12 Financial Tips Every Australian Should Know

1. Introduction
When it comes to personal finance, there are a few key things that every Australian should know. These financial tips will help you make the most of your money and take control of your financial future.

1. Start saving early. The sooner you start saving, the more time your money will have to grow.
2. Make a budget and stick to it. Knowing where your money is going is the first step to taking control of your finances.
3. Invest in yourself. Education and self-improvement are important investments that will payoff in the long run.
4. Live below your means. Just because you can afford something doesn’t mean you should buy it.
5. Save for retirement. The sooner you start saving for retirement, the better off you’ll be.
6. Invest in assets, not liabilities. An asset is something that puts money in your pocket; a liability is something that costs you money.
7. Protect your assets. Make sure you have adequate insurance to protect your assets in caseof an accident.

2. The difference between good and bad debt
Good debt and bad debt are terms that many people are familiar with. But what exactly is the difference between them? Good debt is debt that can help you achieve a financial goal, such as buying a home, getting a degree, or taking out a business loan. In other words, it’s debt that can help you make money in the long term.

Bad debt is debt that does not lead to any financial benefit, such as buying expensive jewellery, taking out a loan to pay for an overseas vacation, or using credit cards to buy goods that you cannot afford. Bad debt can increase rapidly, leading to a financial crisis.

Therefore, it is very important to understand the difference between good and bad debt and to ensure that you limit your exposure to bad debt as much as possible.

3. The asset test
The asset test is a set of criteria used to determine whether or not someone is eligible for certain government benefits, such as the Age Pension. Essentially, the asset test assesses an individual’s financial assets and determines whether or not they are within the allowable limits set by the government.

The asset test is based on two main categories: ‘non-exempt assets’ and ‘exempt assets’. Nonexempt assets, such as investments held outside of superannuation and property, are assessed using a slightly different formula. Exempt assets, such as a person’s home and their superannuation balance, are not subject to the asset test.

It’s important to be aware of the asset test when applying for any type of government benefit, as it will have a direct impact on the amount of money you are eligible to receive. Make sure you read up on the details and do some calculations to ensure that you will be within the requirements.

4. The importance of an emergency fund
An emergency fund is an important part of financial security in Australia. It’s a pot of money that should be used in the event of unforeseen expenses, such as medical bills, job loss, or home repairs.

Having a quick access to money can prevent you from taking on expensive debt and make sure that your family is taken care of in times of financial crisis.

It is recommended to have 3–6 months of finances saved in an emergency fund as a safety net for unexpected costs. The amount should be enough to cover basic costs such as rent, food and utility bills, as well as any medical bills or other costs. It’s important to manage the emergency fund carefully and not to dip into the money unless absolutely necessary.

An emergency fund should be kept in a high-interest savings account. This will not only help you to save more, but also safeguard your funds from any market fluctuations. Make sure to review and adjust the amount regularly to make sure you are covered. Make sure you also factor in inflation when assessing how much money you need in your emergency fund.

5. The 50/30/20 rule
The 50/30/20 rule is budgeting strategy that can make your financial goals achievable. The idea behind it is to allocate money in the following way:

50%: Essentials– The first 50% of your income goes towards key expenses such as rent, food, insurance, utilities, etc.

30%: Wants – The next 30% should be allocated to discretionary expenses such as a restaurant, new clothes, travel, or any other item or activity you deem unnecessary but are also capable of being accommodated in your budget.

20%: Savings – Finally, the last part of the 50/30/20 rule is saving. This should be 20% of your income and should be used to build an emergency fund, set aside money for retirement, or pay off debts like your credit card, loan, or mortgage.

The 50/30/20 rule is a great way to keep track of your spending and budget your money in an effective way, so that you don’t overspend and you can live comfortably within your means.

6. Invest in yourself
It’s also important to invest in yourself. This means taking the time to learn new skills, attend industry events, network, and stay abreast of the latest financial trends. Investing in yourself can help you to gain access to new opportunities, grow your career, and stay ahead of the curve when it comes to managing your finances.

Additionally, make sure to pay yourself first – make savings and investments in yourself a priority before anything else. Whether this be professional development courses, attending a finance seminar, or taking up a new hobby, it’s important to take some time to invest in yourself.

