The money survival guide every millennial should read


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Secure long-term employment with benefits, rising wages, affordable homes and the introduction of super gave many baby boomers the means to own a home and accumulate wealth.

But in just one generation things are starting to fray.

There's no shortage of headlines reflecting it: "Underemployment of young people is the highest it's been in 40 years"; "Millennials are the most unhappy about work and life in the world"; and "Fall in home ownership threatens to sink Australia's retirement system." It's news to everyone - except millennials.

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Associate professor Sarah Kaine, at the Centre for Business and Social Innovation at UTS, says a number of trends have come together to create a more insecure work life.

"You've got the platform economy, the gig economy, peer-to-peer sharing, whatever you want to call it, that has a particular type of work attached to it which is flexible but also precarious.

"Then you have portfolio workers who are at the top end of the labour market, who go about providing themselves with some security despite what looks like an insecure form of work.

"Then there are the recent graduates who will take unpaid internships. So there's a conflation of trends and the result of all of them is, at least temporarily, a more insecure employment relationship.

"Add to that trying to get together enough money to buy a place somewhere or even try and rent in a capital city. I don't envy any millennial figuring out how to get through that maze of obstacles."

Everyone knows someone affected by it.

"There is probably someone you know that has been on rolling contracts or is in casual work and looking for more work and is underemployed," says Kaine. "It is such a prevalent situation that it would be unusual not to be touched by it."

From the baby boomer perspective it's a "labour market that is unrecognisable, a different world".

A report by accounting firm Deloitte in April found millennials or generation Y (born between 1982 and 1999) are pessimistic about their chances of owning a home.

Only 8% believe they will be better off than their parents and only 4% believe they will be happier.

Boost your income

Adrian Raftery, associate professor at Deakin University and course director of financial planning, encourages millennials to be proactive.

"They need to build their resume, and do extracurricular activities to make them stand out and show they are a good team player and a good communicator. It's what employers love.

"At work put in a solid effort so that you are the last person the employer wants to get rid of. Show them you are adding value to the business. With all that will come opportunity ... your casual job may become permanent.

"Find ways of increasing your income. That may be by doing extra study.

"You may need to upskill, maybe do a master's degree to get you into the higher-paying jobs, or be promoted more quickly and with that get a pay increase. Always look to continually improve yourself."

Build a buffer

"The biggest thing for millennials is the risk of living pay cheque to pay cheque," says Dominique Bergel-Grant, a director and financial planner at Leapfrog Financial.

"The first thing to focus on is getting some savings behind you so that if there is an emergency you've got a cash buffer.

Understand what your costs are to keep a roof over your head and food on the table, then make sure anything you earn in a particular week above that amount is put into your savings account.

Once you've determined what your weekly spending allowance is withdraw cash from the ATM. Don't use payWave.

"Some weeks where you don't have that level of income, you have a resource to fall back on and not have to use a credit card. And be really strict about putting pay increases into your savings account."

Bergel-Grant says consider living at home longer. "The old cliche, 'rent money is dead money', is true. It's stopping you from moving forward financially."

Or if you must rent, then share with friends to make it more affordable and help you save for that home deposit.

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Renting's Bessie Hassan says that when applying to rent a place you need to be organised.

"You will be assessed on your financial means to pay the upfront payments - the bond and advance rent - and pay the rent on time." She says a well-written letter with your application could give you an advantage.

"You could detail how you are able to afford to pay the rent and maintain the property. Offer to pay a month's rent in advance to show you are serious.

"You might include references from previous landlords. Make sure you have a rental bond equivalent to four weeks' rent to offer for security purposes."

The agent may check national tenancy databases for your rental history and seek verification for all the other information you've provided such as work history and pay.

"Some agents request a prospective tenant to provide a consent for them to obtain access to their credit report for the purpose of checking their credit worthiness. However, the act prohibits disclosure to anyone other than a credit provider. Therefore, credit reporting agencies are prohibited from providing this information to a landlord or property manager," says Hassan.

Car loans

When buying a car, don't accept the first loan you see, says Hassan.

"Compare low-interest loans from credit unions, banks and dealers and factor in any monthly fees.

"Regardless of which lender you decide to go with, negotiate a discount on your interest rate and ask for the upfront fees [$100 to $600] to be waived. If you can, provide a deposit from savings or in the form of a trade-in. This means you're borrowing a smaller amount compared to the value of the car."

The corporate watchdog ASIC says it's a good idea to know what's on your credit report.

"You are entitled to check your credit report for free once a year. If you need to see it quickly, there may be a charge but if you are prepared to wait a little longer (about 10 days) it won't cost you anything."

An incorrect listing can alert you to identity theft. But don't give your details to any credit agency on the net. There are plenty of scams. Find out more at MoneySmart.

