This post is based on an interview we conducted with Lucy in November 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: Lucy
Age: 20
Where do you live? Randwick
Please tell us a bit about yourself.
I'm a 20 year old uni student in my last semester of a 3 year Bachelor of Arts degree. I'm a bartender, waitress, and HSC supervisor. I desperately want a dog but the strata doesn't allow pets in the apartment.
What's your current net worth?
$1,600
How does it break down?
- Spaceship: $20,800
- Vanguard via Superhero: $1,250
- Crypto: $100
- Super: $750
- Cash: $200
Do you have any debts?
HELP debt: $21,500
How did you build your net worth?
I have always been very frugal and money-conscious.
I remember having $99 in my piggy bank when I was six years old because I'd always be on the lookout for coins people dropped on the ground, and doing chores for Mum.
I am very lucky to be living out of home with my boyfriend and not pay rent.
I stopped working for a year and a half to focus on uni but started again this September doing roughly 30 hours a week whilst doing full-time uni.
The bartending and waitress jobs pay roughly $26/hr, plus penalty rates and tips (gotta love generous drunks)!
Earn
Tell us a bit about your career.
My first ever job was as an art assistant making $8 an hour when I was 14.
When I was 17 I started working at Maccas for two years and then quit in Jan 2020 right before Covid. I then applied for Youth Allowance payment as an independent full-time student.
Last year I became a HSC supervisor, and I'm doing it again this year. I started working as a bartender and as a waitress in September this year. I've signed a contract to start a graduate consultant job in January next year at an advisory firm (not a Big4 but like top 10).
Do you have any income sources outside your job? How much do you earn from each and how did you develop them?
My boyfriend and I rent out our car spot to our neighbour for $10 a week (which is very low for Randwick so he's getting a good deal).
I made $50 from investing $1,000 in Raiz two years ago and pulling out just before the Covid plunge.
I also have my investment returns in Spaceship ($1,600) and Vanguard Diversified High Growth Index ETF via Superhero ($10) but they're not realised.
(Spaceship note: This is the interviewee’s overall investment performance as at 30 November 2021. Past performance isn’t an indicator of future performance.)
What advice do you have for other people who want to earn more money?
Stop spending like an idiot! Saving money is making money. Lock your money away in investments, promise yourself not to touch it and future you will thank you.
Save
What's your savings rate? How has it changed over time?
Currently it's at 81%. When I was on Centrelink as my only source of income it was more like 50%.
Do you have a budget?
No, since my spending is quite low. I use Pocketbook to track my money and feel guilty if I've spent more than the previous month.
How much do you spend per year?
About $10,000-12,000.
Do you make purchase decisions carefully, or are you loose with your money?
I am usually pretty careful in how I spend my money. When I'm grocery shopping I'll use gift cards that I bought with 5% cashback, I'll always buy home brand and by unit price, and use my FlyBuys deals and points.
With more expensive items I like to buy things that I know will last me ages, like my M1 MacBook Air (bought with an eBay discount I saw on OzBargain alongside 5% cashback gift cards).
How is your work-life balance?
At the moment I'm pretty busy so I'd say 70% work and 30% play but it used to be like 95% play a couple months ago.
What's your favourite thing to spend money on?
Having fun experiences with friends rather than spending money on material possessions. Also chocolate.
Invest
How do you invest?
As soon as I get paid I dump as much money as I can into Spaceship and Superhero and try to live with about $200 in my account for the week.
What's been your best investment?
I invested $100 in bitcoin for a laugh about two or three years ago, and now it's worth $800. Pretty crazy.
What's been your worst investment?
Not had anything tank but my Superhero investment hasn't done much yet since I only invested in it two months ago.
What’s been your overall return?
$2,410
How are you building wealth?
I'm actively investing and saving money by spending less wherever I can by using deals like cashback and sites like OzBargain to help me.
I like playing around with compound interest calculators, super calculators, and mortgage repayment calculators to get a feel for how much money I should aim for.
What are your main roadblocks to building wealth? How are you addressing them?
My major roadblock is my income as it will take me a few years to climb the corporate ladder to have an income I'd be happy with ($100,000+). But I've learned that with compound interest, investing a dollar now at the age of 20 could be worth roughly 88 times that amount when I'm 60, so that makes me feel better about not having a fantastic income at the moment.
Do you have a target net worth you want?
I want to be able to retire at age 50 with a $2 million home and $1 million in super so I can live off the dividends without reducing the nest egg.
Behaviour
When did you make your first significant behavioural shift towards wealth building?
When I moved in with my boyfriend two years ago he got me hooked on finding good deals and then we fell down the investment rabbit hole together a year ago when I made my first ever investment in Raiz.
If you could start again, what would you do differently? What advice would you give your younger self?
I'm pretty satisfied with how I behave around money but I guess sometimes it would be nice to not feel guilty about treating myself every so often. If I could give advice to my younger self I would tell her to bet everything on Verry Elleegant to win the 2021 Melbourne Cup.
What mistakes have you made along the way that others can learn from?
That you don't need a minimum amount to start investing unless there's a brokerage fee. So it's good to start small and go from there. Don't freak out over the dips, just ride them out. And it's probably not a good idea to check your investments every day (but I still do that for fun anyway).
Do you have any worries about retirement? If so, how are you planning to address them?
I'm excited to retire. I can't wait for financial freedom and the ability to fill my days how I like. If I keep working, it'll be because I enjoy the work. Having a retirement goal of $1 million is a huge motivator and I'm keen to achieve it.
How are you learning about building wealth?
I watch financial YouTube videos about saving for deposits, mortgages, retirement nest eggs, etc. I haven't read any books yet but I'm keen to.
Do you give to charity? If so, what percentage of your time/money do you give?
Here and there I'll chuck $10 to pet rescue or the homeless. Once I have a bigger income I'll look into sponsoring a child through World Vision.
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.
