4 Things You Need to Know About Your Money If You’re Earning (& Spending) It
Investing for a better world.
When it comes to millennials and money, it feels like everyone has an opinion on how we’re making it, where we’re keeping it, and how we’re spending it (hello, avo toast).
But let’s face it: what all these opinions do is make it really hard to know what info actually matters when it comes to your hard-earned cash, like how to know if your money is doing good by people and the planet, for example. That’s why we’ve gone back to basics. Here’s what you need to know if you’re earning and spending money in 2019.
#1 Sort Your Super
Superannuation isn’t exactly something we spend a lot of time thinking about when we’re busy enjoying life, but if you want to live comfortably in your twilight years (without relying on the aged pension, which might not even exist when you’re ready to retire), you need to start focusing on your super now.
There are a number of things you can do to get the ball rolling. First, you could consider combining all your accounts – if you’ve been working since you were a teenager, chances are you’ve already got a number of super accounts under your name. Most employers will make super contributions of at least 9.5 percent of your pay into your chosen (or default) super fund, but if you’ve got multiple accounts, you’re probably also paying multiple fees. These costs might not seem like a lot now, but if you add them up over your career, the numbers can be pretty hefty.
What’s more, you might even have unpaid super owing to you. According to the ATO there’s more than $17.5 billion in lost super waiting to be claimed in Australia. To see whether any of that could be yours, head to the myGov website.
It’s also worth noting that you should check the implications this will have on insurance cover that you might have in your super funds.
After you’ve considered combining your super, you could focus on growing it as much as you can. Regularly adding extra money into your super account could help do the trick (thank you, compound returns). Remember that there is a limit to what you can add to your super account each financial year – it’s called “contribution caps”. If you contribute more than the cap amount, you may have to pay extra tax, so check out MoneySmart for more information.
#2 What Is Your Money Supporting?
Getting super-savvy benefits more than just you and your bank account. What so many of us don’t realise is that our super has a real impact on the world around us – it’s just up to us whether that impact is good or bad.
Confused? Well, Head of Ethics Research at Australian Ethical, Stuart Palmer, explains that super funds invest your money in businesses with the long-term aim of making your money grow – but that doesn’t always mean they’re investing in ethical businesses. “Many funds choose to invest in really unsustainable industries,” he says. “Without knowing it, your super could be used to invest in coal, tobacco or nuclear weapons.”
So, what can you do to stop your hard-earned cash being invested into organisations that are in complete opposition to your core values? Ensure your super is being managed by a fund that places your money into planet-positive industries like renewable energy, innovative technologies and education. Simple!
#3 Make Your Savings Sing
Sure, we’ve heard it all before, but there’s a reason why everyone bangs on about saving a little to save a lot. Think about it this way – even if you pop $30 away every week for a whole year, you’ll end up with $1,560. Keep it up for 10 years and you’ve got $15,600 in your pocket. Yep, that money you didn’t even realise you were missing has suddenly become a lifesaver and it’s all thanks to your decision to squirrel away a small amount of cash on a regular basis.
To keep up with how much you’re actually saving, you can track your cash through apps like ASIC’s MoneySmart TrackMySPEND, which is free to download. It lets you nominate a spending limit each week, fortnight, month or year and tracks your progress.
#4 Budget Like A Boss
If you’re going to put in the effort to save, you might as well attempt the dreaded ‘b’ word, too. Yep, we’re talking about a budget. After all, saving and budgeting go hand-in-hand. For a bit of short-term pain, a good budget you actually stick to can create some serious long-term gain.
To start, think about what you spend your money on. What’s a necessary expenditure (rent, bills, transport costs) and what are the items or experiences that aren’t essentials (alcohol, clothes, gigs)?
Once you’ve got your list, consider allocating a portion of your income toward your essentials, your fun-time money, and your savings. This might be a 60:20:20 split, but go with what works for you. Breaking your money down this way both helps you stay across what you’ve got coming in and going out and makes you more accountable. As an added bonus, you’ll have a certain amount to enjoy as you please, guilt-free.
Basic apps like Pocketbook are great for this sort of budgeting because they automatically organise your spending into categories to show you where all your cash is going.
Now you can invest ethically, grow the good and feel great about your retirement while you’re at it.
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This article provides general information only and is not intended to provide you with financial advice or take into account your personal objectives, financial situation or needs. Visit australianethical.com.au /super for a copy of the Financial Services Guide and the Super Product Disclosure Statement. You may wish to seek advice from a licensed financial adviser before making an investment decision. Australian Ethical Investment Ltd (ABN 47 003 188 930, AFSL 229949) makes offers of interests in the Australian Ethical Retail Superannuation Fund (ABN 49 633 667 743) pursuant to an arrangement with its subsidiary, and Trustee of the Super Fund, Australian Ethical Superannuation Pty Ltd (ABN 43 079 259 733).