I was shopping at a retail boutique a couple of weeks ago, and the young shop assistant and I started chatting. She asked what I did and I appreciate that she stifled a yawn when I mentioned I was an accountant, a business owner, an author and a money columnist. I generally throw all of my hats in the ring when asked, to lessen the effect of "accountant."
I asked her what her biggest money challenge was and she said she didn’t know what she should be doing when it came to her money. When I questioned her further she said she tried to save each pay, but she didn’t know how much she should be saving, what she should be doing and if she was doing the right thing.
So if you are getting started in a career or even if it’s a first job or a weekend job, what should you be doing with your weekly wage? How much is the right amount to save and spend?
Unfortunately there’s no neat answer. The answer is: it depends. That’s because if you’re working five nights a week and studying at uni the money you’re earning may all be going on rent, text books and food. Alternatively if you’re living at home and working full-time you might have cash to burn.
Instead of how much is the right amount to save and spend, I think the better question is: what can you afford to save?
You can start to determine what you can afford to save by working out your fixed costs. This might be mortgage, rent or board repayments as well as course fees, fixed travel costs and so on. If this takes up too big a slice perhaps reconsider your living situation where possible and consider bringing in a lodger or moving to cheaper accommodation.
Next, look at the pool left over. Instead of asking, what am I allowed to spend, ask instead what can I afford to save? Challenge yourself to see what is possible. So if you have $500 left over after your fixed expenses each week, then why not see if you can afford to save $250 of that? If you have $100, then perhaps you could save $10 of that. Then the rest can be spent on food, living expenses, going out and so on.
Once you’ve decided on your savings amount, then automatically deduct that amount into a savings account you can’t access with an eftpos card and concentrate on what is left over. After a month, if you find you’re cruising, then either leave things as they are or challenge yourself as to whether you could save more, and increase your automatic deduction.
With anything, it’s always easier when others are involved. So start a money dialogue with your friends and work out what everyone is saving. If none of you are saving, decide to start together and challenge each other. If you all develop good money habits together, it will be much easier than if you’re the only one not spending your entire wage.
All that’s left is to get started. Like with anything, you’ll have good weeks and bad weeks. The trick is to make tweaks, work out your weak spots and adjust. If you need motivation, work out a savings goal so you are incentivised to watch that savings pile grow.
There are no rules when it comes to money, only great habits. One of the best habits is to develop good practices and a good mindset early when it comes to saving.
Melissa Browne is an accountant, adviser,author and shoe addict. Twitter: @melbrowne_
"The answer is: it depends."Melissa Browne
David Potts is on leave.