This post is based on an interview we conducted with Rebecca in July 2021.
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: Rebecca
Age: 24
Where do you live? Tasmania
Please tell us a bit about yourself.
Although I live in Tassie I can't stand the cold. I enjoy travelling, sport, a good night out and a cosy night in.
What's your current net worth?
Currently $81,082.17
How does it break down? (shares, real estate, businesses, home, superannuation, etc)
- Savings: $19,424.15
- ETFs: $33,855.30
- Super: $27,984.72
Any debts? (including HELP from uni)
Nope. I have never had any type of debt, not even buy now, pay later. I have not yet studied at university so no HELP/HECS either.
How did you build your net worth?
I have always naturally been a saver and I have been taught to live below my means.
I am grateful to have had low living costs and not experienced high lifestyle inflation since working in 'real jobs' and moving out of home.
Generally I value experiences over things so I find it easy to save for travel or put away for future me. My position also pays over the government guaranteed super amount of 10.5%.
Earn
Tell us a bit about your career.
I started working as soon as I could legally get a job at 14 and nine months.
I have worked various jobs since then, mostly in customer service roles. Not always full-time though, you take what you can get when there are few jobs to go around.
I worked really hard last year to develop my skills in applying for jobs. Writing a resume, cover letters, selection criteria and doing interview prep. The aim was to land a permanent full-time role in the public service, which I achieved. It is a secure environment to develop my skills further and explore other departments when I am ready for a change.
Do you have any income sources outside your job? How much do you earn from each and how did you develop them?
Not really, except the passive income I receive from my share portfolio. It isn't much but the aim is to grow it for the long term. Right now I am just reinvesting the distributions. I like the idea of having a side hustle but then I also enjoy my sleep and free time.
What was important for you to learn about earning more money?
A lot of people focus on higher education or working more hours. This is important but I think 'playing the game' when it comes to recruitment is key. By that I mean interviews and selection criteria suck but if you get that part right then you give yourself the best chance at a foot in the door.
Do your research! Don't apply for jobs at the last minute. Take your time and if you aren't good at writing then learn or ask for help! Practice, practice, practice and believe in yourself! Also hot tip – write down good examples of your skills when they happen eg. that time you calmed a disgruntled customer down... So the next time you have to describe how 'you have the skills for the role' you have real examples to draw upon! My last boss called it a 'brag bag'.
Save
What's your savings rate? How has it changed over time?
Roughly 46%. When I first moved out of home (about 4 years ago) I was working part-time and casually and earning less than half of what I am now. My savings rate has stayed relatively high during this time because I have kept my living expenses low.
I usually spend more on holidays and events so I guess those purchases can erode a chunk of my savings at once, rather than little bits over time by my weekly living habits and lifestyle.
Do you have a budget?
Yes, when I first moved out I sent up a separate savings account just for bills because I didn't want to accidentally spend it on fun stuff and be left with nothing! My current budget/cash flow plan looks a bit like this.
- Account one: variable bills (healthcare, electricity)
- Account two: fixed bills (rent, internet, phone, rego, insurance, Spotify, Netflix etc)
- Account three: travel savings
- Account four: investing savings
- Account five: gifts and Christmas
- Account six: emergency fund (over three months of expenses)
- Account seven: everyday spending (fuel, food and fun)
- Account eight: lifestyle savings buffer (larger purchases like event tickets, new tech, appliances, etc.)
It sounds like a lot but some are sub-accounts, not individual bank accounts.
It works for me and gives me freedom. If all my money were bundled together in one or two accounts I would feel restricted and too scared that I would over-spend on fun stuff and not have enough for the essentials and bills.
How much do you spend per year?
I don't track this too vigorously but I guess at least $26,000
Do you make purchase decisions carefully, or are you loose with your money?
I definitely make decisions carefully when it comes to physical items but when it comes to experiences I can be pretty quick to spend the money. I don't like clutter or spending on things that don't add value to my life.
How is your work-life balance?
It is getting better now that I am able to work from home a few days a week. I find it hard during winter because all I want to do is hibernate. I would love to work part-time one day, three-to-four days a week would be nice.
What's your favourite thing to spend money on?
Probably travel, food, nights out, festivals and gigs.
Invest
How do you invest?
I use the dollar cost averaging method and currently just hold two ETFs in my portfolio that give me exposure to Australia and the world. I usually wait until I have $1,000-$2,000 saved up then make a purchase.
What's been your best investment?
I haven't really held my investments for long enough to assess their performance but so far an ETF.
What's been your worst investment?
I haven't really held my investments for long enough to assess their performance.
What's been your overall return?
Around 15% for the past 6 months so far.
How are you building wealth?
Living below my means and investing the rest. Investing in diversified stocks/ETFs and holding for the long term.
What are your main roadblocks to building wealth? How are you addressing them?
Identifying the right balance between saving and investing. I don't want to 'over invest' and then have to pull money out if my goals change.
Do you have a target net worth you want?
I would say at least $1 million by age 50. It would be nice to retire early and live off that passive income.
Behaviour
When did you make your first significant behavioural shift towards wealth building?
When I took the plunge and made my first investment. I had been researching it for a while and when I finally purchased my first investment I gained a better understanding of how markets work, my appetite for risk and realised that it isn't that scary after all!
If you could start again, what would you do differently?
100% start investing earlier and put away a portion of my pay, even just $5 to save for when I need to start 'adulting'. Also I wish I had learnt another language when I was younger.
What mistakes have you made along the way that you've learned from?
I was scared to take action and it was easier to not invest and stay comfortable. I think it is important to educate yourself but you can learn a lot by taking action.
Do you have any worries about retirement? If so, how are you planning to address them?
Yes, I don't know what the world will be like then and what the rules around super and tax will be. I am lucky that my employer pays a higher than normal amount of super. I really want to be able to retire early or work part-time. I worry about striking the balance between living in the now and saving for my future. I also worry about my parents' retirement.
How are you learning about building wealth? Is it from family, books, being forced to learn as your wealth grew, etc.?
Podcasts, books, Facebook groups, YouTube, Instagram, watching my shares, Vanguard.
Do you give to charity? If so, what percentage of your time/money do you give?
I try and donate blood and plasma regularly.
I've adopted a koala and donate $50 a month to WWF.
Another $40 a month goes to A21 which is a charity focused on abolishing slavery and human trafficking.
We want to hear your Real Money Talk
At Spaceship we’re big believers in sharing our money stories. We want to hear yours, too. In our ongoing Real Money Talk series, members of our community share what they’ve learned about managing money. We’d love you to take part. Here’s a link to our Real Money Talk survey where you can share your story.
