Simple steps to make your money work harder for you

With winter now officially behind us, it is only natural to break out of hibernation, go out more and spend more of our hard earned dollars.

While it is very easy to spend money – especially during the warmer months – you may be interested to know that there are also some easy ways to build your wealth while still doing the things you enjoy.

Indeed, there are a few simple techniques you can implement now to help you make your money work harder for you – so you can have your cake and eat it too!

1. Review your bank

Re-evaluating the relationship you have with your lender is a great way to find out whether or not there is another lending institution that is better suited to our needs. Australia’s lenders are hungry for business at the moment, so many are offering cash and other incentives for new-to-bank customers. The trick is to do your research and find out whether or not there is another lender who offers a better product/s (such as a high interest savings account). You may find that by simply switching lenders you are able to save more money.

2. Salary sacrifice

Making salary sacrificed super contributions offers a simple way to save on tax and build wealth. It involves having part of your before-tax salary paid into your super rather than taking the money as cash in hand. These contributions are taxed at 15 per cent, which is likely to be below your marginal tax rate (which could be as high as 46.5 per cent), so more of your money goes towards growing your super rather than paying the tax man. Up to $25,000 annually can be added to super through pre-tax contributions ($35,000 if aged 60-plus).

3. Maximise your tax return

If you receive a substantial tax refund, it pays to invest this money wisely. Using the refund to reduce your debt can help you considerably with your future endeavours – including home ownership. The reality is having too much debt can make a difference when it comes time to apply for a home loan. Alternatively, you can transfer your tax refund into a high interest savings account. Whether you are saving up for a new car or a deposit to buy your first house, this lump sum injection will help speed up the process. Once the cash is in your savings account, leave the money untouched and watch the interest add up.

4. Cancel your credit card

According to Mortgage Choice’s 2014 Money Survey, 35 per cent of Australians with a credit card currently owe $5,000 or more. Not only are the interest rates on credit cards notoriously high, but many people get stuck using a credit card because they can’t break the cycle as interest continues to accrue. If you have a credit card, work on paying it off in full. Once done, cancel the card. Debit cards are an ideal alternative, providing a similar level of protection for online and over the phone purchases, without the significant interest rates.

5. Compare to find a better deal

You may be paying more than is necessary on your home loan, insurances, utility bills, etc. By doing your due diligence and comparing to see if there is a better deal out there for you and your needs, you may find you are able to save hundreds of dollars.

By following these simple steps and making your money work harder for you, you will be able to go out and enjoy the lovely summer months while still saving money.

Do you have any other tips to save and make your money grow? Tell us in the comments below!

Jessica Darnbrough is the Head of Corporate Affairs at Mortgage Choice. With eight years experience as a journalist Jessica has written for an array of trade and consumer publications. Her current role as Mortgage Choice’s head of corporate affairs and company spokesperson sees her as a key communicator of Mortgage Choice’s services and specialties, with a particular focus on Mortgage Choice Financial Planning.

Photo credit: Tax Credits via Flickr