With a brand spanking new financial year ahead, it’s time to set yourself up for a year in the black. Our Top 10 Tips are guaranteed to help you get your personal finances and business affairs sorted so you can look back this time next year with pride.
TIP 1: Use your budget
We invest a lot of time in our goals and plans, and establishing a budget to reflect these is really important. Your budget is a ‘live’ document. Input Actual v’s. Budget, and continuously review. It’s your yardstick, your measure of success and your guide to forward planning. The greatest advice this financial year, after developing your budget (and plans), is to stick to it! You can tweak and massage as you go, and be a little bit flexible, but as a rule stick to the plan. Xero Personal is a great tool for tracking your personal finances.
TIP 2: Stay on top of your paperwork
The new financial year is the kick-start you need to take charge and stay organised. Schedule some time each day, or week, to organise your paperwork. Update basic information in a spreadsheet, use online tools or manage your data in the cloud. For small businesses we swear by Xero Accounting software… you’ll be amazed how much time this gem will save you when it comes to record-keeping, invoicing, payroll and other number-crunching business processes. It’s vital to your business to effectively track expenses, invoices and payments, so don’t put it off.
TIP 3: Start saving
Plan to save at least $2 a day this new financial year. The secret to building wealth is pretty simple, spend less than what you earn and save a little, often. Save $2 a day during your 20’s and you’ll have $30,624 by the time you’re 40 (assuming a 7% rate of return). If you’re 40 and you save $50 per week you’ll have just over $112,000 by the time you’re 60. Nothing more amazing than the magic of compound interest. To help you keep track of what you’re spending your money on, download the free MoneySmart TrackMySPEND app.
TIP 4: Get help
You don’t know what you don’t know… which is why you should seek professional advice and get help, particularly relating to tax planning and structuring. Perhaps the establishment of a company or a partnership or a trust could best suit your business. Ask the experts for advice on how to utilise our tax system to your benefit.
5: Super salary sacrifice
Superannuation is arguably the best tax structure available, so take the time to investigate if super salary sacrifice is for you. This is when you ‘sacrifice’ some of your pre-tax salary into your super fund, taxed at a heavily discounted rate. You also benefit by compounding the growth of your super. So while you’re getting organised this new financial year, take the time to consider some of your wealth creation strategies and include the opportunity to super salary sacrifice. If you’d like further advice about superannuation, please book a complimentary appointment and we’ll point you in the right direction.
TIP 6: Pay off your credit card every month
The average credit card debt is $4,377, and if you only pay it off at the minimum it would take you thirty-one years to pay off, and cost you $14,900 in interest. Resist the temptation to spend more than you can afford, and pay the full balance each month to avoid paying astronomical interest.
TIP 7: Think differently
When you review your end-of-year results and reflect on the year that was, take time to stop and think – Is there a better way? What could you have done differently to deliver better results? Don’t be afraid to challenge yourself and look for a better way to work smarter, not harder.
TIP 8: Start your log book now
While you’re feeling positive and spritely about the new financial year, start recording your work-related expenses. You may be eligible to claim work travel in your vehicle, and if you maintain a logbook for twelve continuous weeks, you might not have to do it again for another five years.
You may also be eligible to claim expenses incurred from time spent in your home office, so keep a diary and capture the time you spend working from home. Maintain the diary for four weeks to establish a pattern of use for the whole year. You can also use the diary method to capture small expenses ($10 or less). Make use of technology and store all your receipts using the ATO’s myDeductions mobile app – you can send info straight to us electronically!
TIP 9: Review your insurance coverage
When was the last time you reviewed your insurance coverage? Life is constantly changing, so it’s important that your insurance policies are updated accordingly. It’s good practice to review all of your insurance policies on a regular basis to make sure you have the right cover at the best price. Not sure how much insurance you really need? This article will help you. Stop procrastinating and get in touch today to make an appointment to review your insurances!
TIP 10: Use your tax refund to kickstart one of your goals
It was your money in the first place. The Government just got to keep it for 12 months, interest-free. If you’re fortunate enough to get a tax refund this year, use it to kickstart one of your goals – putting it all into a high-earning online savings account is a great place to start!