The time has come for you to go out into the big wide world, take on your tertiary studies and find your first real job.
You might be excited to finally be independent, but you're probably a little scared too. Here's everything you'll need to know to financially equip yourself during this transition. Compare student bank accounts, savings accounts and credit cards below, and find out more about programs like HECS-HELP and Youth Allowance that might impact your finances.
What is student banking?
Money can be tight when you're a student because there are books to pay for, a social life to fund and even some bills to pay. To help you better manage the money you have, there are accounts designed specifically for students.
There are also a variety of accounts available from financial institutions and it is important that you are aware of at least those that will be of interest to you at the beginning.
What are the types of student banking products?
Credit cards provide you with a low revolving balance, which means your monthly repayments are relatively low. Using a credit card wisely will allow you to build a good credit rating but if you don't manage it properly, you could end up in debt which affects the quality of your student life. Opt for a student credit card with low annual fee to help you maximise value. Debit cards can also be a good alternative for students and are worth considering.
A transaction account is a good way to handle your everyday spending. They are flexible and shouldn't come with any monthly fees. Because this account is used everyday, ensure that the permitted number of ATM transactions suits your money-withdrawal habits. Compare student transaction accounts.
High interest savings accounts are a good way to build your savings, as they offer a higher interest rate than transaction accounts. Normally there is no minimum amount required to open the account and there are no account keeping fees. These are handy to have on the side to deposit any extra funds you may have. Some savings accounts come with higher interest rates than others but there might be certain conditions you have to meet to qualify for these rates.
First Home Super Saver Scheme (FHSS)
Your home will be one of the biggest financial assets you'll ever buy, so preparing early will help you in the long run. The Australian government's First Home Super Saver Scheme was introduced for this very purpose. Through the scheme, you will be able to save money for your first home inside your superannuation fund. As long as you're eligible to apply for this scheme, you'll be able to apply for it from 1st July 2018 onward. Read our guide on FHSS to find out more about the scheme and how it works.
A term deposit is like a savings account in that you deposit money with a financial institution and earn a higher rate of interest. However, the money is deposited for a fixed period of time, which can range from one month to five years and you can generally only access your funds at the end of the predetermined period. If you want to withdraw your money earlier, you can but you will have to pay a penalty, which can be a significant portion or even all of the interest your money has earned.
Due to the fact that you can't access your money without paying a penalty for a fixed time frame, term deposits usually carry higher interest rates than other types of savings accounts.
A prepaid credit card is an excellent tool that can help you manage your finances while still enabling you to make online purchases and enjoy the convenience of a debit or credit card.
The advantage of such a card is that you can't accrue debt with it. You load the card with a specific amount of money and can only spend that money. Once you've spent it all, you can't use the card until you load more money onto it. This can make it very easy to stick to a budget because you can load the card with the amount of money you've budgeted for one month's expenses. You can't spend any more than what is on your card.
However, since financial institutions do not charge interest on these cards, they have to earn their money elsewhere, which usually means that these cards carry annual fees.
As a student, it's also important that you:
- Don't stay with one bank. Always compare financial products so know you're getting the best deal. If you feel as though your bank account or credit card is outdated, then consider switching to one that isn't. Banks tend to offer the best deals to new customers instead of existing ones.
- Avoid late bills. Paying your bills late not only racks up fees, it shows up on your credit history. As a student, you want your credit history to look as clean as it can so in the future when you apply for credit, there aren't any roadblocks.
The first step to building good budget habits is to set goals. Do you want a new car? Your first home? Financial stability? Regardless of what you want, make note of it. Then, you have to find a way to measure your progress.
The easy way to save: Pay yourself first
One of the best ways to save is the 'pay yourself first' method, which is the idea that you should save some of that money you worked hard for, for yourself before paying off anything else.
There are quite a few ways you can set aside money each time you receive a pay check by setting up your personal banking the right way.
- Use a jar or a piggy bank at home. Simply put in an amount every time you get your pay check.
