Before writing my daily piece for this website, I do two things. First, I see what Wall Street is up to in order to see if the world is worrying or is excited about a money matter. At 6am, the Dow Jones index is up 42, so all’s quiet on the hip pocket front, at least for now.
Second, I scan the front pages of major newspaper websites, in case there’s a local economic/political/social issue that needs not to be ignored. As there’s nothing there of great consequence, I thought I’d look at five things we don’t do that could make us richer.
It’s crazy but so many of us are so ‘busy’ that we ignore the basic things that could make us richer in the long run, let alone the short run!
First, get real about the tax you pay. If you have a number of complications in your life and you earn a pretty good income, then make sure you are legally minimizing your tax. Go to the ATO website and see if you’re claiming all the expenses you’re entitled to, given your occupation, whether you own an investment property, etc.
If your tax bill is big, it pays to visit at least a tax agent to get your tax return done but I’d go to an accountant and ask them for ideas to reduce your tax. I did decades ago when I started a coaching business and I didn’t want to accept cash and not pay tax. However, in doing so, my accountant explained I could partly claim for a car lease for the business activities, my phone usage, my dedicated office and all related expenses to the earning of the additional income. It opened my eyes to one of the benefits of being in business over and above the sense of freedom, the satisfaction of being self-employed and the money!
Second, compare what interest rate you’re paying on your home loan. I’ve being hearing ads lately on radio about a lender offering loans under 4% and I was a bit annoyed as Switzer has a variable home loan rate at a good 4.09%. However, I saw an ad for the lender on TV last night and the comparison rate on this loan was over 4.2%! So when you add in the fees and charges, the rate is above our rate as our 4.09% is both the headline and the comparison rate. Lesson number two is find out what headline and comparison rate you’re paying. On a $500,000 loan over 25 years at 5% compared to a 4% equivalent, you’d pay $85,000 more in interest and that’s money you should have in your super fund when you retire!
Third, check out what credit card rate you’re paying. We all use credit cards and many of us don’t pay them off on time, we don’t use the interest-free period properly and we pay too high rates. So, I ask you, what rate are you paying on your credit card? If it’s more than 9.99%, which is the rate for ME Bank’s frank credit card, then you’re undermining your goal to be richer. There might be better rates out there but it’s time you stopped losing money, isn’t it?
Fourth, are you in the best super fund and are you being charged too much? If your fund charges you more than 1% but is an out-performer, then you might be OK but so many good industry funds charge less than 1% and these have been great performers.
Here are the Top 10 Performing Growth Funds for 10 years to 31 December 2015 (%): (Source: Chant West/Super Guide)
1 REST Core 6.9%
2 BUSS (Q) Balanced Growth 6.7%
3 Telstra Super Balanced 6.7%
4 UniSuper Balanced 6.6%
5 CareSuper Balanced 6.6%
6 Catholic Super Bal (MySuper) 6.6%
7 CBA Group Super Mix 70 6.6%
8 AustralianSuper Balanced 6.5%
9 Cbus Growth (MySuper) 6.4%
10 QSuper Balanced 6.4%
Finally, set down your money goals then work out whether you’re likely to achieve them. Then ‘put your life on the lawn’ — do a Budget — and see where you’re spending your money and try to spend it better. I once suggested GST’ing your life by trying to cut your total spending by 10% by shopping smarter and changing your lifestyle a bit. For example, buy in bulk, buy in less expensive suburbs and avoid being mugged by a super market that makes you buy more than what you need. If you spend $50,000 a year and you save 10%, which is $5,000 and you rolled that into your super or against your mortgage, it could deliver you hundreds of thousands of dollars in benefits.
You don't get richer in a day but daily. If you really want to be richer, then change your daily inputs so your lifetime output will be miles richer.
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