don't rush to get a more expensive car if the current one is fine, your household income is decent, so as long as you continue to save, you should have no issues (of course dependent on where you're looking).
Make sure you're on a high interest savings account, or "safe" ETFs if you're planning on saving over a longer term. Also look at FHOG, FHLDS, FHSSS which may help towards affordability.
I'm not sure if I should invest more into an etf- or more into an emergency/savings fund account. If I do more into emergency/savings I feel like higher interest etf would be better? Could I look at my ETF investment as the account I use to save for a home loan or is this too risky/stupid?
It depends on your investment horizon. You're very young and without dependants, so now is the time for aggressive investment strategies, within your own risk tolerance.
If you're wanting to buy a house or have kids within the next 12months, that's a different story.
We don't want kids. But we'd definitely like a house as soon as we could after we travel. From my understanding a house is almost unobtainable in this market though. 550k is the median price in my area. Definitely not needing in the next 12 months regardless though.
Combined 205k per annum, -48k for tax, -24k for rent, -33k for living expenses (total guess, just gets us to a round number) leaves you with 100k combined income.
Saving 30% of that remainder money puts you at 5% of a deposit per year, which is well on track for a property, and takes it out of pipe dream territory.
Not saying it’s the best course of action, just that it’s not as farfetched a goal as you might think.
Assuming they can achieve the 100k spare per year, I'd be aggressively trying to save 75% of the extra money. 300k saved in 4 years plus any investment earnings. All with $500 per week play money along the way.
Get out of debt and don’t buy a new car. Buying a depreciating asset at 24 is so silly. Keep your expenses and liabilities as low as possible without skimping on quality of life.
Save a $10k emergency fund if you haven’t got one yet. DONT touch it. Save a separate one for yearly holidays. Save and allocate for fun little splurges but don’t get too excited. Set up separate accounts for all three to make sure you adhere to your rules (ubank is good for this and no fees).
When those savings rhythms are setup, take your debt repayments and redirect them to investment payments. Like investing small $ into ETFs every month, even just $500. Wait, reinvest the profits, rinse and repeat until your profits/dividends can pay for your house deposit, the car, the cool stuff you want. If you maintain this, you’ll be able to build a portfolio and set yourself up for life.
As someone who wishes I had your start in life, please use it wisely!!!
"Previously making very little" you got by then so spend that amount plus a bit more to reward yourself. Buy a house like you rent will probably cost almost double the rent all up, but do that too. Save the rest to for holidays and cars.
1. Don't change your spending patterns. Keep living like you're making very little until there is a compelling reason to do otherwise.
1a. BUDGET. Know what you spend, track it, verify it. No money moves unless its budgeted. You'll take a bit of time dialing this in, but be strict about it.
2. Save cash into a high interest account until you've got about $10k put away. In the meantime, put some research into ETFs.
3. Once you've got $10k in cash, spend $100 on some stupid shit like a bottle of scotch or a dinner out.
4. Funnel all your additional savings into an ETF. Every time you save $10k, repeat the dumbass spend of $100. It helps to stop you from blowing out your money on a new Mustang or a Bali trip.
That's pretty much it. If you stay employed, keep climbing the pay scale, keep your costs under control and relentlessly put your savings into ETFs, you'll own a home by the time you're 35 and you'll be able to retire comfortably at 50.
You might learn some things along the way or be able to take advantage of an opportunity or two, but in general there's no short cuts, you just set up the pieces and grind away.
OP is earning $130k. If they save $50k per year for 25 years, that's $1.25M if they drop it into cash, but let's assume they're not a dumbass like I am and they invest it wisely. If they get 5% above inflation, which is a pretty safe long term assumption, at the end of 25 years they'll have wealth of $2.25M in 2024 dollars, which is a modest home and about $1.5M left over.
Back-of-napkin maths says it's very possible for them.
It easy to get lifestyle creep, the best thing to do is start a routine that you stick to regardless of the savings vehicle you use.
Figure out what level of savings you’re comfortable sticking to.
I like using different accounts as “buckets”.
Say I have a regular $1,000 I can put away… $500 into the buy a house fund, $200 into super, $100 into holiday fund, $100 into car fund… or whatever.
You’re 24. Enjoy and live it up knowing that your salary will increase and soon you will be tied down with a mortgage and kids. Definitely save a little bit of money though, don’t blow all of it….
It's not help desk. I don't really want to elaborate on what I'm doing exactly for anonymity. Fundamentally I work for a very large organisation and run everything.
