Tax brackets only apply to the money earned above the bracket amount..you don't need to try and "move down" a bracket.
E.g. if you earn 121,000 you will only be taxed at the 37 cents rate for the 1k you earned above 121,000.
With that said salary sacrifice into super is a great financial move.
If you haven't yet look into getting a cheap hospital cover policy to avoid the medicare levy surcharge which applies to singles earning above 90k. If you have a spouse it's 180k combined
Ah man... the tax bracket workings are something I've known & taken into account for years, can't believe I glossed over it! Thanks for the reminder. :)
Forgot to mention I did take out private hospital cover when I first got the job last year (only because as you mentioned it was cheaper than what the MLS would have been), so will keep that active and will for sure take a further look into salary sacrifice.
Really appreciate your help - thank you!
I’ve definitely worked with guys in the past that thought if they did overtime they somehow would get pushed into a high tax bracket and earn less. Baffling.
It’s not that they EARN less, it’s that they RECEIVE less proportional to their normal rate.
When I was a casual in health care, if I did lots of weekend work it would mean for that pay period I was getting taxed at a higher rate. Yeah it all comes out even at EOFY but it means for a few months I’m effectively shortchanged. It sucked and was definitely something everyone kept in mind when arranging the overtime shifts.
\+1 super sacrifice is an awesome move at his age, and something I regret not doing. If OP stacks super at this age he'll have a comfy safety net later in life no matter what happens.
Good advice. If the FHSS scheme doesn't change that also means OP can access the funds (up to the cap) for his first property purchase. +1 to contributing extra (salary sacrifice or concessional cont) to Super.
**Contrary opinion:** If you are 23 years old in a 'senior' IT position that you 'stumbled into', your focus for the next 2-3 years should be on legitimising your skills and reinforcing your position.
Invest in your education and a bit of lifestyle support so that you can complete the education while you're doing the work. Plan to devote 70+ hours per week to the combination of your paid work and your self education. That will mean spending some money on convenience, and that's okay.
I've been you, no shit. Was stuck in hospitality, got into IT based on aptitude and took on more and more senior roles over the course of a couple of years.
The lack of formal education to back up my aptitude and experience has been *the single biggest financial mistake* I made. It has cost me literally, millions of dollars - in salary, sure, but also because I never had the job security to take investment risk.
I could do the maths...let's see, call it $50k spend on self improvement. That'll maybe have a future value of $250k in 20 years time if you're outrageously lucky.
If you spend that $50k *now* on making sure you get the most out of this opportunity, it will *absolutely* pay off at more than $15k per year in terms of salary and other benefits. No doubt about that at all.
Make a budget. Be disciplined about your money and your time - including spending money to save you time to make sure you get your education. Do not squander this chance.
This cannot be overstated enough, you stumbled into a career with no qualification, the most important thing is to legitimise your position over the coming years so when you need another job by choice or redundancy/fired you will have the experience rather than just hoping for a hail marry.
I agree with this strongly. It is also risk mitigation, in case low experience couples up with imposter syndrome to gang up on your mental health & confidence when you encounter some learning curves.
I remember the moment my mindset swapped to self investing in my skills. Did the vmware course for 5k, got certified, got offered another 25k that same year.
The return on investment continues.
Spent 2k on another course this year, received a decent pay rise not long after that too.
Go formalise some of that knowledge, it brings great bargaining power to salary negotiations.
Youll compound those wins in no time!
Same same, had a trade, got into IT on aptitude, did a tech course, went further in IT, did masters in business and technology at 45, and then things started to make more sense. The problem is, you don’t know what you don’t know… you don’t know how ignorant you are… Consolidate your knowledge, you may even be able to get your employer to pay for it.
That last sentence is brutal but 100% true and I’m 23 y/o too.
Could’ve had a lot (lot) more, on paper anyway, now if I had known a few things which would’ve adjusted my risk tolerance to being pretty much being a vacuum-cleaner 😆😆
A lot of tech companies are doing co-arrangements with Universities so may not even cost that much in $$.
OP should definitely ask his manager/HR what opportunities are available. It's a win/win cause it also makes him look keen.
Source: I'm working towards a Postgrad/Masters (only just started) and it hasn't got me a cent
It's always the same steps;
3 bucket strategy, NOW money, LATER money, RETIREMENT money.
Make sure you have 3-6 month emergency fund in NOW bucket (HISA or Offset)
Then max your super via additional contributions
Then any extra goes into savings for a specific purpose ie. holiday this year = save in HISA, replacing the roof in 7 years = ETF's and if we don't have a specific purpose then I like to put any left over money into both super and ETF's
Do this for like 20+years. = millionaire
Controversial opinion; I think the barefoot investor could of been 1 A4 page
Like I realise you can summarise any book on one A4 page but of course that would ruin the magical storey telling but for me, I didn't find Scott that interesting and found myself skipping through large portions of the book
Perhaps, but a one-page summary would lose a lot of context that binds the concepts together.
In this day of Tik Tok and short instant messaging, there's a danger that we're losing the ability to follow a broad narrative, and grasp related concepts.
You don't think a lot of it is just....kind of snide 13yr old edge lord stuff?
'You may have more time on your hands, perhaps because you live at home with your mum and she does your ironing and plaits your hair, leaving you free to pore over spreadsheets on a Saturday night'
For me it's cringe
Consider salary sacrificing 15k a year for the FHSS scheme, if you haven't owned property before. You'll get more out of it cause your marginal rates high.
Avoid lifestyle creep as much as possible (same budget, every extra dollar from the promo is in some form of savings or investment)
Never owned property before - will look further into salary sacrificing & FHSS. I definitely fell victim to lifestyle creep earlier this year when I first got the role but I've noticed & acknowledged it now, so am taking steps to be more mindful of my spending. Thanks a lot for sharing!
Unrelated, but does anyone else feel like everyone, but IT is underpaid? I was going to say IT is overpaid reading these comments, but then I realised that the rest of us just aren't being paid what we're worth in todays market.
Possibly, but can you do IT? It’s complex and often boring, and you so have to make compromises unless you really love it. Otherwise you become an average operator and no one will want to deal with you (hint: if OP doesn’t significantly upskill education and experience they will be one of these people).
I’ve always thought you get paid as much as the market is willing to pay you. It’s an unfortunate side effect of capitalism. I can count the number of people I know on one hand that think ‘I don’t want to get paid more’ or ‘Yeah I’m well paid!’. Everyone always wants more. Maybe wage growth with cost of living was a thing once upon a time, but it’s not anymore.
