Super changes - effective 1 July 2022

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The sooner you start planning for your future, the better. Developing healthy budgeting, investing and savings habits in your 20s can help you now – and set you up for future financial wellbeing. 

Key points:

  • Compound interest can help you grow your savings, without thinking.
  • Superannuation is now at 10% and is a compulsory payment for most employers to employees.
  • There are strategies to rebuild your super if you withdrew funds early due to COVID-19.
  • Whether you like risk or are more conservative, there are investment options for you.
  • Life insurance is not just for retirees. Discover how you could benefit, 

If you’re in your 20s, chances are that life could feel like a bit of a rollercoaster right now. The economic fallout of COVID-19 may have knocked your personal finances for six and, at the same time, you could be faced with new expenses and experiences for the first time, such as moving out of home and starting your first full-time job. Learning to juggle competing financial priorities and save for the future is essential.

While these lessons may be confronting at the moment, they can also teach valuable skills that your future self will thank you for. If you do things right in your 20s, you can lay the foundations for a solid financial future and set yourself up for life. Here’s how to put some sound plans in place to give yourself more choices about how you live your life in the years ahead. 

Get budgeting

It might seem obvious but getting in to the habit of budgeting when you’re young is one of the best ways to boost your future financial wellbeing. 

Start by tracking what money you have coming in (your income) and going out (your expenses). It’s important to understand where your money is going and what proportion you’re spending on essentials, like rent, food and utilities, and non-essentials, like entertainment and clothes. Brush up on the basics of creating a budget , then use a budget planner calculator to help you get started.

Practise mindful spending 

No matter what your financial situation is at the moment, this is an ideal time to learn savvy spending techniques. Practising mindful spending is an easy way to ‘trick yourself’ into saving money. And when you do need to buy a big-ticket item, do your research, shop around and, where possible, look out for seasonal sales to help stretch your hard-earned dollars further. 

If you get in the habit of doing all of this from an early age, saving money will become second nature; you’ll start to put money away for your future without even thinking about it, which could benefit you in the long-term. 

TIP: It’s a good idea to have a separate emergency fund, for when life throws you a curve ball.

Compound your interest

When you’re in your 20s, your budget is usually pretty tight and there are plenty of other demands on your income. But if you can spare a few dollars from your pay, it can make a big difference later on. 

By starting to save in your 20s, you have a great opportunity to maximise the growth potential of compound interest. This means that you not only earn interest on whatever funds you deposit into your savings account, but you also earn interest on that interest. It’s extra money – without the extra effort.

For example, if you begin with $100 in an account earning 2% interest a month, and deposit just $10 into the account every month, in 10 years you’ll have $1,449 in the account – $149 of that pure interest. If you keep doing that for your
entire career, say 50 years, when you retire you’ll have $10,568. Of that, $4,468 – almost half – is pure interest. You can test this out for yourself on the MoneySmart compound interest calculator.

One of the simplest ways to make compound interest work is to ‘set and forget’. Establish a direct and automatic transfer from your everyday account to your savings account, so you don’t have to do anything to make your money work harder for you.

Watch your super grow

Once you earn more than $450 a month and you’re over the age of 18, superannuation is compulsory in Australia for most employees1, which typically means you’re in the fortunate position of being able to start financial planning for your retirement.

So, rather than thinking of super as a burden, think of it as an easy way to save for retirement while you’re young. It can be tax effective and harnesses the benefits of compound earnings.

Choosing your super account

When thinking about super, your first task should be to choose a super fund for your employer to pay your superannuation guarantee (SG) contributions into. The next step might be to consolidate your super accounts. If you've had more than one job in the past, chances are you’ll have multiple super accounts – you may not even know they all exist. Think about bringing them all together to minimise the fees you’re paying. Make sure you understand the differences between each super account and any insurance benefits you have and may lose, when you’re thinking about consolidating.

Your final, but most important, task is to make sure your super account is working hard for you. When you’re time-poor, it’s easy to let your superannuation tick over in the background. But it’s a good idea to be mindful about your retirement savings and become familiar with the different investment options your fund offers.

