Starting your first job
When you start receiving a regular salary, it’s an exciting feeling of independence and adulthood. Seeing the money in your bank account is the fun part, but it helps to know how much is deducted from your pay automatically, and how to spend and save in a smart way.
Understand your pay slip and your rights
Your employer is required to give you a pay slip whenever you get paid. Check every pay slip you receive to make sure it accurately shows your:
- gross pay—your money before tax, superannuation contributions, HECS repayments or other deductions
- net pay—the money that goes to your bank account.
If you’re unsure about something on your pay slip, then ask your employer to help you understand it. You can also contact the Fair Work Ombudsman to help with issues related to pay, leave, exiting your workplace, your entitlements, and other awards and agreements.
Celebrate for the long term
When you start to earn more money, you may have an urge to spend in celebration. Keep in mind that there’s a difference between:
- spending on one-off costs—buying new clothes, going on a holiday or saving up for an anniversary gift
- taking on new ongoing costs—moving somewhere with higher rent, adopting a pet or increasing how often you eat at a restaurant
- a combination of both—buying a new car that’s expensive to maintain or getting a new phone with a more expensive subscription plan.
By accumulating too many ongoing costs, you can quickly end up living beyond your means. At the same time, if you haven’t budgeted for non-essential one-off costs, you may overspend without realising.
Put money away for the future
Super or savings accounts are two places you may want to save your money.
How super works
Money for your super will be taken out of your gross pay automatically. This money enters your super fund and you can only access the money when you reach a certain age. As you keep working, your super balance will build over the years, so it can help to keep track of your super and learn more about your options.
How savings accounts work
One way to save for big purchases is to set up a high interest savings account. Many savings accounts ask for minimum monthly deposits and only allow a limited number of transactions. These rules are in return for an interest rate that’s higher than what you get with your everyday account. The interest will usually be deposited into your account monthly, so it’s a no-risk way to grow your money.
To make good decisions with your money, try using our Budget planner calculator to understand what you can afford.
Save money through smart banking
There are ways to set up your banking to make the most of your money:
- Save on bank fees—Set up an everyday bank account that has no fees, free access to check your balance and no minimum deposits.
- Pay off any debts that have interest on time—Make it a priority to pay off credit cards or any debt with high interest rates, so you can avoid excess charges.
- Set up your automatic direct debit payments—Follow instructions on your bills to set up automatic payments to avoid late fees.
- Make savings a part of your monthly budget—Make sure your budget includes an amount that you put away into a high-interest savings account.
To stay focused on saving, it helps to have a goal in mind.
Understanding your HECS-HELP debt
If you have HECS-HELP debt, compulsory repayments will automatically be deducted from your pay when you earn above a certain amount.
You’ll pay a percentage of your ‘repayment income’
No matter the size of your HECS-HELP debt, the amount you repay depends on how much you earn—the more you earn, the higher your compulsory repayments will be.
Over the last 10 years, the repayment percentage has been between 4–8% of repayment income. You can visit the Australian Taxation Office (ATO) site to see the latest repayment threshold and repayment percentages.
Your pay slip will show how much HECS-HELP debt is withheld
You can check your pay slip to see how much money is withheld from your pay to go towards HECS-HELP. For example, if your salary is $60,000 including super in the 2014/15 financial year, your monthly compulsory repayments will be approximately $182. This money is withheld each month and then transferred to the ATO as a repayment at the end of the financial year.
There is no interest charged on HECS-HELP debts
Your HECS-HELP debt is a no-interest loan, but it will usually increase each year based on the consumer price index (CPI). On 1 June each year, your HECS-HELP debt will be adjusted based on this figure. In 2014, the CPI was 2.6%.
You can make voluntary repayments
At any time, you can make a voluntary repayment to the ATO to reduce your HECS-HELP debt. In the 2014/15 financial year, you’ll benefit from a 5% bonus on any voluntary repayment amount.
The decision to pay off your HECS-HELP through voluntary payments will depend entirely on your situation. You may calculate that you could benefit more in the long run, if your HECS-HELP debt is cleared and that money is no longer deducted from your regular pay packet.
Each year, the government adjusts the minimum threshold and repayment rates. So keep up to date with annual changes to HECS-HELP, so you can choose the best way to manage your debt.
Important informationShow more
It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions before deciding what’s right for you. This information hasn’t taken your circumstances into account.
This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.
The bank product issuer is AMP Bank Limited.