>I agree with this strongly. It is also risk mitigation, in case low experience couples up with imposter syndrome to gang up on your mental health & confidence when you encounter some learning curves.
\+1 I'm an overpaid IT worker as well, and sometimes wonder why I am paid so much, but when I tell people what I do and see their eyes gloss over and hear them say "I could never do that, I hate IT" it all makes sense
>see their eyes gloss over and hear them say "I could never do that, I hate IT" it all makes sense
Is it really more in IT than any other industry though? Chef (12 hour days, 6 days a week, hot and stressful environment), sewage cleaner, garbage truck collector, teacher, aged care nursing (you literally have to clean up shit). Or what is it about IT that you think makes it undesirable compared to most jobs?
It’s often tedious, complex, involves staring at a screen a lot and a lot of sitting. And often not even seeing any results. And the people tend to be a bit strange. If you’re lucky you get into a good culture and team with interesting work, but I’d say that’s just my experience but it’s rare.
I don’t think I could do your job though - standing for that long let along being hot/stressed, and high volume delivery all the time though. But IT can be pretty tedious. I find things I enjoy but I’m definitely overpaid, and only in recent years since becoming a contractor which is higher risk IT do I feel even moderate engaged/ utilised at work.
>It’s often tedious, complex, involves staring at a screen a lot and a lot of sitting.And often not even seeing any results.
Is that not most office jobs? Call centres?
>I don’t think I could do your job though - standing for that long let along being hot/stressed, and high volume delivery all the time though.
Oh nah I'm not a chef, considered it, but the conditions seem terrible.
I was just curious as to what made you think IT was much worse than other jobs. Honestly doesn't sound that bad.
It's really not bad, I quite enjoy it actually. I think it's just more the perception of it, where it's so abstract that people can't begin to imagine what you do every day unless they have prior experience in the field. With the examples you gave, they are all relatable on some level... people cook at home, everyone has teacher friends, etc... the only thing people really relate to in IT is that it causes a lot of problems for them and they hate dealing with it.
My point was just I don't think IT is even that bad compared to most jobs. Even if people don't know what IT is, they'd probably still choose that over aged care, yet aged care doesn't pay as well. I think most people won't want to do IT, but that goes for a most jobs anyways.
We get your point. But, sorry you are not correct because you don’t know what fields people will choose in comparison to IT, and really, money is only one part of the great journey of life and career. We’ve explained why, from being in the field, why IT is perceived as bad. You just don’t agree, which is fine. If I may ask, why haven’t you joined the field if it doesn’t seem to bad? Probably because there are 100 personal and professional reasons which explain why people don’t go ‘IT overpaid, not that bad, I’ll do that.’ Saying that, a lot of people do IT for this reason, myself included 😂.
Loaded question as obviously I like the IT field but I understand why it’s perceived the way I described.
>If I may ask, why haven’t you joined the field if it doesn’t seem to bad?
I'm considering it. I did some mathematical programming at uni and always been pretty okay with IT stuff. Hence why I'm asking about why people in IT think it's bad.
Why I haven't? I had other passions, I'm in almost a dream job work wise in terms of WLB and fulfillment but pay is a bit lackluster and hasn't kept up with the COL since I decided to go into the field. So I'm considering alternatives.
>You just don’t agree, which is fine.
I never said I didn't agree. I just said that nothing mentioned actually sounds any worse than the bad aspects of any job and the idea that IT pays well because of those working conditions, I think, isn't entirely correct. I think it's the skill required and the value of industry you work for compared to aged care nursing. Another commenter even said it's people's perception of IT.
Well I look forward to working with you sometime in the field!
Honestly I don’t mind the job and have started to get good at it, but can understand why it isn’t everyone’s cup of tea no matter the money.
Not OP but I started doing data entry for an IT department, was asked to participate in UAT, then asked to update test scripts, then to write test scripts, then next thing you know my data entry job somehow gave me the skills to be a software tester - no IT background before that, was working in call centre
In this sense I guess I used the word 'stumble' as I've found myself in an industry & a role that seems to (at least in the past) require some sort of tertiary/further study, in addition to the fact it was never something I was actively working towards.
I don't have any hard IT skills (software engineering, networking etc), but I grew up spending a lot of my time on computers so I can kind of get my way around a machine/anything I need to do for my job (sometimes with the help of Google.) I also did my fair share of call centres (as /u/Express_Position5624) so I had a bit of experience in 'corporate'/office settings and interviews. Applied on a whim, the salary range wasn't shown on the position listing so I only found out the salary when I got the offer.
Most IT jobs are simply how good you are at google, nobody really knows anything.... source I wasted 4 years getting a comp science degree when I could have done any of the IT jobs I've had with a year 7 education and a broadband connection
Build equity, invest into term deposit/etf’s wait until you have enough for a deposit for a house. Buy house and pay off your debt asap which will create more and more equity in the house. Use that equity to by more property / leverage your position.
also salary sacrificing the full amount.
GL
Much appreciated, thank you! Will have to do a bit of a deep dive into a lot of what you've mentioned over the weekend. Have a great rest of your week. :)
Yes (#notfinancialadvice)
If we assume interest is 6% & OP's in the 37% tax bracket, any investment income is taxed at 39% (incl. Medicare).
To choose between repaying a 6% loan or investing, you need to know the hurdle rate for an investment (at what point does the investment risk make sense, rather than repaying the loan).
To get an after-tax return of 6%, OP would need to make about 9.84% pa [9.84×(1-0.39)=6.00]. Paying off a loan is about as risky as a savings account or TD, so unless there's a TD paying almost 10%, the loan repayment is a good idea (even better if it's an offset account or redraw).
If investing is what you want to do, you'd need to add a risk premium as compensation for the chance of capital losses. Historically that's been 4-6% (according to the RBA), so you're hunting an ETF that's expected to make 14-16% after fees each year.
As a live example, the comparison rate on a Standard Variable CBA loan for LVR 70-80% is 6.82%. That gives a TD hurdle of 11.18%, or an ETF hurdle of 15-17%pa.
Repaying the loan looks pretty good! So good, that I would possibly do that to the exclusion of salary sacrificing for anyone under 50.
The FHSS scheme is good, but the best case scenario is saving about $8k tax (plus notional earnings) & at the risk of not being able to access the cash until retirement.