Around one quarter of super investments in Australia sit in a default MySuper fund[1]. If this includes yours, it’s worth looking into whether this type of fund is best serving your needs. 

Another reason to take a more active role in your super is that it makes it easier for you to choose a fund that’s in line with your own values and goals. Learn more about super investments

If you withdrew your super early 

If you’ve been affected financially by the COVID-19 pandemic, you may have withdrawn some of your super early, under the government’s early super access scheme in 2020.

While it might have helped in the short-term, it’s important to consider the long-term implications of withdrawing any money from your super. Just as compounding earnings work to grow your retirement savings over time, the reverse is also true, and any money that was withdrawn could have been worth much more by the time you’re ready to retire.

If you did withdraw some of your super early, think about whether you can commit to a plan for paying it back, once you’re on your feet again. There are a number of strategies to do this, including making personal contributions to your super. 

Ditch personal loans and credit card debt

It’s easy to over-extend your finances when you’re young and starting out in the workforce. In your 20s, your social life can often dictate your expenses, and even become unconscious spending habits. Add to this your existing debts and the high cost of everyday living, and your expenses can build up, making it tempting to take out loans. But falling into credit card debt at an early age can quickly spiral into an unhealthy financial future. 

If you do have any spare cash at the moment, it may be a good idea to prioritise debt repayments. Write down all the money you owe, then rank each debt in terms of the interest rate on the amount. Payday loans and credit cards generally have higher interest rates, so you should prioritise paying them off first. Learn more about managing debt.

Learn to invest wisely

While you’re in your 20s, retirement isn’t just around the corner, which means you have more flexibility with your finances than someone in their 60s  who may be planning to leave the workforce in a few years.

With fewer financial responsibilities, you may be in a position to take a few more risks with your investments –if things don’t work out, you’ll probably have time to fix them, or ride out the market highs and lows. 

Start early and consider talking to a financial advisor about choosing a mix of investments that will bring you gains you feel comfortable with – like the stock market, cash or perhaps property  – depending on your financial investment style.

Insure yourself

While you’d like to think you’ll be healthy and happy forever, chances are you’ll need medical assistance at some stage in life, including retirement. If you’re thinking about taking out private health insurance, there are incentives to doing so while you’re young. 

In fact, if you take out hospital cover after your 31st birthday, you’ll have to pay a lifetime health cover loading on top of your insurance premium3. This works out to be an extra 2% on your premiums for every year you’ve waited. That’s a big financial incentive to invest in your future health, right now. 

Other insurance types, like life or income protection insurance, can cover you if you can no longer work to support yourself or your loved ones. Our insurance needs calculator can help you get an idea of how much insurance you may need here.

1 Australian Taxation Office: Super- Employees
2 Association of Superannuation Funds Australia (ASFA): Superannuation Statistics
3 Australian Taxation Office (2021): Lifetime health cover

Get started in 3 easy steps

Choose your super fund

If your super is in a MySuper account, check whether this is right for you.

Search for lost super

Consider bringing the balances from any additional super funds into your primary fund.

Remember to look at what insurance cover or benefits you may lose by doing this before you consolidate.

Think about long - term financial goals

Consider compound interest for your savings, repay early super withdrawals and grow your super to make your money work harder for your future.

Speak to a super coach

If you’re an AMP super member and would like to know more about your super, book a complimentary 20-minute super coaching session.

Tools & calculators

What you need to know

Any advice and information is provided by AWM Services Pty Ltd ABN 15 139 353 496, AFSL No. 366121 (AWM Services) and is general in nature. It hasn’t taken your financial or personal circumstances into account.

It’s important to consider your particular circumstances and read the relevant product disclosure statement, Target Market Determination or terms and conditions, available from AMP at, or by calling 131 267, before deciding what’s right for you.

You can read our Financial Services Guide online 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. You can also ask us for a hard copy. The information on this page was current on the date the page was published. For up to date information, we refer you to the relevant product disclosure statement, target market determination and product updates. All information on this website is subject to change without notice. AWM Services is part of the AMP group.

The super health check is provided by AWM Services and is general advice only. It does not consider your personal circumstances.