- Another approach is to set up a bank account with a completely different bank which you use solely for savings. The idea is that if you don't see it and don't have ready access to it, you're likely to forget about it, which means the level in your account will steadily increase and you won't even realise it's happening.
- Another way is to open a separate savings account with the bank you work with. In fact, you can open multiple savings accounts and use each account for a different goal. A great advantage of having multiple accounts is that it looks like you don't have quite as much money. When you see one large balance, you feel as if you can dip into your savings because you forget what you are saving for.
Paying for your education (HECS-HELP)
HECS-HELP is the loan which students in Australia can take out from the Australian government to help cover the costs of their tertiary education. Designed for students who don't have the money upfront, it allows them to study for a degree and deferring payment until they are earning over $55,874 in the workforce. There are three options when paying your university costs:
- Upfront payment. If you or your parents pay all of your fees upfront, you can get a discount of 10% on the full cost of your studies.
- No payment. You don't have to repay the debt until you're earning over the threshold and there's no interest charged on your loan.
How does HECS-HELP work?
Once you start earning over $55,874 (even if you are studying) you still start repaying your HECS. Be mindful that this threshold changes each year and although you don't pay interest, the loan does increase in line with the Consumer Price Index (CPI), or inflation each year.
Eligibility for HECS-HELP
There are a few requirements to be eligible for HECS, you need to:
- Be an Australian Citizen
- Be studying in a Commonwealth supported place (subsidised by the Australian Government)
- Enrol within the census date as stated by your university
- Submit the relevant paperwork by the census date
Youth allowance and Austudy
Youth allowance and Austudy are both financial help payments. Youth allowance is for student studying full time and apprentices who are 16-24. Austudy is for full-time students and apprentices are aged 25 or older.
Eligibility for Youth allowance and Austudy
There are many eligibility requirements to receive Austudy or Youth Allowance. In addition to the points below, you'll be evaluated on whether you're independent or dependent, doing an approved course or study and more. In general, you might need to:
- Be an Australian citizen
- Study at TAFE or university full-time
- Satisfy income and asset tests (this may also apply to your parents)
Moving out and student accommodation
If you're thinking about living on campus or abroad while you study there are number of things you need to consider.
- Did you research and find out what you can afford?
- Is living at home an option?
- Living on campus is quite expensive, but do the pros outweigh the cons?
- What about living in a share house?
How much does it cost to live on campus?
According to the University of Sydney, a single student living away from home will require at least $1,690 per month for accommodation, food, utilities and entertainment. Accommodation options can range from $205 - $687 per week. Other costs to consider are food and groceries, lifestyle expenses such as entertainment and socialising, incidental costs such as clothing and toiletries, textbooks and student health cover.
Living the student life
As a student, you can also get discounts and concessional rates for things like public transport, movie tickets and entry into events. Here are some money-saving ideas:
- Consider your travel money options if you're going on holidays or exchange
- Buy in bulk, cook from scratch and eat at home more often
- Get a job at a place where you shop and benefit from staff discounts
- Shop online or regularly go to sales
- Compare products so you're always getting the best deal
Many students come to Australia to study, and the good news is it's quite easy to set up a new bank account, transfer your money from overseas and handle your finances in Australia. Here are some features that you can come to expect from an everyday account in Australia:
- Access to branches and an ATM network
- A debit card to use your money at stores, online or over the phone
- Some may come with monthly account fees, although this is increasingly rare
- The ability to transfer money in and out of an overseas account (fees may apply)
- Access to mobile banking and online banking
Here are the steps that you may want to follow when setting up an account in Australia to ensure the process is as easy as possible.
- Before your arrive. There are some eligible bank accounts that you can open online from your home country. Compare your options below
- It may be worthwhile to find a bank with a team dedicated to migrant financial services such as the Commonwealth Bank of Australia (CBA) or Westpac. You'll then be notified of your bank account details and the location of the branch that you'll need to visit to provide identification. It's also a good idea at this stage to transfer funds into your bank account.
- When you arrive. It may be a good idea to have some money ready to be exchanged into Australian dollars. When you visit your branch for the first time, remember to bring your passport and proof of identification.