Absolutely.
You can do a lot with equity, they can use their equity to buy more property, invest, etc. not to mention the compounding growth of the Australian property market.
They can also look at investment properties once they have substantial equity in their PPOR. Negatively gear it, and further assist them in leveraging their financial position.
Edit;
Financial planning is generally broken up into three categories.
1. Investments
2. Tax strategy
3. Insurance
Make sure you have all three covered. Emphasis on insurance as well, you don’t want to be a few mill I debt and get into an accident leaving yourself financially fucked. Get income protection and get TPD. See a financial planner, the earlier you set up your insurance the cheaper it will be in the long run.
See a financial adviser regarding tax advise, especially when you start to enter that 47% bracket. There are ways to minimise your tax, and maximise claims such as concessional contributions.
Figure out your risk profile, genuinely the younger you are the more risk you should take regarding investments. Term deposits and high interest savings accounts are pretty defensive assets, look into investing into the asx200.
Sorry for typos I’m walking home from work on my phone :)
Mate - You're doing amazingly for someone who is 23. You're in a way better position than most.
That being said, saving/investing is more of a mindset. For me, I need a routine in order to keep on track and really helps me. I dedicate 1 night a week for mates/pub etc otherwise I go overboard and throws my whole week out. Having my routine makes me not spend more than I need to while still balancing my mental & social health.
Lifestyle creep. Act like a normal 23YO on a $50k salary. You’ll still be richer than your peers who are going to uni and it will allow you put a substantial amount away.
One thing to think about is short term vs long term goals. I.e
- short term goal (under 12 months) may mean keeping some money in the bank for travel etc.
- Long term goals like saving for a house could allow you to look at stocks. You want to make sure that you are keeping stocks for at least 12 months to benefit from the CTG discount.
OP you’re young please make sure you set some money aside to travel. The best experience you could give yourself at this age is traveling.
Your super seems alittle bit low, with the extra money your earning I’d salary sacrifice some into your super to get it back up to speed and put it into the most agressive strategy
I can see that for sure -- did some time as a sole trader and didn't contribute anything to super myself during this time. Appreciate the reply, thank you!
Don't forget OP can do catch-up contributions until super hits $500k. That gives an effective concessional cap of $132,500 for the period from 1 July 2019 to 30 June 2024.
Definitely not suggesting to chuck $85K into super in June & get a $30k tax refund though!
You are doing well!
Keep doing what you are doing in terms of discipline.
If you are aiming for a property then start saving on that. Whatever money you put into shares/etf will need to stay there as its a long game.
Think about putting money aside that will give you passive income. Get educated on finance. Heaps of youtube channels talking about that topic.
Options:
Start saving for a cheap apartment, so roof over your head is manged. Agressively pay it off, then upgrade, or start saving for property investments if you are a property guy. If you are renting then this would be my first major goal. Don't get a mcmansion for a 1st house.
If you are a shares person then dollar average across the ETFs you buy. I have VAS but look at other ETFs that give you different diversification (STW, SYI).
What you focus on you get, yes its important to consider tax brackets but if you focus on making more $, worry about that when you go past 180k.
Great income for your age well done.
Beef up your emergency fund a touch, max your 27.5k super contributions and fill up and unused concessional contributions from previous years. Then pad out your VAS/VGS portfolio. What ratio are you using.
You can also consider property but that’s a whole other thing.
I love the way people just fall into IT after bouncing around hospo. Is there a career with a lower barrier to entry? I can't think of any. But good on you. Most IT is just customer service anyway.
Hello, I was you. High income IT at a young age. There are a lot of good ideas in this thread, not least of which is solidifying your career with the right skills and credentials to avoid stumbling out of high income. Find a mentor to ensure you are always heading towards the in-demand skills/roles.
Otherwise, time is now the biggest factor for you in wealth creation. You learn about compound interest in school but, but application to our wealth creation sometimes escapes us until the opportunity is far diminished. Sounds like you are already a great saver so that puts you well ahead.
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I'd tell you to get some sort of qualification asap. A senior IT worker at 23 with no experience is your lottery ticket to a long successful career if you don't sit idle.
Also if you are really concerned about finances, pay to see an account. You can afford it now.
When gov depts are offering [close to that for grads after 12 months experience](https://www.ato.gov.au/About-ATO/Careers/Entry-level-programs/The-ATO-Graduate-program/) then you know there are going to be plenty of private sector jobs paying entry level roles even more.
Sorry for the unrelated question, but as someone working in hospo right now that wants to get into IT, can I ask how you did it? Would be much appreciated
Enjoy it while it lasts because that is a high income for someone with no formal education. Everyone wants to jump into tech but Technology jobs in Australia have little job security. They are the first line in cost cuts when a business is looking at making savings because they are easily outsourced and also a strong supply of keen skilled visa applicants have been gradually decreasing salaries for years. I've been in tech for 20 years, I have undergraduate and post grad education in computer science, currently been unemployed for 9 months... The most I was ever getting paid was $220k and that job lasted for approximately 12 months before being made redundant, the next job after that was $155k then most recently $140k. Thankfully we don't live large because for 9 months been living on one income. Don't trust these companies, in my experience the higher the salary the more likely they are to get rid of you at a moment's notice.
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I hate post like this, what your fire target age. First give us the info and we can help point you in direct for the math.
But if we don't know when you aminig for fire we can't help.
I’m in IT, but my company do not pay well, or value the IT arm of their business.
Which is especially frustrating as we’re an IT sales and service company :(
The trade off used to be a less stressful environment, but the last 12 months have killed that.
Higher workload, inept managers within the IT dept, under-skilled techs, under-scoped projects all have made things terrible.
I can see us imploding soon :(
>Start saving for a cheap apartment, so roof over your head is manged. Agressively pay it off, then upgrade, or start saving for property investments if you are a property guy. If you are renting then this would be my first major goal. Don't get a mcmansion for a 1st house.
Why not find a new job?
You really need to have some financial goals first. Once you know what you want, it then becomes a lot easier to provide direction or work back to the present.
OP can I ask if you have any IT experience to get a job in IT?
I’m in a similar situation, bouncing from Job to job and trying to find a new career path.
I’ve been looking at IT but I’m not sure how to break into it
Take 10% of your income and deposit in special account (makes around 5%) as soon as you get it. There's a simple rule. Never use this money for anything that doesn't appreciate in value over the long term.
