How to Set Up Cursor (AI Code Editor) from Australia

Status: 🟩 COMPLETE 🟦 LIVING Section: how-to Tags: cursor, ide, ai-coding, setup, walkthrough, developer

What you’re doing

This guide walks you through installing Cursor, configuring it with the right AI model, and getting productive with AI-assisted coding. Cursor is a code editor (based on VS Code) with deep AI integration. It’s the easiest entry point to AI-assisted development for most developers.

Time: 15-25 minutes including writing some test code.

What you need

A Mac, Windows, or Linux computer
An email address
(Optional but recommended) A credit card if you want Cursor Pro or API access to better AI models

You can use Cursor’s free Hobby tier to get started without paying.

Step-by-step

Step 1 — Download Cursor

Go to https://cursor.com
Click Download
The download will be your operating system’s version
Install like any other application

The download is around 200-300MB.

Step 2 — First launch

Open Cursor
On first launch, you’ll see Cursor’s welcome screen
If you’re a VS Code user, you can import settings, extensions, and keybindings from VS Code automatically
Sign in with email or GitHub

Step 3 — Familiarise yourself with the interface

Cursor’s interface is intentionally similar to VS Code, with AI features added:

Sidebar: Files in your project (left)
Editor: Where you write code (centre)
Chat panel: AI chat (right; toggleable)
Terminal: Command line (bottom; toggleable with Ctrl/Cmd + `)
Composer button: For multi-file AI editing (Ctrl/Cmd + I)

Key AI keyboard shortcuts:

Ctrl/Cmd + K: Inline AI edit (highlight code; describe change)
Ctrl/Cmd + L: Open AI chat
Ctrl/Cmd + I: Open Composer (multi-file agent mode)
Tab: Accept AI suggestion (autocomplete)
Ctrl/Cmd + Enter: Use AI on whole file

Step 4 — Configure your AI model

Cursor supports multiple AI models. You can choose:

Cursor’s default: Uses Cursor’s bundled AI (included in Pro)
Your own API keys: Bring your own OpenAI, Anthropic, or Google AI key (you pay model providers directly)

To configure:

Settings (gear icon, bottom left) → Models
Enable the models you want
For “bring your own key”: paste API keys from OpenAI, Anthropic, or Google AI

Recommended setup for serious development:

Cursor Pro ($20/month) — easiest; uses Cursor’s allocation; no API management
Cursor Pro + your own Anthropic API key — for unlimited Claude Sonnet/Opus

Step 5 — Open your first project

File → Open Folder → select a project folder
Cursor indexes your codebase for context-aware AI suggestions (may take a minute first time)
You’ll see your files in the sidebar

If you don’t have a project yet, create one:

Make a new folder anywhere on your computer
Open it in Cursor
Create a file (e.g., hello.js) — type some code

Step 6 — Try the AI features

Test each major AI capability:

Tab autocomplete:

Start typing code; Cursor suggests completions as you go
Press Tab to accept

Inline AI edit (Ctrl/Cmd + K):

Highlight a function
Press Ctrl/Cmd + K
Type: “Add error handling to this”
Cursor proposes changes; accept or reject

AI chat (Ctrl/Cmd + L):

Open chat panel
Type a question: “How do I read a file in Node.js?”
Get an answer with code examples
Click Apply to insert code into your editor

Composer (Ctrl/Cmd + I):

Open Composer
Type: “Create a simple Express server with two endpoints: GET /hello and POST /echo”
Cursor proposes multi-file changes
Review and accept

Step 7 — Set up your preferences

Go to Settings:

Theme: Light or dark mode
Editor settings: Tab size, font, line numbers (inherit VS Code if you imported)
Cursor Tab: Configure how aggressive AI suggestions should be
Rules for AI: Add custom instructions Cursor follows in every chat
Privacy Mode: Decide whether your code is used to improve Cursor’s models (off by default for Pro)

Recommended initial configurations

Custom rules

In Settings → Rules for AI, add:

- Always use Australian English spelling in comments and documentation
- Prefer TypeScript over JavaScript when possible
- Add JSDoc comments to all functions
- Use modern syntax (async/await, destructuring, optional chaining)
- Don't apologise; just produce the code
- If you're uncertain about my codebase's patterns, ask

Customise these to your style preferences.

Privacy mode

For sensitive client work: Settings → Privacy Mode → On. This prevents your code from being stored or used for model improvement.

Codebase indexing

Cursor indexes your codebase to provide context-aware suggestions. Check Settings → Features → Codebase Indexing is on (it is by default). For huge codebases, indexing takes longer; consider what folders to exclude (build outputs, node_modules — already excluded by default).

What it costs

Plan	Price	What you get
Hobby	$0	Limited AI features; 2,000 completions/month; 50 slow premium requests
Pro	$20 USD/month	Unlimited completions; 500 fast premium requests; access to all models
Business	$40 USD/user/month	Team features; admin; SSO; privacy mode default

For active developers, Pro pays for itself many times over in saved time.

Australian-specific tips

Currency: Pricing in USD; ~$31 AUD/month for Pro at current exchange rates
GST: Charged on Australian customers
Tax deduction: If used for income-producing work, generally tax-deductible
Time zone: No time zone issues; works anywhere

Privacy considerations

Where does your code go?

When you use Cursor’s AI features, your code is sent to AI providers (OpenAI, Anthropic, Google) for processing. This means:

Code is briefly transmitted to model providers’ US servers
Code isn’t stored beyond the immediate request (with Privacy Mode on)
Code isn’t used for training when Privacy Mode is on

For sensitive client or proprietary code:

Enable Privacy Mode
Consider whether your client’s contracts allow AI-assisted development
For absolutely sensitive code: use local models (Continue.dev + Ollama, see open-weights-vs-closed)

Common gotchas

AI suggestions can be wrong. Always review code before accepting. AI confidence ≠ correctness.
The AI doesn’t know your business logic. It infers from context. For critical business rules, write tests, don’t trust AI to “figure it out.”
Tab completion can be annoying when off-track. Press Escape to dismiss; adjust suggestion aggressiveness in settings.
Large codebase indexing can slow first opens. Patience the first time; subsequent opens are fast.
AI sometimes generates plausible-but-fake APIs. Verify documentation for library functions the AI uses.
Don’t commit AI-generated secrets. AI sometimes generates example API keys or credentials. Never let these reach a repository.
Pro plan rate limits can be hit by heavy users. Configure tasks to use slower/cheaper models when speed isn’t critical.

What to try first

Three exercises to get comfortable:

Refactor an existing function: Highlight a function in your code → Ctrl/Cmd + K → “Make this more readable”
Generate a new feature: Ctrl/Cmd + I → Describe a feature → Review the multi-file changes
Explain unfamiliar code: Highlight some code → Ctrl/Cmd + L → “Explain what this does”

Comparing Cursor to alternatives

Cursor vs Windsurf: Both similar; Cursor more polished; Windsurf has good agent flows. See cursor-vs-claude-code-vs-windsurf.
Cursor vs Claude Code: Cursor is IDE-based; Claude Code is terminal-based. Different workflows.
Cursor vs GitHub Copilot: Cursor is much more capable for multi-file work; Copilot is great for tab completion but more limited.

Sources

Cursor official documentation: cursor.com/docs
Tested setup flow (June 2026)
Cursor pricing: cursor.com/pricing

Tech & AI, Explained

Explorer

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