Tax

Dear Andrew Hingston,

I suppose tax is something that I have just not worried about before I started vacation work in Brisbane. Prior to this, I've only worked a casual job as a residential advisor, not earning enough to be taxed by the Australian government. Now, however, I'm taxed at 30%, and when that sum amounts to more than $300 a week, it's hard not to notice.

The tax is at such a high rate, because the monthly salary I earn would translate to more than $52,000 gross income a year. Though, of course, I'm only going to be working for 3 months here, not the whole year. I do realize that I will be able to file a tax return and get back at least some of what has been deducted as tax, at least for the 1st $6000 I earn.

One thing has irritated me about this whole tax issue. I am taxed at 30%, however most of my colleagues (except one) are only being taxed at 20%. I have tried to get my employer to look into this issue but to no avail. I was worried at first that I couldn't claim the tax-free threshold in the current position I hold, because I had already claimed it in my casual job (which I am still going to go back to when I return to Sydney). But, upon asking around, this shouldn't be the case. Another friend suggested that I did not file a tax return in the middle of last year, which could have caused it. I will have to look into that. In any case, my employer (a recruitment agency) is not helping one bit.

From the notes I learned that Australians are taxed at relatively high rates compared to most other countries because of the benefits that the government gives back to the community. Before this, I questioned whether I'd really want to work in Australia long term because of the higher tax rate than my home country, Malaysia. However, recently I've noticed that a lot of the things Australians might take for granted are really benefits to the society that the government sustains using taxes.

Take for example, reliable public transport. Not to diss Malaysia, but public transport there is really... not up to standard. Which is why people prefer cars there. Another thing is beautiful recreational areas for Australians to relax in like parks, botanical gardens, beaches and so on. Money is needed to maintain the plants, the cleanliness and the safety of these areas. The police force is also a point to be proud of. Where the police here can be relied on to be trustworthy... in countless countries, corruption is rampant - because of the low pay they receive.

In short, I do understand why tax is high here, and am grateful for it. I guess I'll just have to think of my withheld tax as savings... with no interest. Big no no for Paul Clitheroe. Oh well.

See ya next post.

Saving

Dear Andrew Hingston,

Going through the component on 'saving', I've learnt a lot and managed to put some of the very good tips on saving in practice.

The first thing I found particularly interesting was that the term 'saving' only applied to limited circumstances. Most of what I thought saving to be previously was really deferred spending! And even leaving money in my transaction account didn't count as saving; only putting money in my Commonwealth Netbank account (with higher interest returns) did. I always thought it a hassle to keep transferring money from my Netbank to my accessible bank account, but now I realize that the interest generated in the former is much better for me.

Besides that, I think the saving tips were practical and did work! The first one I tried was delaying buying stuff that I wanted for 2 weeks (as mentioned in the previous post). After a week, I no longer feel the desire to go out and buy the clothes that I had wanted.

"Save little and save often" was another great tip from the book. Long-term regular savings is actually not that difficult! I have already planned to channel at least 10% of my income in the period of these 3 months towards savings in Netbank, and possibly open a fixed deposit account if I garner enough funds to merit one. And of course, I'm starting to save in small ways; for example after a week of noting down my expenditure in the expense tracker, I've realized that I spend quite a fair bit on drinks - $4 for coffee, $5 for a Boost juice... etc. And this happened almost daily. I didn't realize that I was spending that much really, and I decided to pull back on that this week. And I'm going alright so far.

On a side note, the expense tracker helps to keep my spending in check. Every time I want to spend on something, I remember that I have to note it down in that spreadsheet, and the desire to buy just for fun dissipates in a snap; to be replaced by a sense of unwillingness to see money flowing out of my account. I might just consider continuing to track my spending even after this course. It has its benefits!

In terms of other tips I've tried, I've incorporated bringing lunch to work from home into my lifestyle, and realized it's pretty easy (and healthier!) to do this. Great way to save up to $40 bucks a week!

I think the take-away message is to save consistently, save where possible, and save reasonably (i.e. not until i can't have any fun at all). In my first year in university, I kept an expense tracker of my own making, but I became more stressed because my savings goal was a bit too unrealistic. It didn't allow me to have much fun; movies, eating out at nice restaurants, and transport seemed too expensive, so I cut them out of my lifestyle. Eventually, I gave up because it was quite depressing. Now, I don't plan to repeat that mistake, and instead save in smaller amounts. It's better than giving up anyway.

