How to Not Be Irresponsible with Zero Expenses?

I'm currently in my second year of uni but managed to get offered a full time internship at a big bank for a year. Its not a ton of money, but i never expected to really make that much until my 4 year degree was over.

I'm currently living at home and apart from public transport (I don't have a car), I'm lucky that my parents don't charge board and I'm pretty much expense free.

I do know that this could be a really good year to put me in a safe position, however the 19 year old in me wants to go crazy on all the things i never had.

I'm mostly just looking if anyone has advice for me to make the best of this year.

Cheers!

Comments

  • +13 votes

    Do not take out loans or get a credit card.

    Go nuts with money you actually have, get it out of your system, then there will nothing much you want.

    • +4 votes

      I mean, if you insist…

      •  

        Honestly what you really want isn't much.

        When I started my first job, high end gaming PC with games, big TV, new mountain bike. All of which I use all the time so not a waste of money anyway.

        Get it out of your system now. Thing is people that only save do until they say "F it", spend an insane amount of money idiotic things because they never spent money and never had buyers remorse. Rather than a whole bunch of pretty cheap crap when you're young, some of which you get buyers remorse, which is a good lesson on the road to cheap ass nirvana. Then get over it spending money and save because you're content, then you will not resent saving but actually enjoy it.

        •  

          This. I did the same thing and now I am just content. Except when I read OzB and FOMO kicks in on cheap hard drives.

  •  

    What exactly do you want to go crazy on spending?

    You are only going to be 19 once, these are some of the best years of your life.

  • +4 votes

    If you trust your folks (and why wouldn't you),pay them at least 50% of your salary as rent, in the understanding (if they don't need the money) that it's simply to start a saving pool and reduce the opportunity to spend 100% of your income.

    Alternatively, split that 50% it between a tied in 1 year bank savings for steady reliability and ratesetter for a 3 year return. This ties up the 50% into things you can't readily access, removing the temptation.

    DON'T get used to it, otherwise the sudden drop in income will hurt. learn to live lean and then times of plenty will give you the ability to make a larger cushion to soften the harder times (and there WILL be harder times, as there are in all things).

    With the 50% you have left, enjoy yourself, but steer clear of a large capital purchase (expensive car) that will require more $ to keep up, just get mobile, your mates won't care, and better to have a corolla you can afford to put fuel in than a golf gti that sits on the drive because it's too expensive to enjoy!

    •  

      This seems like sound advice. Do I do some research on finding the best savings account I can go with or is there a definitive one above the rest?

      • +2 votes

        Due diligence, ALWAYS do your research, anyone giving you information is giving their perspective/rating(me included!) in your position, it's what I would do, you may be risk averse/a risk taker.

        Ratesetter seems to offer ok rates given main bank savings rates, but unsecured, hence split risk in conventional risk and high risk.

        Alternative? Super. High Risk as you're 19 and it will balance out over the next 40+ years you'll be working, and the magic of compound interest doubles your money every 70 years divided by the rate of interest!) so doubling a doubling means that say:

        lump sum 10,000 at 19, rate of 6%, lower tax threshold for Super anyway over income, means 10k = 20k by the time you're 33, 40k by the time you're 47, 80k by the time you're 61 etc. Not including better rates, inflation, better performance, fees, and the fact you'll be adding to that investment all the time, reinvestment is where it's at. Jeff Bezos didn't become rich by not reinvesting, it's why Amazon is so big but makes zero taxable 'profit', as it's all reinvested, dividend only!

        Lets say you earn 60k in your year, and somehow managed to Save 50k of it, now. Stick that into a high risk yield at 6%, and at 61, it'll be c. 400,000 on top of whatever you add through your lifetime. 50k at 19, vs worrying about super forever. Your investments are worth more when you're young as they have so much more growth time (i.e you sit back and let the magic of compounding take it's time). 50k at age 40 doesn't do nearly as well!

