10 Smart Saving Tips For The New Financial Year
The new financial year is almost here. It’s nearly time to dig out the receipts and book an appointment with your accountant. 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.
Here are 10 tips to help you get started.
- Tip 1 – Write down your financial goals and current spending
- Tip 2 – Make a list of your wants and needs
- Tip 3 – Build a budget
- Tip 4 – Track your spending
- Tip 5 – Review your plans
- Tip 6 – Sort out your super
- Tip 7 – Check your investments
- Tip 8 – Make insurance more cost effective
- Tip 9 – Pay off debt
- Tip 10 – Speak to a financial professional
Write down your financial goals and current spending
Make a note of where you’d like your finances to be this time next year. Now jot down your income and expenses for the last month. How much is left over? Are your goals realistic? It’s only by taking a close look at your current financial situation that you can begin to take control of it.
Make a list of your lifestyle wants and needs
With the new average Australian lifestyle now more affluent than it used to be (1), it appears many of the things that used to be considered to be ‘wants’ are fast becoming ‘needs’. If you want to save or invest more money this new financial year, you may need to 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.
Build a budget
To ensure you’re getting the most from your money, you’ll need to build and stick to a budget. Balance is 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 range of digital tools to help you organise your finances.
Track your spending
Once you have a budget, it’s important you stick to it. That means tracking your expenses. A great way to do this is to use a digital money tracker. These are available either through online banking or as a standalone app for smartphones and tablets.
Review your 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.
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 balance, consider setting up additional regular contributions. Depending on your salary, you may even qualify for government co-contributions.
Consider the caps
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 consider other options.
Check your investments
Make checking the performance of your investments an annual ritual. Check that your asset allocation and level of risk are appropriate for your age and plans. A financial adviser can help you understand and manage your portfolio more effectively.
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 super fund.
Buying insurance through super can be cheaper than buying it outside super. Also, it could be possible to have the premiums deducted from your superannuation account balance, without making contributions to cover the cost.
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. Savings can also be made by consolidating the insurances held by yourself and family members into one policy.
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 adviser
The investment market, taxation rules and government regulations change frequently, so unless you’re a financial professional, chances are you’ll need help to navigate them.
If you have a financial adviser and accountant, now is the time to book an appointment to discuss your investment performance and plans for the year ahead. Your advisers can help ensure you receive all the benefits you’re entitled to while supporting you to grow and manage your portfolio.
If you don’t have a financial adviser, take this opportunity to arrange an initial appointment. Meeting with a financial adviser is a positive experience, and the benefits of a tailored financial plan can add up substantially over your lifetime. All you’ll need for your first meeting is photo ID, relevant financial statements, details of your assets and liabilities and an hour or so to discuss your financial goals.
Information is current as at 01/06/2016 and may change. Please keep in mind that the above links are provided for information purposes only. You will need to make your own judgement about the reliability of the information contained in the above.
(1) MLC and IPSOS, Australia Today, Feb 2016.