Where Will You Invest Your Tax Savings?

• Are you still having trouble meeting mortgage repayments?
• Is building up your Rainy Day fund taking forever?
• Have you been thinking of starting a share portfolio but never had the funds?
• Would you sleep better at night knowing you have money offsetting your mortgage?
• How important is it to start setting aside money to help your children get a head start in life?

If tackling one or more of these objectives excites you, we have some good news. As all things being equal, when you receive your first pay packet in July (about two months from now) you’ll find you have extra cashflow, a larger cash reserve… aka MORE MONEY!

Okay so we’ve got your attention and now you want to know how much money you can expect? CLICK HERE to go direct to the ATO’s page that discussed the tax cuts and provides a calculator that will compare the tax you pay today versus what you will pay from 1^st July onwards.

Your opportunity starts right now, where you decide if you’re a financial winner, or you are simply another worker hoping and going to do this and that but never take action. That might sound harsh, but its key opportunities that present themselves that help you make decisions that will either enhance your future financial prosperity or not.

Yes, cost of living has impeded most if not all of us. Most of us have one way or another found ways to save and get back on top of our costs and day to day cashflow. So we very much hope for the majority of you that the upcoming tax savings are a great opportunity to do something positive for your financial future.

If what we are saying resonates, then follow our lead:

1. Dust off your Money Plan and review, or write down (then review) your financial priorities
2. Take stock of your finances, i.e. check if anything is out of whack and needs some TLC
3. Take action using your soon to be newfound cashflow

If you’ve just used the ATO’s calculator, you’ll have a pretty good gauge on how much additional cashflow you’ll soon have, and how many priorities / objectives you can tackle. 

Getting clear on where your money needs to go, or where your money should go, will help you avoid wasting these tax savings. It’s time to let your new money go off to work for you and your future self.

Don’t forget this… having a plan for your money is essential if you don’t want to rely on luck to become financially successful (funnily enough, the same factors that led you to every other success in life are usually the factors required to be successful with money). Please follow the 3 steps above and your future self will thank you for it.

We’ve elaborated below on a few of the ways you might consider using these tax savings…

Pay off silly spending
What’s that, you’ve got credit card debt? Okay, so it’s no surprise that you’re not alone, although we wish it wasn’t the case. Take this opportunity to clear your credit card debt and then keep it that way. Everyone wants the best financial return, well here it is, pay off your credit card that is accruing interest at 18% and its not tax deductible! Once you kill this debt, redeploy the cashflow to your next financial objective (and so on).

Invest in your safety net
If you want to invest, aka build financial wealth, the first place you need to start is to build up your Rainy Day fund. We know, this is boring, we honestly do. BUT, without a stocked up Rainy Day fund things can quickly unravel and you can find yourself in a situation where you need to sell investments to address spot fires. There’s only one thing worse than a poorly performing investment and that is a poorly performing investment you have to sell, locking in the loss. The salt in the wound is then to watch the investment rebound (as they always do if you’ve invested sensibly) and you’ve jumped out to pay for an unforeseen expense because you didn’t have your Rainy Day fund stocked. As we said, it’s boring but hugely important to ensure the strong foundations for your financial house. You’ll very likely sleep better too!

Now invest to build wealth
Okay, so you’ve tackled credit card debt and you’ve got your Rainy Day fund fully stocked (well played!). Now it’s time to invest. What are you investing for? Are you saving for a home deposit, are you looking to build long term wealth by boosting your super? Get clear on what the end game is for your investment and it will help you work out what the first step needs to be. Investing is actually quite simple once you have the tools to take action. If you are unsure here, we encourage you to check out our investing module within the Wages to Wealth program. It lays it all out so anyone can become a guru. And there’s an entire section on investing for your children including recommendations.

Last and most important – you!
Don’t forget to invest in yourself! The purpose of financial planning is to ensure you have enough money to live your life now and later on when you might not be earning money. So whilst investing for your financial future is really important, it needs to be balanced with living for today, tomorrow and next year. Research suggests that the best way to invest in you is to purchase experiences and help others. Work out how best to invest in you and start putting the money into the right places to make this happen. Your tax refund can be the perfect jump start you might need.
 
We hope you are now armed to use your tax refund to actually get results for you, not just let it fritter away!

Cheers,
Dan and Dave