As always, the content below is meant as general information to give you a better understanding of this topic, and is subject to our terms and conditions. You should seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.
Starting Uni is a big step into the world of adulthood, and there’s a few things you should know. The beauty about being young is you have time up your sleeve to get things sorted right from the beginning.
Tip 1 - Understanding my student loan
This is probably your first ‘debt’ that you’re taking on – and for good reason. Not all debt is ‘bad debt’ and this is arguably ‘good debt’ as you’ve made the decision to invest in your education and future.
A student loan is essentially money borrowed from the New Zealand government. It allows you to study, without the pressure of interest over your head, as long as you stay in New Zealand. The idea is that you will gradually pay it off later once you’re in the workforce. After you finish studying, you do need to start paying the loan back. Repayments are income based and will automatically start being deducted from your payslip until the loan has been paid off (more on that in Tip #2).
*Very important to note: If you are planning on heading overseas for 6 months or longer, you’ll need to keep making minimum repayments, or apply for a temporary repayment suspension. Your loan may also no longer be interest free, and if you don’t make your repayments on time, you can be charged late payment interest. – more on that here
Tip 2 - Understanding my payslip
Many of us have part or full-time jobs at uni, and it’s super important we understand the info in our payslips.
Your payslip will outline the following info:
Your gross pay for the time period worked (otherwise known as your salary)
Deductions such as KiwiSaver (both from your pay & your employer contributions), student loans, PAYE (income tax), child support etc (these are done automatically and you are paid the amount after tax – this is known as net pay)
How much annual leave you have
Quick tip – Gross = before tax has been deducted, net = after tax has been deducted
Tip 3 - Setting my KiwiSaver account up properly
KiwiSaver is a voluntary investment savings scheme that helps you save for your first home deposit, and retirement. The best thing you can do is start contributing to KiwiSaver as early as possible so you can take advantage of compound interest and investment returns over time.
*Quick tip - setting your KiwiSaver account up correctly from the beginning could mean the difference of thousands of dollars when you come to use it for your first home, or retirement.
There’s a few things to consider when setting up your KiwiSaver
Choose a KiwiSaver provider that aligns with your values (there are many good providers out there to choose from)
Choose a fund type that suits your investing risk and timeframe - You may want to use a risk profile tool to help find the right type of fund to suit
Choose the correct tax bracket (also known as your Prescribed Investor Rate)
Let the investing journey begin!
P.s. if you already have your KiwiSaver account set up, if you haven’t paid much attention to the above, you can go in and change your provider, fund type and tax settings at any stage.
If you want to see what your balance could look like for your first home or retirement, use this handy Sorted calculator.
Tip 4 - Tracking my incomings and outgoings
Being a student can be bloody tough and a fine balance between not earning much money but still wanting to enjoy nights out and a social life. One of the best things you can do from the beginning is to simply know how much income you have coming in, and how much you’re spending. If the spending is higher than the income, you know you are living beyond your means and unfortunately you need to cut back (or earn more). Learning this lesson at a young age is important as it helps set you up with good money habits from the get-go. Creating some savings might be difficult at this stage in your life, but even if it’s $20 a week, that’s $1,040 a year – doesn’t seem like much but over time and invested the right way this little pot can grow into something big.
Tip 5 - Creating a Will
While it’s not the most exciting thing to talk about, once you have belongings / savings / KiwiSaver worth $15,000 or more, it’s time to make your Will. In a nutshell, making a Will is not just for you. It is to make it easy for your family if the worst were to happen to you. Otherwise, it can be messy, timely and costly for them to get sorted. You can do one yourself (free), do one online (cheap), or get legal assistance (most expensive but may be most suitable option). 50% of Kiwis don’t have a Will, and many die without one. It’s a massive headache and in my opinion should be a compulsory exercise for all adults.