Personal Finance 101: A Complete Guide to Getting Started
Personal finance can feel like a hundred disconnected topics, but the pieces fit together in a fairly clear order — this guide ties them together so you know what to prioritise first.
1. Budget, Then Build an Emergency Fund
Start with a simple budget (see the budgeting guide on this site) so you know how much you can realistically save each month. Then build a 3-6 month emergency fund in a high-interest savings account, protected within Financial Claims Scheme limits, before investing anything — it protects every other financial goal from being derailed by an unexpected expense.
2. Clear High-Interest Debt
Credit card and other high-interest debt (often 18-20%+ interest) typically costs more than any investment reliably earns — prioritise clearing it before investing heavily, using the snowball or avalanche method described in the debt guide on this site.
3. Check Your Super, Then Consider Investing Outside It
Once your emergency fund and high-interest debt are handled, review your compulsory superannuation and consider whether extra voluntary contributions (via salary sacrifice) make sense, given the tax advantages inside super. For goals you might need to fund before your preservation age, investing outside super — in shares, ETFs, or term deposits — keeps the money accessible.
4. Diversify and Keep Costs Low
Inside whichever structure you use, a diversified, low-cost fund or ETF (see the diversification guide on this site) is a reasonable default for most people, rather than picking individual shares — brokerage fees and fund costs compound against you over decades, so low cost matters as much as good returns.
Frequently Asked Questions
- What's the right order to tackle personal finance goals in Australia?
- Budget first, then build a 3-6 month emergency fund, then clear high-interest debt, then review your superannuation and consider extra voluntary contributions, then invest outside super for goals you might need sooner.
- Should I invest before paying off debt?
- Generally no for high-interest debt like credit cards (often 18-20%+ interest), since few investments reliably beat that cost. Lower-interest debt, like some home loans, is more of a judgement call.
- Should I prioritise super or investing outside super?
- It depends on your timeline. Super offers tax advantages but generally can't be accessed before your preservation age (currently 60) — money you might need sooner should go into accessible investments outside super instead.
- Do I need to pick individual shares to invest well?
- No — a diversified, low-cost index fund or ETF is a reasonable default for most people, and avoids the risk of over-concentrating in a single company.
Informational content, not financial, tax, or legal advice. Verify amounts, limits, and current conditions directly with official sources (ATO, ASIC, APRA) before making a decision.
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