Yahoo Finance 10 tips to boost your savings this new financial year
Here are the best ways you can make your money work for you.
A new year often brings mixed feelings: hope for the year ahead but guilt about the sins of the year gone by.
Financial years are no different. Thankfully, there are many simple ways to create better money habits and boost your savings that will benefit you now and into the future.
Also read: Financial adviser shares 4 practical tips to fight inflation
Also read: Tax 2023: All the law changes coming July 1
Here are my top 10 tips to help you make your money work for you.
1. Lodge taxes ASAP
Lodging your taxes sooner means your refund is banked sooner too – more time to make that cash work for you. Use it to pay debts, reduce interest in your mortgage offset account, invest, or top up your emergency fund.
2. Claim all deductions
Commonly overlooked and underclaimed deductions include travel and mileage, depreciation, and occupation and industry-specific deductions. Self-education expenses are now fully deductible (previously the first $250 was non-deductible).
Scrutinise work-from-home expenses. The fixed-rate method is now 67 cents per hour (previously 52 cents), but the COVID-era shortcut method is scrapped. Calculating actual costs may still work out better overall, especially given soaring energy costs. Keep good records for visibility over your deductions.
3. Leverage superannuation benefits
Catch-up and spousal-contribution rules allow you to make extra super contributions AND claim a tax deduction.
Other rules, such as downsizer provisions for retirees selling the family home, allow even more contributions tax-free. Plus, lower-income earners may qualify for government co-contributions – essentially free money to fast-track your super’s growth.
4. Check debts
High interest rates mean more expensive debt. Pay off high-interest debts first, such as credit cards, to avoid them snowballing.
Consider refinancing loans – you could secure a better rate and/or unlock equity to invest. Consolidating multiple debts can reduce your payable interest and make keeping track of repayments easier.
5. Follow the money
Many companies and investments benefit from our currently high inflation. Consider tweaking your superannuation and investments to leverage these returns.
Revisit your investment strategy regularly to ensure it best suits the economic climate of the day and the level of risk you are comfortable with.
6. Shop around
Avoid the loyalty tax – the higher costs lenders, utilities and insurers often charge existing customers than new ones, hoping they won’t notice.
Some lenders and utilities are offering incentives to change providers, or cash back if you need to refinance or switch plans. Double-check that any new rate really is better overall, not just a temporary offer or cheap headline price with hidden fees.
7. Review insurances
With premiums rising, review insurance policies to see whether you can get better value. That could be the same cover for cheaper somewhere else (car CTP and green slips are a good example), greater coverage for the same cost, or a discount as a loyal customer.
Alternatively, change your coverage to remove paying for bells and whistles you don’t need or inclusions you’re unlikely to use.
8. Check pension eligibility
Current and soon-to-be retirees should re-check eligibility for the pension, because increases to the assets thresholds from July 1 mean more people may now be eligible. Even a part-pension qualifies you for a range of benefits, meaning you’ll need to draw down less from super.
Remember, the pension age has also increased this year, to 67 years.
9. Get good advice
“You get what you pay for” is certainly true when it comes to advice about money and tax. Family and friends mean well but don’t know everything. And what worked for their circumstances may not work for yours.
‘Finfluencers’ are not only illegal but often push ideas that benefit themselves, not you. Tailored accounting and financial advice from qualified professionals can more than pay for itself in extra income earned and taxes saved. It’s generally tax deductible too.
10. Take action
Planning helps you identify possibilities, but action is what pockets those savings. Explore three different spending plans - “living my best life”, “a nice life”, and “absolute minimum”.
Have a plan for if you lose your job, and put that money away. If the worst doesn’t happen, you will have saved more to invest. Make a financial plan – saving is about the long term, but years go by quickly. Redefine your goals as your circumstances change.
The sooner you put this into action, the more your hard-earned cash will grow.
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