It’s almost the end of the financial year and you’ve worked hard. Fingers crossed you’ll get a tax refund and it will be good to have a bit more cash than usual. What will you do with it? Spend it all at once? Or think about how it, and the money you earn each week, might be put to better use? Here are 5 easy tips for making the most of your money.
Having a plan for how you handle your money puts you in control and reduces the stress of overspending or not being able to pay an expense you can’t avoid. You will also pick up knowledge and habits that will benefit you later on, especially if you plan to start a business or a family.
#1: The rule of 3
When you first start earning money, it’s easy to spend it all. The trouble is, you have bills to pay, and what happens if you have an emergency? Keep it simple and think about dividing your take-home pay into roughly three equal parts. Use a third for having fun, a third for paying for essentials like rent, food or petrol, and a third for saving towards goals like a holiday or new car. This simple formula helps you keep track and manage your money, without feeling like you’re missing out.
#2: Beware the not-so-fantastic plastic
It’s easy to lose track of your spending when you tap and go. While credit and debit cards are all about convenience, they can also make it easy to overspend. Even small amounts will add up when you ‘paywave’ too often. Consider withdrawing cash for your ‘having fun’ money. That way you’ll know when you’re overspending. While debit cards take money directly from your own bank account, a credit card uses the bank’s money and they expect it to be paid back. The trick is to clear your credit card balance every month, otherwise you could find yourself paying extra in high interest rates.
#3: Spend less than you earn
Know your ‘take-home’ pay. Your employer is obligated to provide a payslip which indicates your gross pay and the tax they withhold on your behalf. The amount that’s left over is your nett pay and what you take home. Once you understand how much you take home, you’ll be able to apply the ‘rule of 3’ so you have the money to pay for your essential and non-essential expenses AND have fun while living within your means.
#4: Start saving
Getting into the habit of regularly putting a little money away now can make all the difference to your financial future. It’s worth it even for just $30 a pay. Set up a direct debit from your transaction account to your savings account so that your savings happen automatically. If the money goes to savings on the same day as your pay enters your account, you won’t even miss it and this will make sure your savings are a priority that don’t get forgotten.
#5: Make a plan
When you don’t have many financial responsibilities, it’s easy to get into the habit of spending everything you earn without thinking about your future. Making a plan can be as simple as putting these 5 easy tips into practice. The sooner you do, the more you will benefit – both now and later on – from your income.
And because it’s tax time, call me on 07 5479 5499 to find out how you can pay 25%* less on this year’s tax return preparation, thanks to Community Solutions. (*This offer applies to Community Services Apprentices and the Apprentices of Community Services Host Employers.)
If you have any questions how to make the most of your money (including your tax refund), please come and see us. Contact me today on 07 5479 5499 or info@vbatax.com
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At VBA we specialise in strategic tax advice, offering tax and financial reporting for individual income earners, family businesses, tradies and construction companies.
Victor Bimrose Accountancy Pty Ltd (ASIC No. 1259423) ABN 53 010 957 294 is a Corporate Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361.
Mark Foxley-Conolly (ASIC No. 1259421) is a Limited Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361
General Advice Warning: This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.
