Taking control of your finances when you turn 18

23 March 2016 / Published in Your Money

Turning 18 and finishing school is an exciting time – it opens the door to opportunity, freedom and independence – but it can also be daunting.

One of the biggest changes is you’ll be looking after your own bank account and finances if you haven’t already been doing so. Here are a few tips to help get you in control.

Find the right account

Now that you’re 18 it’s a great time to make sure you’re on the right account as you may find that certain accounts have a maximum age limit of 18. We have special packages, whether you’re working, studying or starting an apprenticeship

Understanding your banking package

You also may come across new terms in your next banking package. Here are a few key banking concepts you might see.

  • Interest. There are two types of interest – one type of interest is the extra money you can earn from having money in an account. The other, is interest you might pay on money you have borrowed with something like a personal loan or credit card.
  • Fees. These can be charged to you for a number of reasons and for a number of services depending on what accounts or products you have.  We encourage you to read the terms and conditions in your banking package so you know what you’re paying for.
  • Credit cards. A credit card allows you to purchase goods and services now and pay them back later, with interest.  With many credit cards, you can get an interest free period on purchases if you pay off your card in full every month.
  • Overdrafts. Basically, the bank allows you to take more money out of your account than you currently have, up to a set-limit and with the expectation you will pay it back. Some overdrafts come with fees and interest so it’s important to find out what these are. Learn more about overdrafts.

Tips for managing your finances as a school leaver

  • Set a budget. Up until now most of your expenses may have been covered by your parents. Now that you’re in charge of your accounts you might be managing all of your own expenses. A budget is the best way to manage your money. To make it work, we encourage you to write it down. This gives you something clear to look at and helps you really understand what’s coming in and what’s going out. Want to know more about budgeting? Read this post.
  • Keep on top of your spending. The ASB Mobile app can help you track your spending in real-time. It also has great features like the quick balance function. This will help to see if you’re sticking to your budget and if there are any changes you need to make.
  • Think in terms of what you actually get in your bank account. When you start working, you’re probably told your hourly wage or your yearly salary. But it’s easy to forget that amount is your total pay (before any deductions have come out). To work out your actual pay, take your wage and then subtract PAYE tax, ACC, KiwiSaver contributions and any student loan repayments. If you’re having trouble figuring this out, this is a really great tool for calculating your take home pay, or you can contact IRD for their help. So remember, your take-home pay that is deposited into your bank account is your wage less these deductions. It could be less than what you thought you might get so you should factor this in when budgeting.
  • Consider KiwiSaver. Whether you’re working full-time or part-time, or even if you’re studying, it’s a good idea to look into KiwiSaver. KiwiSaver can help shape your financial future and could even help you into your first home. The great thing about KiwiSaver is not only do you make contributions yourself but if you’re eligible so do your employer and the Government. Your savings are then looked after by a KiwiSaver provider who invests them. You can read more about KiwiSaver or contact us on 0800 272 738 (0800 ASB RETIRE) to figure out if it’s right for you.
  • Ask your parents. Even though you’re now in charge of your own money, you can still ask your parents for advice. They’ll be sure to have tips for budgeting and managing your finances they can share with you. This blog is also a great place to come for learning more about managing your money; our money tips category is a great place to start.

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