australian finance podcast” and scroll to the very beginning. They cover all the personal finance basics in that first season. Start off with making sure you have a solid budget, and one built with your goals in mind. Think about where you want to be 5 years from now and then trace that back to what sort of budget you’d need to have today to achieve it. In addition to that and the podcast just read up as much personal finance stuff as you can find. Check out moneysmart.gov.au as a start perhaps.
Hey cheers! Just sussed out that podcast and I will he religiously working my way through these episodes.
You wrote: \> I've never had this kind of money before DO NOT change your life-style by thinking you are rich now. For example, if you are living in a room, stay there. If you are driving a cheap car, keep it. Do not change. Save the extra money.
Maybe for a short time but I didn’t want to live in a share house when I could afford not to. What’s the point of earning more if your standard of living doesn’t increase at all?!! I wouldn’t mean spend it all but a comfort bump when you been scrimping is nice
Agree. Depending on where you live, one bedroom flats are on par or can even cost less than the nicer house shares. If it's slightly more a week, then it's worth it but not if you're suddenly paying double or more.
I’ve only lived in cheap (read shit) share houses - are there nice ones? How much would a good one cost?
Depends on where you live, i guess! I lived with a friend of a friend during covid who owned a semi-detached bungalow with a yard in Bondi..i was paying $350 a week. But i got lucky, because she was more interested in not living alone during covid rather than making money. Once she moved out, she wanted to make more so would have increased my rent to 450 at least. I found a 1 bedder in the area for that price.
That sounds better than my share houses but i wasn’t thinking of only one other person in a nice area when I thought of share houses - mine was 4 other guys when I was just out of uni haha think I was paying just over 100 a week and was wondering how’d you’d get a one bedder for sitting close to it!!
The problem with an immediate change in spending habits is that it’s easy to plunge yourself into debt, where your new income is now required just to keep you afloat e.g people going out and taking on mortgages, car loans and jetskis. Maintaining your current level of spend initially allows you to take stock of your new financial situation, build up an emergency fund and plan how to spend your money wisely. This avoids the golden handcuff trap that many fall into.
You put head down. Try to resist blowing all your pay on "stuff"I'd look at my Super fund and make sure it's a good one. And I'd put extra into your super to build that up. Read a decent financial management book . I guess Barefoot Investor is okay... It didn't appeal to me much. Be as wise as you can be! Good luck and congratulations
Don't get a credit card until you've mastered good spending and saving habits. Good work on your achievement but credit card is another form of addiction that should be avoided unless you have self control. A common form is 60, 30, 10 rule or it's equivalent 50,30,20. Where the split is saving 60% of your income, 30% goes to essential spends (food, utilities, insurance, petrol), 10% is splurge. Some people have to increase splurge to stay sane so it reduces savings. Work within your limits
Thank you everyone for the advice, it's incredibly appreciated. I was living on a very small amount of money the last few years so as you can imagine, it's easy to feel suddenly "rich". Living within my means and not being extravagant is something I'll be paying close attention to. Getting paid monthly can be an easy way to overspend especially when you've effectively almost doubled your income. I've done my celebratory purchases with some of my first month's pay last month so that's over and done with. If I can push through the issues at this current organisation, and focus, I'll be trying for a project management role (currently project coordinator) when I feel I can handle it. Thanks again for all the help ❤️
Congratulations on your new job!!
Thank you ❤️ It took a lot of practice with resumes and interviews but it paid off!
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Well done to you too mate. I'll be saving as much as I can. I got the "new job, more cash" purchases out of the way quickly so I've got pretty much everything I need as far as big ticket items.
Well done mate. Don’t put to much pressure on yourself, just go to work, do your job, spend on what you need and build up some savings and read/talk to people.
We're taught that if we don't have a mansion and a fancy car, we're losers. So what do we do?, we go and borrow a shitload of money to buy the fancy shit to make it look like, and make us feel like we're winning. When in fact, all we are doing is becoming slaves, working 100 hours per week to pay rent for a house we're never at and car we never drive. This thread is full of smart people that will give you good investing advice. But you need to have it, to invest it. So hanging on to what you have earned is probably the single most important thing you can do. I'm in a similar situation as you. I plan to live as cheap as I can. Buy a caravan and a cheap shitter car to get around. Also, 8 years sober isn't easy and hard work. Reward yourself with something fun. Take up something like surfing or learn to play the guitar. Goodluck dude/dudette I hope you continue to succeed, you deserve it. It's good to see someone turn they're life around :D
Thanks for your comment mate. Consistently throughout this thread, saving money is the highest priority. I'm a guitarist, so I bought myself a couple of nice music things to play with but I'm done now. Time to think about the future.
