Ask Paul: My daughter wants to save every dollar from her full-time job


Dear Paul,

My daughter has her first job, earning $50,000 a year. She also has a casual job as a sports coach for about 10 hours a week.

She has changed her tax status on her casual job, so she pays tax on every dollar.

ask paul clitheroe my daughter wants to save every dollar from her full time job

She wants to save as much as she can while living at home and is looking at banking/saving her full-time wage, giving herself spending money from her casual wage and salary sacrificing into super from her casual wage to reduce tax.

Does this sound reasonable? - Rachael

Wow, this sounds terrific, Rachael.

I, along with many other people, have spent a lot of my working life with government and industry, trying to build a schooling system and other financial literacy initiatives, so your question gives me great joy.

It shows me a young woman who has a deep sense of financial literacy. Living at home using her part-time coaching money for spending and saving 
100% of her salary is just great.

My only question is about tax. Despite her coaching job, her tax rate is still low. We do pay 15% tax on money going into super from our wages. I wonder if she wants money locked into super for possibly 40 to 50 years with no access to it. I doubt there is much of a tax break in super for her at this early age.

My general advice to young people is to appreciate the fact that super is building up through compulsory contributions, but unless there are exceptional circumstances, I think that saving money under her own control will give her more flexibility regarding investment options, including buying an investment property or a home in time to come.

Well done and please pass on my best wishes.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.