Buying property

The biggest challenge for millennials is to get a toehold in the property market. For generations home ownership has been the cornerstone of wealth creation.

Remove it and there are dire implications for life in retirement.

Raftery says the earlier you can buy the better off you will be.

"I know when I did the numbers years ago when I was in that age group, 25 years of paying a mortgage was a lot better than paying 50 years of rent, which is dead money."

But don't overextend yourself.

"Discount by 30% whatever the bank says you can borrow. Not only will it make the loan more affordable but it will also protect you on the downside. What if you don't get a bonus or lose your job?"

Try to pick a place where there is a greater likelihood of appreciation, he says. "I'm a huge fan of buying a house with land of a decent size rather than a unit. By buying a unit all you are doing is buying air rather than anything else. The ability to appreciate in value isn't as great."

While new blocks of units with underground parking, gyms, pools and a 24-hour concierge may have lifestyle appeal, they also have hefty strata levies.

"And these units don't have a sinking fund yet so the initial purchasers of the properties have got to invest a lot of money - $10,000 to $12,000 a year - to build up the sinking fund."

Disheartened millennials often consider buying and selling an investment property to fund their own home but Raftery says there are risks attached to the strategy.

"There are some pretty high entry and exit transaction costs.

"People think, 'I'll buy the investment property for $500,000 and sell it for $650,000,' but don't take into account the conveyancing costs, stamp duty, agent's commissions and capital gains tax. All of those add up.

"For a raw $150,000 profit, they may only see a portion of that. It's even further diminished because they would've had the property negatively geared in all likelihood for perhaps the five years they've held it.

"So they may be making a loss of $10,000 for five years. Yes, they get a tax benefit off it but the net after-tax loss has to form part of their calculation when they make an assessment to see if they've got a good return on investment or not.

"There's no guarantee with investments. If you are guaranteed a 15%pa return you'd do it. You've borrowed at 5% and get 15%. You'd do it 100 times over but it's partly glorified gambling when the market is as high as it is right now."


Martin Fahy, head of the Association of Superannuation Funds of Australia, says the average 25-year-old entering the workforce now can expect to have 30 to 40 different roles and up to 20 employers before they retire.

Clearly, millennials will need to have their wits about them.

"Super is your money - you should be actively engaged in monitoring and managing it, whether it's finding and consolidating accounts, salary sacrificing, looking at investment strategies and fees, or simply working out how much money you need to ensure you have enough," he says.

The good news is super's generous tax concessions make investing for retirement very attractive.

"Ask a 60-year-old what would they do differently about money and most of them will say, 'I wish I had put more money into super, knowing that money makes money'," says Raftery.

"If you put $25,000 a year into super over the next 40 years as a couple, that's $1 million. You are potentially saving up to 32% tax on that amount, which is $325,000.

"And that's without taking any earnings into account. So try not to have only the basic minimum going in because money makes money. You've got another 30 to 40 years of work and it's a forced form of saving as much as anything else."

Time is your friend, says Bergel-Grant. "You should be in a growth or high-growth style of portfolio because there's no point holding cash for the next 40 years.

That's not going to make any significant amounts of money. You'll be invested in good markets and bad but realistically if you believe the sharemarket will be worth more when you retire than where it is today there's no reason not to be mostly fully invested in the market."

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'I try to save 10% a week'

Marlee Redshaw, 24, is in her final year of a bachelor of business management at the University of Technology Sydney, majoring in events management. She also juggles two jobs: one at the university in its events team and the other on weekends for an events management company.

Her work helps pay the bills: all the costs associated with going to uni, running a car and having some sort of a social life.

"I also try to save 10% a week but things come up," she says. She keeps a credit card for emergencies only. While her current jobs pay super, there are no employee benefits.

Marlee hopes to move to Sydney from the NSW central coast next year for work. "It would have to be shared accommodation because rents are so expensive. It makes it difficult to save for a house deposit, stamp duty and everything else that comes with buying and owning a house.

"My family has always owned a house so I anticipate wanting to own my own home to bring up my family in. But when I look at the market, I wonder whether it's going to be a future of renting."

Redshaw has a paid internship under a program run by UTS, which should give her an edge after graduation.

"It's hard to get into the industry you've trained for these days. If you look at job ads, they all want two or three years' experience. The best way to get in is to volunteer with those organisations and get your name known so you have a better chance when a paid position becomes available.

"I was lucky enough to get a paid internship but some of the internships aren't paid.

"So you need to balance the hours you are volunteering to get the job at the end of your degree but still cover your overheads and costs."

She says she been fortunate to be able to live at home.

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Vita Palestrant was the editor of the Money section of The Sydney Morning Herald and The Age. She has worked on major metropolitan newspapers here and overseas and has won several prestigious journalism awards including the 2001 Citigroup Award for Excellence in Journalism, Personal Finance Category.