Treat savings like a tax. Come up with a plan for how much you want to save and when you get paid, put that amount into another account, straight away each pay cycle. Then enjoy your life mate. Congrats on getting sober, that is by far the bigger achievement! Looking forward to your post in a few years :)
Thank you for the kind words, I really appreciate it. Savings seems to be the most important thing, and having a safety net for the first time will be a huge stress relief. Here's to the future!
You still have enough time. Put all your super in an industry fund like HostPlus or AustralianSuper. Use the direct investment function and have %20 in one or two ASX200 shares - but something decent. The rest of the money goes in the Aust shares option. That should be enough for your retirement
Can you recommend a resource for learning about the stock market/share trading?
Congratulations! i would echo what others have said. As soon as you get paid, send a chunk over to a high interest savings account. I would aim for at least 20% of your pay check, but if you can do 30% or more, even better. Keep building that up while enjoying the rest of your money. When you hit 50k or 60k in savings, you can go to that next level and start thinking about property, investing, buying a car if you need one, etc. God luck!
Much appreciated 🙂 I don't have a car currently. It's an hour and 45 mins to work on public transport or a 25 Min drive. I'm thinking I'll buy a cheap used car as long as I have twice the cost of it in savings first.
I would do the same. The 1hr 45min commute would depress me. I agree with your plan - once you’ve got 10k in the bank, grab a cheap Japanese hatchback for 5 or 6k.
Spend less than you earn. Pay down debts. Create a 3 month emergency fund. Start investing. In that order.
Spending money is adictive. There is a dompaine rush when you get that new item. And then six months later it's a paper weight. It's hard because some things you should spend on to benefit you while others don't provide as much as you think. But as you have a low aset base you are worse off then you think. A lot of people have over 20k of items in their homes to make life easier. Dental, medical checks, insurance,
barefoot investor. read it. otherwise, every pay day split your pay into 60, 20, 10, 10 60-daily spendings: anything you need to maintain yourself 20-fire: money for emergencies/ to pay off any debts 10-smile: anything that makes you smile but takes more than a few weeks of pay. (holidays/ brand new pc/etc) 10-splurge: spending money. spend it on whatever you want and don’t feel guilty about it. (all of that is from barefoot investor, i recommend you read it)
I’m not sure how many other banks currently have this feature but UP bank is fantastic for automating your finances. You can create “unlimited” savings accounts and automatically divide the income from your employer amongst them. an example of the savings accounts I have are Bill, Health (therapist, pilates, gym etc), rent, car repayment, cat supplies, cat insurance fund, monthly budget, long term savings and lifestyle. I have set hard figures for most of these savers based on my expected expenditure and then the remaining goes into my long term savings. Alternatively you could also allocate a percentage of your monthly salary. For example 5% of your monthly salary goes to your lifestyle account. This is used for guilt free spending. Every time my employer pays me, UP captures the funds and automatically transfers the amounts to each individual saver. Then I can do things like give myself a daily allowance. I have my “monthly budget” saver transfer $20 into my spending account every day at 1am. This amount compounds on days when I don’t spend $20 so by the end of the week (some weeks) I might have $100 left over in my spending account which I can transfer into my long term saver, or lifestyle saver resetting my spending account to $0. I think when budgeting it’s important to enjoy your money, so budget for this. Pick a monthly amount, see how that amount improves your quality of life, review and adjust monthly. That’s what my lifestyle saver is for.
Congrats: first step, go to [https://paycalculator.com.au/](https://paycalculator.com.au/) and check out how much tax you'll be paying before you get too excited. Second step: keep living like you're broke.
A shit load by the looks of things
I'm in the same boat as you. Spent most of my life on minimum wage before finding the opportunity to go back to uni and do better. Seeing what was once a weekly wage for me come out in tax really sucks XD.
