The Most Important Investment

The most important investment you can make, is in yourself. Educating, up skilling and doing anything else to increase your earning power is really what is going to make the difference when it comes to building wealth. Cutting expenses and saving is only going to get you so far, and while it is important, growing your income is where you will see the real difference. You can only cut down on your spending by so much, but your income can potentially be unlimited.

Get Educated

Have something you are interested in or think you would like to make a career out of? Go study in that area! This may be through an apprenticeship, TAFE, or University. Many tertiary educators now have many courses that are 100% online, meaning you can work it around your current work commitments. It also offers the flexibility to study anywhere in the country as you won’t be required to attend workshops or tutorials in the flesh. Covid-19 has only hurried this on in my opinion and I think we will continue to see more and more courses becoming 100% online.

We are very lucky here in Australia that we don’t have to pay for university upfront. Instead, you can take on a HECS-HELP debt, which is an interest free loan that you only start paying back once you start earning a certain amount. This is a great way to get educated, and then once you are earning a solid income you can start paying it off in small amounts.

You pay your HECS debt off as a proportion of your income, so if you are on the lower end of the threshold, you will pay a smaller amount, and if you earn a really high income, you will pay a higher amount. You don’t have to start paying the HECS debt off until you reach a certain salary, so if you aren’t earning the minimum you just won’t pay it at all. It also dies with you, so there is no rush to pay it off. If you never earn another dollar and you die at the age of ninety after a happy life but you still have a HECS debt of $100,000, that just disappears! It doesn’t get passed on to your relatives to be paid, it is wiped clean. How good!

Up-skill

Are you already in a profession/career you love and have the opportunity to complete a training course or further certificate to increase your pay or get a promotion? Do it! Speaking to your employer about what you can do to do upskill and add value to the business you are working for shows great initiative and will no doubt make you stand out. Not only will it potentially help you to get a promotion within a business, it will also increase your employability if you want to move somewhere else and will give you room to negotiate for a pay rise.

Start a Side Hustle or Business

The best way to make more money is to work for yourself! Create a side hustle that you can potentially turn into an income stream. Is there anything you are interested in or already like doing that you could make some extra cash off of? You may not want it to become a full time gig, but doing something on the side can be a great way to make some extra coin. If it is something you want to turn into a full time job, starting it off as a side hustle while keeping a secure job is a great way to start. If it fails you still have your job to fall back on, decreasing the risk. If it does boom and become successful, once you have the customers you could cancel your job and be your own boss!

How I Have Finally Employed This

I am going back to university this year! I am practicing what I preach and am investing in myself. Finance is something I am really passionate about, and I have finally decided it is what I want to pursue as a career. I have been delaying it as I didn’t want to have another HECS debt as I have just paid mine off, and didn’t feel I could commit to full time study while working full time. I finally decided to take the plunge, I am working part time so I can study full time, and I will have a HECS debt again starting next year! I reminded myself that I am a good investment, I have plenty of working years left and I want to do something I love. If that means some short term pain for some long term gain then so be it. If you have been thinking about going back to university or changing careers, take this as a sign it is your time to do it! If it is going to make you happier, make you more money in the long run, or you are just ready for a change, go do it! There is no time like the present.

I am starting a bachelor of business, majoring in financial planning. It is a University of South Australia degree, and is based 100% online. As I am based in Mount Gambier, I am unable to attend the campus in Adelaide and therefore the online course suited me best. It also means I can be very flexible with work, and base all my university studies around my job.

Uni SA has plenty of online courses so if you were considering going back to university but work full time, this may be a great option for you!

The most important investment we can make is in ourselves. Never feel guilty about spending money to get educated or up-skill. Our ability to make money is going to determine how well we can live in the future.

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Net Worth End of Year Update

2021 Summary

This was my first full year of tracking my Net Worth. I started tracking it when I first bought my house, which was in July 2020. While covid-19 sucked for me personally, I was lucky enough that it actually really fast tracked my finances- which is more lucky than most. Thanks to my work in a needed field, there was an abundance of work as a paramedic and I was able to complete a lot of overtime and fast track my goals. Since March 2021 however, I have been working only part time, which was initially so I could play for the Mount Gambier Pioneers in the NBL 1 South Conference. While this did take an impact on my finances, I feel so lucky to have been able to play. It took a lot of commitment, but meant I got to play against some of the best basketballers in the country, including a few Tokyo Olympians here and there. Not many people have the opportunity to ever do that so I am super thankful.

yeah the girls

Even though the basketball season is now over, I have decided to sign up to an extended part time contract. My mental and physical health is much better when I am at work less, and this contract is also days only, meaning I do not have to do those gruelling night shifts. My life is better for it, and you can’t put a price on that!

