The new financial year is here – and that means it’s time to dig out the receipts and book an appointment with your Accountant.
But tax time is also a good opportunity to review your current financial situation, and put a plan in place for the next 12 months.
Sorting out your finances doesn’t have to be complicated, as even small savings can add up over the year.
Tip 1 – Make a list of your wants and needs
With the new average Australian lifestyle now more affluent than it used to be1, it appears many of the things that used to be considered ‘wants’ are fast becoming ‘needs’.
If you want to save or invest more money this new financial year, consider whether there is anything that you’re willing to sacrifice to get ahead. Could you live without that overseas trip? Do you really need to update your smartphone again? It all adds up.
You might like to use a budget tool – but that means creating a realistic budget and sticking to it! Balance is the key here. If you make your budget too restrictive you’ll likely break it. Alternatively, if you make it too light you might miss out on some financial benefits. And don’t worry if you’re not a fan of spreadsheets – there are a number of apps and digital budget planners available e.g. ASIC’s MoneySmart Budget Planner.
Tip 2 – Review your utility plans
The new financial year is an ideal time to review your regular monthly plans to ensure you’re getting the best possible value for your money. There are a range of sites that provide direct comparisons of different suppliers offering mobile phone, internet, pay TV and utilities plans:
- WhistleOut – compares mobile phone, broadband and pay TV suppliers
- iSelect – compares electricity and gas suppliers
Tip 3 – Make insurance more cost effective
There are ways of setting up personal insurance so it’s more affordable and may be more tax-effective. This can include purchasing your insurance through your superannuation fund, and having the premiums deducted from your account balance.
In some cases, you may be eligible for a discount if you pay your premiums annually rather than monthly and holding all your personal insurances in the one policy can reduce fees.
Tip 4 – Sort out your super
If you haven’t sorted out your super yet, now is a good time to do it. If you have multiple super accounts, finding and consolidating them in the one account could help you cut down on fees and grow your money faster with compound interest.
To boost your super balance, you could consider setting up additional regular contributions and depending on your salary you may even qualify for government co-contributions.
But before you decide to invest more in super, you need to be aware that caps apply to different contribution types and penalties may be payable if you exceed the relevant cap.
You also need to consider that super contributions generally can’t be accessed until you retire. So if you’re saving for something else, you’ll need to look at other options.
Tip 5 – Pay off debt
If you’re paying off multiple debts with a range of interest rates, you should consider the appropriateness of prioritising paying down the debt with the highest interest (while continuing to meet your repayment obligations in relation to your other debts).
Alternatively, you may be able to combine your debts with a debt consolidation loan. If you can continue to make the same level of repayments, this may significantly reduce the amount of total interest payable and help you pay off your debt sooner.
Speak to a financial professional
The investment market, taxation rules and government regulations change frequently, so unless you’re a financial professional, the chances are you will need help to navigate them.
A financial adviser can help ensure you receive all the benefits you’re entitled to while supporting you to grow and manage your portfolio.
If you’d like to speak to Victoria or Sam, please call our office to schedule an appointment.
1 MLC and IPSOS, Australia Today, Feb 2016
This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax and/or legal advice prior to acting on this information. Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.