{"id":767,"date":"2020-05-31T00:53:49","date_gmt":"2020-05-31T00:53:49","guid":{"rendered":"https:\/\/www.wellbeing.com.au\/curious\/?p=767"},"modified":"2020-05-29T01:06:09","modified_gmt":"2020-05-29T01:06:09","slug":"your-millennial-money-worries-answered","status":"publish","type":"post","link":"https:\/\/www.wellbeing.com.au\/curious\/your-millennial-money-worries-answered","title":{"rendered":"Your millennial money worries answered"},"content":{"rendered":"

Each generation has its own financial struggles. While baby boomers are trying to afford their third investment property, millennials are trying to budget for their daily coffee, an Instagrammable lifestyle, overseas travel and a future home. It\u2019s good to have goals<\/a>, but the generational gap means what has worked in the past may not still be relevant today.<\/p>\n

Here are two common millennial money questions:<\/p>\n

Should I make voluntary payments to my HECS\/HELP debt?<\/h1>\n

Having student debt ticking away in the background may cause angst to many people in this situation. There is logic in thinking that once this debt is gone, there will be more money to devote to the things you love.<\/p>\n

However, it is generally not recommended that you pay additional funds towards your HECS\/HELP debt. Any voluntary payments are made from post-tax dollars (unless possible via salary sacrifice). Also, the HECS\/HELP debt is technically not attracting interest, it\u2019s only indexed annually (currently 1.9 per cent as of 2019) and does not impact your credit file.<\/p>\n

The minimum payments that your employer should withhold start at 1 per cent for those earning more than $45,881 and 2 per cent once you reach $52,974. If your earn more than $134,572, the amount is 10 per cent. The thing is, as your career progresses and your income grows, you will be paying off your debt more than the indexation. This means it is taking care of itself. Further to this, if you were to die prematurely, your debt is cancelled. Your HECS\/HELP debt is an education tax; it\u2019s best to just say this out loud and get on with your life.<\/p>\n

If you are applying for a mortgage, a lender would generally take into consideration the \u201crepayment rate\u201d from a servicing point of view. This could mean that a person on a high income and low HECS\/HELP balance could be impacted more than a low-income earner with a higher HECS\/HELP balance. There are instances where it might make sense to pay off your debt if applying for a mortgage, but a good broker should be able to explain all the scenarios regarding how HECS\/HELP impacts your lending.<\/p>\n

Do I need private health insurance?<\/h1>\n

The good news is, if you\u2019re sick in Australia, there\u2019s a great public safety net that will care for you and cover most medical treatments and expenses. The better news is, if you\u2019re facing an emergency, you\u2019re not asked about any private insurance before being checked into hospital.<\/p>\n

The not-so-great news is, however, if you earn more than $90,000 as an individual or $180,000 as a family unit, you\u2019ll have to pay the Medicare Levy Surcharge (MLS) if you do not have private patient hospital cover (private health insurance). This starts at 1 per cent, then 1.25 per cent through to 1.5 per cent based on your income.<\/p>\n

The other not-so-fun news is that if you\u2019re over 30 years old and do not have private health insurance, you will essentially have a 2 per cent loading applied to your health insurance when you do decide to take out cover. This loading is applied every year that you do not take out cover. The system is designed to get as many people as possible out of the public health network.<\/p>\n

Private health insurance is a great tool for elective surgery as you can choose your doctor and have a procedure undertaken on your own timeline as opposed to being on a public waiting list for up to 18 months.<\/p>\n

Do not get sold on the extra benefits with private health insurance such as optical, dental or physiotherapy. These are benefits, not the sole purpose for cover.<\/p>\n

Here\u2019s a quick snapshot exploring whether or not you need <\/em>health insurance:<\/p>\n