Despite a significant decrease in pay, I have found I am even better with my finances now than I was before. Whether it is the blog that is helping to keep me accountable and focused, or the fact that I have less money which makes me care for it more, who knows! All I know is I am feeling very motivated and dialled in with my money, so I am super excited for the next year.

Before I focus too much attention on the year to come, I want to look back on 2021 and reflect on how I did with my finances.

The Beginning of 2021

As I said earlier, the second part of 2020 was a good financial time for me (we will not delve into the personal stuff). I was working a lot, saving lots of money, and had absolutely nowhere to spend it thanks to state and international border closures. Therefore, in January 2021, I was in a good position. I had purchased my home six months ago, so was well and truly settled in that, I had built my emergency fund back up to where I wanted it, and was ready for the international borders to open (lol).

Here is a graph of where my money was sitting:

Home Equity
I was able to put down a healthy 20% deposit thanks to a combination of cheap rural housing and a slow housing market due to the start of the pandemic. When I bought my home there were fears the market would drop 30% by the end of the year. Turns out the market did the complete opposite and I was lucky to have bought when I did! Having a long term focus was the true reason I bought when I did and why I benefited from that.

Superannuation
As an employee of SA Ambulance we are required to make additional payments to our super. As a result, for the last five years I have been employed, my contributions have been set at 14.5% (10% by the employer, 4.5% by me). While initially I would have loved that 4.5% coming into my bank account instead, I’ve realised just how beneficial this money has been for my super. I probably have more than most 25 year olds in my super, and a lot of that comes down to the extra contributions.

Share Investments
My investing was pretty erratic in 2019 & the start of 2020. I was regularly contributing but didn’t really have a set plan. I was still learning as well so what I was investing in was a bit all over the place. While it was mainly still ETF’s, it was quite a few that ended up overlapping. By the end of 2020 I had started to invest more regularly and was seeing success because of that.

During 2021

Thanks to the pandemic, life is pretty uncertain, so I was sitting cash heavy throughout the year. I was also saving to buy a car, which recently have been very pricey thanks to what seems to be global shortages. With no end in sight in regards to border closures, any extra income I received I was channelling into investments instead of holiday savings. I also moved to the platform Pearler, which allows you to set up an auto-invest function. This means it takes the thinking out of investing and helped me regularly contribute and invest in shares. As a result of these, my investment portfolio grew significantly throughout the year. The long term plan is to grow this enough that I can live off of the dividends, so this is a great start!

I have only been paying the minimum off of my house here in Mount Gambier as I eventually intend on converting it into an investment property. Debt for an investment property is tax deductible, so I don’t see the point in paying that down at this stage. My interest rate is also only 2.7% at the moment, and I can get a better rate of return by using my additional cash investing in the share market rather than paying off my mortgage.

Any cash savings I do have are sitting in my offset account anyway, which means I am paying less interest while that is there.

The End of 2021

At the end of 2021 I find myself in a good place. I found a car a few weeks before the end of the year so managed to tick that off in my 2021 goals. I now have a sound investing strategy, and I am consistently investing in 3 different ETF’s that cover the best companies in the world. Borders are open (kind of) which means travel will hopefully be on the cards for this year. I am part time and plan to take full advantage of my time off and open borders to explore more of Australia and tick some stuff off the bucket list.

2021 Net Worth Summary

Here is a graph of where my money is now sitting:

You’ll notice my cash has gone down significantly (thanks to my new car), and my home equity has also decreased in %. In fact, my home equity has increased but thanks to the large increases in my share portfolio and super, they are now a larger portion of my net worth. I am also waiting to have my house revalued which I think is now much higher than what I bought it for, so that will be interesting to see how it effects my net worth.

My total net worth increased in 2021 by a total of:

$56,225

Where did most of this come from ?

Income from my job
Investing returns
Dividends
Board/Rental Income

Fingers crossed this year is going to be just as successful- money or otherwise!