      •  

        Rabo Bank High Interest Savings Account - 3% for 4 months

  •  

    crypto, or all on black

    you either end up a millionaire , or just like other broke students, no harm trying

    it's the only time you can risk everything

    just don't go buy high investment car, iphone, laptop, tablet, smashed avos

  • +4 votes

    I'm lucky that my parents don't charge board

    1. Pay some or all utilities - electricity/gas/water/internet
    2. Treat parents to nice night out every couple of weeks - dinner/movies
    3. Invest in stuff around the house - polish the deck/repaint the house etc.
    • +1 vote

      I definitely owe it to them, I'll keep these in mind. Thank you.

      • +3 votes

        My 22yo doesn't pay board but she cleans up, washes dishes, puts stuff away and does gardening without being asked. You wouldn't believe how much it is appreciated.

        Regarding your question. Take the opportunity of employment to salary sacrifice into superannuation to the maximum $25k allowed in a high growth industry fund like Australian Super. If nothing else it will reduce your tax paid.

        Have fun with the remainder. Work hard. Party hard.

  • +1 vote

    Sage advice (that's right, self proclaimed sagehoood)

    1. You're only X years old once in your life, you have to live now. Insert any number in there and you can go on a spending spree for life.

    2. 19 year olds know jack shit about jack shit. When you party, drink the cheapest crap, it all tastes like piss when you haven't had any exposure to tasting notes.

    3. Tasting notes are BS, just like art reviews, fashion, movies… If you like it, it's good.

    4. Everyone wants to be the big shot alpha. With no little to no skill, no achievements and still suckling at the teats of family and Centrelink, the concept of an alpha is laughable. The one who laughs hardest will become the alpha.

    5. Don't take loans unless you're buying assets in context of investment. A $80,000 car is a high yield investment. Or not. Who knows.

    6. Girls love a guy with talk. Women leave them.

    7. Start all conversations by presupposing you're a sage.

    8. Don't end by tying off the opener. It's just tacky.

    •  

      Your sageness knows no bounds, thank you for the advice. I'll make sure I'll have a full garage of high yield investments by the time I'm 20. I think after reading this I'm more than qualified to self proclaim my sage abilities.

  •  

    There is no substitute for being debt free.

    None

    • +2 votes

      My uni fees are on HECS, its 0 interest just indexation and if I really wanted to I could pay most if not all off over the next year. Though I feel like HECS is the one debt I can have the advantage of keeping. In terms of other things, I'll make sure I don't accrue any debt if I can help it.

  • +5 votes

    Save for a house deposit

  •  

    You should have a financial goal in mind before making these kind of decisions, what do you want out of life. Do you want to be able to holiday 3 months of the year every year, do you want to be able to eat out whenever you feel like it, buy a house or unit before a certain age.

    Prioritse your wants/needs and be able to differentiate between them.

    Spend on what you truly enjoy, dont get trapped into a cycle of wasting your money like alot of young people do.

    I recommend saving about 40% of your annual after tax wage, and use that for the major purchases in your life, like car/house/ medium to long term goals.
    Limit your spending on frivolous things to once or twice a year under 1k, or whatever you think is reasonable. I usually buy myself a present at xmas and birthday, and i save up for when i want that specific thing, like a new computer or maybe new furniture like an expensive chair.

    Last but not least keep a budget, so you can actually see where your money is going, that way you can monitor your expenditures, and if you are not happy with how much you are spending on a specific thing you can curtail it or change your spending habits.

  • +3 votes

    I predict you'll get two main type of responses from this. The financial conservatives will tell you to store it away, put it into shares or save for a house, and live frugally now while you have no obligations. I find this to be funny advice, because the purpose of putting away money now is to fund the dreams of the future, but the people who give this advice often have no imagination and so have no real dreams to fund.

    The other type is the 'live it up while you can' crowd, who look back at those years with rose colored glasses and wish they had lived it more.

    I would say, there's no reason you can't do both. Partition your life in two. Save half the time, and spend the other half. Best of both worlds

    To put that into context, if you were being paid a wage of $38K a year, that would be $650 a week after tax. Setting aside $150 for general expenses( train fare, gym, the odd hamburger etc) you have $500 a week as disposable income to use as you wish. You would take $250 of that, bank it or invest it someplace, and then have the other $250 available as fun money. After a year, thats $13K you have saved up, and you don't have to feel like you lived your life as a pauper.