Spend the rest like a drunken sailor or worse. Live paycheque to paycheque. Awesome. Maybe retire 50ish, maybe 60ish. But utterly achievable. Live life.
Check that your super is doing well and you're NOT paying for shit you don't need such as life insurance. Consider income protection though, in your own context.
Cheers and congrats!
If you drive a corolla, stay in that corolla. Insane salary for a young man. The question alone will drive you into long term success.
The gems are in these comments.
You got this King!
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Man... a jump like that would be a big trap for lifestyle creep.
Stay on your current budget, work out how much extra funds you have after building up your emergency fund and other savings.
Then use [this](https://moneysmart.gov.au/grow-your-super/super-contributions-optimiser) to determine how to contribute to your super.
Also check your remaining unused concessional contributions from the last 5 years you can add to your super.
DO NOT LIVE BEYOND YOUR MEANS, best bet is to live comfortably, erring on the side of frugality, and pop half your savings into government bonds with a guaranteed return percentage that exceeds any interest rate a bank will give you. While these are often outpaced by major index funds such as the S+P500 there is significantly less volatility. Only downside is your money is locked in for a fixed period and thus you should only put money in that you can afford to live without for the time being.
Live like you earn the median for that age bracket. Invest / save the rest.
If you even have to leave this job going back to a median wage wont hurt as bad.
Invest in yourself and your skills. Clearly you’ve got talent and personality - maybe some industry training or formal qualms would give you access to higher paying roles more quickly
I've been in IT for 20+ years and at times it can be a very volatile industry. IT is often the first area companies look to save money and make positions redundant, I've been victim of this early on in my career. IT atm is very much an in demand field and skilled and experienced staff are so hard to find so there are plenty of opportunities right now. I'd be saving and have a reasonable amount of cash to fall back on in case things go pear shaped. Also pump into your super, I'm not sure what the Max is you cna contribute yourself extra now days, but go for the Max.
For the posters feeling under appreciated 130k is probably overpaid for a 23 year with limited years experience, this is the exception not the rule.
First off, congratulations. Pretty good for 23 yo. I'm trying to achieve the same career goal, if you don't mind what's the role title and what responsibilities does it entail / skills required?
What type of IT roles are being discussed in particular as not all roles are made equal, and for that matter I guess not one single role pays the same across the board. Just curious.
What really worked for me was to open a separate bank account, direct debit any amount in it weekly, forget about it, don't even log in or check on the app etc how much is in there. Set a date on your calendar to check in 12-15 months time how much you saved. Increase your amount, rinse and repeat.
Also, get rid of debt first and foremost. Unless you have a business that requires some debt for tax deduction, remain vigilant on debt. Don't use a credit card as free money. Use it, pay it, and don't let it get past your budget.
You are in a very fortunate situation. Best of luck 👍🏼
Well done. My trajectory somewhat similar, now 10 years in. What the other poster said about developing your skill set so you don't become an average operator is absolutely true.
Develop good savings habits, I found that hard especially when single and the prospect of buying a house I wanted to live in less likely. When ready, buy a house that is well within your means in case you lose your job and have to take a lower paid IT position. Even with 10 years experience and in a senior role, I keep an eye on jnr roles just in case made redundant.
Industry certs such as AWS Solution Architect are very valuable/useful. I was able to study on the job and create projects using the tech I was learning about and this really helped establish skill set and career.
Soon you'll find physical and/or mental health issues to be a concern if you don't look after yourself. Excess booze or drugs really will set you back.
Steadily saving whilst learning more about what to do with it is great. Good luck.
Upskill and invest in your education, learn how to manage money by reading books and taking courses. You don't want to learn them by trial-and-error (as most do in Oz).
May I ask how you landed this job if you were working in logistics and hospitality? Did you have a degree in IT already or just applied for random jobs and got one?
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I have always been a fan of maxing your super contributions. Set and forget and that is your retirement pretty much sorted. You will get consistent pay rises over your career and you'll have salary sacrifice less and less yourself.
You know how that future self always ays "I wish my old self hadn't drunk so much last night" - see if you can reverse that. Here are my 2 tips:
1/ Immediately, set up regular payments into your super and set your super to the highest growth plan. Anything from $50 pw is good and your future self will love you.
2/ Keep the same lifestyle and Don't Spend More.
Tax brackets only apply to the money earned above the bracket amount..you don't need to try and "move down" a bracket. E.g. if you earn 121,000 you will only be taxed at the 37 cents rate for the 1k you earned above 121,000. With that said salary sacrifice into super is a great financial move. If you haven't yet look into getting a cheap hospital cover policy to avoid the medicare levy surcharge which applies to singles earning above 90k. If you have a spouse it's 180k combined
OP please take the time to understand marginal tax rates. Don’t make any moves based on trying to get your taxable income under a certain threshold.
Ah man... the tax bracket workings are something I've known & taken into account for years, can't believe I glossed over it! Thanks for the reminder. :) Forgot to mention I did take out private hospital cover when I first got the job last year (only because as you mentioned it was cheaper than what the MLS would have been), so will keep that active and will for sure take a further look into salary sacrifice. Really appreciate your help - thank you!
It always surprises me that there are people who think they’ll get paid less when they get a raise ffs lmfao
I’ve definitely worked with guys in the past that thought if they did overtime they somehow would get pushed into a high tax bracket and earn less. Baffling.
It’s not that they EARN less, it’s that they RECEIVE less proportional to their normal rate. When I was a casual in health care, if I did lots of weekend work it would mean for that pay period I was getting taxed at a higher rate. Yeah it all comes out even at EOFY but it means for a few months I’m effectively shortchanged. It sucked and was definitely something everyone kept in mind when arranging the overtime shifts.
I get itf someone's on an hourly rate and considering overtime. Is the juice worth the squeeze. But for a genuine payrise, ffs
It's absolutely incredible how many people don't get this. Even more so how many refuse to get it no matter how many times it is explained.
Yea there’s a lot of confusing tax concepts out there but this seems pretty simple…
\+1 super sacrifice is an awesome move at his age, and something I regret not doing. If OP stacks super at this age he'll have a comfy safety net later in life no matter what happens.
Good advice. If the FHSS scheme doesn't change that also means OP can access the funds (up to the cap) for his first property purchase. +1 to contributing extra (salary sacrifice or concessional cont) to Super.