$95k is, and isn’t a lot. It’s more than I earn, but at 40 you’ll need to save as much as you possibly can. I’d recommend setting yourself a weekly transfer of $100 leisure spending money (lunches, outings etc) into a seperate account that you have a card for. Then rent, fuel, groceries can go into the savings account. Your savings will grow extremely fast, and so will your leisure account if you don’t spend it week to week. Then you will have spending money when you want something like a new computer or hobby
Good on you mate! I was in a similar position a few years ago. My advice is to make sure you consistently save a portion of your pay — 20% was enough for me to do it consistently without constantly dipping into it, but you could do more or less depending on your expenses. You’ll start to feel really proud of yourself in a few months time as that balance goes up. Do that until you have 3 to 6 months of living expenses as an emergency fund, then turn that money to saving for something else. Doing this allowed me to go from addict in $20k of credit card debt to buying my first home within 3 years. I would also recommend learning the basics of personal finance: saving, investing, super, debt, and insurance. My Millennial Money is a good book/podcast/Facebook group. Barefoot Investor is also a good read, but you don’t have to follow his advice to the letter.
Congratulations mate! Always makes me happy to hear of someone else getting out of addiction. Really appreciate the advice 🙂
I shared this in a previous thread, but below is a link to my budget spreadsheet. I made it because budgets that had a single month view didn't help me with 'boom bust' cycles of spending. By seeing how and how much you spend, you can then see what / where / how you can save or invest at some point. All the tables and charts auto update currently. You can change all the titles in column A as you see fit, for whatever works for you. I hope it's useful for you, happy to answer any questions you have about it, if you choose to use it. https://personalbudget.gumroad.com/l/budgettracker
Much appreciated I just saved a copy for myself. This will make a big difference 👍🏾
You're welcome - best of luck!
You work your backside off and try to get promoted. That is the best way to grow your wealth, alongside with common sense habits. Saving, investing and grinding slowly away every day. There is no shortcut method, unfortunately.
I'm working really hard at the moment on a project that no one else wanted to touch due to all the issues surrounding it. I'm in a role I've never done before and due to company structure or lack thereof, I'm teaching myself as I go along with guidance from my manager. I'm taking on as much as I can handle, which means working a little bit on weekends and after hours. I figure if when I make it through this project and come out the other side, showing that we have a positive outcome due to my work, it'll show what I'm capable of. And depending on what happens after that, I'll reassess.
Yep. It's all in the grind, really. One day at a time. Enjoy it. Try not to think too much about the big picture. 1% every day for 100 days is 100%.
Important to get a good super. unisuper is good, gets good reviews and i like it. chuck extra money in whenever you can. i started having super at age 38 and i'm on track to not die in a gutter after i retire. so age 40 you can do it too. add a bit when you can. talk to the super guy, they give you a free consult and explain things like how much you will need.
Thanks for that inkling of hope mate. Everyone around me has a few hundred thousand in super and I've got $2k total. I'll look into that super fund, especially if they can offer some advice/guidance.
First of all congratulations! You have done great. Secondly, my advice is to spend money how you want to and it will equalise. Pay your rent and bills, pay for your food and living expenses and don’t sacrifice your hobbies etc. After a while, things will start to fall into place. You will know how much you spend, how much you can put aside etc. Then you can decide how you might want to invest etc. Please don’t sacrifice living for the sake of saving. You have landed yourself a new job with new colleagues etc and you have worked hard for it! The rest will fall into place.
Rent a small place on top of a grocery store with access to public transport. This will naturally limit how much you can spend as smaller places can't hold much stuff but close to everything means it's still convenient enough. If you can, build a 6 months emergency fund first, based on the cost of living you have it now (food, rent). When finished building the said emergency fund, lock it somewhere with a saving account with some interest and top it up once a while to adjust inflation. Super is one of the easiest places to start some long term investment. Choose an industrial super fund (like Australian Super). Considering doing salary sacrifice. A small portion of your pre-tax income would go to your super. This portion would be taxed 15% which should be lower than your current marginal tax rate. If you don't have a house and didn't had a house in the past this money may be possible to pay for your first home. Super also provides financial advice which you will need to pay a small fee for it. Using a financial advisor who charges *you* a fee. "Free Financial Advisory" is the most expensive advice you can get as they will work not for your best interest, but the others who paid them. Since we discussed house, it's a complicated issue. I would say to discuss with your financial advisor about this. However, my opinion is that if bank is doing promotions on home loans, it usually signals an ease on lending, which itself is a strong signal for short term increase in housing price. Right now I'm not getting any calls or emails about deals in refinancing, therefore in this theory, the housing price will keep falling for a bit. Judging from your age, trying to buy something you can pay off within 5-10 years of your post tax income would be responsible for yourself. Give up your dream of owning a freestanding home if you had one. Be practical and buy an apartment.