Til next time.

Being Generous and Content

Dear Andrew Hingston,

After listening to Part 1 of this course, I think the parts that impacted me the most was on planning to be generous and content. The chunks of the pie were not what I was expecting, because I thought the rule of thumb in money matters is usually: save up and invest. However, the first chunk of the pie focused on being generous. Coming from a typical Chinese background (what more of Hokkien dialect; we are notorious for being tight-fisted), it didn't make too much sense to find advice on financial planning starting off by encouraging spending.

I was taught not to be too frugal with my money by my parents in word, because they understood that such a selfish outlook would only bring unhappiness. However, often their innate nature to spend only for personal benefit would counteract their verbal teachings. In that sense, I was brought up with a healthy respect for the value of money, but never found it particularly easy to be generous with people.

As a Christian however, I gradually realized that being generous with others (especially those who were more in need than I was) would be something God would want. Hence, my commitment to give regularly to the church out of what I have. Yet, in other things, I was seldom generous; but in my defense, I had a limited amount of money to spend on others as a student.

This week, I was given a chance to show generosity to my friends. On the weekend, my friends decided to come over to my new apartment in Brisbane for dinner and I offered to cook. At first, I contemplated asking them to chip in for the cost of the ingredients, but when I thought of the chunks of the pie, I decided against it to try to be more generous. I knew I could afford the $50 for the meal, since I now earn enough in my current job.

We had a great time, and though I felt a little pinch at the sudden drop in my bank account balance (I saved for a whole week, and now in one day $50 is gone!), I did feel good being able to treat my friends to a nice dinner. With Christmas coming up, I think this part of the course will help me understand that balance is important in every aspect of life, particularly in financial matters. I will save where I can, but also be reasonably generous in spending on my loved ones.

The other chunk of the pie that had impact on me was the part on 'being content'. Prior to listening to the slidecasts, I was hoping to purchase several expensive items for personal use; namely pretty working clothes and shoes so that i'd look professional at my new office job. After I listened, however, I thought about the money I had wanted to spend and asked myself if it was really necessary. And the answer was no. I had enough clothes; I didn't really need any more except to satisfy my craving for newer, better possessions.

Therefore, I held off the buying of those items for 2 weeks, to see if I really couldn't live without them. And concluded that those certainly were wants and not needs. Now, I no longer have the urge to run to the shopping mall because I need to look as good as everyone else in the office. I think I can save quite a fair bit by reducing the amount of wants I buy, and being satisfied with what I have. Of course, a realistic budget is key, as Paul Clitheroe advises: a budget that doesn't allow you to enjoy yourself is unrealistic and will be ignored.

So, I take away two valuable lessons from the first part of this course already. Until the next post then!

Basic Introduction

Dear Andrew Hingston,

Since this blog will be for your eyes only (I highly doubt anyone else would care to read it), I shall address each post to you. I shall briefly introduce myself here.

I'm a 20 year old international (Malaysian) student who has just completed her third year of studies for a Bachelor in Petroleum Engineering. Currently, I am located in Brisbane to undergo industrial training with a mining company for 3 months which is a requirement for me to graduate.

This explains why I have been tardy getting my blog and first post up; I relocated here from Sydney during the 1st week of the summer term and was unable to access the internet during my one week stay at a hotel. Now that I have moved to my permanent dwelling for the next few months here in Brisbane, I have finally purchased mobile broadband and gotten myself online.

I am rather lucky to have landed a position as a vacation student in this company because the cost for my accommodation is covered by them. Living in Brisbane CBD, I know that they are paying a fair sum for my place. I am also a paid intern, which is a sweet deal.

On another note, I am under a scholarship from a company in my home country, therefore I receive a monthly allowance to cover my living expenses. This amount is barely enough for me as a student; which is why I used to have a part-time job while studying in UNSW.

I enrolled for this course because I heard from several sources that it is a very beneficial subject to learn; because it would help me plan financially for the future. And hey, i need to complete two more gen eds anyway.

What I hope to get out of this subject is a better understanding of how to maximize money, invest, and set myself up for a financially sound future. I'd also like to see if Paul Clitheroe really has good advice, since I had to pay $35 today to find out. Well, at least I logged in something into my expense tracker!

Til next time,

Mei Mei