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12 Tips For The New Financial Year
The new financial year is nearly here, and that means it’s a great time to rethink the way you manage your money and set yourself up for a successful new financial year.
Here's how you can do just that.
Create a budget – and stick to it
It’s one of those things you probably talk about each new financial year but when you actually do it, it will make a difference to your money management. Until you understand exactly what’s coming in and what is going out, how can you possibly find ways to cut down on expenses and boost your savings efforts?
2. Pay off a credit card completely
It can be challenging to clear debt – but oh-so-rewarding. To help you do it, go back to the top of this list and create a budget. If you have more than one credit card, pick one to pay off completely, as quickly as possible. It may be the one with the smallest debt, or it might be the one with the highest interest rate. And once it’s paid? Cancel it.
3. Don’t apply for any more credit cards
Do we really need to explain? If you’ve paid one credit card off completely, celebrate that – but don’t get another one.
Once your debt is manageable, there can be strategies around utilising credit cards to actually save you money, but that kind of money management works best once debts are cleared and you can reap the financial rewards of accessing bonuses that many credit card companies offer. Just remember, however, that if 'bonuses' are negated by credit card interest rates, this kind of strategy is not for you.
4. Pay all your bills and debts on time
This one seems like a no-brainer but not many people actually do it. If you can afford to, do – not only does it help improve your credit score but it also helps you avoid unwanted fines, penalties and interest charges. If cost-of-living price hikes are stinging your budget, pick a couple of bills you can manage to pay on time (internet or phone, perhaps?) and start there.
5. Pay off your HECS debt
Pre-2022, the indexation applied to HECS-HELP debt was between 0% and 2%, which matched the record-low interest rates. But on 1 June 2022, HECS debts were indexed by 3.9%. This year, in 2023, the Australian Taxation Office (ATO) announced any outstanding HECS debt amounts would be indexed by 7.1% on 1 June 2023 due to the continuing cost of living crisis.
What that meant is that a HECS debt balance of $30,000 on 1 June 2023 now incurs a lump sum increase of $2,130 to its existing loan. And, depending on your income, that could add another year to your repayment schedule.
If you plan to pay off your tHECS debt balance with a voluntary repayment, it’s best to make that repayment before you lodge your tax return. If you use a salary packaging arrangement with your employer, it’s critical that you understand that entering into a salary sacrifice arrangement could result in your employer providing a fringe benefit to you. Seek advice from an accountant to see if this is the right move for you.
6. Shop around for a better utility provider
Ask your energy company for a better deal that can save you money. Or, if they don’t give you a better deal, use a trusted comparator to see what’s on offer.
7. Check your insurance cover
As you age, your insurance needs change too. Shopping around for a better deal can sometimes net great results, and being brutal with junk insurance policies that aren’t giving you the protection you need or want is critical.
Make sure you are properly covered for all the things that really matter. This might mean having health insurance, car insurance, home and contents insurance, building insurance, or even landlord insurance if you own an investment property.
8. Take some steps to protect yourself from identity theft
If you think identity theft won’t happen to you, you might be very wrong – and it can be costly. To give yourself the best protection against identity theft, look out for:
unusual bills or bank account charges you don’t recognise
calls, texts or emails about products/services you have not bought
mail you’re expecting that doesn’t ever arrive
an increase in spammy calls, emails or texts
9. Seek professional advice
Seeking professional financial advice can help you think more strategically about your money. And it doesn’t have to cost much – if anything. You may be able to access financial advice via your superannuation fund, or your bank/financial institution.
If you have debt issues to deal with, seeing a financial counsellor may be a good idea.
10. Use your tax refund wisely
Expecting a tidy tax return refund for EOFY? Use it wisely! Paying off interest-incurring debt is always a smart strategy. And if you can’t bring yourself to put it all on debt, consider splitting it so you can have some to deal with debt repayments now and just a little to treat yourself.
11. Set financial goals
A new (financial) year needs new goals. If you’ve got a savings milestone you’d love to reach, the only way to get there is with a practical, realistic budget – and commitment.
Whatever you’ve got planned, setting a firm goal will help you start the new financial year positively.
12. Check in with your super
If you work and have ongoing superannuation contributions topping up your nest egg, it’s kind of strange not to monitor it to see what your hard-earned money is doing for your future self.
Making sure all your employer contributions match what they are meant to be paying is another reason to keep an eye on your super balance.
There are strict limitations on early access to super, so it’s not the right place to put savings you need to access in the short-term. Plus, it’s important to remember there are limits to how much you can add each year.
For concessional contributions to superannuation, the limit per financial year is $27,500 (this includes the superannuation guarantee contributions made by your employer, plus any salary sacrifice and personal deductible contributions you make).
For anyone with super (on 30 June 2023) of less than $1.68m, non-concessional contributions have a limit of $330,000 across three years and include contributions made from your take-home pay, cash in your bank account you put into super, inheritance proceeds, or proceeds from the sale of an investment property.
The bottom line
If it ain’t broke, don’t fix it, it’s true. But, if your finances could be working harder for you, finding ways to do things differently can make a genuine difference. And when it comes to your money, that has a direct impact on how you spend, save and clear your debts faster.
Go deeper: Health insurance and tax: what you need to know
Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