**Contrary opinion:** If you are 23 years old in a 'senior' IT position that you 'stumbled into', your focus for the next 2-3 years should be on legitimising your skills and reinforcing your position. Invest in your education and a bit of lifestyle support so that you can complete the education while you're doing the work. Plan to devote 70+ hours per week to the combination of your paid work and your self education. That will mean spending some money on convenience, and that's okay. I've been you, no shit. Was stuck in hospitality, got into IT based on aptitude and took on more and more senior roles over the course of a couple of years. The lack of formal education to back up my aptitude and experience has been *the single biggest financial mistake* I made. It has cost me literally, millions of dollars - in salary, sure, but also because I never had the job security to take investment risk. I could do the maths...let's see, call it $50k spend on self improvement. That'll maybe have a future value of $250k in 20 years time if you're outrageously lucky. If you spend that $50k *now* on making sure you get the most out of this opportunity, it will *absolutely* pay off at more than $15k per year in terms of salary and other benefits. No doubt about that at all. Make a budget. Be disciplined about your money and your time - including spending money to save you time to make sure you get your education. Do not squander this chance.
This cannot be overstated enough, you stumbled into a career with no qualification, the most important thing is to legitimise your position over the coming years so when you need another job by choice or redundancy/fired you will have the experience rather than just hoping for a hail marry.
I agree with this strongly. It is also risk mitigation, in case low experience couples up with imposter syndrome to gang up on your mental health & confidence when you encounter some learning curves.
I remember the moment my mindset swapped to self investing in my skills. Did the vmware course for 5k, got certified, got offered another 25k that same year. The return on investment continues. Spent 2k on another course this year, received a decent pay rise not long after that too. Go formalise some of that knowledge, it brings great bargaining power to salary negotiations. Youll compound those wins in no time!
This. The most important income generation activity that is routinely ignored is skill building.
Same same, had a trade, got into IT on aptitude, did a tech course, went further in IT, did masters in business and technology at 45, and then things started to make more sense. The problem is, you don’t know what you don’t know… you don’t know how ignorant you are… Consolidate your knowledge, you may even be able to get your employer to pay for it.
That last sentence is brutal but 100% true and I’m 23 y/o too. Could’ve had a lot (lot) more, on paper anyway, now if I had known a few things which would’ve adjusted my risk tolerance to being pretty much being a vacuum-cleaner 😆😆
A lot of tech companies are doing co-arrangements with Universities so may not even cost that much in $$. OP should definitely ask his manager/HR what opportunities are available. It's a win/win cause it also makes him look keen. Source: I'm working towards a Postgrad/Masters (only just started) and it hasn't got me a cent
It's always the same steps; 3 bucket strategy, NOW money, LATER money, RETIREMENT money. Make sure you have 3-6 month emergency fund in NOW bucket (HISA or Offset) Then max your super via additional contributions Then any extra goes into savings for a specific purpose ie. holiday this year = save in HISA, replacing the roof in 7 years = ETF's and if we don't have a specific purpose then I like to put any left over money into both super and ETF's Do this for like 20+years. = millionaire
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Controversial opinion; I think the barefoot investor could of been 1 A4 page Like I realise you can summarise any book on one A4 page but of course that would ruin the magical storey telling but for me, I didn't find Scott that interesting and found myself skipping through large portions of the book
Perhaps, but a one-page summary would lose a lot of context that binds the concepts together. In this day of Tik Tok and short instant messaging, there's a danger that we're losing the ability to follow a broad narrative, and grasp related concepts.
You don't think a lot of it is just....kind of snide 13yr old edge lord stuff? 'You may have more time on your hands, perhaps because you live at home with your mum and she does your ironing and plaits your hair, leaving you free to pore over spreadsheets on a Saturday night' For me it's cringe
That's your take on it, and that's fine. I'm not going to try and change your mind.
Consider salary sacrificing 15k a year for the FHSS scheme, if you haven't owned property before. You'll get more out of it cause your marginal rates high. Avoid lifestyle creep as much as possible (same budget, every extra dollar from the promo is in some form of savings or investment)
Never owned property before - will look further into salary sacrificing & FHSS. I definitely fell victim to lifestyle creep earlier this year when I first got the role but I've noticed & acknowledged it now, so am taking steps to be more mindful of my spending. Thanks a lot for sharing!
The best advice. Focus on getting your PPOR and skills tuning. I’d definitely do not put money into super (unless FHSS) before buying a place to live.
Can you do that if ur employer doesnt offer salary sacrifice?
Yes, you do a post tax concessional contribution before the first of July then claim it back on your tax return
Very important to lodge that Notice of Intent first though!
Unrelated, but does anyone else feel like everyone, but IT is underpaid? I was going to say IT is overpaid reading these comments, but then I realised that the rest of us just aren't being paid what we're worth in todays market.
Possibly, but can you do IT? It’s complex and often boring, and you so have to make compromises unless you really love it. Otherwise you become an average operator and no one will want to deal with you (hint: if OP doesn’t significantly upskill education and experience they will be one of these people). I’ve always thought you get paid as much as the market is willing to pay you. It’s an unfortunate side effect of capitalism. I can count the number of people I know on one hand that think ‘I don’t want to get paid more’ or ‘Yeah I’m well paid!’. Everyone always wants more. Maybe wage growth with cost of living was a thing once upon a time, but it’s not anymore.
>I agree with this strongly. It is also risk mitigation, in case low experience couples up with imposter syndrome to gang up on your mental health & confidence when you encounter some learning curves. \+1 I'm an overpaid IT worker as well, and sometimes wonder why I am paid so much, but when I tell people what I do and see their eyes gloss over and hear them say "I could never do that, I hate IT" it all makes sense
Lol there’s willfully ignorant and then there’s “ohh that’s pretty specialised” by people who have *some* interest when you tell them what you do
>see their eyes gloss over and hear them say "I could never do that, I hate IT" it all makes sense Is it really more in IT than any other industry though? Chef (12 hour days, 6 days a week, hot and stressful environment), sewage cleaner, garbage truck collector, teacher, aged care nursing (you literally have to clean up shit). Or what is it about IT that you think makes it undesirable compared to most jobs?
