Managing a Significant Income Increase: Seeking Guidance

TL;DR

Help me effectively manage my income increasing from $1,670 to $2,790 per fortnight—I know very little about finance.

Hello, r/ausfinance community! As indicated by the title, the exciting news is that my income is set to nearly double, and I’m eager to gather some advice on how best to manage this financial change. I haven’t come across similar discussions specific to Aussies on Reddit, so I’m taking the initiative to create this post myself. I hope it’s not an inconvenient repeat!

I’ve been more of a savior than a planner—I typically just save up for things I desire or for vacations, purchasing items when my finances permit. I’ve never taken on a loan, held a credit card, or made any investments. (As a side note, I do use YNAB to track my spending, which is a good starting point!)

New Opportunities on the Horizon

With this income increase, I feel motivated to enhance my financial footing. Still, I find myself a bit lost in figuring out how best to do this. I’m also thrilled about having more disposable income for things like new clothes or hobbies, which have felt out of reach in the recent challenging financial climate.

In particular, I have several specific questions and areas where I’d really appreciate some pointers:

Balancing Financial Planning and Enjoyment:
What’s the most effective way to strike a balance between setting myself up financially for the future while also allowing myself the joy of spending now that I have more disposable income? How do others achieve this balance?
Saving for a Safety Net:
With my new salary, how long should it realistically take me to save three to six months’ worth of living expenses as a safety net?
Best Practices for Saving and Investing:
As my earnings grow, what are the best ways to save and accumulate my money? I am interested in investing and ETFs but lack knowledge in these areas. How can I slowly start learning about this?
Spending Evaluation:
Are there areas within my current spending that seem excessive, or suggestions on where I could tighten my belt a little to increase savings?
General Guidance and Resources:
Any general tips on formulating a solid financial plan would be greatly appreciated. Are there any excellent resources or tools out there that could assist me in managing my finances more effectively?

Understanding My Financial Situation

Just to give you a clearer picture, I’m single, renting an apartment, have no mortgage or children, and thankfully no debts aside from HECS, although I do have a beloved dog to care for.

Current Financial Snapshot:

Current Income: ~$1,670/fortnight (approximately ~$3,618/month)
Current Monthly Spending: ~$2,860 (which allows me to save around $758/month for emergencies and unforeseen expenses)
Current Savings: About ~$2,500

Upcoming Income Change:

After the salary bump, my new pay will be approximately $2,790/fortnight (~$6,045/month), which is a significant increase of $1,120/fortnight or $2,426/month. This equates to an additional $1,470/fortnight or $3,185/month after covering my living expenses.

Breakdown of Current Spending

To give better insight, here’s a breakdown of where my money currently goes:

Food & Spending

Groceries/Household Items: $600/month
Eating Out: $255/month
Alcohol: $120/month
General Spending Money: $275/month
Total Food & Spending: $1,250/month

Utilities/Bills/Subscriptions

Rent: $810/month
Fuel: $105/month
Water & Electricity: $60/month
Mobile Phone: $35/month
Internet: $25/month
Car Insurance/Roadside Assistance: $30/month
Car Registration & License: $50/month
Dog Expenses: $105/month
Subscriptions (Netflix, Spotify, etc.): $52/month
Professional Fees: $36/month
Yoga Membership: $80/month
Medical/Mental Health: $150/month
Total Utilities: $1,538/month

Miscellaneous Unplanned Expenses

Unplanned Incidental Expenses: $75/month

Overall, my monthly expenses total approximately $2,860.

Outline of My Financial Goals

Short-term (Next 3-12 months)

Purchase a van (around $15,000 – $20,000)
Establish a savings safety net covering 3-6 months of income
Acquire some music equipment (estimated $1,000 – $2,000)

Medium-term (1-2 years)

Invest in a personal creative project (approximately $5,000 – $10,000)
Consider a secondary vehicle for personal use (budget of $10,000 – $20,000)

Long-term Goals (2+ years)

Aim to buy a property eventually, focusing on investment returns, especially given the current housing market.

How AI Legalese Decoder Can Help

While navigating this field of finance, it could also be beneficial to utilize tools like AI Legalese Decoder. This platform can help demystify complex financial documents and contracts associated with loans, investment opportunities, or any service agreements that you may encounter as you step into this new financial chapter. By breaking down legal jargon into plain English, you can make more informed decisions without being overwhelmed by technical terms, thus empowering you to take control of your financial future effectively.

Thank you immensely for any assistance you can provide! Your insights and recommendations are truly appreciated.