Paul Clitheroe
Paul Clitheroe

How to start the 2015-16 financial year properly

THE start of the new financial year marks the midway point of 2014. If money slipped through your fingers over the past six months, it's worth looking at ways to get your cash back under control for the financial year that lies ahead.

A key step is to set some goals. Just be sure to set realistic, achievable targets. While we'd all like to have more money, making more of what you have is a far more achievable goal, and on that score, drafting a personal budget is a valuable building block for reining in your finances.

Most of us can tick off a long list of commitments that eat into our wage or salary but we don't always know exactly how much money goes where. Worryingly, a recent survey by ING DIRECT found one in five (18%) households are spending more than they earn. Without a budget, many people may not be aware that they are overspending on a grand scale.

The good thing about budgeting is that it's easy. Check out one of the many budgeting apps available or try the Budget Planner on the government's Money Smart website ( Once you know where your money goes it's a lot easier to cut back.

One goal to aim for is taking more of an interest in your super savings. From 1 July 2014 your employer's compulsory super contributions will rise from 9.25% to 9.50% of your wage or salary. If you're on an annual salary of $50,000 that's like getting a pay rise of $2,500.

That's great news. With more going into your super, take the time to review your fund - especially the fund fees you're paying. 

Australians collectively pay around $20 billion annually on superannuation fees, and on super savings of $50,000 the annual fees average out at around $726. That's a big chunk of your retirement money. If you're not happy with the fees you're paying, it can pay to switch to a different fund.

Another sensible goal is to put your personal debt under the spotlight. In particular, have a hard look at what I call 'bad debt'. That's things like an outstanding credit card balance where high interest rates apply to purchases of no lasting value.

Paying a bit more off your card each month is a simple way to whittle away card debt. Your budget should show areas where you can save money, freeing up cash for extra repayments.

Finally, bear in mind that in many areas of the country the start of the bushfire season is just ten weeks away. Last summer was a shocker with dreadful bushfires in many parts of Australia. It's a real reminder that we never know what lies around the corner.

Even if you don't live in a bushfire prone area now is a good time to review your home and contents insurance.

Don't simply pay the premium when the renewal is due, understand what your home is insured for and read the fine print so you know exactly what you're protected against.

It can all add up to make the 2014/2015 financial year your best ever. And that's a firm foundation on which to grow long term personal wealth.

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

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