    *Note, the $250 wouldn't be there in a 'spend it or lose it' context to waste on shitty likes like bottle service at some dodgy club. What would more likely happen is most weeks you'd spend little or none, and then every other month you might splurge. That way when someone asks 'Hey who wants to rent a van and go on a 5 day road trip to some festival' you have the money ready and permission from yourself to do it.

    •  

      when you put it into perspective like this, this seems like the best compromise. Thanks.

      • +5 votes

        It's what I would tell my nephew, and it's the way I would go if I had my time over. You never know what the future may hold, and when you're unsure, the best way to hedge your bets is to diversify. Thats how it works in finance, and its how it works in evolution, so its a tried and tested method.

        Truth be sold, as far as I know it at least, everyone is different. Advice is very specific. Some people are wild ones that need to be told to slow down, other people who are too conservative need to be told to live a little. Thats why a question like this gets such conflicting results, because people repeat the advice they wish they had followed when they were young. But there's no guarantee their life would have turned out any better if they had. At the end of the day, its you're own judgement that matters most, so learn to trust it. It will probably be wrong, quite a lot of the time actually, but its the best compass you have to navigate life. The failures are actually part of the calibration process, so don't get too down about them.

        Having been your age, I would say what you really need to watch out for are the big four. These are exponential places of investment, areas where you can spend $500 to get 90% of the possible benefit, or $5000 to get 93% of the benefit, or $50,000 to get 95% of the benefit, and it just keeps going up like that.

        Keep it to the sweet spot, and you can live life now and save for the future, or keep chasing that better buzz (like a hell of a lot of people seem to do) and watch your money as it falls down a bottomless pit.

        1. Drugs, namely alcohol. Sooo easy to fall into the habit of getting blitzed every weekend. Stop at 3-5 drinks and just act drunk. Nobody will know the difference, and you'll have money in your wallet at the end of the week
        2. Cars. A Mercades doesn't say 'I'm different and successful', it says 'I'm insecure enough to spend $15K on a bad car to make people like me more'. If you decide to get a car, get something cheap and reliable. Make a few small mods to bring it into 2019, and you should be gold.
        3. Girls. If you feel the need to spend $1000s of dollars to keep a woman around, you're not a boyfriend, you're a client.
        4. Gambling - this ones the worse. Kid in my tafe class, 17, was talking about his dream computer for months. On and on and on he went. Day after he turns 18, he comes into class, and confesses that the 3 grand he spend years saving up for this computer, he blew all in one night at the casino. The way he told the story, I think he was trying to prove how wild and impulsive he was, but in reality he just came off as young and dumb. It's just stupid. At a casino, the house always has the edge. You want to gamble, do it at home with your friends for dollars, or better still, gamble on yourself. Take a chance on a crazy idea, not on a rigged game. Much more fun

        So yeah, thats it. Concentrate on keeping away from those four money pits (watch out, they are deceptively easy to fall into and one will get its claws into you) and you should come out ontop. Good luck

        • +2 votes

          This is a lot of great advice and pretty philosophical as well, many thanks for spending the time to write this out.

          Fortunately (or not) my past few experiences with alcohol has been rough, so I don't think that'll be too big a sink for me. Cars, it all depends on whether I'm put into a situation where I need one. Girls, I've been in a stable relationship for a few or so years, and fortunately we both like to keep costs low. And gambling, I've had my fair share but always managed to stick to my limits and keep things low. Same enjoyment from the $2.5 roulette table as the $100.

          I plan on having a comfortable year ahead of me, as even though frugality and the FIRE movement seem like no brainers as a path to lavishness, I don't think i have that sort of conviction. I guess I'll have to see how things turn out.

          Again, cheers mate for the sound advice.

          •  

            @FR3D99:

            Again, cheers mate for the sound advice.

            My pleasure. Like most people, I talk mostly for my own enjoyment, but hey if it helps someone thats good too.

            It sounds like we are not too different if that's the case. I had some bad experiences early on with alcohol too. Drank too much the first time, and spent the next day feeling so rotten I didn't touch the stuff for yonks. Until about age 25. Then I started experimenting, and found you can avoid a hangover by following a few simple steps, and suddenly alcohol became fun. Too much fun.

