Financial Advice for University Graduate

Ljewboy on 11/08/2014 - 20:36

Hey everyone,

I'm a recent university graduate (22M, no debt apart from HECS) who has just secured a graduate job with a six figure salary. I don't start work until January 2015, but have begun to think about what actions I should take with my future pay checks. My main concern is the amount of tax I will have to pay, with any advice in regards to lowering my taxable income being greatly appreciated.

My current car is the one I've had since I got my P's and is on its last legs, so an upgraded car is something that is at the top of my list. Would it be worth my while looking into a lease to lower my taxable income whilst also giving me the upgraded car I need?

Any other ideas/guidance into credit cards, health insurance would be greatly appreciated.

Cheers

Financial

Comments

  • scotty on 11/08/2014 - 20:54
    +2

    With 6 figure income for a graduate… yes lease would hopefully reduce your taxable income, but do check with your company and/or your accountant. On the other hand, paying tax is actually not that a bad problem to have.

  • rickb on 11/08/2014 - 20:58
    +1

    By six figure salary I assume you will be on a salary of $100K+

    Some things you could do spring to mind.

    1. Novate lease a car, provided that your future employer has this option for employees. This will not lower your tax as much as you think because sometimes you must enter into a pre/post tax arrangement. I novate lease my car and there are some good benefits apart from lowering of tax.
    2. Make voluntary pre-tax contributions to your Superannuation fund. About 5% of your gross.

    Credit cards are a tricky thing in your situation because some institutions will look at your length of service with your employer. Aim for something with no fees but make certain that you can pay the statement off each month in full. Do you want a rewards scheme?

    You should get health insurance considering that you will be over the medicare levy threshold. If you're healthy then consider the basic plan that gets you over the tax threshold hump. Upgrade it later if and when you want to start a family.

    • jewboy on 11/08/2014 - 21:17

      Thanks for your advice! Salary is just under $110k. I'll get in contact with my employer, but I should think they would offer the option due to it being a multinational company. In regards to credit cards, I would be treating it as a debit card with a rewards scheme ideally with QANTAS FF. So whatever card has the best balance in regards to rewards/fees.

      • jaykay on 11/08/2014 - 21:31

        wow what field are your in to get 6 figures upon grad if u dont mind me asking???

        • jewboy on 11/08/2014 - 21:47
          +2

          graduate Mining Engineer

        • rockman117 on 12/08/2014 - 12:26

          @jewboy: which state?

        • pyro love bird on 12/08/2014 - 12:44

          @jewboy: One of my friends is graduating at the end of this year in mining engineering and no companies want him, they told him his degree is useless, they want civil, mechanical etc. :/ poor guy.

        • jewboy on 12/08/2014 - 13:45

          @pyro love bird: QLD. It's an extremely tough industry to get into at the moment.

        • pyro love bird on 12/08/2014 - 14:32

          @jewboy: Ahh my friend is from WA, even the mining companies are rejecting him. Poor guy, he has a geography degree that he can't relly do anything with either. :(

          Glad to hear you're set though. What sort of mining are you working with? Have you been told? I'm curious as I'm currently studying chem enge

  • toristo on 11/08/2014 - 21:58
    +1

    First stop should be your accountant. At this time of year, getting your tax return done is a good move plus its tax deductible. Any accountant worth her or his salt should be able to give you a really good strategy and probably won't charge much in addition to your tax return to do it.

    If you think professional advice is expensive, try getting advice from an amateur.

    If you're still stuck for something to spend your money on, let me know, as I have an idea. Probably the greatest… Aw, it's not for you. It's more of a Shelbyville idea.

    • jewboy on 11/08/2014 - 22:06

      Haa!
      To be honest I've always done my own tax because it's never been hard to do due to it always being my paltry student earnings that I have to lodge. Are there any tips to finding a good accountant? Or just the 'ole bit of research for accountants in my area, look at reviews etc?

      • toristo on 11/08/2014 - 22:28
        +2

        If you have any friends/family who own small/medium businesses or you know they invest/generally financially savvy, ask for a recommendation. They will be more than happy to offer up a name if they think they're worth it.

        Otherwise, make an appointment with 2. Go in and spend the ~$100 for the consult and ask both basically the same questions. See what they say. Do they understand what you want to do and take an interest in showing you how to do it? You'll know which one to go with just on gut feel.

        • backpaqer on 13/08/2014 - 10:52

          Get an accountant in a nice sunny part of Queensland…trips to your tax accountant to deal with your tax affairs are tax deductible ;)

  • cypher67 on 11/08/2014 - 22:41

    Unless you can somehow get your taxable income under $80k, then you going to be paying 37c to the dollar. Leasing a car would be a good start but its never going to get you under that. Id focus on ways to invest the money your getting to make more money then ways to reduce your taxable income just for the sake of it

  • p1 ama on 12/08/2014 - 00:26

    The only real way to reduce tax is negative gearing. Compared to that, all other tax deductions are extremely small and you'll probably find that they end up costing you more (I.e. buying stuff or paying more for stuff in order to just get a tax break) so it doesn't work out all that well in the end.

    Your best bet is to find an investment and leverage it heavily so that you're making operating losses, then that'll offset your tax. That said, interest rates are record low right now, so it's not a bad time to invest.

  • backpaqer on 12/08/2014 - 08:01

    I don't mind paying more tax…usually means I have earned more

  • Euphemistic on 12/08/2014 - 09:12

    I shouldn't be about minimising tax. You should be more concerned with ensuring you have a good investment strategy. Plenty of miners out there with big mortgages, expensive cars, boats etc and if they lose their job have to sell up.

    Fr a young single bloke on that sort of coin you should be saving at least half what you earn and investing it wisely. I had the opportunity to earn some good money on an away job where I was paid an allowance for living expenses (rent, food etc) I saved heaps during that 9 months and got a house deposit because I wasn't spending much of my income, the allowance covered nearly everything.

  • lidker on 12/08/2014 - 10:59

    I would consider buying life insurance policies in case I get injured or sick in the future.

    • toristo on 12/08/2014 - 20:31

      Income Protection is a good option here too - and tax deductible.

  • dandandan on 12/08/2014 - 14:38

    Private Health Insurance
    New Laptop 75% work use
    Masters Degree with Fee Help. (Degree that is in engineering in your case and that will improve your skills for your job). Yes you will have to pay for it over time however subject deductions can be deducted in year they occur.

  • [Deactivated] on 12/08/2014 - 17:18
    -2

    If you want, you can join a cult and wash your money through there.

    You basically donate all your earnings except for the 18k tax free threshold.

    Then the cult buys you a car, washing machine, furniture and helps you find a place to live.

    I know a lot of koreans and chinese in my area use the local church to funnel their funds so they don't pay any tax at all… It's not even a real church to be honest, it's just a room in a building, no textbooks except for some pamphlets.

  • drexxx on 12/08/2014 - 21:21

    please tell me what your goal is!

    Do you want to be a millionaire?
    Do you want to retire at 35?
    Do you want to minimise your expenses and have a big retirement fund for age 65+?

    My general advice is FOCUS ON YOUR INCOME, NOT YOUR EXPENSES.

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