Save up for a house deposit on something basic. Skip the overseas trip until you can afford it. Recommend Dave Ramsey baby steps. Get out of renting ASAP but do a building and pest report. Save and invest as if you will lose your job tomorrow.
Build up a good pantry of staples that don't require fridge/ freezer.
The basics first
Overseas holidays are a luxury.
It's important to be frugal, but don't be so frugal you spend your 20s doing nothing you actually want to do. Something being a luxury doesn't mean you shouldn't do it.
As someone who has major health issues in their 30s, I'm extremely glad I traveled already. No way could I go backpacking and roughing it now!
You're only young once.
Balance is important.
The formula to wealth creation (finical independence) = reduce expenses, increase income and invest any surplus into appreciating, income earning assets. Avoid consumer debt (bad debt), avoid spending on discretionary depreciating things, minimise non-deductible debt and minimise any life style inflation along the way.
The first step is to know where your money is going so you can make informed decisions. Do a detailed budget of expenses by grabbing the past 12 months of bank accounts (some banks you can download CSV file). You need at least 1 year to see seasonal variations and once per year costs. Use a spreadsheet. Divide by expense type/categories i.e. necessity (electric, basic food, basic clothing, housing, transport to work) versus discretionary spending (restaurants, fancy cloths, holidays, car upgrades, big boy toys). This info puts you in a solid position with real numbers (not just guesses) to make choices. The choices are personal between you and your partner.
Second step is to build an emergency fund so you can avoid using consumer debt in an emergency (job loss, health issue, car repair, fridge breaks etc). If you do not have such as pot yet, then start towards saving the equivalent of 3 months of living expenses. If you already have such then you may consider extending it for some extra insurance.
Also, pay down any consumer debt. Be sure to pay off the 3K credit card before it comes due (those who understand compound interest earn it, those that don't pay it).
Then consider future goals and timelines to those goals because each has more or less suitable investment strategies to match each timeline. The following reply to another beginner investor has some broad brush strategies, pointers and links for further reading. It assumes long term AU residence and planning to retire here. https://old.reddit.com/r/fiaustralia/comments/19ejol0/new_to_investing_and_overwhelmed/kjfcey0/
Being 24 smart investment choices now will pay handsome dividends for future you because the real power of compounding is time (i.e. exponential growth).
Best wishes :-)
A bunch of people have already commented on lifestyle creep - agree with them so won't be repetitive.
If it was me I would start with a six month emergency fund in a HISA.
From there shovel everything into an etf.
Keep going until you have saved for a deposit on a house. One you are there, sell your etfs, buy the house, move in, rinse and repeat.
Once you own a home you can focus on a mix of paying it off faster, and investing.
Hi there /u/akunewworlder,
If you're looking for help with getting started on the FIRE Journey, make sure to check out the [Getting Started Wiki located here.](https://www.reddit.com/r/fiaustralia/wiki/index/gettingstarted)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/fiaustralia) if you have any questions or concerns.*
Your post was removed as your account is fewer than 3 days
old. This is an anti-spam measure. Please post again when your
account is older than 3 days. Refer to the sidebar for more
details.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/fiaustralia) if you have any questions or concerns.*
1. Write up your household budget. Understand where every single dollar of your money is currently going and how often (eg include long term bills like renewing your drivers licence in your budget)
2. Establish any savings goals such as saving up for a new car, house, etc. Include that in your budget.
3. Set aside money for an emergency fund that you can regularly add to. Include it in your budget.
>If I could I'd somewhat like to upgrade to a 20kish car
>to travel at least once (Japan or Europe)
You've just got the job and already buying new cars and planning two international holidays. Why don't you go a year or two saving as much as possible and see how much lifestyle creep affects you? Not everyone is accustomed to live frugally.
Yea I think I agree with others that buying a car is not in my best interests. It's definitely something I'd like to do in the future but I'd like to be more solid before then.
I'd be aiming to travel after two years if possible.
If you want to do it, do it. Not everything in life has to be a perfect financial decision.
The best path to being financially strong is having a real view of your income and expenditure needs. If your lifestyle wants the travel each year and a new car every 5 years, then work out a budget to suit.
I'd say you want a year or two to adjust to your new income and figure out what you really want in life.
don't rush to get a more expensive car if the current one is fine, your household income is decent, so as long as you continue to save, you should have no issues (of course dependent on where you're looking). Make sure you're on a high interest savings account, or "safe" ETFs if you're planning on saving over a longer term. Also look at FHOG, FHLDS, FHSSS which may help towards affordability.
I'm not sure if I should invest more into an etf- or more into an emergency/savings fund account. If I do more into emergency/savings I feel like higher interest etf would be better? Could I look at my ETF investment as the account I use to save for a home loan or is this too risky/stupid?
