This post is based on an interview we conducted with Radha in February 2024.
Real Money Talk is our series where we interview Australians from all walks of life about their personal finances. The views expressed are those of the interviewees, based on their experiences with money, and as such are not necessarily representative of Spaceship's views.
We have changed the name of the interviewee for their privacy.
Overview
Name: Radha
Age: 20
Where do you live? Sydney.
Please tell us a bit about yourself.
I'm a full-time third-year university student who also works part-time.
What's your current net worth?
$74,000
How does it break down?
- Cash: $70,000 (it's not good that I have so much sitting in cash so I am looking into investing again)
- Superannuation: $16,000
Do you have any debts?
- HELP: $12,000 (and another two years worth of courses will be added onto this).
How did you build your net worth?
Initially, I was very fortunate to have my parents open a savings account for me and invest a few thousand over the years while I was in highschool.
I also received a few thousand as a scholarship from my university.
Since the start of first-year university I've been working almost every week. Started off with a couple of hours and then as I added/changed jobs this increased. In summer holidays I've been working full-time (at one point even balancing four jobs at once!) so that helped tremendously.
My current job is also quite high paying for my age. I also don't have very high expenses since I only go out occasionally and live rent-free with my family.
My only major expenses have been paying university fees upfront when there was still the 10% discount and before inflation was applied when it was going for 7.1% alongside dental and orthodontic expenses (cause that stuff isn't cheap!).
My parents have also helped me take advantage of the government co-contribution scheme for my superannuation when I was in highschool which involved contributing $1000 to which the government invests $500 if your annual income is below a certain amount.
I've also continued taking advantage of this while I'm still considered a lower income earner before I graduate and go onto a full-time, higher paying job.
Earn
Tell us a bit about your career.
I worked a bit of retail in highschool. I also tutored during university and then moved onto different accounting/finance-related roles until ending up in my current finance job.
Do you have any income sources outside your job? How much do you earn from each and how did you develop them?
Just interest from savings account and smaller amounts generally in forms of gift cards/pre-paid cards for completing university surveys/interviews and online surveys.
Also some smaller amounts from Cashrewards when making purchases although I'd consider that more of decreasing my expenses as opposed to income.
What’s been important for you to learn about money?
I've noticed that the Real Money Talk articles and generally other finance experiences posted on the internet tend to be more from people aged mid-twenties and above so it can be difficult for younger people to find information online from people around their age.
Hence, for those people I'd recommend having a read of what I've written including things like the government co-contribution scheme for superannuation which is something most people would generally only be able to access when they're younger and earning less income.
I've found that more people than we think don't really know about different schemes, legislation etc. like this!
Another tip I would say is other than some money for daily expenditure and an emergency fund (which can differ from person-to-person), we shouldn't just be having our remaining money sitting as cash in a savings account.
This is long-term, investing it in shares or other types of investment returns substantially greater returns. The interest rate of a savings account is not only much lower but is also generally lower than inflation meaning essentially the money is depreciating in value each year as purchasing power for that set amount would become lower.
The fact that I've had most of my money sitting in cash for so long (although I'm aware of this!) simply because I've been procrastinating and putting it off is a huge financial regret for me.
I did previously have around $10,000 in Spaceship which I did pull out once it made a bit of a profit this year after being in the negative for two years.
I had stopped investing initially as it felt like the value was going lower and lower but I believe at that time I should have only invested more and more since when the market is on the down is when would actually be ideal to invest so that is a regret which I believe a lot of others would share.
I have definitely found this to be a good learning opportunity though since we can easily talk-the-talk but when our own money is involved, it can be different as emotions can come into play and rationality can go out the window!
Save
What's your savings rate? How has it changed over time?
In high school it would've been almost 100% since I rarely spent anything from my savings account.
In university, I would say it went from 50% to 80% primarily due to me working and earning more whilst my expenses did not increase as much.
Do you have a budget?
Yes! I've recently recreated my budget from scratch as a spreadsheet (as templates just weren't personalised enough for my needs).
It tracks all my income and expenses against different categories whilst allowing me to compare these figures with my budgeted/forecasted amounts. It's still in the process of updating but I have been trying to set it up as long-term financial budget to observe my progress and net worth well into the future.
It's fun to do and be able to know that I'll have a detailed overview of my finances without too much effort once I finish setting up the remaining formulas which will automate calculations once transactions are entered.
How much do you spend per year?
Fluctuates but around $8,000 to $14,000 (mostly due to university fees).
Do you make purchase decisions carefully, or are you loose with your money?
I'm quite careful with my purchase decisions.
Although I'm happy to spend when I go out to eat and socialise and for gifts for family and friends, for personal purchases I do definitely think it over before making the decision to purchase, including comparing prices and seeing if there's discounts/ways to save money such as Cashrewards or doing click and collect to avoid delivery charges (because who likes paying for delivery!).
How is your work-life balance?
It is pretty good as my job is not too demanding. However, when adding studies on top it can become much just because of my procrastination and poor time management. I am only working part-time though most of the year so it isn't as bad as full-time would be!
What's your favourite thing to spend money on?
University fees and dental fees (just kidding!)
My favourite things would be clothes, bags, make-up, skincare and haircare.
I don't purchase these items often but when I do, it is something I like to spend on as I see it as an investment in myself.
This would be followed by food and activities as these make me happy too and I see this as an investment in my life experiences and social life.
Invest
How do you invest?
I am currently not investing but I am planning on spreading into different investment opportunities. This would involve an initial large sum and then further investments over time as further income comes in.
What's been your best investment?
So far I have only invested in Spaceship and it has returned a profit this year so happy about that!
What’s been your worst investment?
Spaceship is the only thing I have invested in so technically it would be my best and worst investment simultaneously but I wouldn't really say it's the worst!
How are you building wealth?
Currently, I have primarily been building wealth through working different jobs.
What are your main roadblocks to building wealth? How are you addressing them?
Main roadblocks would include that I only have a certain amount of time that I can spend weekly on work before it negatively impacts other dimensions of my life.
Since I can only make a certain amount of money directly using my time and effort in a job, I am looking to engage in more investment opportunities to gain a more passive method of building wealth and hopefully allow me to achieve FIRE one day!
Do you have a target net worth you want?
I'd like to reach $100,000 by age 22 and $1 million by age 30. The latter of these seems like wishful thinking and I would need to really take advantage of long-term investing to get anywhere close to it.
Behaviour
When did you make your first significant behavioural shift towards wealth building?
In the first year of university when I started working more proper jobs and paying more attention to my savings, superannuation and expenditure.
If you could start again, what would you do differently?
I would've started investing much more of my savings much earlier.
What mistakes have you made along the way that others can learn from?
Not investing more when the market was in a downturn due to continuously seeing my balance being negative.
Do you have any worries about retirement? If so, how are you planning to address them?
I would love to retire early (ideally before 40 although again that might just be wishful thinking in this economy) but I am concerned about my earning potential from a job when I graduate.
Hence, I really do believe that I need to look into investing as there's only so much I can earn with a job.
How are you learning about building wealth? Is it from family, books, being forced to learn as your wealth grew, etc.?
From my own personal research online as well as conversations with my family.
Do you give to charity? If so, what percentage of your time/money do you give?
Less than 1% (which isn't great)! I have donated small amounts of money to charities in commemoration of starting a new job as well as sometimes when I pass someone in need, but nothing regular or large.
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