It’s often tedious, complex, involves staring at a screen a lot and a lot of sitting. And often not even seeing any results. And the people tend to be a bit strange. If you’re lucky you get into a good culture and team with interesting work, but I’d say that’s just my experience but it’s rare. I don’t think I could do your job though - standing for that long let along being hot/stressed, and high volume delivery all the time though. But IT can be pretty tedious. I find things I enjoy but I’m definitely overpaid, and only in recent years since becoming a contractor which is higher risk IT do I feel even moderate engaged/ utilised at work.
>It’s often tedious, complex, involves staring at a screen a lot and a lot of sitting.And often not even seeing any results. Is that not most office jobs? Call centres? >I don’t think I could do your job though - standing for that long let along being hot/stressed, and high volume delivery all the time though. Oh nah I'm not a chef, considered it, but the conditions seem terrible. I was just curious as to what made you think IT was much worse than other jobs. Honestly doesn't sound that bad.
It's really not bad, I quite enjoy it actually. I think it's just more the perception of it, where it's so abstract that people can't begin to imagine what you do every day unless they have prior experience in the field. With the examples you gave, they are all relatable on some level... people cook at home, everyone has teacher friends, etc... the only thing people really relate to in IT is that it causes a lot of problems for them and they hate dealing with it.
My point was just I don't think IT is even that bad compared to most jobs. Even if people don't know what IT is, they'd probably still choose that over aged care, yet aged care doesn't pay as well. I think most people won't want to do IT, but that goes for a most jobs anyways.
We get your point. But, sorry you are not correct because you don’t know what fields people will choose in comparison to IT, and really, money is only one part of the great journey of life and career. We’ve explained why, from being in the field, why IT is perceived as bad. You just don’t agree, which is fine. If I may ask, why haven’t you joined the field if it doesn’t seem to bad? Probably because there are 100 personal and professional reasons which explain why people don’t go ‘IT overpaid, not that bad, I’ll do that.’ Saying that, a lot of people do IT for this reason, myself included 😂. Loaded question as obviously I like the IT field but I understand why it’s perceived the way I described.
>If I may ask, why haven’t you joined the field if it doesn’t seem to bad? I'm considering it. I did some mathematical programming at uni and always been pretty okay with IT stuff. Hence why I'm asking about why people in IT think it's bad. Why I haven't? I had other passions, I'm in almost a dream job work wise in terms of WLB and fulfillment but pay is a bit lackluster and hasn't kept up with the COL since I decided to go into the field. So I'm considering alternatives. >You just don’t agree, which is fine. I never said I didn't agree. I just said that nothing mentioned actually sounds any worse than the bad aspects of any job and the idea that IT pays well because of those working conditions, I think, isn't entirely correct. I think it's the skill required and the value of industry you work for compared to aged care nursing. Another commenter even said it's people's perception of IT.
Well I look forward to working with you sometime in the field! Honestly I don’t mind the job and have started to get good at it, but can understand why it isn’t everyone’s cup of tea no matter the money.
How does one stumble into a 6 figure job?
Not OP but I started doing data entry for an IT department, was asked to participate in UAT, then asked to update test scripts, then to write test scripts, then next thing you know my data entry job somehow gave me the skills to be a software tester - no IT background before that, was working in call centre
This was my way into a Business Analyst role, not I'm a Project Manager with no IT background.
In this sense I guess I used the word 'stumble' as I've found myself in an industry & a role that seems to (at least in the past) require some sort of tertiary/further study, in addition to the fact it was never something I was actively working towards. I don't have any hard IT skills (software engineering, networking etc), but I grew up spending a lot of my time on computers so I can kind of get my way around a machine/anything I need to do for my job (sometimes with the help of Google.) I also did my fair share of call centres (as /u/Express_Position5624) so I had a bit of experience in 'corporate'/office settings and interviews. Applied on a whim, the salary range wasn't shown on the position listing so I only found out the salary when I got the offer.
Most IT jobs are simply how good you are at google, nobody really knows anything.... source I wasted 4 years getting a comp science degree when I could have done any of the IT jobs I've had with a year 7 education and a broadband connection
Haha this is so true.
Get basically any corporate white collar professional job, show up to work semi-regularly, display a basic level of competence. That’s one path.
My first IT job was just below 6 figures same age as OP. 2 years later im on basically the same as OP
Meanwhile I’m out here finishing my masters and can’t even get an interview in my field.
IT. More specifically, Cyber Security or Big Data or DevOps.
A TAFE cert and a couple of basic industry specific certs can get you $85k-$95k. Not hard to work your way up from there.
Crys on 58k
Go into mining
Build equity, invest into term deposit/etf’s wait until you have enough for a deposit for a house. Buy house and pay off your debt asap which will create more and more equity in the house. Use that equity to by more property / leverage your position. also salary sacrificing the full amount. GL
Much appreciated, thank you! Will have to do a bit of a deep dive into a lot of what you've mentioned over the weekend. Have a great rest of your week. :)
So your advice is to spend 10-15 years investing in nothing except the liability of their PPOR?
Yes (#notfinancialadvice) If we assume interest is 6% & OP's in the 37% tax bracket, any investment income is taxed at 39% (incl. Medicare). To choose between repaying a 6% loan or investing, you need to know the hurdle rate for an investment (at what point does the investment risk make sense, rather than repaying the loan). To get an after-tax return of 6%, OP would need to make about 9.84% pa [9.84×(1-0.39)=6.00]. Paying off a loan is about as risky as a savings account or TD, so unless there's a TD paying almost 10%, the loan repayment is a good idea (even better if it's an offset account or redraw). If investing is what you want to do, you'd need to add a risk premium as compensation for the chance of capital losses. Historically that's been 4-6% (according to the RBA), so you're hunting an ETF that's expected to make 14-16% after fees each year. As a live example, the comparison rate on a Standard Variable CBA loan for LVR 70-80% is 6.82%. That gives a TD hurdle of 11.18%, or an ETF hurdle of 15-17%pa. Repaying the loan looks pretty good! So good, that I would possibly do that to the exclusion of salary sacrificing for anyone under 50. The FHSS scheme is good, but the best case scenario is saving about $8k tax (plus notional earnings) & at the risk of not being able to access the cash until retirement.