Finally, don’t forget to set some goals and milestones. Writing down and tracking your financial goals can help to keep you focused and motivated. Once you reach a goal, it’ll be easier to set the next one, and before you know it, you’ll have achieved all of your short and long-term financial goals.

7. Don’t fall for peer pressure
Don’t let peer pressure influence your financial decisions. It’s important to remember everyone’s financial situation is different and what may work for your friends or family may not work for you. Similarly, just because someone else can afford something, it doesn’t mean you should buy it.

If you do decide to go for something you may not be able to afford, be sure to look into ways to make it more financially viable. For example, you may want to consider getting a loan, but make sure to look into the terms and conditions before you take one out.

Think twice if a friend suggests a deal that sounds too good to be true – it probably is. As the saying goes, “If it looks too good to be true, it probably is”.

At the end of the day, no one else can decide what’s best for your finances, so don’t be swayed by peer pressure. Stay within your budget and stick to your financial goals.

8. Avoid the iPhone upgrade trap
It can be tempting to fall for that new iPhone or smart phone upgrade and keep up with the latest tech gadgets, but it might mean putting yourself into debt.

Consider investing in a quality phone with a long-lasting battery or one that provides extra security. You might be able to save a significant amount of money by keeping your current phone.

If you really need the latest phone, consider using pre-owned or refurbished models, or look for discounted upgrade offers. You can often save a lot by buying a newer model that hasn’t been released yet.

Understand the terms of your phone plan and don’t sign up for anything you don’t need.
Many people pay more than they need to for phone contracts with features they never use.

Explore all your options before signing a contract and don’t be afraid to compare prices.

9. Consider your health
Considering your health is an important part of personal finance. A key part of improving your overall financial wellbeing is having good health and well-being.

A healthy lifestyle can help you maximize your financial resources. Eating a well balanced diet, regular exercise, and getting enough sleep all helps you stay mentally and physically fit. This can help you work longer and more efficiently, which in turn can lead to more money in the bank.

It’s also wise to think about the cost of health expenses. Consider health-related insurance and the costs of any major health expenses that may arise and how you would pay for them. Additionally, look into any public health and health promotion services in your area that may help you save money on medical bills.

10. Use your tax return wisely
Your tax return can make all the difference to your financial wellbeing. Make sure you’re using it wisely. There are many ways to use your tax return to improve or enhance your financial wellbeing.

Firstly, think about how you can make the most of the deductions or offsets available for the income year. Tax refunds can be used to invest in your future. You can use your tax return to contribute to a superannuation fund, purchase shares, or invest in long-term savings options such as an investment property.

You can also use your tax return to pay off debts or make important home repairs. Use your refund to make home improvements that add value to your property, or make repairs to your car or home that will save you money in the long run.

Consider your financial future and use your tax return wisely to ensure your financial wellbeing. Avoid spending it on items that will be gone in a week, and instead focus on investments that will add value over time.

11. Invest in your home
Investing in your home is also a great way to make the most of your tax return. Home renovation projects such as a new kitchen or bathroom can help to add value to your home.

This can be a great investment and can also increase the resale value of your home. Additionally, consider other home improvement projects such as adding a pool, putting in a new fence, or renovating your garden.

You can also use your tax return to pay for energy efficient improvements. Investing in insulation, energy efficient windows and energy efficient lighting can help to reduce your energy bills and create a more comfortable living environment.

Finally, consider investing in your safety. Some safety investments you can make with your tax return are installing security cameras and locks, smoke detectors, or investing in home insurance. Protecting your home is one of the most important investments you can make, and keeping your family safe should always be your priority. Investing in your home is an excellent way to make the most of your tax return and create a safe and comfortable home for your family.

12. Play the long game with shares
Investing in shares and the stock market is a great way to make the most of your tax return. Stocks and shares can be a long-term investment strategy, allowing you to make money over the long-term, rather than trying to make a quick profit. Investing in stocks and shares means that you will generally only need to invest a small amount of your tax return to purchase shares.

When investing in stocks and shares, you should always research the company, understand their financial position, and identify whether they have any potential risks. It is also important to note that the stock market can be a risky investment, especially if you have a short-term outlook. Be sure to manage your risk and spread your investment into different stocks and sectors.

By paying attention to the macro-economic environment, you can also make informed decisions on the best times to buy or sell shares. You should also keep in mind that if you’re going to invest in shares, then you should be prepared to keep your investment, as the stock market can be volatile in the short-term.