This post is based on an interview we conducted with Abby in March 2023.
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: Abby
Age: 24
Where do you live? Tasmania
Please tell us a bit about yourself.
HI!
I'm a 24-year-old junior doctor in Tasmania. Recently graduated and moved out of the family home, so many big changes.
I'm a big fan of travel, spending time with my nearest and dearest and eating delicious food!
Recently I've been more interested in personal finance and how to gain financial freedom.
What's your current net worth?
$153,500 (not including my HECS debt)
How does it break down?
- Savings - $81,500
- Super - $29,000
- Shares - $23,000
- Car - $20,000
Do you have any debts?
I do have a HECS debt of ~$53,000
How did you build your net worth?
I started working when I was 16, and despite the low hourly rate, I worked fairly regularly.
I also initially had a goal of saving $20,000 by the time I was 18, to move interstate for university.
I didn't end up moving, but it started my saving habits and building my resume and confidence to get bigger and better paying jobs.
At one point, I was juggling 2 jobs while doing Uni.
But the main thing that has helped, has been my parents.
I was lucky to be able to live with them rent-free for three years out of my five year degree.
As well as my first year working as a doctor, all of which boosted my ability to do what I wanted with my money more.
Earn
Tell us a bit about your career.
I like to say I have had two careers so far in my young life.
I started working as a barista when I was 16 and continued until I was 23, just before graduating university. It was a good job and easy to work around my uni hours which were often long.
Then at 23, I graduated and officially became a doctor. I've been working in the medical field for the last year. It has been a hell of a year, a lot of learning and growing.
In terms of salary, we have a base salary for working full time hours. But often I end up doing overtime working an extra 20-30 hours a fortnight.
I'm only in the early days of my career but I'm excited to see the growth and potential, both in my role/experiences and salary.
Do you have any income sources outside your job? How much do you earn from each and how did you develop them?
Yes and no.
I often do market research and surveys, I also get some income from cashback sites. How much I earn really varies depending on what's available. But the extra bit of cash is always appreciated.
I have considered doing a side hustle, but it's hard to balance with my current hours.
My investments currently earn very minimal dividends, and anything I earn, I automatically reinvest back.
What’s been important for you to learn about money?
I'm still trying to figure it out myself.
I know ideally you have multiple streams of income in case your main one fails, but balancing that with actual life isn't easy.
So I am in awe of anyone who can do it.
Save
What's your savings rate? How has it changed over time?
My current savings rate is 50% (if I include the money I add to my investments).
It's fluctuated a lot, depending on how much I earn, and where I'm living.
When I'm renting, it often goes down, sometimes to 20-30%. But when I was still living at my parent's place, It was as high as 80%.
Do you have a budget?
I have a rough budget. I don't restrict how much money I spend on certain things. But I do have goals that I want to reach.
As long as my bills and rent is paid and I reach my goals for the fortnight/month/year, the rest of the money I spend however I want.
The only thing is I can't touch my savings, unless it's an expense associated with one of my sinking funds.
How much do you spend per year?
It varies year to year. Not too sure what this year will be, as I've just moved to a new place and the rent is high! But last year I spent ~$25,000.
Do you make purchase decisions carefully, or are you loose with your money?
I'm pretty careful, and I like to think I'm sensible.
I don't restrict myself when it comes to food, that is my one weakness.
But I also don't make massive purchases on things.
Whenever I do buy a new thing, I always do my research, look into potential discount codes and I always sleep on it before I buy it.
How is your work-life balance?
Honestly, it sucks.
I do have a great group of friends I see. But my hours at work are so high that sometimes I do sacrifice to fit it all, oftentimes it's my sleep that suffers.
What's your favourite thing to spend money on?
100% food! I rarely hold back with food, when it comes to eating out. For me, it's a simple pleasure in life, eating nice things. I try and keep my groceries relatively tame, but I do tend to go all out with my eating out choices.
Invest
How do you invest?
It took a long time before I started. I was researching options for a year before I started with micro-investing. Initially it was through Raiz. But I transitioned to Spaceship after about a year.
Now I still have my Spaceship account, but I started with Pearler back in 2021 and it's been going well.
What's been your best investment?
VDHG has been pretty good! But my best has definitely been investing in my education around personal finances and investing.
What’s been your worst investment?
I don't know if I have one yet, I've just kind of taken it all as a learning opportunity. I mean some of my other investments haven't done that great. But at the same time I started in the middle of COVID and now we're in a cost of living crisis. I'm gonna see what happens in the next 5-10 years, and I'll let you know.
What’s been your overall return?
I think it's been about 6% overall. A lot of downturns, especially given COVID, but not bad overall.
How are you building wealth?
Mainly by being smart with where my money goes. I currently only have the one main source of income so making sure that I put it to work through savings, investing and my super. Hopefully with time, as my income grows and my overtime shrinks (hopefully), I can start developing other forms of income.
What are your main roadblocks to building wealth? How are you addressing them?
Mainly time, to develop other income streams. For the moment I'm happy with my current position, so I'm going to give it time, and hopefully as I get older I can start to develop more.
Do you have a target net worth you want?
I'm currently aiming for $2 million, but I will probably revise that as things change.
Behaviour
When did you make your first significant behavioural shift towards wealth building?
Probably at 18, when I decided that I wasn't moving and I had $20,000 in the bank.
I started looking into personal finance and researching investing and learning about roads to financial freedom.
It was hard because I came from a family which wasn't very financially literate.
My parents filed for bankruptcy twice and we always lived above our means.
Which made my childhood great, but thinking back as an adult, it does make me scared for my parents, ‘cause habits are hard to break.
If you could start again, what would you do differently?
I would 100% invest earlier. From 18, I would also look into super accounts earlier.
My advice (to myself) would be, "you're young, take the risks. You may lose it, but you have time to earn it back."
And, "Don't be scared to live your life, say yes to things even if they cost money, you'll never be 18 at uni with your friends again."
What are some mistakes you’ve made along the way?
Don't be scared with investing. Fear was the main thing that held me back from making that step. A lot of it was related to analysis paralysis, so many options and not knowing which one was the right one.
Do you have any worries about retirement? If so, how are you planning to address them?
Not really. I'm making extra contributions into my super and I invest with the aim to retire early. So I'm pretty happy with where I am currently.
How are you learning about building wealth?
Mainly from online sources and podcasts. I have recently read Girls that Invest and it was a really helpful book, helped me clarify what kind of investments I want to make.
Do you give to charity? If so, what percentage of your time/money do you give?
Intermittently. I have recently started doing regular donations to Medecins Sans Frontier and I often donate to Vinnies or Salvos when I can.
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