Where can I find information about travel money?
Will I be eligible for a credit card if I'm a student?
Each credit card has different minimum requirements. Some are available for students and will have lower income requirements.
How can I get an income while studying?
Where can I find the best credit cards for shopping online?
Please see our page for credit cards that are best for shopping online.
How can I keep up to date with the latest deals on offer?
We have a range of deals that help you save money whatever you're shopping for.
Where can I find information about mortgages?
Please see our home loan comparison.
|Account keeping fee||This is a fee that a lender charges for loan maintenance and can be charged either monthly or annually, also referred to as a service fee.|
|ATM||An Automatic Teller Machine (ATM) is a terminal that is interactive, featuring a touch screen or a keypad. If you have a credit or debit card, you can use it to check your balance, withdraw cash, or make deposits. Most ATMs are part of a large network that means you can do your banking or use your credit card at practically any ATM in the world.|
|Balance||This can either represent the amount of money held in an account at any moment, such as a transaction account or, in relation to credit card or personal loan debt, the amount you still owe. So, if you have $300 in your checking account, you would say your account has a balance of $300. If you still owe the credit card company $250, this amount of money represents outstanding balance you have to pay off.|
|Bank account||A financial account containing funds you have given a bank to hold for you. Withdrawals can be made at any time.|
|Bank account number||A number issued by a bank as a way of identifying an account, which can be a loan account, a transaction account or any other type of account.|
|Bank/State/Branch number||More commonly referred to as a BSB number, it is used as an abbreviation of your banking information. Instead of having to remember a lot of text, your BSB is comprised of a few numbers that a business or bank can use to find out your important baking details.|
|Bank statement||A document, either electronic or on paper, that you receive at regular intervals, usually once per month, providing you with a summary of all transactions on your account. Each statement details the transactions performed from the date of the last statement.|
|Charge card||A card similar to a credit card that can be used to make payments or to purchase goods or services. However, unlike a credit card, the money you use must be paid off in full when you receive the bill. This normally occurs every month.|
|Credit card||A credit card allows you to borrow money from your card provider and spend it, and then pay this money back later. When you are approved for a credit card you'll get a credit limit which is the maximum amount you can borrow at any one time. At the end of each statement cycle you'll be required to pay your balance, and you can pay either the minimum repayment amount, pay more than this amount, or pay the balance in full. If you don't pay off the balance you'll be charged interest on this amount. A credit card can be used in stores, at ATMs, online, over the telephone or overseas.|
|Debit card||This type of card is just like a bank card or ATM card that a financial institution gives its customers to make it easier for them to access their own funds held in an account. The advantage of a debit card is that it can be used to make payments, withdraw cash from an ATM, or make purchases either online, in a store or via telephone, just like a credit card. However, unlike a credit card, the payment is made using money from your own account so you don't have to pay it back later.|
|Deposit||The money you put into any type of bank account.|
|Everyday bank account/ transaction account||This type of account is one you would use for the majority of your transactions, including in comings and outgoings.|
|Interest rate||This is a percentage that is calculated on an amount of money and is either charged or paid by the financial institution. Think of it as a fee you pay for borrowing money from the bank or a fee the bank pays you for putting your funds in their institution. It is expressed as a percentage and can be fixed, meaning that the rate you are offered at the beginning, whether on a loan or savings account, stays the same or can be variable, meaning that it changes over time due to a variety of factors including the Reserve Bank of Australia's (RBA) interest rate fluctuations.|
|Introductory rate||This is a type of interest rate that is more attractive and is offered by lenders or credit card providers to entice new customers. Note that after a while, this rate will go up.|
|Introductory period||This the period of time for which you get a more attractive rate. Once the introductory period is over, the rate generally goes up.|
|Opening balance||The funds in your account or the amount you still owe at the beginning of the statement period, before that month's transactions have been calculated.|
|Trust||A trust essentially means that your parents hold the account for you and protect it until you are considered old enough by the bank to take over these duties yourself.|