Pork up the piggy bank
5 Maximise deposits
Interest paid on bank deposits is ballooning after years of paltry returns, with some at-call accounts offering introductory rates near 4.5 per cent and ongoing rates near 4 per cent. The best term deposit rates range between 4 and 5 per cent.
Ratecity.com.au research director Sally Tindall says “it’s showtime for savers looking to maximise their cash” but warns that some online savings accounts still pay poor interest, so it’s wise to shop around.
“People with money tucked away in the bank shouldn’t just assume their cash is benefiting from rising interest rates,” Tindall says.
6 Compare and save
There are many financial products where shopping around can deliver hundreds of dollars a year of savings – or potentially thousands on home loans.
Consider using comparison websites to check you are getting the best deal on your mortgage, personal loans, savings, insurance and super. It’s a good idea to check different sites.
7 Automate your savings
Your Financial Wellness chief executive Alex Hassall says automatically transferring money from your wage to a savings account – even if it’s a small amount – can make a big difference over time.
“Set up a savings account and set up automatic payments to it on the day you are paid and try not to touch the money for a year,” Hassall says.
8 Food for thought
“Cook your dinner, pack your lunch,” Hassall says. “Making a salad or sandwich at home or taking leftovers is almost the easiest way to save money while you work.”
9 Plan to spoil yourself
Money is a tool to help you get through life and enjoy rewarding experiences. Plan to set some aside for things you enjoy.
“Budget for the occasional treat,” Hassall says. “Saving doesn’t mean you can’t buy nice things, but make sure you budget for it.”
10 Eye on energy costs
Gas and electricity prices are surging, and there are plenty of practical ways to lower your usage and reduce your bills. Check energymadeeasy.gov.au or state government energy comparison websites to see how your current plan stacks up.
Enphase Energy general manager Wilf Johnston says bills can be improved by using less hot water, turning off appliances when not in use, insulating your roof and closing blinds in summer.
11 Produce your own power
Millions of Australians have switched to solar energy and more are considering it ahead of bill spikes in 2023. “A good-quality solar system can pay for itself in less than five years, save you tens of thousands of dollars on your power bills over more than two decades, and increase the value of your home,” Johnston says.
Solar system costs have reduced dramatically in a decade and vary from a few thousand dollars to more than $10,000. Johnston says choosing a reputable installer is critical.
12 Supercharge wealth
Superannuation strategies such as salary sacrifice, co-contributions, spouse contributions and catch-up contributions will grow your wealth faster using the power of compound interest, and deliver tax deductions at the same time.
Industry Super Australia says a 30-year-old earning an average wage can enjoy an extra $67,000 at retirement if they salary sacrifice $20 a week into superannuation.
13 Consolidate your nest egg
High superannuation fees erode people’s wealth, and many pay more than they should because they have multiple unnecessary super funds. You can check if you have lost super by contacting the Australian Taxation
Office or using myGov, and can also check your balances and funds.
“Check you are getting what is legally owed, that you’re in a fund with a long-term history of good performance, combine multiple accounts and invest extra in super if you can,” says Industry Super Australia chief executive Bernie Dean.
14 Start a side hustle
There have never been more opportunities to earn extra income through online apps and platforms, ranging from Uber and delivery driving to pet sitting and freelance jobs.
Outsourcing company Airtasker’s chief executive, Tim Fung, says many side hustles are free to set up.
“You can literally start your side hustle just by selling your skills, whether that be in accounting and finance, marketing, party planning, or cleaning, and you don’t have to invest anything other than your time,” he says.
15 Share your stuff
Similarly, your unused items and space can earn extra dollars.
Some of the sharing economy platforms available include Camplify for caravans and camper trailers, eBay and Gumtree for second-hand goods, The Volte for designer clothing, Spacer for storage spaces, Parkhound for parking spaces and Uber Carshare (previously Car Next Door) for your car.
16 Lose insurance loyalty
Car, home and other insurance premiums renew annually and often trap consumers with sharp price rises that go unnoticed. Insurers often charge new customers less than existing customers because they want new business, so compare your policy with others to potentially save hundreds of dollars.
17 Private health check
Health insurance premiums rose in November for many Australians, while others will be hit with rises in mid-January, and iSelect spokeswoman Sophie Ryan says there are ways to reduce premiums. “If you think it’s unlikely you’ll be admitted to hospital in the near future, you could opt for a higher excess on eligible policies in exchange for lower overall premiums,” Ryan says.
Some people can consider prepaying annual health insurance premiums upfront to lock in current rates and “help you delay any premium increases”, she says. And, of course, shop around.
18 Start building a buffer
Equifax consumer general manager James Forbes says having an emergency savings stash covering three to six months’ worth of expenses is important.
People who don’t have a buffer can “aim to save up at least one month’s worth and build up from there”, Forbes says.
Many people use home loan redraw facilities or offset accounts as their emergency savings buffers, because they can save interest in the process.
19 Check your credit score
“A high credit score generally indicates lower risk and can translate into many benefits, such as lower interest rates on mortgages,” Forbes says.
But only 50 per cent of Australians know how to access their credit report, he says. “This knowledge gap could hinder consumers’ ability to demonstrate to lenders they are in control of their finances.”
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A good-quality solar system can pay for itself in less than five years
Kill credit card interest Credit card interest rates are near 20 per cent and one of the most expensive forms of debt.
If you cannot pay it off within the interest-free period, consider debt consolidation, balance transfer cards, low-rate cards or cutting up the credit card.
21 Invest to earn
True wealth comes from having assets delivering you a passive income, and there are many ways to access high-growth stockmarkets and property markets.
Micro-investment platforms have boomed in recent years and in some instances require just $5 to set up, while exchange traded funds diversify every dollar you invest across multiple companies,
countries and sectors.
22 Calculate future wealth
There are free compound interest calculators online that will show you how every dollar invested can grow over several years and decades.
It’s the best incentive for starting to invest now, and it helps to write down future wealth targets so you have something to aim for.
23 Starting small is OK
Social investing network eToro Australia’s managing director, Robert Francis, says people often choose overly ambitious financial goals.
“The trick might be to set multiple smaller, more attainable, goals, such as making sure you save some money – it doesn’t matter how much – each month,” he says.
“If you find that too easy, then increase your monthly target and keep raising that bar until you find a level you feel comfortable with.”