So as we head into a new financial year take this opportunity to give yourself a financial health check so you start the next 12 months cash positive
We all know tax time isn’t exactly the most thrilling part of the year. However, what is exciting is being able to shave down as many of your outgoing costs as possible so you’ll have more in your pocket. Follow these tips to create more oomph in your bank balance this financial year.
Financial Health Check Tips.
1. Get all your tax deductions in order
Get a clear understanding of everything you are entitled to claim by doing research online or asking your accountant ahead of time. “Now is a good time to do repairs on an investment property,” says State Custodians’ general manager Joanna Pretty. “Once you receive your refund try not to spend it all at once. Consider re-investing a portion of it into your mortgage, shares, term deposits or super so your return ends up making you money in the long run.”
2. Update your budget
Is your household budget working for you? Or do trips to the shops usually descend into a grabby spend-fest? Even if your budget’s been working okay it’s still a good idea to review it as there’s a possibility that your expenses and income have changed. Even small changes might save more. If you need motivation seek out a budgeting plan such as trackmyspend.com.au.
3. Pay off as much credit card debt as possible
If you have money owing on a credit card pay off as much as you can in preparation for the new financial year. Particularly if you have multiple cards. You need to learn to live with just one card with a low interest rate, or none at all. Then pay down your one card regularly – but not just the minimum balance. If you need more than one card to survive ask yourself why. If you’ve got numerous cards, cut up the ones with the highest interest rates first, then pay them off ASAP.
4. Clear up your super
If you have lost super or multiple funds now’s a good time to roll everything into one fund to avoid multiple fees. If your super isn’t doing so super, ring your fund manager and re-consider the investment option. Consider salary sacrificing to add more into your pot. And if you earn less than $36,021, for a maximum co-contribution of $500 the government will give you 50c for every dollar.
5. Prepay investment loan interest
If you have an investment property if you prepay up to 13 months interest on the investment loan it can be quite a score. You’ll reduce your taxable income this year by bringing forward a deduction on the interest paid. If you had a year of high earnings, that could be useful to lower the taxable amount.
6. Check your credit rating
Now’s probably a good time to bite the bullet and check your credit rating – no matter how scary the thought is. There are several free online sites which will quickly check your score for you. If you have a bad credit rating the best way to improve it is to start paying all your bills on time, get rid of multiple cards and start reducing your outstanding credit balances.
7. Reduce your capital gains tax
Any capital gains you’ve made during the year will be subject to tax. However, you could sell other assets that have accrued a capital loss so you can offset your gain and reduce your tax liability.
8. Review expenses
It’s often the little (and sometimes not so little) things that add up. In other words, haul out your phone contracts, utility bills, insurance policies and loans and call each provider to see if you can get a cheaper quote. If not, do a little research and consider switching by logging onto a comparison site such as finder.com.au. By turning a blind eye money could be flowing out unnecessarily
9. Take out insurance
It’s a good idea for the main breadwinner – particularly if there are kids to support – to take out income protection insurance which is tax deductible. If you pay a year in advance rather than monthly payments, you’ll save on premiums and can bring forth the tax deduction into this financial year.
10. Plan a goal or reward
Making sure you have something to look forward to in the new financial year is a great savings motivator. Work towards something fun and rewarding – like a holiday or something even bigger like a new car or house. You can also reward yourself by treating yourself to a little something if you meet your major savings goals each month. Who knows you might end up enjoying saving!