Boss Lady

5 Tips on making your money work harder for you this financial year

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Yes, there’s a great deal of uncertainty arising from COVID-19. But don’t be fooled into thinking you have zero control over your money this financial year! We’re grappling with a global pandemic, recession, surging unemployment and uncertainty about when and if things will return to normal. As such, it’s more important than ever to start the new year on the right footing, adapt to our changed reality and make our money do some of the heavy lifting for us.

  1. Even in crisis, there’s opportunity

For every loser there is a winner: someone who acts while others are too scared to try. So look past the losers to find the silver linings.

For instance, investments tied to health, food production, logistics and telecommunications have generally performed well in recent months. And as essentials, they should continue to do so, regardless of what happens with the coronavirus.

Also, price slumps now are likely to be recouped over time, meaning you can buy a bargain today and watch it appreciate in value as the economy recovers.

Ultimately, it’s all about your end game. Playing the markets day-to-day is akin to gambling. But taking a long-term view over investments means you’re much more likely to generate positive returns.

  1. Pay debts faster

Interest rates are currently the lowest on record. The official Reserve Bank of Australia (RBA) rate is just 0.25 per cent; most mortgage rates have a 3, even a 2, in front.

And they’re expected to stay low for the foreseeable future.

So, use them to pay down your mortgage faster or to consider borrowing to invest. It could save you tens of thousands of dollars in interest over the life of your loan!

  1. Beef up your super

Superannuation is an important safety net for us all once we’re no longer working. And there are benefits to stashing any surplus cash into your super now.

Firstly, there are generous tax incentives for making additional contributions – particularly if doing so brings your taxable income down to a lower tax bracket.

There’s also the ‘carry forward’ rule, effectively allowing you to catch-up on periods when your income and hence super contributions may have been lessened – such as losing your job or being pushed onto JobKeeper.

If you’re among the thousands of people who used the government’s early access scheme for COVID-affected workers, it’s even more important to repay what you withdrew: $10,000 out now could be a loss of $200,000 over the next 30 years.

Plus, the government offers co-contributions for low income earners – essentially free money towards your retirement.

  1. Doubling down

If you’re married or in a de facto relationship, it’s not just your own financial position you need to address, but also that of your partner. Afterall, many people have sadly suffered loss of income due to COVID.

Is your other half out of work or earning a reduced income this year? Are they self-employed? Are they likely to have a job once JobKeeper ends?

It’s important to revisit your household budget and adapt it to any new reality. If you’re lucky and things work out, then you can reinstate those little luxuries. If not, you’ve already made sacrifices that will preserve some much-needed cash.

  1. Just start

Too many people will let another year go by and it’s another year gone. So, my biggest advice is also the simplest: just start.

Any positive change you make to your personal finances now will have long-term benefits. Some things to get started with are:

  • Reviewing household bills: You could be getting cheaper insurance, utilities and other services just by shopping around.
  • Refinancing loans: Again, shop around for better alternatives and investigate whether it’s better to consolidate multiple loans into one.
  • Review your subscriptions: I’d put money on the fact you’re paying for at least one subscription you no longer use.
  • Claiming tax deductions: Don’t pay more tax than you need to by not understanding what you’re eligible to claim. An accountant can be a worthwhile investment!
  • Start investing: When it comes to investing, time is your friend, so make a start and give yourself more time for it to ride the waves.

Get advice: Quality advice usually pays for itself particularly if you avoid a costly mistake.

About Helen Baker

helenb@thebusinesswomanmedia.com'

Helen Baker is a licenced Australian financial adviser and author of two books: On Your Own Two Feet – Steady Steps to Women’s Financial Independence and On Your Own Two Feet Divorce – Your Survive and Thrive Financial Guide. Helen is among the 1% of financial planners who holds a master’s degree in the field. Find out more at www.onyourowntwofeet.com.au | Note this is general advice only and you should seek advice specific to your circumstances.

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