An economist is someone who didn't have enough personality to become an accountant.

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Money is like manure. If you spread it around it does a lot of good. But if you pile it up in one place it stinks like hell. - Jr Murchison

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How to manage money for under 25’s

 Quick steps to manage money

  1. First part time job
  2. Savings and separate bank account
  3. First permanent job – buy car etc.
  4. Do without a credit card for as long as you can.
  5. 5 – 10% of wage to go to savings
  6. Have a long term vision – small targets (save to go overseas)

First part time job

Starting out on your first part time job can be a daunting task but usually with the help of friends and family it can be both challenging and rewarding. The first pay going into your account makes you realise you are part of the workforce and the way you control your new income can be the path to future financial freedom. If you can get into a habit of saving more than you spend you will be well on the way to being financially savvy.

Savings and separate bank account

With the help of family (if you’re under 18) set up a new bank account that you can put some of your savings in that is separate to your everyday banking account. How much should you save? The answer is as much as you think you can. I used to put all my money into a separate bank account and only take out the minimum money I needed for everyday expenses. By doing this you’ll be surprised how quickly the amount adds up.

It’s also very important to think about a savings goal that may be in the future. Is there something special to save for that you need to consider? By writing a target price and timeline down into smaller sections it can make a daunting task seem more manageable. For instance, you may want to save for a stereo for your bedroom that’s $700.00. By telling yourself that you aim to buy it within 6 months you can do the sums – $700 divided by 6 = $116 per month. $116 per month sounds more manageable than having the $700.00 total to think about!!

Forget a credit card !

One of the best pieces of advice for young savers I can think of is to last as long as possible before being tempted by a credit card. They can be a very convenient way of easy access to money but they can also create a financial nightmare if not used properly. Unless you pay the balance off in total every time a bill arrives you will be charged a large amount of interest on all your purchases. Before long you are paying interest on interest and quickly a small debt can spiral into a large debt. Use debit cards instead as they require you to have the cash already in your bank account. You can’t spend money you don’t have!

First permanent full-time  job

Once you get your first full time job you may think it’s time to party! You’ve got so much spare money all of a sudden especially if you’re still living at home with your parents. But wait!! Along comes the shock when you decide to move out or buy a car and all the related expenses mount up. A medium sized car can cost you about $120 per week to maintain and run. Moving into a first rental flat can cost up to $2500.00 (rent in advance plus bond) and $350.00 per week for rent. That may sound a lot of money at first but if you start breaking it down into small parts as I mentioned earlier the task seems smaller. Saving for $2500 over 6 months would be $96 per week.

10% of wage to go to savings

I know this sounds like a massive target after spending all the money setting up a flat, running a car and going out to have fun but if this can become a habit you’ll be ahead of most other people. At first, if you can’t manage 10% of  your wage try for at least 5%. I’ll include a calculator below so you can do some calculations but you’ll be amazed how quickly the cash can add up. By saving $100 per week for 10 years @ 7% the amount adds up to over $70,000.


Now type in 30 years and see the result – $485,150. Now I know many of you will say,”Oh yeh, great! Like we’re going to hang around for 30 years to see if our money adds up?”. Believe me from experience –  30 years will go quicker than you think and unless you have a good plan in place, you’ll end up like most people. Wondering where the time and money went.

If you start with a good plan  – like the one above. You’ll be guaranteed success!!

Remember it’s Your Savings.

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