20 January 2020

Making money and keeping it is something we all want to do. But, focusing on wealth accumulation or whether there will be enough superannuation to support retirement can take a lot of effort, time and stress.

Here are some quick and simple ways to help increase your wealth as well as ensure your super is tracking in the right direction.

Savings

• **Implement 50:30:20 method:**Keep 50% of your income for living costs (fixed), 30% for entertainment or fun purchases (fun) and the remaining 20% could be directed to a savings account (future).

• Automatic savings: Set up a regular payment to a separate account and look to invest that money in a share portfolio or high interest account.

• Manage debts: Use the snowball method by paying off the smallest debt first and progressively pay off other debts in size order from smallest to largest. Once one debt is extinguished, use the repayment previously used to service the debt onto the next debt and so on. Another option is to use the debt stacking method, which involves paying off the debt with the highest interest rate first and eventually paying off other debts in order of their interest rates from highest to lowest. Pay the minimum amount on all other debts and focus on putting the majority of funds into the debt with the highest interest rate. Over time, there will be more income to go into savings.

Tax efficiency

• **Donations:**Any donations made to charities of $2 or more can be subtracted from your taxable income, which reduces the amount of tax paid.

• **Super contributions:**Pre-tax contributions will reduce the tax paid on the contribution to 15% - see super section below

• Deductions: Ensure that you claim any deductions that you are due, that directly relate to earning your taxable income.

• **Negative gearing:**If the rent or dividends received from an investment property or share portfolio are less than expenses such as interest paid on the loan, then the difference can be deducted from your taxable income. The result will be less tax paid.

Superannuation

• Track your super: According to the Australian Tax Office (ATO), there is $17.5 billion in lost super. A quick searchmay reveal that you own some of the lost super.

• **Consolidate multiple funds:**After a few jobs, you may have super held in different accounts. Multiple fees, costs and insurance premiums may be depleting your retirement balance so by consolidating into one fund will assist in preserving your super. One way to see if you have multiple accounts is by creating a myGovaccount and linking it to the ATO.

• **Extra concessional contributions:**You may be eligible to put more into super. The current compulsory contribution by your employer (SG) is 9.5%, but you can increase this up to the total concessional contribution (or pre-tax contribution) cap of $25,000 per financial year. Not only will this boost your super balance, but you only pay a 15% tax rate, which is most likely to be lower than your marginal tax rate.

• Non-concessional contributions: It is also possible to pay up to $100,000 a year into your super from after-tax income. Depending on your age, you may even have the ability to trigger a three year bring-forward (rule) and contribute $300,000. Be mindful though, that if too much is paid into superannuation then you could be subject to up to 47% tax rate.

• **Apps:**Statistically, women are more likely to retire with less superannuation than men. Using an app such as Super Rewards can help boost your super with cash payments from participating retailers paid directly into your super fund. This app is available to everyone.

These small steps can help lead you to more savings, lower tax paid, less debt and a bigger super balance.