5 Grown-Up Financial Responsibilities And How To Tackle Them
When you’re a newly minted adult, grown-up money talk can send chills down your spine or induce the biggest internal NOPE of all time. And yet you still have to suck it up and deal.
However having adult financial responsibility makes you feel, it’s unavoidable. Often we choose to neglect the idea of our financial future because it’s a problem for future you; but let’s be kind to future you, shall we?
We’re here to help you shake your fears. So, here are five grown-up financial responsibilities and some simple steps you can take to tackle them.
#1 Planning for retirement
I can think of 101 convos sexier than planning for retirement – it’s forever away. But you can bet it’s better to chat now than regret not even considering it when you’re old, wrinkly and broke.
As you probably already know, under the superannuation guarantee, your employers have to pay super contributions of 9.5% of your Ordinary Time Earnings. For example, if you have a salary of $50,000, you can expect $4750 deposited into your super account each year.
If you’re employed, your employer is legally obligated to pay your super. If you’re a freelancer, you will have to take care of that yourself.
But you need to ask yourself the question, is that enough to live off as a sole income? When you’re retired, super is often the only source of income you’re going to be getting – how long do you reckon you could live off $4750 per year?
This is why it’s important to consider voluntary super contributions. It’s a great way to boost your retirement nest egg. Plus, by sacrificing some of your salary, you could be paying less in tax! For more info, read our tips on superannuation.
#2 Sharing your finances
So you and your partner have moved in together and I guess you could say things are getting pretty serious right now. What’s the next step? Financial transparency – yay!
No, in all seriousness, there are a bunch of reasons why you’d want to share your finances with your partner, whether it is a sign of commitment, no longer needing to split annoying bills, to make budgeting and saving easier – the list goes on.
There are, understandably, also drawbacks, these may include a loss of financial independence, less freedom, arguments and fights which may occur, existing debt; again, the list goes on.
The best way to conquer this one is to have the chat with your partner, weigh up all of the pros and cons and decide whether this is the right path for you two to take. It’s important not to rush into stuff like this.
When it doubt, talk it out (or just read our tips on sharing finances).
#3 Doing your own tax
When July 1st first rolls around each year there are two kinds of people: the ones who are keen as a bean to get their return in (and score a refund), and the ones who’d much rather cry themselves into a stress-induced nap than contemplate visiting the ATO website.
As much as it may hurt, it’s a good idea to learn tax stuff. If you only have one job, don’t have any dependents and have no other investments or sources of income, you can easily file your own taxes.
But, if like me, numbers give you too much of a stress headache to even contemplate doing your own tax, accountants do exist. Plus, they’re experts at it and know all the things you’re eligible to claim. This means you’re more likely to get a larger return, or minimise the amount you owe the ATO.
If you want to wise up when it comes to taxes, we’ve got you. Here’s all you need to know.
#4 Setting up an emergency fund
You never think you’ll need an emergency fund until the time that you do. Don’t wait until that moment, because when an emergency happens, having no money to remedy it is gonna suuuuck.
Most financial advisors will say you should have between three and six months of living expenses saved in an emergency fund. This should have you covered in most situations.
Living expenses include all the things you’d spend money on day-to-day to stay alive. These include, rent, bills and food. They don’t include treating yourself to swanky restaurants, post work bevvies or new shoes.
The first step in setting up an emergency fund is determining how much you need to have saved. Once the figure has been identified, you can figure out how much per week you should be depositing into the fund for you to reach your savings goal.
I remember as a kid hearing my parents talk about house prices. I recall looking at the $2 coin I had in my money box and thinking to myself, how the hell am I going to save 200,000 of these? Where will I keep them?
I clearly didn’t know what a mortgage was.
To get you up to speed, a mortgage is a home loan. It’s where a financial institution will lend you money and charge you interest on these borrowings.
If you think all that sounds a bit scary, just know it’s a totally normal part of being a grown-up and chances are your mum and dad had one too, so have a chat to them about their experiences, and do some research to get your head around it.
Bradley is a writer from Newcastle who enjoys travel, Tina Fey and is a connoisseur of cheap red wine.