6 things school-leavers need to know about banking

Estimated reading time
 6 min

In this article

• Different bank accounts and cards we use each day
• Banking on your phone (it’s super easy too)
• How to make a budget and level up your money management
• Why financial wellbeing is important for everyday life

Banking is an integral part of everyday life. 

Splitting the bill at dinner? Banking. Paying for your bubble tea? Banking. Stashing away your coins for a videogame? Also banking. Paying your rent and bills each month? Yawn, but it’s banking. 

There’s a lot of banking things that young people – tweens, teens and young adults – might not know about. So we’re here to give you the run down on the important everyday banking basics you need to know.

What type of bank account do you need?

A few of us might have started the banking journey with a kids account back in the day. But once you hit 18, that account can evolve into a savings or transaction account, which you’ll use in everyday life.

A savings account lets you save towards a financial goal and earn interest. You don’t get a card for it, as the goal is to keep it stashed away. A transaction account is used for daily expenses and comes with a fancy banking card, so you can take money out of an ATM or tap and go instore. Don’t get suckered in by the status quo bias and keep doing things how you’ve always done them – do your research, explore your options and see if there’s something better you never considered. For example, getting some of your salary auto-transferred into your savings on pay-day (neat!) or organising your books into a rainbow (colourful!) – whatever floats your boat.

What’s the difference between a credit card and a debit card?

Credit and debit cards are like apples and oranges – they’re completely different.

Debit cards are directly linked to the money in your transactional account. When you use them, you’re spending your own hard-earned cash.

Credit cards allow you to spend up to a certain amount that the bank loans to you – separate from the money you have in the bank. You then pay back your credit card through regular repayments (often at the end of each month) along with interest which is the cost of borrowing the money in the first place.

Can you do banking on your phone?

You can do your banking just about anywhere nowadays – even on your mobile. Banking apps have a smorgasbord of great features to make banking easier. You can check your daily balance at a glance, set a savings goal, transfer money with a few swipes and more.

Some banking apps (like ANZ’s) allow you to pay for things with a digital card. So if you forgot your wallet but have your phone (with a banking app), you can pay for things in a single tap. 

Do you need a budget?

A budget is essentially a plan of how you’re going to spend your money each month (or year). It can help you divvy up your income and work out how to spend that cash on everyday costs.

There are different ways you can build a budget. At ANZ, our golden budgeting rule is the 50/30/20 ratio:

• 50% goes towards your needs – the everyday things like rent, bills, groceries
• 30% goes toward your wants – your fun money
• 20% goes toward your goals – whether that’s a holiday or a home deposit

And we have a handy and easy-to-use calculator you can use to get the budget ball rolling.

How can you manage money?

Everyone manages their money in different ways:

• Set up a budget to have a visual snapshot of your financial situation. This can help you spend smartly and save like a pro.
• Work out how you can boost your savings by making little swapsies. For example, buying home-brand rice instead of the one in fancy packaging.
• Habit stack to make money management part of your daily routine. For example, reading a chapter of your book then checking your budget.
• While we might think we can stay on top of regular repayments (thanks optimism bias), sometimes it doesn’t go according to plan. That’s why setting up automatic payments is a great money management hack – this is where you program your online banking to make automatic transfers for you each month to pay bills or fill up your savings. Set it up with online banking or your banking app and get organised without lifting a finger.

What is financial wellbeing?

Money touches all parts of our lives, so understanding your financial wellbeing (and improving it) can help you go a long way. Simply put, your financial wellbeing is how comfortable or confident you are about money management and is based on:

• How easily you can afford everyday expenses – things like your bills and rent
• How prepared you are for an emergency – this can be a large, unexpected expense or it could be earning less income
• How confident you are about your financial future – think about your retirement and future ‘you’s’ needs.