            Unfortunate or not though, there is a culture of youth drinking, and if you want to be part of the fun crowd you gotta drink. BUT, there's no reason why you have to actually drink. Learn to fake it, do the Cayote Ugly thing and spit it into a bottle

            From the sounds of it, your problem isn't going to be getting into too much trouble, it will be not getting into enough. Make sure to push the boundaries a bit, go a little wild. You're 19! People expect you to be stupid, so you can get away with a lot more than you will be able to in 15 years. Also, and this may just be from my perspective, but the world is starting to look dark. Really dark. There's no guarantee that everything will be as easy in 10 years. We could be at war, or the economy could tank. If that becomes the case, having a few really good memories might be the only thing that keeps you struggling forward.

            FIRE movement

            I only looked at that quickly, but it sounds like A grade BS. The idea of retirement was a lie sold to get people to work harder for less. It doesn't work in reality.

            Girls, I've been in a stable relationship for a few or so years, and fortunately we both like to keep costs low.

            Sounds like a good woman. You should surprise her with something nice. Take her on an exploration trip into the sewers (lol)

        •  

          Girls. If you feel the need to spend $1000s of dollars to keep a woman around, you're not a boyfriend, you're a client.

          Filthy gold diggers!

  • +2 votes

    I'd say set yourself a savings/investment % and a spending/fun % and enjoy yourself with what you have to spend.

    After that, all the other suggestions above are solid.

    If you want more specific advice, maybe check out Scott Pape's barefoot investor book. It's one of the best solid personal finance books out there.

  •  

    Zero Expenses

    Maybe… Get an older chick with a full time job.

  •  

    This is easy! Spend half of it. You'll still save a lot more than most are able to.

  •  

    wants to go crazy on all the things i never had.

    What does that mean to you? Is that like ordering pizza and having it delivered, or is it like a trip to Venice in a penthouse hotel.

    •  

      To be honest, I'm not sure. I'd consider myself a car enthusiast but I've had the conversation with myself, and buying a car that I'd really like to drive, I know will turn into a massive money sink, plus the fact that it wouldn't be exactly cheap.

      Honestly at this point its just cool tech, maybe a new PC, virtual reality headset, monitors. I have planned a trip at the end of the year (which I planned before I got the job, I was planning on draining my savings and hope that I could recuperate it eventually) which would take a small chunk.

      It would also probably involve a lot of eating out, but hopefully I'll be able to control that early on.

  •  

    You’ve got another 40 years of your life to slog your guts out making money. Enjoy your youth and don’t be handbraked thinking you need to be fiscally responsible at this age.

  •  

    Spend enough to be comfortable, save enough to be able to quit work and not starve or be sad when the uni work piles up in 3rd year and honours, so you can dedicate yourself to getting top marks.

    Plenty of time to make money, so don't worry about spending it on the right things. Your job is to excel at uni, some creature comforts may help with that.

    Nothing feels better than knowing you could be unemployed for a year and still be fine. Build a pillow, rest on it in comfort.

  • +1 vote
    • Spend less than you make.
    • To make sure you do this, determine how much you want to save (20% of your income) and put that into a separate account first
    • Make sure that with whatever is left you can afford what you need with some buffer (rent, car, meals, groceries, insurance, fun, dining out, events)
    • If you have extra left over, then make the call to spend more, or use it to "treat" yourself

    I find using an app to track what I spend really helpful - I use Banktivity but I'm at a different stage of life (mortgage, super, etc) so need a more high powered tool (have been doing it for 20 years)

    Saving everything without having fun sucks - what if you get hit by a car and can never enjoy it
    Spending everything and having nothing left over sucks
    Knowing where you spend your money, and making sure that the things you buy are good value (while having fun) I think is pura vida!

  • -1 vote

    I would say at 19, spend as much money as you like and buy, do everything you want to do. Just don't get a credit card or go into debt. The fact that you are thinking about this shows you do have some financial control, worry about saving when you start your first full time job. You have 30 years of being in a Mortgage and only 2-3 years of single no fixed expense lifestyle. Make the most of it.

