The Cost of Being an Adult

Monday, December 15, 2014

Today, we’re going to have a look at some of the surprising costs of being an adult – and, more importantly, how to manage them. Here’s a question –


When do you think you truly become an adult?


I’m not talking about legal or cultural hallmarks like turning eighteen or twenty-one – drinking or driving or moving out. I’m talking about the moment that you feel like you’ve actually become an adult. That you have, in a good way, become your parents. Responsible, mature and independent.

It may not have come for you yet. It may never come at all. When she turned thirty, Guardian columnist Eva Wiseman had thirty questions – but top of her list was ‘will I ever feel grown up?’ This is far from an unusual question. In fact, it even has a bit of a name.

In 2000, Clark University’s Jeffrey Arnett suggested that we’d started to see a new phase in personal development in the world’s industrialised nations – Emerging Adulthood. This was described as a new phase of growing up that stretched from after high school to the latter half of our twenties and concerned our seeking out, experimenting with and ultimately forming our final identities as adults.

This is obviously a recent innovation. Previously, we expected to (and were expected to) become adults shortly after graduating high school or university. As such, it’s a concept that’s not without its critics. A number of criticisms levelled at the millennial generation (or Generation Y), for example – such as millennials’ apparent refusal to settle into one career indefinitely – could be considered indirect criticisms of the belief that a majority of millennials are still developing into adults.

But, regardless of whether such changes represent a whole new phase of development or not, there can be no denying that our current expectations of young adulthood are different to those of our forebears. If nothing else, statistics don’t lie. The Australian Bureau of Statistics, for example, has found that there has been a significant change in young adults getting married. In 1976, 67% of 24-year-olds were or had been married. In 2011, only 14% of 24-year-olds can say the same.

It’s part of a greater trend. A different study from the Australian Bureau of Statistics similarly found that there was a consistent increase in the number of young adults living at home from 1986 to 2006 – an overall increase of 16%, in fact. Furthermore, if today’s young adults do move out of their parents’ home, there’s now a 31% chance that they will return to live with their parents again at a later date. Often, for a stay of more than a year. Statistically, our conventional hallmarks of adulthood are arriving later and later.

Why are we talking about all of this? Well, it’s to confront an assumption. See, there’s a good chance that you feel that you should have it all figured out as an adult. Or, you should know what to do. After all, your parents could have been married and living in their own house by your age. But, things have changed. As we’ve just discussed, adulthood is different in today’s world. So, if you do feel you’ve got it sorted – that’s fantastic. But, if you don’t – that’s actually quite normal. It’s normal to feel a little overwhelmed and unsure about adulthood.

(At this point, we should perhaps briefly acknowledge that the changing nature of adulthood is a historical phenomenon – not a personal one. So, don’t think a whole generation is just lazy or aimless. A myriad of shifting social factors have created this new phase of development over the past fifty years. The increased focus and popularity of tertiary education, for example). If you’re feeling skeptical, you should remember that the concept of adolescence has also only emerged in the last eighty years. In fact, ‘childhood’ as a concept only dates back to around the eighteenth century.

To bring it back to our key focus – it’s absolutely normal to feel a little overwhelmed by the seemingly endless costs of being an adult. After all, it’s something you rarely think about as a child or a teenager. Initially, adulthood is simply about freedom. But, as you start to carve out your own life, you’ll realise there are lots of expenses that you hadn’t considered in your youth. Even ignoring basic things like weekly groceries and rent – you’ve got to contend with figuring out things like work attire, utilities, tax, insurance, health insurance, buying a car and university HELP debts.

It’s definitely a bit of a list. But, these things are not as complicated, difficult or overwhelming as they might seem. In fact, I’ve often found a large part of the process of getting these things sorted is to simply view them as individual goals and targets – and not as components of some huge and overwhelming mission to Fix Everything Right Now. When broken down to achievable goals, many of the costs of being an adult are relatively straightforward and painless. To demonstrate, we’ll address a couple in detail.

(But, before we go any further, it’d be remiss of us not to suggest making a budget. A well-constructed budget will actually help you easily get a handle on many of the costs of being an adult – groceries, rent and utilities, for example, are all regular payments that can be comfortably addressed in a regular budget. Furthermore, it will give you a clear idea of the amount of money you have at your disposal. If you’ve never made a budget, we’ve got you covered). And, while we’re recommending ourselves, we’ve also previously published an in-depth guide to buying a car.)