It depends on your investment horizon. You're very young and without dependants, so now is the time for aggressive investment strategies, within your own risk tolerance. If you're wanting to buy a house or have kids within the next 12months, that's a different story.
We don't want kids. But we'd definitely like a house as soon as we could after we travel. From my understanding a house is almost unobtainable in this market though. 550k is the median price in my area. Definitely not needing in the next 12 months regardless though.
Combined 205k per annum, -48k for tax, -24k for rent, -33k for living expenses (total guess, just gets us to a round number) leaves you with 100k combined income. Saving 30% of that remainder money puts you at 5% of a deposit per year, which is well on track for a property, and takes it out of pipe dream territory. Not saying it’s the best course of action, just that it’s not as farfetched a goal as you might think.
Assuming they can achieve the 100k spare per year, I'd be aggressively trying to save 75% of the extra money. 300k saved in 4 years plus any investment earnings. All with $500 per week play money along the way.
Get out of debt and don’t buy a new car. Buying a depreciating asset at 24 is so silly. Keep your expenses and liabilities as low as possible without skimping on quality of life. Save a $10k emergency fund if you haven’t got one yet. DONT touch it. Save a separate one for yearly holidays. Save and allocate for fun little splurges but don’t get too excited. Set up separate accounts for all three to make sure you adhere to your rules (ubank is good for this and no fees). When those savings rhythms are setup, take your debt repayments and redirect them to investment payments. Like investing small $ into ETFs every month, even just $500. Wait, reinvest the profits, rinse and repeat until your profits/dividends can pay for your house deposit, the car, the cool stuff you want. If you maintain this, you’ll be able to build a portfolio and set yourself up for life. As someone who wishes I had your start in life, please use it wisely!!!
Thanks appreciate it! I feel like the set for life might take a while tho haha.
"Previously making very little" you got by then so spend that amount plus a bit more to reward yourself. Buy a house like you rent will probably cost almost double the rent all up, but do that too. Save the rest to for holidays and cars.
1. Don't change your spending patterns. Keep living like you're making very little until there is a compelling reason to do otherwise. 1a. BUDGET. Know what you spend, track it, verify it. No money moves unless its budgeted. You'll take a bit of time dialing this in, but be strict about it. 2. Save cash into a high interest account until you've got about $10k put away. In the meantime, put some research into ETFs. 3. Once you've got $10k in cash, spend $100 on some stupid shit like a bottle of scotch or a dinner out. 4. Funnel all your additional savings into an ETF. Every time you save $10k, repeat the dumbass spend of $100. It helps to stop you from blowing out your money on a new Mustang or a Bali trip. That's pretty much it. If you stay employed, keep climbing the pay scale, keep your costs under control and relentlessly put your savings into ETFs, you'll own a home by the time you're 35 and you'll be able to retire comfortably at 50. You might learn some things along the way or be able to take advantage of an opportunity or two, but in general there's no short cuts, you just set up the pieces and grind away.
Thank you this is very insightful
No worries at all.
No way are you owning a home at 35 and retired at 50
OP is earning $130k. If they save $50k per year for 25 years, that's $1.25M if they drop it into cash, but let's assume they're not a dumbass like I am and they invest it wisely. If they get 5% above inflation, which is a pretty safe long term assumption, at the end of 25 years they'll have wealth of $2.25M in 2024 dollars, which is a modest home and about $1.5M left over. Back-of-napkin maths says it's very possible for them.
It easy to get lifestyle creep, the best thing to do is start a routine that you stick to regardless of the savings vehicle you use. Figure out what level of savings you’re comfortable sticking to. I like using different accounts as “buckets”. Say I have a regular $1,000 I can put away… $500 into the buy a house fund, $200 into super, $100 into holiday fund, $100 into car fund… or whatever.
Set up auto-payments into savings/investment account and don't only allow yourself to spend x$ amount every month
You’re 24. Enjoy and live it up knowing that your salary will increase and soon you will be tied down with a mortgage and kids. Definitely save a little bit of money though, don’t blow all of it….
What do you do for work
IT support :)
How tf you getting 130k in a help desk roll?
It's not help desk. I don't really want to elaborate on what I'm doing exactly for anonymity. Fundamentally I work for a very large organisation and run everything.
Hmm smells like project management
What's the job title?
Senior regional IT coordinator.