  •  

    Live as cheaply as possible, don’t waste money on crap and save everything possible. But if you have the desire Travel. I went overseas at the end of my first year of uni best thing I ever did. Life goes too fast, fast forward 8 years to being married with pets and a child it’s near impossible.

  • +1 vote

    Following a few other people's advice here, I'd say split your disposable income between saving and spending. I'm 28 and worked for most of my early 20's and then went to uni at 25. No matter what I earnt, I always saved something. But I definitely spent money on fun things. Travel is the best thing to spend your money on. It is immensely rewarding, and I believe the best time to travel is when you're young (AND single!). I've been to Europe a few times and America and still have the travel itch a bit.

    My biggest hack for having fun and not spending $$$ on a night out, is taking a vodka flask in to the clubs/pubs (usually just hide it under my dress and then place in bag once inside). Friends always laugh whenever they realise, but the drinks are $10+ in a club, and those plastic Smirnoff flasks fit half a bottle of vodka ($15 total). Then I just get free water from the bar and top it up (I usually put cordial in the flask for flavour).

    I've seriously saved hundreds and had just as much fun as my peers (FYI I did this hack travelling all around the world - not just Aus).

    But yeah, have fun in your 20's is my motto.

    •  

      taking a vodka flask in to the clubs/pubs (usually just hide it under my dress)

      Charligirl.. baby. You really know how to get the kangaroo party on a joey budget. I'm impressed

      What other tricks do you have? Maybe you also carry cheese under that dress, for when you eat at Hungry Jacks and order a whopper? No paying extra on cheese for you.

      • +1 vote

        LOL. Just to be clear: It's usually tucked under my arm and I wear a jacket over the top. Or I wrap it in a scarf and hold the scarf.

        No more creative hacks I can think of. Apart from the usual sim porting (only ever pay $5 a month) and mymaccas app.

        •  

          Oh. I think classically it's supposed a silver flask held on the inside of your thigh with a garter belt, but I might just have got that idea from American pie. Even so, I think its an eminently practical idea, and it's surprising that more people don't do it. I guess they're afraid to get caught, but gosh.. The savings..

          People can be such cowardly cowardly custards.

          • +1 vote

            @outlander: I am surprised more people don't do it. I used to be nervous walking in but I have never been caught (maybe once in Europe actually but the security guard just threw it out and still let me in).

            Most nights I go out, I don't buy any drinks. I just make drinks from my flask and the occasional free drink from a guy. I always offer to make them my water + vodka + cordial concoction in return but I haven't had many takers haha.

            • +1 vote

              @charligirl: What a bunch of wet blankets. My parents always taught me, if a stranger offers you a drink of mysterious liquid from a bottle, you take it. Wouldn't want to be rude, right?

            •  

              @charligirl: lol @ getting desperate guys to buy u drinks. betas dont understand buying her stuff is not going to make her like u if she doesnt already.

              and outlander u sound like ur interested in more than just conversing lmao.

              •  

                @roidcel: You sound like an incel from a sub-reddit forum. Did you read my comment? I offer them a free drink in return. And I only accept drinks from guys I'm actually talking to/interested in.

                •  

                  @charligirl: wow u actually go on those places, and i thought this is a normie forum. if u really only accept drinks from guys u like fine. offering a stranger a bottle hidden in ur clothe, yeh just like wat outlander said. too many beta cucks buy drinks for random women then complain on forums, makes me feel sorry for them. p.s. im not incel, nor do i have the negative attitude they have towards women, but u sound triggered.

              • +2 votes

                @roidcel:

                and outlander u sound like ur interested in more than just conversing lmao.

                I like to talk to interesting people. Become someone interesting, and I'll talk to you, too.

  •  

    Take the opportunity to build some SAVINGS

  • +1 vote

    Invest in work clothes for the good first impression.
    Apart from all crazy spending/saving you want to do, i'd suggest to take your parents to a nice dinner when you receive your first pay. Not everyone is as lucky as you to have your parents support.

    When working in a bank, you probably get some perks (hope they extend that to interns?)
    Usually a discount home loan which you dont need. There might also be a better rate for saving accounts and also brokerage account if you're into shares trading, keep an eye on those and take advantage of it.
    If i were you, I'd probably spend as I normally would.

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