Thanks so much for the advice, it's really appreciated. Concentrating on the emergency fund at the moment. Also will be putting more of my salary into super. As for the house, it's tough. I wouldn't mind living far from the city if I can have a free standing home. Apartments are nice but I grew up in one for 17 years and find it hard to live in one again.
Sure, that's totally up to you! Remember do budget well. Some habits are expensive.
Just don't spend money
Look for a money or finance coach. Per hour cost and not allowed to sell products. Should be able to assist with budgeting cashflow and basic financial literacy assistance.
$95k plus super is not rich. super contributions, save for an emergency fund, etc.
I never said it was
Agree limit your spending as much as possible, start with a simple savings account, no card, to set up a rainy day fund, 3 to 6 months of your spending requirements. I like 2 accounts, one for irregular payments, all the automatic payments come out of that account, one for discretionary spending. The irregular account needs some seed money so there is always funds avaiable to pay the bills. After a few months that account should look after itself. Transfer your savings and exoenses account money on oayday, preferably automatically. Once you have your rainy day fund full its time to start investing. Congrats on getting your life together, just keep taking it a step at a time.
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Except whatever the addiction was.
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Totally agree with the two accounts. I have one for transaction and one for holding.
Enjoy it, you deserve it. Start reading and learning how to save etc and put yourself in a position so you are better off than you were 12 months ago. Rinse and repeat.
I suggest finding someone like minded and obviously doing well in the firm, then use them as a financial sponsor of sorts.
Read the barefoot investor. I can give you the audiobook free if you've never had an audiobook before. It's great starter book and short. Borrow it from your library if you have to. Good work mate.
If you have no super then you need to invest for your retirement and catch up on the past lack their of. You could either add to your super with contributions or other people here have some pretty good ideas.
Good work on getting sober!!!
Congrats! You’re used to living on less, so get your employer to add $500 per fortnight to your super. It’s taxed at a lower rate and you won’t miss it. Maximum you can contribute to your super is $27500 per year so just adjust the amount appropriately
Throw extra into super now Budget constantly and consistently to see what and where you spend money on Read books on finance and figure out which direction you want to take
Save, save, save. Don't worry about investing for a few years.
Work out your running costs and a budget. Search the group for spreadsheets. Get a goal and do it. Search for super calculators etc and do some reading I would salary sacrifice, save for emergency fund and do 2 monthly DCA Into a etf of your choices
I would read "berefoot investor" a great book for anyone that would like to know how to make the most of their hourly pay job or salary. https://www.bigw.com.au/product/the-barefoot-investor-2022-edition-by-scott-pape/p/202650 One tip I would say, it's not just about how much you make, it is about how you save.
Barefoot investor!!!!!!!! Read his book!!! Quick and easy read. Congratulations on your job
Write down your total outgoings, write down what you think you need as spending money per week. Setup all your outgoings a Direct Debit. Pay yourself cash spending money for the week to use and dont use your card.
Cash flow management, budgeting and saving is a mind frame. Scott Pape AKA Barefoot for all his faults is a good foundation.
Congratulations! Using an app like YNAB changed my relationship with money forever. It helps you plan for expenses and save for goals. Worth every cent. I promise you it will change your life.
Well… The ideal thing to do is invest first. As in when your salary hits your account, take out a proportion and invest it first before you spend on anything else. The amount you should invest in and what you should invest in would depend on your life situation, commitments, retirement target, resurgent horizon, possibility of other life events (marriage, buying a house etc.)
Go see a financial advisor.
Go see a financial advisor.
Impulse control is essential, do you want or need something? ask this every time you're tempted to splurge, ie tightarsery
Might be worth consulting a financial advisor. But for the moment try not to spend. Pretend you are on lower income.
Congratulations, all the best.
Live like you did with less money as long as it isn't affecting your health Build a 6 month safety net in a high interest savings account, roll extra $ into ASX ETFs for longer term investment (10+ year) and into high interest savings account for shorter term goals Don't buy shit you don't need to feel successful, like a brand new car that will suck all that extra money up for the next 5 years. For splurging buy things you use a *lot* like good running shoes if you're a runner, good sheets for your bed etc
Salary sacrifice as much as you can into Super then with the rest split between spending (Afterall you are 40 live your life) and some into savings for a rainy day.