Is your takeaway coffee costing you 100k?

Have you met Anna? 

Think of her as your avatar in the game of life. A woman who’ll age from 20 to 70 in five weeks flat. A woman who’ll face common crossroads that will shape her financial future. Big crossroads, like whether or not to have kids. And smaller ones, like whether or not to buy a weekly takeaway coffee. 

By the power of social media polls, we – the FW community – are collectively guiding Anna through each decision. And thanks to a cast of financial experts, we’re getting financially literate along the way. 

As we took a lightning-fast tour through Anna’s 20s, she (we) had some choices to make. Like whether to launch straight into full-time work or to study while working casually. 

Weighing up the economic consequences of Anna’s decisions in this decade is award-winning finance expert, Women with Cents founder Natasha Janssens. Who says that, in the short-term, studying around casual jobs comes with greater financial risks.   

“Casual work – although it usually pays a higher rate – tends not to come with benefits such as sick leave. And, depending on the hours worked, you will likely be earning less in superannuation, which can have long-term implications.” 

She’s not wrong. Around three-quarters of our retirement balance comes from compound returns. Which means missing out on super early in your working life can, over time, result in big losses. 

On the flip side, tertiary study is likely to boost your future earning potential. Research tells us that higher education leads to higher salaries and wages, more diverse sources of income and less reliance on the aged pension.

As Natasha points out, Anna can be successful either way. “It’s less about the circumstances and more about how you make them work for you,” she says.

“In both scenarios I would suggest having emergency savings and a backup plan in case you are unable to work. Your ability to earn an income is your biggest asset – so it’s important to protect it as best you can.”

Anna’s career field is also ours for the picking – and will significantly impact her economic future. 

Women are increasingly working in undervalued “feminised” industries, such as healthcare, social assistance and education – which plays into a 19.4 percent superannuation gap between men and women aged 25-29. But regardless of what career Anna pursues, wages in most industries are not keeping up with inflation.

She (and we) will want to consider growing wealth in other ways, like investing in the stock market. And there are free, Gen-Z and Millennial targeted resources to help – like the Girls That Invest podcast, care of 28-year-old, self-made millionaire Simran Kaur. 

But twenty-something Anna is cash poor and keen to spend on current fun. Is it worth foregoing a night out with mates, new wardrobe addition or takeaway coffee to throw a few dollars to her future self? 

“Although Anna is young and likely not earning as much as she will in later years, time is her friend,” says Natasha. “The sooner she starts, the less she has to invest in order to achieve the same result.” 

According to MoneySmart’s compound interest calculator, from age 25, if Anna supplements her superannuation with $10 a week, she’ll likely end up with more than $100,000 extra at retirement. 

How’s that takeaway coffee looking now?

During this period of her life, Anna might do better with a home-brewed Moccona. Ideally, under her parents’ roof. 

“If you are fortunate enough to have family you can live with, rent free, make the most of it while you can and give yourself a head start,” says Natasha. “The older we get, the more our time and finances come under pressure with increased responsibilities and the harder it becomes to achieve our financial goals.”

Here’s how Anna is looking as we exit her 20s, according to our votes. 

She’s travelled the world, found love and gained a Bachelor of Education while working casually. Along the way, she’s bought a used car, contributed to her super, paid off credit card debt and lived in her family home, rather than a sharehouse. Anna also opted for ethical fashion, online privacy and finishing her degree, instead of dropping out for a dream job.