The time has come for you to go out into the big wide world and take on your tertiary studies and your first real job.
You might be excited to finally be independent, but you're probably a little scared too. You will have to face and tackle obstacles such as a lack of credit history, low income, expensive study costs and more which might make it hard to get your first credit card and your first car.
We'll be looking at all these issues and much more in this guide. By the time you finish reading through it, you'll know everything you need to make good financial decisions and to understand what awaits you the moment you set foot in the grand world of employment. There are a number of expenses and new financial opportunities you'll be worrying about over the course of your studies: your HECS loan, living on campus, starting your first job and moving out, and if you're an international student, setting up your bank accounts in Australia.
What is student banking?
Student banking is managing your cash while you're studying. 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.
Banks that offer student bank accounts
Table of contents
Finance for under 18s
If you're under 18, you're probably still in high school or have an apprenticeship. The sooner you learn about managing money and finances in general, the more likely you will be to make financially responsible decisions that will ensure you live the life you pictured.
Saving money is essential. It's how you'll be able to afford all those things you've been dreaming of. A loan or credit card can get you those things now, but they're often not the best idea, and you'll see why further down. But first let's take a closer look at savings accounts and how they can help you grow your wealth.
Some of you might already have a savings account that your parents or primary school has set up for you while others may not. If you don't already have one, you should consider opening a savings account as soon as possible. The good news is there are quite a few options available and there are savings accounts that you can open yourself, even if you are quite young. Here are a few great savings accounts for you if you are under 18.
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.
- St.George Maxi Saver account. While the Maxi Saver account from St.George features an attractive interest rate, it can only be opened by someone who is 18 or older. However, you needn't worry because you can still get an account by asking your mum or dad to open the account on your behalf.
- ANZ Online Saver. The ANZ Online Saver account is a little more flexible in that you can open an account in your name if you are 16 years or older. It also offers a highly competitive rate. If you are under 16, you can have a parent or guardian open the account for you in trust.
- Bankwest Smart eSaver. The Smart eSaver account from Bankwest can be opened by anyone who is 12 years or older. It offers a competitive interest rate and can be opened online.
- ME Bank Online savings account. If you are 12 years old or more and a member of an eligible superfund or union, you can open a Members Equity Online Savings account, which features a relatively high rate of interest. It can also be opened online.
- ING DIRECT Savings Maximiser. You must be at least 13 years old to open a Savings Maximiser account with ING DIRECT. This is also an online savings account.
- RaboDirect High Interest Savings account. Almost anyone can open a savings account online, however, if you are under 18, a parent or guardian will have to open the account in your name.
- Commonwealth Bank Dollarmites. This is a special type of savings account designed for under 18s. The Dollarmites club is designed to help you learn how to save money faster and teach you responsible financial habits. It combines fun and games with valuable financial learning tools.
Commonwealth Bank Dollarmites
The Dollarmites site features an extensive range of great advice on saving money faster such as taking a little of your weekly pocket money and setting it aside in an envelope or a box. Or how you can earn some extra cash by asking your mum or dad if there are any extra chores you can do around the house to earn a little more money.
There are also plenty of excellent games and downloads you can get from the site, including Space Monkey Rescue, Eat My Space Dust and the Cricket Memory Game. The whole idea is to make savings fun and at the same time teach you about personal finance.
Regardless of whether or not you have a savings account, it's time to take matters into your own hands. Now you can take care of your own finances but with that privilege comes responsibility as well.
Firstly, it's vital you understand the important terms. If you don't understand the words being used and what they represent, you will have a tough time and it will be hard to make a good decision. So, let's look at some of the essential terms you need to be aware of.
Types of accounts
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?
Many university students will get themselves a student credit card, and there are number of things you have to know before getting one. 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. The interest rate for transaction accounts is commonly low, so it may be more important to consider things like the bank's ATM network and the type of debit card that it's linked to.
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. The higher rate could also be introductory and available for a certain period of time only. These are not to be confused with term deposits. These are a type of savings account which comes with a higher rate but once you deposit funds into it, you can't touch them until the term is up.