We’ll deal with these in order of necessity. So, work attire. If you’re applying for jobs, it’s important to think about presentation and how to dress appropriately for job interviews. If you’ve secured a job, you’ll know you need to really financially commit to continue to dress in appropriate attire. In some instances, your work will have a uniform (which you may or may not have to pay for) – but, if they don’t, you’ll have to handle matters yourself. Remember, youth unemployment accounts for 40% of all unemployment in Australia – so details like these are actually quite important.

If you’re unsure of where to begin with something like figuring out appropriate work attire, there is no better resource than your friends, family and employers. They will all help you figure out what to wear. If you’re looking for a way to save money on work attire, my personal advice is to look for factory outlets – small stores where popular and established brands offload excess stock or stock from previous seasons. It’s cheaper – but still high quality. In Australia, we have a chain called DFO (Direct Factory Outlets) who specialise in the concept. Trade Secret provides a similar service.

Those are not your only options, of course. While they still have a certain stigma, second-hand stores like St Vincent De Paul (or Vinnies) and Lifeline Clothing Shops can have some surprisingly excellent finds. I wore an Italian-made pinstripe suit to my brother’s wedding – I got it second-hand for forty dollars (and I looked fantastic). Regardless of where you end up getting your clothes, though, a budget will help. It’ll give you a good idea of how much you can spend on your work clothes.

(And having a clear amount to spend will also ensure you don’t make too many impulse purchases and over-spend.)

Next, let’s look at tax. To a substantial number of Australians, tax is a painful, boring and irritating gauntlet of punishment that we all must periodically navigate as adults because being a grown-up is horrid. This diagnosis is not necessarily incorrect. But, it needn’t be a complete chore. For the most part, most of your tax will be handled by your employer. But, if you’re looking to streamline the process further – employ an accountant to handle your tax at the end of financial year (or earlier). Ask friends and family for their recommendations to find a good one.

Given you’re fully permitted to handle your tax personally, it may seem like an unreasonable expense. But, there are surprising benefits to outsourcing your tax. Most tangibly; a tax accountant will almost always navigate their realm better than you. There can be surprising loopholes or technicalities that can ensure you pay less tax or receive more money in your tax return. A good tax accountant will find them. More obscurely; your time is valuable. The time spent on a tax return you needn’t do is money lost. So, don’t waste your time.

(That sounds like an abstract concept – but time really does translate to money. If in doubt, consider that a 2012 study published in the Journal of Economic Perspectives found that the time spent dealing with spam emails costs the world twenty billion dollars a year. Don’t waste time.)

Finally, your HELP debt as a university student. Until you take out a home loan, your university fees will probably constitute your largest debt as a tax-paying adult. Currently, they’re quite simply handled. When you earn over a certain threshold of money per year, your employer will begin automatically deducting money from your salary to pay off your debt. The interest on your HELP debt is small – so you needn’t be in a hurry to repay if it doesn't suit you. That said, if you make a voluntary repayment of $500 or more, you will earn a bonus reduction of your debt.

Is there a significant advantage to repaying your HELP debt early? Under the current arrangement, no. You do get a bonus reduction of your debt – but it’s only a small percentage. The only real advantage is that repaying your debts early can help boost your credit rating and make applying for loans easier. But, your credit rating is also boosted by simply paying your electricity bill on time.

Now, under the current government’s proposed Higher Education reforms, university fees will be higher, additional interest will be applied to HELP debts and the threshold at which you’re expected to repay your HELP debt will be lowered. In which case, the sooner you can repay your debt, the better.

But, the Australian Senate has so far voted against introducing those reforms. It’s not currently expected that the government will be successful in implementing such changes.

So, you can see that the costs of being an adult are really quite simply handled. From groceries and utilities to work clothes to buying a car to doing your tax – it’s all a matter of taking it one step at a time and just hitting those achievable targets. Again, a budget really will handle most of the work. Anything else is simply a case of being patient and logical and breaking it down into manageable components.

Of course, you may still not feel like an adult when you’ve got all of these things sorted. But, as we’ve covered, that’s becoming a part of growing up in this era. In the end, you needn’t worry. You’ll be okay. You’re doing great!