Want a higher-paying job, but can't afford to get the qualifications?

The poverty trap is real, and it's a vicious cycle.

One of the greatest challenges that many people face is improving their financial situation. It almost seems as though the system is structured to prevent people from breaking out of their particular income class.

The "poverty trap" occurs when people simply can't afford to take expensive steps to improve their lives. They are often too poor to make sensible financial decisions. For example, they may not have enough money to pay for twelve months of car registration, so they pay for six months, which costs more than half of the twelve month option.

The classic example of this situation is the "toilet paper effect", based on a US study that found high income households bought toilet paper on sale 39% of the time, compared to 28% for low income households, because they had the spare income to take advantage of special offers.

In order to break out of your current income bracket, you need to upskill yourself and earn the qualifications that employers are looking for. However, this comes with a sacrifice of both time and money.

When finances are tight, it can be very difficult to find the money and time to return to study. Through facing multiple challenges daily and constantly battling financial insecurity, it can also be immensely difficult to find the confidence to return to study.

However, regardless of how desperate your situation is, there are ways out of it. You don't have to work dead-end jobs because you lack the right qualifications. It is always possible to make changes to your life. You just need a plan.

Have goals and a plan to get there.

So, you're ready to step up and move forward. They key to getting ahead is having goals. You need to know what you're aiming for, and have a clear picture of where you want to be. When you have goals, it's far easier to stay focussed.

Write your goals down, and represent them in picture-form if it's realistic. If your goal is to have a nice job with a city view, find a picture. On the same note, if you want a fancy car and a nice house, find a picture of those things and put them on your nightstand/bathroom mirror/office wall.

Once you have a goal, the most important step is to develop a realistic, time-limited plan to achieve it. Plenty of people have goals. Fewer have plans. Fewer still apply time limits to achieving each stage of their plan. It's easy enough to know what you need to do to get your dream job (get the qualifications, get the job, show up to work). However, actually developing a plan and applying specific, strict dates to it will give you a genuine chance of getting there one day.

Develop a realistic budget.

A sensible, realistic budget is something that you should develop anyway, regardless of whether or not you're returning to study. Most people vastly underestimate the value of a budget before they use one. Among people that have used a budget, there aren't many stories of them complaining about having extra money.

To begin, analyse your expenditures over a six month period. Get a good idea of your monthly phone and internet bills, as well as anything else you're outlaying money for. Understand the average cost of your power and gas bills, car registration and any insurance payments you make.

Once you've got an idea of your consistent, fixed costs (including rent), it's time to take a long, hard look at your variable costs, such as that iced coffee you bought yesterday morning. These random purchases can be a huge drainage on your income, and are the easiest to cut out.

Maximise your entitlements.

If you qualify for youth allowance, rent assistance, or some other level of financial support, make sure you apply for it! The initial application process may be difficult and require you to dig up a lot of information, papers and other documents. However, it's absolutely worth it if it can help you stay financially afloat while you pursue your qualifications.

Find a suitable bank account (and loan, if you need it).

Thanks to very low interest rates, the Australian banking industry is incredibly competitive right now. Don't just stick with the same old bank you've been with for years. Shop around, and find a basic account that doesn't charge any account keeping fees or requires payment for statements. There are plenty of accounts out there that are ostensibly free to maintain – you don't need to pay to have a bank account.

If you need a loan for anything, shop around and compare interest rates and associated fees. A few hours spent on research will absolutely save you a lot of money.

Smooth out bills and payments to reduce "bill shock".

Know when your bills are due. You don't want to get smashed with large bills right when you have to buy textbooks or have student fees to pay.

Smoothing out your bills can be a great way to avoid needing to splash out several hundred dollars when they come due. Discuss this with your providers and see if you can make payments of around $20 each week to avoid large bills every three months.

In addition, set aside a bit of cash for bills each pay check – you may be able to open up an additional free bank account specifically for this purpose.

Stay committed.

Don't give up! To begin with, progress might seem slow. You might struggle balancing study and work, but the end result is absolutely worth it. Remember your reasons for starting. Keep your mind on the motivating force behind what you're doing, and never forget about your ultimate goals.

Get help!

All of the above advice concerns paying your own way. However, there are other options! Do some research around HELP and VET loans. The Commonwealth Government is committed to ensuring Australia has a highly educated population. Additionally, you may be able to talk to your employer and get them to help pay for you to obtain additional qualifications.

Give us a call to chat about your options. We're always happy to help.