New Year, New You

The start of a new year is a great time to make some new goals!

So, before Jan 2022, have a think about what you want to achieve in the next year. It doesn’t necessarily have to be about money, but I think it’s a good idea to have at least a couple of money goals. What are some small goals that you can start to implement now, that will help you overall in life? Where do you want to be at the end of next year? Have a think about it and write it down.

I believe where people most go wrong with New Years resolutions is that they aim way too high and try to drastically try to change their lifestyle from January 1st. Sure, you may be able to stick with it for one week, but soon you will get frustrated or miss one day and throw it all away. The important part about setting these new years resolutions is to make sure they are achievable, relatable and realistic for you. If you are $20,000 in debt, saying you are going to save $1000 a week and have that paid off in half a year is probably not achievable and will have you feeling worse than when you started. Instead, aiming to pay that debt off by the end of the year if you have a good salary may be a more achievable goal!

When thinking about goals, it is helpful to have a time frame in which you want to achieve them. I’d encourage you to think of a weekly, monthly, half yearly and end of year goal that you want to achieve. It doesn’t need to be anything drastic, but should be a small change that you can implement or start to work towards on January 1.

Here are mine:

Time Frame	Things to do:	Goals:
Weekly	– Continue to follow my budget – Continue to transfer $200/week into investment account – Any overtime money- one half goes to investments	– Start to build my emergency fund back up – Be mindful of my spending- especially with takeaway food and coffee
Monthly	– Calculate net worth – Complete minimum one overtime shift a month	– Increase my net worth each month
June 30	– Revaluate goals – Revaluate budget	– Another 10k invested – Have 12months worth of expenses in my emergency fund
December 31st	– Reflect on the year – Create new goals	– Another 10k invested (20k total for the year)

My budget and cash flow sit pretty good now so I only need to really go over it every 6 months, this may be different for you if you are just starting out so maybe you need to do it every month. I also don’t have any major financial goals at the moment like buying a home, so my main focus is just continuing to consistently increase my net worth and also increase my cash reserves for when I finally can travel overseas.

My goals are pretty boring for this year, which isn’t always a bad thing! They are very simple in that I just want to continue to increase my investments and also build up my emergency fund. The goal of 20k invested by the end of next year takes into account my regular payments of $200/week and also assumes I will contribute extra from overtime completed throughout the year. The goal of twelve months of living expenses saved in my emergency fund is there for when I decide I want to do a big holiday or do an extended trip. That way I can go without working for a bit if needed and still have money to fall back on.

If you feel you need motivation to hit money milestones, goals are a great way to do that. Finding something that you care about is a great way to build up the motivation to achieve that goal. It may be a holiday, a home or a car, whatever it is that gets you excited or keen, use it to get you kicking goals! For even more motivation, maybe have your goals stuck up somewhere you will see them everyday, like a walk in robe or bathroom! Even just a picture of a dream home or car, or the Eiffel tower might keep you on track. Seeing your goals every day may have you feeling more motivated to achieve them. Another great idea is to get an accountability partner! This may be an actual partner or spouse, friend or family member. Share your goals and help each other to keep you both on track.

Now is as good a time as any, get your notes app out or go old school and grab a pen and paper, and write down some goals for 2022!

Delayed Gratification

“Good things come to those who wait”

Many of us have probably heard this quote before, and it is basically just describing delayed gratification. We will explore more below.

Instant Gratification

As humans, we are designed to always choose instant gratification. We very much live in the present and will almost always want to do something to get the instant reward. Many of us would have seen the experiment with kids and gratification. They have one marshmallow placed in front of them, and if they wait long enough they will be given an extra. Many of the kids eat it straight away, even if they know another one will eventually be given to them.

Although it seems like common sense to wait if we are getting a better deal, unfortunately our brains just aren’t wired that way. We want things now, and social media and advertising is only making this worse. The thing is though, if we can delay just some of this gratification, it will benefit in the long run. This applies to most aspects of our lives, but especially applies to our finances.

Delayed Gratification

Delayed gratification is very relevant when it comes to our money management and is super important. Putting money away for ourselves early really helps set ourselves up in the future. It is easy to put it off and leave it for your future self, but the longer you leave it the harder it is to build your wealth. Making short term sacrifices early gives you a chance at a much better life in the future.

