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This
booklet gives information of a general nature and is not intended
to be relied on by readers as advice in any particular matter.
We
suggest you consult your financial planner on how this information
may apply to your own circumstances.
Other
formats
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APPLY SOME SAVINGS STRATEGIES
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Cutting back is one way to save, but there are also
a number of techniques you can use to help you build
good money habits. Whenever you get some money, bank
some of it immediately before you have time to think
about spending it. This strategy works on the principle
that what you don't see you don't miss.PAY
YOURSELF FIRST
Work out the amount you think you can save each pay
period and have the money put out of reach, or at least
somewhere you can't access it immediately. Ideally,
you should aim to save at least 10% of your pay. You
could arrange a direct debit, so the money comes straight
out of your pay and into a savings (deposit) account
or cash management account. These accounts pay a higher
rate of interest, so your savings can grow even faster.
Smarter Banking Make the Most of Your Money has information
about these accounts and how to establish a direct debit.
Or you could use the money to reduce other debts, such
as a mortgage or personal loan.
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CREATE AN EMERGENCY FUND
Try
to build up an emergency fund which you can dip
into should the need arise. You should aim to have
about three times the amount of your regular take
home pay in the fund. You can then use this money
if your car breaks down, or if you become ill and
are unable to work. Think about putting this money
in a high interest account as well. |
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MAKE MORTGAGE REPAYMENTS MORE OFTEN
Set
up your mortgage repayments fortnightly. By paying more often, you
can reduce your interest costs and pay off your mortgage sooner. Many
providers have online calculators that will show you how much you
could end up saving.
Alternatively, you could consider paying a bit extra each period.
And if interest rates rise, you'll be able to absorb the bigger repayments
more easily. Talk to your lender about how to set up these strategies.
SAVE ANY ADDITIONAL MONEY YOU COME INTOIf
you receive a bonus, get money back on your tax or come into a windfall,
think about saving or investing this money rather than spending it.
These one-off payments can really add up over time.
Similarly, if
you receive a pay rise, continue to live within your existing budget
and increase your savings.
MAKING THE MOST OF YOUR SAVINGS
Once
you have some savings in place, you may start to
think about what to do with them. You could put
them under the mattress, but there are other options.
Depending on your goals and the amount of money
you have, you could begin investing.
Many Australians choose to invest in property or
shares, but you can also think about term deposits
or managed funds - some people even invest in alternative
investments, such as art or wine - there are literally
tens of thousands of options to choose from.
Different investments have different characteristics.
Some limit the access you have to your money, some
are more risky than others and some have the potential
for better returns. What you choose should relate
to your personal circumstances and your goals.
A FINANCIAL ADVISER CAN HELP
A
financial adviser is in the best position to help
you work out the most effective savings strategies
for you and provide recommendations about investments
which match your financial needs and situation.
If you don't have a financial adviser you can speak
to your bank about putting you in contact with a
financial adviser that can assist you. There is
usually a cost involved for seeking advice from
a financial adviser, such as a fee or commission.
Visit ASIC's FIDO website at www.fido.asic.gov.au
or call 1300 300 630 to ask for a copy of the free
booklet Getting Advice: A practical guide to personal
financial advice, which contains some useful information
about getting professional financial advice.
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HAVE A LONG-TERM FOCUS
When
checking performance figures on your statement,
remember that superannuation is a long-term
investment - so focus on at least a five year
timeframe when comparing. Using short-term
performance (such as the last 12 months) may
not be a reliable indicator. But also keep
in mind that past performance is no guarantee
of future performance. |
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