BY RYAN TAYLOR, FINANCIAL LITERACY FOR YOUNG AUSTRALIANS*
Many students upon completion of high school choose to venture off on a “schoolies” trip with friends, a trip abroad, university studies, or immediately land a job and start working. Regardless of which option they choose, being prepared and having the financial know-how for their future can play an important part in their personal development as more independent young adults.
One of the most important things to consider is job readiness. To be job-ready as a school leaver, from a financial perspective, has multiple aspects that need to be considered.
Having a tax file number (TFN)
Without a tax file number, students are not eligible for HECS-HELP and cannot borrow money from the Australian Government to study at university or TAFE. Additionally, without a TFN, all employers are required to withhold the highest marginal tax rate (roughly 49%) of all earnings made until an individual TFN is supplied. Obtaining a TFN requires an in-person identity check and takes time to be processed. Make sure this is done well in advance of any prospective employment.
Having a bank account
Almost all jobs now require a bank account to be provided upon employment for employees to be paid, with very few still opting to pay cash in hand. It is important not only to create a bank account but to find one suitable for their needs.
Many banks have offers for students either studying at high school, university, or both, which waive monthly or annual bank fees. As well as this, make sure that there are no penalties associated with making regular withdrawals and consider the overdraft terms if this is pertinent. If they wish to have an account which is purely for savings then maybe there may be a different more suitable account than just a transaction account.
Having a superannuation fund
The importance of having only one superannuation account is absolutely vital for young adults, due to the large fees relative to low-income that students often experience.
Retirement savings are extremely strongly dependent upon investment returns, which are compounded for decades, to give individuals an income source to live off upon retiring. Many young people have the opinion this is something they will worry about when they want to retire, but by then it’s far too late.
Considering superannuation and taking the time now (less than one hour a year – I promise), can provide an extremely large benefit for years to come. Like a bank account, the important things to look at include low monthly or annual fees, low investment return fees and a reputable history of well-diversified investments and solid returns. The importance of carrying over the same super account between different jobs rather than using an employer’s default fund is also absolutely vital, as fewer accounts mean fewer fees.
These are just a few small things to consider, aside from the basics of resume building and work experience, before diving head first into future studies or careers.
* Ryan Taylor is the founder of Financial Literacy for Young Australians (FLYA). With a passion for education and finance, he aims to inspire others, sharing the knowledge he learned over the past few years of dealing with his own finances.
For more information on Financial Literacy for Young Australians programs and services go to the website.