Budgeting tips for under 30’s

By Dan Hatch

5 minutes

23 December 2020

In your late teens and 20s, the world is full of wonderful distractions — and preparing a budget of your finances is probably the last thing you want to spend time on.

After all, there are nightclubs to go to, trips around the world to plan for, dream cars to buy, and festivals to attend!

But while embracing your freedom and all the exciting things the world has to offer is a rite of passage every Aussie should get to enjoy, creating a budget is one of the best ways to ensure you get to experience not just all the things you want to now, but well into the future, too.

So, what should a budget for someone aged 18 to 30 include and what should it look like? 

We asked Dan Jovevski, Founder and CEO of financial wellness app WeMoney, for his advice. 

Why having a budget is a really, really good idea

According to Jovevski, the financial decisions we make in our 20s can really impact life in our later years — something many people realise too late.

“Every single day counts,” he says. 

“Every single day counts”

“We know this firsthand because a lot of people we see come to us in their 30s, the partying and holidays have slowed down, and they’re looking back on their 20s and they’re asking themselves where the money went.

As soon as you start earning income the first thing to do is track your spending, so you know where every single dollar is going.”

What should a budget look like?

There are countless methods of budgeting out there, but if you’re just getting started Jovevski suggests following a 50/30/20 budget structure.

“Set aside 50 percent of your income to cover your living expenses, 30 percent to cover your short-term and long-term savings, and 20 percent is fun money — for going to the pub and whatever else,” Jovevski explains.

Putting 30 percent of your income straight into savings may sound like overkill, but Jovevski reminds us that not all of that gets locked away. Twenty percent can go towards a mixture of short and long-term goals, like a holiday, a new car or a deposit on a house.

The other 10 percent Jovevski recommends you put on ice. “The golden rule is to save 10 per cent of your income,” he says. “You put that in another account that you can’t touch.”

Continually growing your savings with your income is a fantastic way to provide your own safety net, so if something pops up and you need cash quickly, you can draw on your own money rather than forking out for a credit card, payday loan or personal loan where you are likely to be hit with big fees.

What should I include in my budget?

Paying off debt

Jovevski says people in their 20s are particularly at risk of falling into a debt trap. If you’ve accrued debt, like credit card debt or a personal loan, paying that debt off should be included in your budget.

Jovevski recommends following the debt avalanche method.

“Don’t focus on your big debts,” he says. “Yes, pay those off regularly, but focus on paying off the small debts first. It gives you a sense of accomplishment and then you’re more likely to pay off the next debt.”

The exception to the rule of rel="noopener noreferrer" paying off debt is your HELP (formerly HECS) loan. As this only increases with indexation each year, it’s likely to be the lowest rate loan you’ll take out in your life.


If you’re working in the gig economy and your employer isn’t making superannuation contributions, rel="noopener noreferrer" then Jovevski recommends making your own super contributions. Retirement might be a long way away, but super is a great way to save as it accrues value at a higher rate than other saving methods.

Health insurance

“Health insurance is probably one of the most important investments you can have in your life,” Jovevski says. “Every single thing you dream about at night when your head hits the pillow — going on holiday, buying a house —is easier when you have good health.”

Jovevski, who happens to be an HBF Member, knows the value of private health insurance firsthand.

“I had a shocking run of dentist visits; I had a few dental treatments,” he says. “The cost was $2,500. I thought, if this was five years ago, before I got health insurance, I don’t know how I would have covered that without something else in my life being majorly messed up.”

“Life happens...You’ll be thankful for it when the moment comes and you need it.”

Jovevski’s argument for young people budgeting for health insurance is simply that “life happens”.

“If you receive a terrible diagnosis from a doctor that might be critical to your wellbeing or your life, you want to have the best treatment options available to you as soon as you need them,” Jovevski warns.

“You’ll be thankful for it when the moment comes and you need it.” 

How private health insurance saves your budget long-term

Taking out private health cover before you turn 31, at least, can save you some coin in the long run. 

The Australian Government has an initiative called Lifetime Health Cover, which means people are charged a two percent loading for each year over the age of 30 when they eventually do take out a hospital policy.  It’s designed to encourage people to take out private health as early as possible.

The loading accumulates up to a maximum of 70%. You will need to have hospital insurance for a continuous 10 year period before the loading is removed.

Also, if you don’t have an appropriate level of hospital cover and you earn more than $93,000 a year as an individual or $186,000 a year as a couple or family, you’ll have to pay the Medicare Surcharge Levy (which, at a minimum, is around $930 a year) as part of your tax. 

Preparing a budget sets you up to achieve your goals

Jovevski says when it comes to budgeting, too often young people think “I don’t have to worry about this until I’m older.”

“But the earlier you start, the better!” he insists. 

Budgeting allows you to keep track of your finances and set and (hopefully) achieve your goals — whether that’s being able to afford to go to the pub on Friday night or saving a deposit for a house.

“Setting a goal in your mind, actually writing it down, tells you what’s really important to you,” Jovevski says. “It really separates the people who will achieve those goals and the ones who don’t.”

Jovevski says having a budget and sticking to it is about more than just managing your finances; it also helps remove stress from your life and increases your feelings of security. When you put it like that, budgeting is definitely something worth spending time on.

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