Many university graduates in Australia finish their studies with mixed feelings. They are proud of their hard work and achievements, yet daunted by the many challenges ahead. Disruption, housing affordability, and global instability are all big issues. Forming a plan to navigate these challenges is as important as getting that first job.
A vital plan
A plan needs to include personal finances and good money management. The world we live in today provides many new opportunities to recent graduates. Yet, investing after uni is also more complex than ever. More options can be great, but also overwhelming. They often leave a new investor unsure where to begin building their wealth.
To help you invest, we’ve put together a step by step brief. Let’s look at the path you can take for growing your wealth alongside your career.
Step 1: Start a savings plan
Few students make a great deal of money while they are studying. Graduation and your first job bring the chance to earn more, and also the ability to save.
Don’t already have a solid saving habit in place? Now is the time to set up an easy and effective savings plan. One of the most popular ways to do this is to automate the payment of your salary between two bank accounts. The majority of it can go into your main account for ongoing bills and spending. The rest goes to a second savings account. This helps make regular saving seamless. Having your savings ‘out of sight, out of mind’ helps you avoid the temptation to spend more than you should.
Specific ways to save will vary from graduate to graduate. Here are some common pitfalls to avoid:
The exact percentage you save will depend on many factors, but will be influenced by the next step.
Step 2: Budget for your future
Every uni graduate knows they need to budget. Most graduates are familiar with debt and are paying off their student loans. An important step is looking a little bit further down the track to the future now you have a chance. Great investment opportunities can be made over time with the money you save from reducing your current expenditure. Now is the time to plan for the future and it’s vital to get an early start to growing your long-term wealth. An early start makes the job so much easier. It’s a great opportunity to enlist compound interest as a lifelong ally. Seriously, if you don’t do anything, you will kick yourself later. Compound interest is astonishing in the way it can work for your wealth. Be sure to understand its power (for both good and evil). It will form a critical component of your financial education.
A budget by no means suggests that you should forgo every little bit of luxury or fun. If you’ve landed your first job, then this is a new and exciting time in your life and career. Some money should be set aside to ensure you’re rewarded for all your hard work. Taking time to enjoy the fruits of your labour is important. It keeps you engaged and keen in your financial future long-term.
Establish good habits early and building an investment foundation will allow you to go from strength to strength. Failing to convert your savings into investments is a common mistake. It can make things much harder for you down the line.
An apartment, a shiny car, and around-the-world trip all sound wonderful. The expense alas can set you back years.
You may find these sacrifices frustrating, especially if some of your uni friends are happily spending up big. Remember, you will be the one laughing loudest when their bills start mounting up.
Now is the time to make a difference to your life and not be average (average blog). If you get start sooner, you will end up being able to enjoy a lot more rewards later for the same or even less money.
Why not improve your budget and:
Step 3: Decide what you want in 5 years and make a plan to get it
It is often said ‘dreams are goals with deadlines’. The same applies to investing after uni. It’s great to having a savings plan in place, but it’s also necessary to have some clear goals for why you are saving. Otherwise, it’s easy to lose sight of your longer term goal, and stagnate. Few people I know can afford to stagnate when it comes to finances.
It is important your goals are realistic. It’s great to be ambitious. Having a goal that makes you reach and stretch a little, can be a great source of extra motivation. Energies that were once spent on getting your degree can now be focused on achieving your next ‘big goal’.
Avoid the temptation to over shoot the mark with goal planning and ending up feeling like a failure. In the past, buying a home was part of the great Aussie dream and the major goal for most people. Buying a house is too expensive for many Australian these days. Many Australians now see the stock market as the key starting place for building wealth. After successfully investing in the markets, you may well secure that home deposit quicker than you think.
Investment Education
Financial investing is a lot like university. There are many options, and many roads you can. At its core the investment plan you make will be personal to you. Lecturers and tutors have served you well at university. For the next chapter of your life, it’s time to seek an education with an investment professional. As Benjamin Franklin said, “An investment in knowledge always pays the best interest.” Relying on other people’s investment advice can be fraught with danger. Make your own decisions after getting a sound financial education. Don’t give your financial power away to others.
As well as your new career, good investing needs to be an ongoing and core part of your life after graduation. The world’s greatest investors know to build wealth they need more than one form of income.
Young adults leaving university may have challenges, but more than ever, incredible opportunities. Be bold. Seize the chance to get a great financial education today. You’ll find it pays dividends across your life and career ahead.
Grow your financial skills. Register with us now to build your wealth portfolio over the next 5 years.