If you work hard to save your money, you should be making sure your money works just as hard for you.
Here are some strategies for taxpayers to get the most from their savings to reduce debt, create an emergency fund or even start an investment portfolio.
- Check your goals
The first step in every financial plan is to set goals. Work out what you want to achieve and how long it will take. The investment you choose must suit the investment time frame.
- Pay off your debts
After working hard to save money, the very first thing you should do is to pay off your debts. The interest on credit card debts or personal loans is not tax deductible and usually very high, make these debts your first priority. For those with a mortgage that has a redraw facility, putting money towards the mortgage will reduce your monthly interest and can also help pay the loan off sooner.
- Build an emergency fund
Putting some money towards an emergency savings fund can provide some breathing space to deal with the ups and downs in life. The money could also help if you become temporarily unemployed, need to pay for car repairs, or have urgent home maintenance to do.
- Boost your super savings
Employer super contributions are probably not going to be enough for those planning to retire with a similar standard of living to what they have now. Contributing money to your super is a tax-effective strategy, and since the money is locked away until retirement, taxpayers will reap the benefits of compounding returns over time.
Taxpayers can contribute savings to super by either salary sacrificing through their employer or making an after-tax contribution to their super.