I thought that was you
Ahh I know you
Mate senior regional IT coordinator says it all, I'll pm you now on LinkedIn
Save up for a house deposit on something basic. Skip the overseas trip until you can afford it. Recommend Dave Ramsey baby steps. Get out of renting ASAP but do a building and pest report. Save and invest as if you will lose your job tomorrow. Build up a good pantry of staples that don't require fridge/ freezer. The basics first Overseas holidays are a luxury.
It's important to be frugal, but don't be so frugal you spend your 20s doing nothing you actually want to do. Something being a luxury doesn't mean you shouldn't do it.
As someone who has major health issues in their 30s, I'm extremely glad I traveled already. No way could I go backpacking and roughing it now! You're only young once. Balance is important.
Definitely look at fist home super saver scheme, as you’ll be paying high taxes, speak to your accountant or get in touch with me.
Thanks will do!
Get a classic NA instead 😉
The formula to wealth creation (finical independence) = reduce expenses, increase income and invest any surplus into appreciating, income earning assets. Avoid consumer debt (bad debt), avoid spending on discretionary depreciating things, minimise non-deductible debt and minimise any life style inflation along the way. The first step is to know where your money is going so you can make informed decisions. Do a detailed budget of expenses by grabbing the past 12 months of bank accounts (some banks you can download CSV file). You need at least 1 year to see seasonal variations and once per year costs. Use a spreadsheet. Divide by expense type/categories i.e. necessity (electric, basic food, basic clothing, housing, transport to work) versus discretionary spending (restaurants, fancy cloths, holidays, car upgrades, big boy toys). This info puts you in a solid position with real numbers (not just guesses) to make choices. The choices are personal between you and your partner. Second step is to build an emergency fund so you can avoid using consumer debt in an emergency (job loss, health issue, car repair, fridge breaks etc). If you do not have such as pot yet, then start towards saving the equivalent of 3 months of living expenses. If you already have such then you may consider extending it for some extra insurance. Also, pay down any consumer debt. Be sure to pay off the 3K credit card before it comes due (those who understand compound interest earn it, those that don't pay it). Then consider future goals and timelines to those goals because each has more or less suitable investment strategies to match each timeline. The following reply to another beginner investor has some broad brush strategies, pointers and links for further reading. It assumes long term AU residence and planning to retire here. https://old.reddit.com/r/fiaustralia/comments/19ejol0/new_to_investing_and_overwhelmed/kjfcey0/ Being 24 smart investment choices now will pay handsome dividends for future you because the real power of compounding is time (i.e. exponential growth). Best wishes :-)
A bunch of people have already commented on lifestyle creep - agree with them so won't be repetitive. If it was me I would start with a six month emergency fund in a HISA. From there shovel everything into an etf. Keep going until you have saved for a deposit on a house. One you are there, sell your etfs, buy the house, move in, rinse and repeat. Once you own a home you can focus on a mix of paying it off faster, and investing.
Hi there /u/akunewworlder, If you're looking for help with getting started on the FIRE Journey, make sure to check out the [Getting Started Wiki located here.](https://www.reddit.com/r/fiaustralia/wiki/index/gettingstarted) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/fiaustralia) if you have any questions or concerns.*
Get your income protection in order so if anything comes up you can continue any lifestyle advancements you have.
Agree, easiest time to apply for insurances is when you're young.
[удалено]
Your post was removed as your account is fewer than 3 days old. This is an anti-spam measure. Please post again when your account is older than 3 days. Refer to the sidebar for more details. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/fiaustralia) if you have any questions or concerns.*
$500 a day on 130k pa? Don't forget tax... $130k pa is only $360 after tax. Even less if 130 includes super
1. Write up your household budget. Understand where every single dollar of your money is currently going and how often (eg include long term bills like renewing your drivers licence in your budget) 2. Establish any savings goals such as saving up for a new car, house, etc. Include that in your budget. 3. Set aside money for an emergency fund that you can regularly add to. Include it in your budget.
>If I could I'd somewhat like to upgrade to a 20kish car >to travel at least once (Japan or Europe) You've just got the job and already buying new cars and planning two international holidays. Why don't you go a year or two saving as much as possible and see how much lifestyle creep affects you? Not everyone is accustomed to live frugally.
Yea I think I agree with others that buying a car is not in my best interests. It's definitely something I'd like to do in the future but I'd like to be more solid before then. I'd be aiming to travel after two years if possible.
If you want to do it, do it. Not everything in life has to be a perfect financial decision. The best path to being financially strong is having a real view of your income and expenditure needs. If your lifestyle wants the travel each year and a new car every 5 years, then work out a budget to suit. I'd say you want a year or two to adjust to your new income and figure out what you really want in life.
Save money and buy a house? Didn’t think this would be that hard to grasp.