The more you sacrifice and put away now, the better off you will be thanks to compounding. The biggest component of compounding is TIME. The sooner you start investing for future you, the longer your money has to work and grow! $100 invested today is worth $222 in ten years time. $100 invested today is worth $2427 in forty years time!!! Both of these calculations are assuming growth of 8% per year, which is what the Australian share market returns on average. If you put in the hard work early, make sacrifices and delay some of that gratification, future you would be much better off because of it. If you leave it twenty years and blow all of your money now, future you will be $2k worse off per $100 you eventually invest.

$100 starting investment, 8% interest/growth over 10 years: $222 total

$100 starting investment, 8% interest/growth over 40 years: $2427

*Disclaimer*

Despite everything I just said, it can’t be all about future you. You still need to enjoy the present and live life. In my opinion, you can have both! Decide what is worth sacrificing and what isn’t, and save accordingly. You will need to make some sacrifices to look after future you, but you also don’t have to cut everything you love out! Good luck and if you want to get started investing but don’t know how- send me a message 🙂

Making the Most of a Low Income

Earning less than $40,000? Read on for some tips that will hopefully help you in controlling your finances.

Be Smart With Your Money

• Track your spending
  • Learning how much you spend will make you more conscious of where your money is going and how you can cut down on some expenses.
    
• Pay your bills in instalments
  • Rather than paying bills annually, you may be able to pay them in monthly instalments instead. Or, if you have a good budget in place, it may be worth paying yearly if it will work out cheaper than paying monthly.
    
• Save money on your grocery shop
  • buying canned beans, vegetables, and cheap staples like rice and pasta to make budget friendly meals. Cutting out meat can be cost-effective as well as being good for the environment and your health.
    
• Can you find cheap accommodation?
  • Can you move back in with family or friends to save on rent and utilities? Can you live in a share house to split the payments? Cutting down on living costs will be the best way to cut out spending quickly.
    
• Have an emergency fund.
  • A cash buffer, or emergency fund, should be a priority to build up if you are on a low income. Having a buffer means if you do have any unforeseen expenses come up you will be able to pay with cash instead of having to dip into credit or get a personal loan. Any amount of cash is better than none, but aiming for at least 1-2k or ideally three months of expenses will leave you in the best position possible.
    

Increase Your Income

• Check if you are eligible for government benefits and payments.
  • Centrelink
  • Housing, aged care and disability services
• Check for state government grants, concessions and assistance.
  • Depend on the state in which you live in, each state varies.
• See if you can pick up a second job for additional income.
  • This one is self explanatory, see if you can find extra hours on week nights or weekends for additional income.

Find Other Options for Low Income Earners

• See if you are eligible for the no interest loan scheme (NILS)
  • No interest loans are provided for individuals and families on low incomes for essential goods and services for up to $1,500. This may include things such as fridges, washing machines, car repairs and medical procedures. The repayments are set at an affordable amount over 12 to 18 months.
    
• Have a look at the good insurance company for cheaper insurance
  • They offer affordable and simple insurance policies for people on low incomes, in conjunction with some of Australia’s largest insurance companies.
    
• See if you are eligible for the low-income superannuation tax offset (LISTO)
  • If you earn $37,000 p.a. or less, you may be entitled to a LISTO. This means that the Australian Government will contribute up to $500 to your super balance per year. There is nothing you need to do on your end, if you are eligible the ATO will pay the money into your super.
    
• See if you are eligible for the Saver Plus Program
  • Saver plus is a financial education program for families and individuals on a tight budget to develop-life long savings habits. If you reach your savings goals you can have your savings matched by up to %400 by ANZ for education items for you or your children’s education expenses.
    
  • To be eligible you must:
    • have a health care care or pensioner card AND an eligible Centrelink payment.
    • Be in school yourself OR have a child in school
    • Have regular income from work
    • Be 18+ years old

Resources

https://moneysmart.gov.au/budgeting/managing-on-a-low-income

https://www.bsl.org.au/services/saving-and-managing-money/saver-plus/

https://goodshep.org.au/services/nils/

https://goodshep.org.au/services/insurance/

https://www.ato.gov.au/Individuals/Super/In-detail/Growing-your-super/Low-income-super-tax-offset/