This type of account comes with a high interest rate and is designed to make it easier for you to save money, but is also highly flexible in that you can access your funds whenever you need them. All you have to do is link another of your bank accounts to the online savings account to make withdrawals. Simply transfer the funds from your savings account to the linked account to access the money. You can make deposits into your online savings account from any account, whether or not it's linked to your savings account.
This is an excellent type of savings account since you can access your funds at any time you choose but still has a relatively high interest rate. It's also a great option because it generally won't cost you anything in terms of bank fees. Interest is calculated daily on your balance and paid monthly.For example:
If you have $300 in your savings account today, interest will be calculated on $300. If you make a deposit of $200 tomorrow, then interest will be calculated on $500. At the end of the month, the interest you earned will be deposited into your account.
First Home Saver Account (FHSA)
If you're comparing these accounts, good on you for already thinking about saving up for your own home! 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 FHSA is an account supported by the Federal Government to help young Australians buy their first place. However, there are many rules you need to follow with this account and it isn't that flexible.
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. There is no risk of overspending and it will teach you good spending habits because you will have to learn not to spend more than you have.
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. In fact, some banks will charge you a monthly fee to use the card and if you want to withdraw cash from an ATM, you will likely have to pay a fee as well. Note that these are only some of the fees you might have to pay so it's worth doing your research before applying for a prepaid card.
Things to avoid as a student
- 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.
- 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.
Building good budget habits
The first step to building good budget habits is to set goals. When you start dealing with your own personal finances, the key is to establish a goal you want to achieve. So, you need to ask yourself what you want. 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. You might not realise it but you are always working to achieve some goal. The key is to be specific in terms of what you want. You have to state what you want to achieve and by when you want to achieve said goal. Then write up a plan of how you are going to achieve said goal and who you need to talk to so that it happens.
Once you've done all this, it's time to decide how much you are willing to give up or to do to get to that goal.
The easy way to save: Pay yourself first
Now you know what you want to achieve, let's look at one way you can achieve that goal. Achieving any financial goal is a matter of saving effectively.
And one of the best ways to do that 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.
- For example, one approach is to use a jar or a piggy bank at home. Simply put in an amount every time you get your pay check. Of course, there are some issues with this method. For one, you might be tempted to dip into the jar when you run out of cash. There is also a bit of a risk of it getting stolen. However, it can be really motivating watching the amount of cash grow.
- 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. For example, one account could be an emergency fund, another could be savings for a car, another could be for a holiday and so on and so forth. And don't worry, most banks will let you open as many savings accounts as you need.
A great advantage to 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. However, having multiple accounts reminds you exactly what you are saving for and how far you have to go. You can even have a chart with the associated bank accounts next to your computer showing your progress and how far you have left to go, which should prove highly motivating.
An excellent way to make sure you pay yourself first is to set up automatic transfer. You simply schedule automatic transfers into your various savings account on the dates you get paid. This approach is a great way to make sure you pay yourself first instead of always finding something else to use the money for. Before long, you'll find you're well on your way to achieving your goals and you'll be more motivated than ever to save.
Now, you have practically all the information you could possibly need to enter the world of employment, finances, life insurance and other responsibilities. While there is a lot to understand and to remember, don't worry if it seems complicated. You'll catch on soon enough and if you're smart and learn how to manage your money early, you could end up being one of those people who has millions by time they reach retirement age.
So, good luck and don't forget to take a little break and enjoy life along the way!Back to top
Important financial considerations for students
Paying for your education (HECS)
HECS stands for Higher Education Contribution Scheme and 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 $51,309 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.
- Partial payments. If you can pay $500 or more, you could also get a discount of 5%. This will be abolished on 1 January 2014.
- No payment. You don't have to repay the debt until your earning over the threshold and there's no interest charged on your loan.
How does HECS work?
Once you start earning over $51,309 (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
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?
Below is an example of how all of these living costs can add up. To live on campus at the University of Sydney, establishment costs can total $2165 and to rent a room near the campus adds up to $3195. Living costs can also add up to $17,476 per year if you live on campus for both semesters, and $18,054 if you rent.
