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'How to save' strategies
Research shows that only 26 % of Australian adults have the ability and inclination to save. Those who are saving are putting aside a mere 2.5 % of their taxable income, as compared to 20 years ago, where the average Australian was saving 11 %1.
Where does it all go?
It is getting harder and harder to reach our savings goals because many of us continually strive for higher standards of living.
The secret to financial security isn’t a ‘get rich quick’ scheme, and it isn’t particularly exciting, but it does work.
It’s up to you to make your financial security happen, using:
- a budget – identifying how much you earn and spend;
- a savings and investment plan – deciding how much you need to put away and where to invest it;
- discipline – adding to your savings regularly; and
- patience – building wealth takes time.
The following 6 simple strategies will help you identify the range of saving options available:
Invest in super
By investing in the tax-effective environment of super you can receive tax breaks on contributions and investment earnings.
Spouse account
By opening a superannuation account for your low-income earning or non-working spouse, you may be entitled to a rebate on your personal tax.
Borrow to invest
By doing so you can either positively or negatively gear your investments.
Positive gearing means the income from your investment is greater than the interest you pay on your loan.
Negative gearing means the interest you pay on your loan is greater than the income you receive from your investment. This loss means you may be able to receive a tax deduction.
Invest in shares that pay franked dividends
You can then reduce the tax payable on dividends, while using the franking credits to reduce tax payable on other income.
Pay off your mortgage
If there is more than a 12 month period between the purchase and sale of your home, you do not have to pay capital gains tax (CGT).
Private health insurance
By purchasing a private health insurance policy you can receive a 30% tax rebate on the cost of premiums.
The above information must be explored in greater detail. Speak to your financial planner for guidance and visit the following websites:
Budget planner
It can be difficult to estimate your expenses. However, by using the budget planner calculator, you can build an accurate picture of where your money is going.
1ABS National Accounts 5206.0 Table 23
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