Money Milestones Q&A: Thomas, Young Worker With a Student Loan

Tell us a bit about yourself!

My name is Thomas, and I am currently in my third year of study at the University of Otago. I study Psychology, Sport Management, and History. I am currently on track to be completed at the culmination of next year. I enjoy watching and sometimes playing rugby and love reading (that isn’t assigned by lecturers) in my free time. I also have a lot of fun writing and hope to earn something from it at some point in my life.

What is your approach to managing and budgeting money?

My personal approach to managing money is that of identifying what is necessary week in and week out. These are often the consistent and unchanging costs of rent, power, and groceries. I then allocate the appropriate and minimal amount of money possible to these necessary expenses and, hopefully, save whatever might be left over. It is very difficult to keep my head above water with my very small student weekly paycheck, but I manage — unless there’s a special occasion wherein my weekly leisure expenditures on golf come under the microscope.

What are your current financial goals, and how are you working towards them?

Like most young New Zealanders, my main financial goal is to buy my own home, which will be my first. There are obviously things in the way, and with my part-time job, I can only dedicate so much to my KiwiSaver every fortnight. This is, of course, a plan for the future and I am aware that many post-university years will be spent on a shoestring budget as I juggle a loan and saving for a house. However, I feel living frugally throughout my tertiary years will put me in good stead to manage the hopefully more substantial paychecks I will be getting in the future.

My current plan to really tackle the loan is to live at home after I finish my degree. Hopefully, this will allow me to have minimal expenses insofar as I can put substantial amounts of my paycheck towards the loan in the inevitably trying years following my degree.

Where do you go for financial advice and information?

As for personal financial advice, my father’s history of working in foreign exchange qualifies him, at least in my mind, as a financial professional. He is the one I go to for advice in setting up any minuscule investment I make into the likes of Sharesies. These are in an attempt to diversify my very solitary financial portfolio.

How do you manage your budget as a student and young professional?

I like to divide up my insignificant weekly paycheck into different, for lack of a better term, piles. These ‘piles’ are then used to pay my different expenses, which are consistently rent (weekly), power (monthly), and groceries (weekly-fortnightly).

The toughest one to plan for is my grocery shop as that is often changing, depending on what level of hunger I enter the supermarket with. Power can be a struggle too, if my flatmates have decided to use ovens and showers like they’re free. In this case, which isn’t often, it can be a rather debilitating monthly expense, but it can also go the other way if we keep it tight. So I have three ‘piles’ I like to keep my weekly paycheck in, and I do try to alleviate any stress by hopefully having a smaller pile to cover any erroneous costs that may pop up. However, it is difficult to manage such a small budget, but it seems to work for me.

What strategies are you using to pay off your student loans?

There aren’t too many strategies I can implement to pay off my student loan currently. Obviously, part of my paycheck from my part-time job goes to paying it back automatically, along with any full-time work I may do over the summer. However, my current plan to really tackle the loan is to live at home after I finish my degree. Hopefully, this will allow me to have minimal expenses insofar as I can put substantial amounts of my paycheck towards the loan in the inevitably trying years following my degree.

How do you prioritize your spending between necessities and leisure?

As for prioritizing between necessities and leisure, there is not too much leisure I can allow myself. My golf habits are left with a very small sum after my essential expenses. I do consider it important, however, to have an outlet of leisure that is somewhat habitual from week to week. It would be ideal if it were free but playing at the cheapest and closest courses allows for minimal cost. With it often being a group fee, I will offer to drive friends to the range and then have them front the bill — allowing my own expenses to only center on gas.

What financial advice do you wish you had received before starting university/your job?

I personally would have liked investment advice earlier in life in order to gain a retrospective head-start in the investment world. I would have a greater net worth today if I was pushed in that regard to diversify my finances. Small tips regarding the allocation of funds would have been very useful to me when first living away from home.

This interview is part of New Zealand Money Month 2024. NZMM is coordinated by trusted personal finance resource Sorted, in partnership with the financial capability community, and it involves events all around the country to encourage New Zealanders to talk about money and develop greater financial capability. To further the conversation about money, we got in touch with everyday people to explore how financial priorities and challenges evolve through different life stages and milestones.