Living the student life
Being a student can be expensive because there are a number of things you need pay for such as tuition fees, books, learning materials and tools if you're doing an apprenticeship. You may also be paying for rent, mobile phones, utility bills and petrol and car costs. Here are some tips to help you get your finance in order:
- Budget. A budget lets you see where your money is coming from and going. Once you know how much you spend on a weekly or fortnightly basis, you can then see how much money you have left over. You can identify where you're spending too much money and how to limit yourself. For example, if you spend too much eating out, then try and limit yourself to eating out twice a week.
- Create a savings goal. Having a goal motivates you to save. Whether it's something small like a new mobile phone or a big ticket item like a new car, at least you have a number you need to save up for. Regularly deposit money into a high interest savings account or lock it away in a term deposit so you're tempted to spend it.
Fortunately, 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. Find an eligible bank account that you can open online from your home country. 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.
Frequently asked questions
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?
You may want to look around for a job. You can try asking student services, registering with an employment agency, looking at online advertisements or asking others.
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.
Your first financial glossary
- 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. If you are under 18 or a student, financial institutions will generally waive account keeping fees. Once you turn 18, though, these fees will automatically be charged unless you provide further proof that you are still a student, whether that means you're still in high school or have started university or TAFE.
- 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. Note that there are some fees you may have to pay. For example, you may have to pay a fee when withdrawing cash. If the ATM belongs to the same bank you work with the fee is either waived completely or smaller than if you were to use the ATM of a different bank. You might also have to pay fees for other operations, such as checking your balance, but this is generally determined by your bank and a quick look at the terms and conditions will let you know what fees you can expect to pay.
- Balance. This can either represent the amount of money held in an account at any moment, such as a transaction account or, when it comes 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.
The BSB 033088 breaks down as
03 = Westpac Banking Corporation
3 = Victoria
088 = 383 Chapel Street, Prahran
- 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. This number, which can be comprised of both letters and numbers, is used to identify the account and is necessary for operations like wire transfers.
- 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. Most banks follow a certain convention when it comes to BSB numbers. The first two digits refer to the financial institution, the third digit identifies what state the branch is found in and the last three digits identify the exact branch.
- 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. The closing balance on the statement represents the opening balance after the addition and deduction of all the in comings and outgoings on the account and is usually the opening balance for the following statement
Note that if you have internet banking, you can see your account statement at any time online to review your transactions. Generally, this type of statement is updated in real time or, at most, within a few hours of a transaction being performed, allowing you to be fully aware of what's going on with your account at all times
- 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.
- Closing balance. The amount of money you have left in your account or the amount of money you owe at the end of the statement period, e.g. at the end of the month, after all transactions have been performed. So, if your transaction account had an opening balance of $500 and you had in comings of $700 and outgoings of $850, your closing balance would be $350.
- 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. Debit cards usually require a PIN for additional security and some merchants offer cash back facilities, where you can make a purchase in a store as well as withdraw cash.
- Deposit. The money you put into any type of bank account.
- EFTPOS. This is an acronym for Electronic Funds Transfer at Point of Sale and refers to a system that allows you to transfer money from your account directly to a retailer's account via a debit card. The card is swiped through a reader, just like with a credit card, you then enter your PIN to authorise the transaction and the money is transferred directly into the seller's bank account without actual cash having to exchange hands. You can also opt to receive some cash from the transaction by charging a larger amount and receiving the difference from the retailer. This is a good way to save money on ATM fees.
- 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. The balance of this bank account can vary from one day to the next depending on the transactions you perform. This type of account differs from a savings account in that the latter is used to remove the temptation of spending the money and also features a higher interest rate. You can link your high interest savings account with your everyday bank account and receive your salary to your transaction account.
- 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. For example, a credit card issuer might give you an introductory purchase rate of 5.69% for the first year, meaning that you will incur interest of 5.69% on your outstanding balance during the first year. After this first year, though, the rate goes up to the standard purchase rate, which might be say19.99%.
- 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.