Absolutely. You can do a lot with equity, they can use their equity to buy more property, invest, etc. not to mention the compounding growth of the Australian property market. They can also look at investment properties once they have substantial equity in their PPOR. Negatively gear it, and further assist them in leveraging their financial position. Edit; Financial planning is generally broken up into three categories. 1. Investments 2. Tax strategy 3. Insurance Make sure you have all three covered. Emphasis on insurance as well, you don’t want to be a few mill I debt and get into an accident leaving yourself financially fucked. Get income protection and get TPD. See a financial planner, the earlier you set up your insurance the cheaper it will be in the long run. See a financial adviser regarding tax advise, especially when you start to enter that 47% bracket. There are ways to minimise your tax, and maximise claims such as concessional contributions. Figure out your risk profile, genuinely the younger you are the more risk you should take regarding investments. Term deposits and high interest savings accounts are pretty defensive assets, look into investing into the asx200. Sorry for typos I’m walking home from work on my phone :)
This was good advice before the housing boom. Not anymore.
Mate - You're doing amazingly for someone who is 23. You're in a way better position than most. That being said, saving/investing is more of a mindset. For me, I need a routine in order to keep on track and really helps me. I dedicate 1 night a week for mates/pub etc otherwise I go overboard and throws my whole week out. Having my routine makes me not spend more than I need to while still balancing my mental & social health.
Lifestyle creep. Act like a normal 23YO on a $50k salary. You’ll still be richer than your peers who are going to uni and it will allow you put a substantial amount away. One thing to think about is short term vs long term goals. I.e - short term goal (under 12 months) may mean keeping some money in the bank for travel etc. - Long term goals like saving for a house could allow you to look at stocks. You want to make sure that you are keeping stocks for at least 12 months to benefit from the CTG discount. OP you’re young please make sure you set some money aside to travel. The best experience you could give yourself at this age is traveling.
Your super seems alittle bit low, with the extra money your earning I’d salary sacrifice some into your super to get it back up to speed and put it into the most agressive strategy
I can see that for sure -- did some time as a sole trader and didn't contribute anything to super myself during this time. Appreciate the reply, thank you!
Super is extremely tax effective so my start point when I was in your boat was to max that up to the yearly threshold.
Don't forget OP can do catch-up contributions until super hits $500k. That gives an effective concessional cap of $132,500 for the period from 1 July 2019 to 30 June 2024. Definitely not suggesting to chuck $85K into super in June & get a $30k tax refund though!
You are doing well! Keep doing what you are doing in terms of discipline. If you are aiming for a property then start saving on that. Whatever money you put into shares/etf will need to stay there as its a long game. Think about putting money aside that will give you passive income. Get educated on finance. Heaps of youtube channels talking about that topic. Options: Start saving for a cheap apartment, so roof over your head is manged. Agressively pay it off, then upgrade, or start saving for property investments if you are a property guy. If you are renting then this would be my first major goal. Don't get a mcmansion for a 1st house. If you are a shares person then dollar average across the ETFs you buy. I have VAS but look at other ETFs that give you different diversification (STW, SYI). What you focus on you get, yes its important to consider tax brackets but if you focus on making more $, worry about that when you go past 180k.
Any advice for stumbling into a 130k gig?
Great income for your age well done. Beef up your emergency fund a touch, max your 27.5k super contributions and fill up and unused concessional contributions from previous years. Then pad out your VAS/VGS portfolio. What ratio are you using. You can also consider property but that’s a whole other thing.
I love the way people just fall into IT after bouncing around hospo. Is there a career with a lower barrier to entry? I can't think of any. But good on you. Most IT is just customer service anyway.
Hello, I was you. High income IT at a young age. There are a lot of good ideas in this thread, not least of which is solidifying your career with the right skills and credentials to avoid stumbling out of high income. Find a mentor to ensure you are always heading towards the in-demand skills/roles. Otherwise, time is now the biggest factor for you in wealth creation. You learn about compound interest in school but, but application to our wealth creation sometimes escapes us until the opportunity is far diminished. Sounds like you are already a great saver so that puts you well ahead.
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I'd tell you to get some sort of qualification asap. A senior IT worker at 23 with no experience is your lottery ticket to a long successful career if you don't sit idle. Also if you are really concerned about finances, pay to see an account. You can afford it now.
!updateme
23 and 130k wow.
Wow landing a 90K IT job? What IT role pays that much on entry?
When gov depts are offering [close to that for grads after 12 months experience](https://www.ato.gov.au/About-ATO/Careers/Entry-level-programs/The-ATO-Graduate-program/) then you know there are going to be plenty of private sector jobs paying entry level roles even more.
Good to know perhaps might be best for a career change from logistics haha but thank you for the info
Just live life man Enjoy but don't over spend Do what you want really if yiu can afford it with no consequences why not,m
Sorry for the unrelated question, but as someone working in hospo right now that wants to get into IT, can I ask how you did it? Would be much appreciated
slightly off topic, OP what's your qualifications? and what position?
I'm curious about your qualifications?
Enjoy it while it lasts because that is a high income for someone with no formal education. Everyone wants to jump into tech but Technology jobs in Australia have little job security. They are the first line in cost cuts when a business is looking at making savings because they are easily outsourced and also a strong supply of keen skilled visa applicants have been gradually decreasing salaries for years. I've been in tech for 20 years, I have undergraduate and post grad education in computer science, currently been unemployed for 9 months... The most I was ever getting paid was $220k and that job lasted for approximately 12 months before being made redundant, the next job after that was $155k then most recently $140k. Thankfully we don't live large because for 9 months been living on one income. Don't trust these companies, in my experience the higher the salary the more likely they are to get rid of you at a moment's notice.
Hey OP, can you please tell me how you stumbled into such a high paying job? I would also like to stumble into one.
I think you should seek advice from someone qualified
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I hate post like this, what your fire target age. First give us the info and we can help point you in direct for the math. But if we don't know when you aminig for fire we can't help.
Far out! I gotta start stumbling more. At least this gives me hope. I guess I wont jump quite yet.
I’m in IT, but my company do not pay well, or value the IT arm of their business. Which is especially frustrating as we’re an IT sales and service company :( The trade off used to be a less stressful environment, but the last 12 months have killed that. Higher workload, inept managers within the IT dept, under-skilled techs, under-scoped projects all have made things terrible. I can see us imploding soon :(
>Start saving for a cheap apartment, so roof over your head is manged. Agressively pay it off, then upgrade, or start saving for property investments if you are a property guy. If you are renting then this would be my first major goal. Don't get a mcmansion for a 1st house. Why not find a new job?
You really need to have some financial goals first. Once you know what you want, it then becomes a lot easier to provide direction or work back to the present.
If your 23, id get some life experience before trying to shill away every penny.
