Paul Clitheroe - tertiary study - a great investment
13 Feb 2012
ipac Paul Clitheroe
my weekly view
When we think of long term investments, things like shares or property tend to come to mind. But one of the best investments we can make is improving our own skills and qualifications. That’s what thousands of young Australians will do over the coming weeks as they head off to TAFE or uni, and while it can mean sacrifices today, the financial rewards are worthwhile.
Research continually shows that workers with post school qualifications have less trouble finding and keeping jobs. The real drawcard though can be the difference that skills and qualifications make to your income.
A 2008 study by AMP NATSEM found that over a working lifetime, a university graduate can expect to earn around 70 per cent more than their peers who went no further than Year 12. In dollar terms that’s an extra $1.5 million in total earnings.
Whether you choose to study at TAFE or uni, the downside can be scraping through your student years on a low income.
Nearly one third of full time VET (Vocational Education Training) students and over half of uni students balance study with part time jobs. Even if you receive some government financial support, that can mean living on a fairly lean income at least until you graduate.
This makes it worth putting plans in place to manage your finances while you study.
A sensible starting point is drawing up a budget. This will show all your sources of income and your regular outgoings. You may not be sure what bills you’re going to be landed with at this stage but it’s critical to have at least a fair idea of unavoidable expenses like rent, phone, internet, electricity and transport.
When it comes to day to day spending, it can help to keep a notebook and list everything you pay for over the course of a month. A couple of beers at the uni bar once a week, a few coffees after lectures and a daily takeaway lunch can quickly add up. Recording your spending will show where you could cut back to help make ends meet.
When you’re on a tight budget, every cent counts so track down the best student bank account for your needs. Plenty of financial institutions offer fee-free everyday accounts, and many others will waive account keeping charges for full time students.
Some banks offer ‘packages’ to students that incorporate a credit card and possibly a personal loan. You need to think very carefully before taking these on. The last thing you need is to enter the workforce saddled with high interest credit card debt. So, use your budget as a guide for spending, and if you are struggling to purchase essentials like textbooks, speak to your student union to see what financial support is available.
It’s worth pointing out that being careful with your money doesn’t have to mean living your student years as a hermit. It’s a question of balance, and if you can learn to live within your means during those cash strapped student years, you’ll be well placed to forge ahead once you start earning serious money after graduation.
For more tips on managing your money, take a look at my book Making Money.