money saving tips

There are many, many things that cause money leaks in your financial affairs. Uncover some of the hidden things that can rob your savings, and find out what you can do about it through these tips.

Superannuation Leaks

If you’ve got multiple Super accounts, you’re in fine company; millions of us do.  The trouble is, each fund charges admin fees – and it’s hard to keep track of more than one fund and what each happens to be invested in. So little leaks occur each year, leading to a smaller savings pot for you.

Fees make a huge difference over time, so ensure that you’re not paying more than the average of 1% in administration fees in your super. If you already have life insurance, just check that automatic life insurance premiums are not also coming out of these other accounts. (My hubby was paying an extra $700 a year in insurance premiums – automatically elected!)

One-third of us have a rolled over account with Australian’s MySuper – as this is the government-regulated, default super account. Now, the Government is ensuring that accounts in Australian Super with less than $6,000 will be tracked and ‘looked after’ by the ATO, and you might find it through MyGov if you have a lost fund.

Performance is another strong factor to consider — look at this super comparison chart, which maps the performance of a $50,000 super account in an industry fund, a retail fund, or Australian Super. Look back at your annual super statements — how much did yours grow?  The asset allocation can make a huge difference — while my little fund grew by a total $20,000 over 5 years (only $2750 was voluntary), my spouse’s little fund hardly grew at all — with the insurance premiums and fees offsetting any value growth.

It’s all your money people — look after it! 

A big problem is the laissez–faire attitude of workers, as found during the Productivity Commission:

“There are many people who don’t even bother to check their fund balance when the statement arrives (or who don’t read the details). They don’t understand that the money they put aside till later is an investment that will grow.”  — InDaily

 

What to do about Multiple Super Accounts

Don’t let that be you. Register for and manage your super by creating a myGov account and link it to the ATO (it’s a simple step). You can then:

• See details of all your super accounts, including any you have lost track of
• Find lost super held by super funds that you can roll over into a super account of your choice
• Find ATO-held super – if the government, your super fund or your employer can’t find an account to transfer your super into, the ATO hold it on your behalf
• Combine multiple super accounts by transferring your super into your preferred super account, with a rollover form.

 

How to Select your Own Super Fund

The recent Productivity Commission found that many young workers were signed to the default fund for their award, and a non-performing Superfund at that. Look around and ensure you select a low fee-paying Superfund, an industry fund, to keep for the long term. Canstar is one place where a consumer can get reports.  With Canstar’s comparison chart, look for a fund with 5 stars – meaning it has been reviewed across all features and fees and rated among the better ones.

Australian Super came out on top for my age & fund amount, with my actual super fund (Hesta) down in 13th position. I noticed though, that my statement does NOT show investment fees, only administration fees and contributions tax. I wonder where that’s hiding?

In the future, when younger people sign on for a new job, they should get the choice of going online into MyGov account and selecting their own Super fund for this new employer. Too easy!

______ Read my eBook How to Control Your Financial Destiny to gain a solid knowledge of investing and saving principles. It has good ROI 🙂 _______

Lost Bank Accounts. Lost Inheritances. Bonza!

About $1.3 billion in unclaimed funds is still available from old bank accounts, shares, investments and life insurance policies now matured, say ASIC MoneySmart. There are leaks all over the place – quick, grab me a money bucket!

Different types of funds are governed by different rules. Bank accounts become unclaimed (by ASIC) after 7 years if the account is inactive and over $500 (no deposits or withdrawals). So if you are looking for old account money, lost shares or lost life insurance funds, you will need to do an Unclaimed Money Search. Some figures below $500 will be held by the actual bank or another financial service. 

To claim, you will need to supply some credentials, such as a TFN, and your date of birth, and details of your search result (the OTN). Don’t forget to also type in your previous full name, if you changed your name by marriage or deed poll. State Revenue services also keep share dividends, funds from unclaimed wins, and life insurance payouts. See Unclaimed Money at ASIC Moneysmart.

Search State Revenue of NSW for unclaimed share dividends and managed funds, if you have lived there: http://www.revenue.nsw.gov.au/ucm/search

If you’re struggling with it – just contact me and I’ll help you get started.

Unclaimed Estates

Lots of people have died and left their assets behind, having lost touch with relatives. If there was no will and no probate granted and you’re a relative, you might have a shot at claiming the estate assets. You’ll need to provide ASIC with certain information about your personal details and relationships.

Since 2009, first cousins can also apply to unclaimed estates, but they wait behind brothers, sisters, parents, children, spouses, and grandparents.

See ASIC instructions for claiming intestate estates: https://www.moneysmart.gov.au/tools-and-resources/find-unclaimed-money/claim-money-from-shares-and-investments

Deceased members’ superannuation also becomes unclaimed by other parties when “the superannuation provider, after reasonable efforts and time, cannot ensure the benefit is received by the person entitled to receive it.” (NSW Office of State Revenue)

It’s a good idea to nominate your next of kin on your Superannuation fund, so benefits can be shared to them without delay upon your untimely demise.

Don’t Pay Interest & Fees on Credit Cards

ASIC say that we owe nearly $32 billion and an average of $4,200 per card holder (interest $692 p.a.).

So a key savings tip is to work out your card Annual Fee/s + average interest paid + any other fees (it could be say, $800 p.a.). That’s a high price to pay for the convenience of short-­term lending, plus a few points… perhaps a free magazine.

Business Leaks

Finally, if you’re in any kind of business – from direct sales/party plan to a larger company, you can find money leaks too. They may be in the form of unused online subscriptions. Look at all your online subscriptions and see which ones are not needed or are too high a level. I found that Adobe Spark premium is free with my InDesign and replaces Canva in its capability. That saves me $15 per month.

For companies, it may be about over-charged accounting fees. Rely on your accountant for advice, but don’t pay crazy fees. e.g. You can transfer from a sole trader to a company for around $800 online at an ASIC-registered incorporation provider, and just pay for the structure advice separately beforehand with your normal accountant. Save yourself there.

If you have been talked into a Trust but only run a micro business that is low-ish risk, then look at why you are paying out trust accounting fees and admin per year. Essentially, that is eating into your profits.

 

This article was written by Jennifer Lancaster (c) Copyright 2018. Please support her writing by buying the money and mindset book for Aussies which interests you the most.