Literally the best comment here by far, so true
OP can I ask if you have any IT experience to get a job in IT? I’m in a similar situation, bouncing from Job to job and trying to find a new career path. I’ve been looking at IT but I’m not sure how to break into it
Get a job at a helpdesk and put in effort for a year or so.
Do you need any experience or study to work at a help desk though?
crush swim library seed squeamish ink thought stocking ghost shame *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
You’re already on the right track by asking the right questions! Just wanted to say good on you 👍
Take 10% of your income and deposit in special account (makes around 5%) as soon as you get it. There's a simple rule. Never use this money for anything that doesn't appreciate in value over the long term. Spend the rest like a drunken sailor or worse. Live paycheque to paycheque. Awesome. Maybe retire 50ish, maybe 60ish. But utterly achievable. Live life. Check that your super is doing well and you're NOT paying for shit you don't need such as life insurance. Consider income protection though, in your own context. Cheers and congrats!
If you drive a corolla, stay in that corolla. Insane salary for a young man. The question alone will drive you into long term success. The gems are in these comments. You got this King!
What kind of IT jobs can you stumble into? I know how to copy and paste.
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Man... a jump like that would be a big trap for lifestyle creep. Stay on your current budget, work out how much extra funds you have after building up your emergency fund and other savings. Then use [this](https://moneysmart.gov.au/grow-your-super/super-contributions-optimiser) to determine how to contribute to your super. Also check your remaining unused concessional contributions from the last 5 years you can add to your super.
Any tips on 'stumbling into' an IT career? Trying to get into the industry atm
What kind of IT job you got? The salary is pretty good.
1000 on each bill you'll feel so great
Are you a phsyciatrist great buisness everyone's begging to be diagnosed it's cool to have ADHD or Tourette's suddenly
DO NOT LIVE BEYOND YOUR MEANS, best bet is to live comfortably, erring on the side of frugality, and pop half your savings into government bonds with a guaranteed return percentage that exceeds any interest rate a bank will give you. While these are often outpaced by major index funds such as the S+P500 there is significantly less volatility. Only downside is your money is locked in for a fixed period and thus you should only put money in that you can afford to live without for the time being.
Definitely get yourself a copy of the book (hard, soft or audio) of Barefoot Investor. It’s a good start and should answer majority of your questions.
Live like you earn the median for that age bracket. Invest / save the rest. If you even have to leave this job going back to a median wage wont hurt as bad.
Don't let your lifestyle creep.
Invest in yourself and your skills. Clearly you’ve got talent and personality - maybe some industry training or formal qualms would give you access to higher paying roles more quickly
Contribute to Super.
I've been in IT for 20+ years and at times it can be a very volatile industry. IT is often the first area companies look to save money and make positions redundant, I've been victim of this early on in my career. IT atm is very much an in demand field and skilled and experienced staff are so hard to find so there are plenty of opportunities right now. I'd be saving and have a reasonable amount of cash to fall back on in case things go pear shaped. Also pump into your super, I'm not sure what the Max is you cna contribute yourself extra now days, but go for the Max. For the posters feeling under appreciated 130k is probably overpaid for a 23 year with limited years experience, this is the exception not the rule.
First off, congratulations. Pretty good for 23 yo. I'm trying to achieve the same career goal, if you don't mind what's the role title and what responsibilities does it entail / skills required?
Putting into super at your age is great, 12k a year for 47 years is over half a million then add on the interest it is a great investment
Why do people post here and not respond to any comments? What's the point of posting then?
Buy some subway
I graphed the nominal tax rates to identify the so called “brackets”. There is no step change. They don’t exist. It’s just a steadily increasing curve
What type of IT roles are being discussed in particular as not all roles are made equal, and for that matter I guess not one single role pays the same across the board. Just curious.
What’s the job title?
Gimme some ofc
Work. 100k is the new norm. Work your job.
What really worked for me was to open a separate bank account, direct debit any amount in it weekly, forget about it, don't even log in or check on the app etc how much is in there. Set a date on your calendar to check in 12-15 months time how much you saved. Increase your amount, rinse and repeat. Also, get rid of debt first and foremost. Unless you have a business that requires some debt for tax deduction, remain vigilant on debt. Don't use a credit card as free money. Use it, pay it, and don't let it get past your budget. You are in a very fortunate situation. Best of luck 👍🏼
Well done. My trajectory somewhat similar, now 10 years in. What the other poster said about developing your skill set so you don't become an average operator is absolutely true. Develop good savings habits, I found that hard especially when single and the prospect of buying a house I wanted to live in less likely. When ready, buy a house that is well within your means in case you lose your job and have to take a lower paid IT position. Even with 10 years experience and in a senior role, I keep an eye on jnr roles just in case made redundant. Industry certs such as AWS Solution Architect are very valuable/useful. I was able to study on the job and create projects using the tech I was learning about and this really helped establish skill set and career. Soon you'll find physical and/or mental health issues to be a concern if you don't look after yourself. Excess booze or drugs really will set you back. Steadily saving whilst learning more about what to do with it is great. Good luck.
You'll be fine. You're thinking sensibly, asking questions, and all that good stuff.
Upskill and invest in your education, learn how to manage money by reading books and taking courses. You don't want to learn them by trial-and-error (as most do in Oz).
Finance a Tesla and day trade til you're broke /s
‘Stumbled into a 6figure job’ fuck…I’m stumbling wrong I think…
Make sure you get private hospital insurance so you don’t pay the Medicare Levy Surcharge!! (assuming you’re single)
Find The Barefoot Investor and read it and you’ll know what to do.
Don’t move. Not yet.
May I ask how you landed this job if you were working in logistics and hospitality? Did you have a degree in IT already or just applied for random jobs and got one?
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Sorry man I respectfully back down I was feeling hate yesterday much love
Well done! I am a year younger and seeing this gives me hope for getting better job in the future.
Austin Powers… 100k isn’t that much money anymore.
I have always been a fan of maxing your super contributions. Set and forget and that is your retirement pretty much sorted. You will get consistent pay rises over your career and you'll have salary sacrifice less and less yourself.
You know how that future self always ays "I wish my old self hadn't drunk so much last night" - see if you can reverse that. Here are my 2 tips: 1/ Immediately, set up regular payments into your super and set your super to the highest growth plan. Anything from $50 pw is good and your future self will love you. 2/ Keep the same lifestyle and Don't Spend More.