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How to prepare your finances for new financial year
Bessie Hassan | Money Expert at finder.com.au
The end of financial year (EOFY) may be behind us, but as we enter the new financial year, it’s time to review our finances and prepare for the year ahead. This may involve reviewing your tax obligations, checking your credit score, consolidating personal debt, or mustering up the confidence to ask for a better deal on your financial accounts.
Whichever way you want to approach it, take action now so you’re in a strong position to manage your finances (and any unexpected curve balls) moving forward.
The following tips will give you an idea about how to get ready for the 2017-18 financial year.
Lodge your tax return (if you haven’t already):
If you haven’t submitted your tax return, don’t fret. You have from 1 July to 31 October to lodge your tax return for the previous financial year, but it’s best to get in early so it’s not hanging over your head.
Also read: Why you should look closer at credit card fees
Before you submit your tax return, create a tax return checklist with all the basic documents you’ll need to disclose such as your tax file number (TFN) and your bank details.
You’ll also need to provide details of your earnings, such as your payment summaries (PAYG) and any income received from assets such as shares or property.
Remember to put forward records related to your deductions such as receipts for work-related costs (e.g. phone calls, transport or office equipment).
You can submit your tax return online via myTax or with a registered tax accountant.
Use your tax return wisely:
When (and if) you receive a tax return, consider how you want to use it. Whether you want to put it straight in a high-interest savings account or towards loan repayments, think about the most beneficial way to use your tax refund.
When it comes to receiving a tax return, the majority of Australians are financially responsible with 31% claiming to save it, according to a new finder.com.au study. Interestingly, the research also found 23% of Australians intend to use their return for household bills, while 10% will use it towards making extra mortgage repayments.
Instead of spending it right away, think carefully about how you want to use the savings as this could help you improve your financial position.
Also read: Ultimate Guide to Tax Deductions for the Self Employed
Merge your personal debt:
The new financial year is a good time to review your personal debts and to find ways to repay it more efficiently. Have a look at your repayment history (and schedule) to see how well you’re managing your repayments; if you find you’re struggling to make your repayments on time, it may be time to take action.
A common way to take charge of your personal debt and to reduce your interest costs is to roll your debts onto one account. For example, if you have lots of credit card accounts, think about consolidating your total balance onto one card. If you do this with a 0% balance transfer card, you’ll pay no interest for a given period which can lead to huge cost savings.
Another tip to consider is to prioritise high-interest debt. For example, if you have extra money to put towards extra repayments, and you have a credit card and a mortgage account, put it towards your credit card bill first as this normally attracts a higher interest rate.
Ask for better deals on your accounts:
Like most things in life, there’s no harm in asking. If you don’t think you’re getting a good deal on one of your bills – be it your utilities, mortgage, phone, or internet provider -, see if your current provider can give you a better price. They’re likely to offer you a discount if it means keeping your business!
Revise your household budget:
It may also be time to give your budget a detox. Have a look at your outgoings and think about expenses that you can reduce. Whether it’s saving 10% on your groceries by shopping online, cutting back on travel, or eating out less, there are many ways you can trim your expenses.
The new financial year represents an opportunity to examine your financial accounts and to make changes for the better. By preparing and lodging your tax return, consolidating your debt, or negotiating more competitive deals, there are many tactics you can adopt to improve your financial health for the year ahead.
