Can you afford to live? Saving tips for survival
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Can you afford to live - Saving tips for survival

Savings tips to help you survive financially

It’s pretty common to associate saving money with cutting back and going without the stuff we like. While this can be part of saving, there are huge gains to be found elsewhere. For example, did you know that Aussies spend over $50 million in ATM transaction fees every month? Using ATMs other than your own bank’s might be convenient but it soon adds up.

We asked one of our guest writers, Peter Wood to share some of his savings tips to boost your savings balance:

If you are constantly looking for saving tips to keep your hard-earned cash from falling into the hands of the taxman, then you may be in luck. A new report suggests that many Australians are in a great position for making frugal investments and savings.

It seems high performance tax and savings isn’t reserved for those making the big bucks. A study by chartered accountant UHY Haines Norton recently reported Australia’s lowest paid workers are also among the lowest taxed.

These figures found that a single unmarried Australian whose take-home pay was up to $24,141 a year enjoyed the third-lowest personal tax rate in the world. The only place with better conditions was Japan and the United Arab Emirates.

The report also attributed the generous tax breaks to an easing of pressure on low and middle-income earners since around the time of the introduction of the GST.

However, what the report didn’t highlight was how to live on just $24,141 a year before tax. Meanwhile, Australians with take-home pay of $US200,000 ($193,000) were the 11th highest taxed in the 25-country survey.

mong the world’s most expensive places to live, how can you cut some of Australia’s most expensive costs? And can you boost your savings and quality of life with saving tips, tax breaks and high interest savings accounts?

Income splitting

Financial strategy is not reserved for high rollers. Income splitting can achieve instant results, with the tax-free rate recently increased from $16,000 to $20,452. This means a couple with their income split equally could potentially receive up to $40,904 each year tax-free. Another $33,396 of taxable income will then fall under the 20.5 per cent marginal rate including the Medicare levy.

Save on banking and services

Banking can be expensive, and if you are making multiple transactions from multiple accounts you could be losing money. And Australians lose billions from savings not held in high interest accounts. The best returns usually come from a high interest savings account or a term deposit. Your may need an account for paying bills, but using a transaction account for saving quickly loses you money.

Pay yourself

Going without luxuries or staples can lead to savings failure. Stick to your savings plan each week and pay yourself as part of your regime. Remember to pay your debts first because you make money when you save on interest. Then reward yourself luxuries without making them into habits.

Change habits to save

Imagine the money you could save from carpooling. If you get it right, you could even forgo that second car. Get familiar with tools such as online savings calculators and start to make other small lifestyle changes such as buying food in season and monitoring coffee or takeaway food budgets.

Don’t put off your savings plan

Think about your savings habits 10 years ago. Were you intending to start putting some money away? What about 20 years ago? You could have a sizeable nest egg had you started. Just $20 a week quickly becomes $30,000 in around 18 years with a conservative 5 per cent annual return and no withdrawals. The best part? You contribute $18,720 while the other $11,277 comes from interest.

Whatever your income bracket, the same rules apply to boosting the worth of your savings. Getting started with some form of high interest savings can maximise whatever contribution you are willing make.

Important Information

Taxation considerations are general and based on present taxation laws, rulings and their interpretation as at the date of this article. You should seek independent professional tax advice before making any decision based on this information.

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