Diana’s property and super plan is paying off

To be financially secure, Diana Barnes took charge of her journey early on, writes Sylvia Pennington.

As a youngster, Diana Barnes’s parents impressed on her the importance of learning to fend for herself financially.

She’s taken their advice to heart. At the end of her first decade as a full-time worker, the 32-year-old is paying off two houses and has turbo-charged her retirement fund with thousands of dollars in additional contributions.

A development studies and sustainability graduate, Barnes worked in the mining industry and volunteered with Engineers Without Borders in Vietnam, prior to commencing her current role in the public sector.

Start early to build wealth 

After five lean years at university, Barnes began mapping out her financial future shortly after finishing her degree.

“I was told by my parents, multiple times, about the benefits of putting money into superannuation and not going into debt, unless it’s to buy property,” she says. “My mum has always been very much about ‘you must be able to stand on your own two feet, you must have your own career and you must have the ability to look after yourself whatever happens’.

“I’ve always been someone who is security-oriented – the stress of not being able to pay bills doesn’t appeal to me. And the idea of not being able to do things I enjoy later in life – honestly, I find that a bit petrifying.

“So I recognised that if I put in extra, early in my career, there would be greater benefits down the track, rather than waiting until I’m 40 and trying to catch up.”

Boosting super contributions

Barnes resolved to contribute 15 per cent of her income, including her compulsory employer contributions, into super from the get-go.

For the bulk of the past nine years, she’s made additional contributions of between $180 and $250 a fortnight.

Don’t see it, don’t miss it, she observes.

“I guess I was fortunate in that I got a reasonably high-paying job straight out of university and that gave me the ability to go, ‘well, do I really need that extra income?’. Right now, it’s probably not going to make any difference either way and my parents really drilled it into me as a young kid about the importance of saving.

“It’s not that much out of every pay and you don’t notice it if you put it straight in. Because it’s never in your pay, not in your pocket, you just work around it, budget-wise. And then it’s there growing for you and you can save and invest outside of super as well.”

Getting on the property ladder

And she has. Two years after starting her first job with global mining operation Xstrata (now Glencore), Barnes pulled together a $12,000 deposit for a house in Lithgow, two hours west of Sydney. Three years later she bought again, this time in Toowoomba, the regional centre on Queensland’s Darling Downs where she now lives and works. Both purchases were made without recourse to the ‘bank of mum and dad’.

“There are other options than just investing in the city or buying your dream house,” Barnes says. “My properties weren’t overly expensive but they give me a place to call home, something outside of super because goodness knows what’s going to happen with that – we’ll probably be 80 by the time we retire! Meanwhile, I’m renting out my place in Lithgow and it’s paying itself off, which is nice.

“I like the fact that I’m building wealth inside and outside super and I don’t think it’s worth waiting because the earlier you start the better.”

Tapping into compound interest 

After eight years salting away additional super contributions, Barnes is seeing the truth in Albert Einstein’s observation that compound interest is the eighth wonder of the world: her super balance is growing significantly under its own steam.

“The thing I’ve noticed between last year and this year is the gains have been a lot larger than in the past,” she says.

“It’s generally said that after about seven years, compound interest really starts to make a difference and that’s what I’m seeing. Previously the extra would go in and I’d think it wasn’t really making a lot of difference.

“I guess it’s similar to when you’re paying off the interest on a home loan – the repayments don’t seem to make a dent initially but down the track, they really start to.”

Don't wait around for Mr Right

Does Barnes have any advice for other young women preparing to enter the world of work?

“Doing things early on, by yourself, is more important than waiting for the perfect relationship or someone else with money,” she says.

“I don’t think women of my generation expect someone to provide for them but they might wait to get serious about their finances and that’s time they could use to save a deposit or grow their retirement savings.”

“I’d encourage them to simply start by saving. While doing that, you have time to read many books which help you gain in understanding and confidence and get better at recognising investment opportunities as they arise.

“You can start with a small amount and grow it from here.”

My financial journey is a series from ANZ Women on how Australian women have overcome major obstacles and taken charge of their finances.