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How to quickly build up your savings

Debra Cleveland

It’s time to get organised – set up systems that enable you to action bills or decisions as they come up, and plan ahead for big expenses so they don’t derail your household finances.

1. Work out priorities

Now’s the time to come up with money goals for this year. Yours may involve cutting a slice off the mortgage by continuing higher repayments as interest rates go down, or boosting your super balance with higher salary-sacrifice contributions. If a new car or holiday is on the wish list, work out the cost and set up a regular savings plan.

2. Establish a budget

If you don’t have a household budget in place, set one up. Use our income and expenditure template as a guide, but add extras such as kids’ pocket money or magazine subscriptions. Allow more for utilities bills, such as electricity, to take into account price rises.

3. Look for savings

Consider if it’s worth taking an annual hit on big bills such as kids’ school fees or private health insurance. Paying an annual premium for health cover can cut the cost by about 5 per cent. It’s often only a few percentage points cheaper to pay annual school fees so may not be worth your while. Get set for the year by researching the best deals for ever-increasing utilities and telecom bills. Do it now and save for the rest of the year. Look for small savings, such as using the Entertainment Book or buying movie tickets via health funds like Bupa (incorporating MBF, HBA and Mutual Community) for 25 per cent less.

4. Review arrangements

Take a fresh look at your portfolio of investments to ensure they still fit your profile and, after asset-price movements, you’re not over or underexposed to a particular asset class. Also review or put in place salary-sacrifice arrangements – if you work for a non-profit organisation or hospital you may be able to do this with your home loan or school fees as well.

5. Keep up to date

Have you filed your tax return? If not and you haven’t registered with a tax agent, you may face ATO penalties. If you registered with an agent by October 31, 2011, you’ve got until April to file.

6. Know your entitlements

If you turned 60 or you were made redundant it could be time for a senior health card. Or perhaps you could claim family tax benefits: single-child households on less than $98,891 (it rises per child) may qualify for Family Tax Benefit Part A, plus the education tax refund.

7. Make it easy

Sort through your filing arrangements so you action bills as they come in. Organise a tax folder so there is a home for receipts, invoices, medical expenses, etc. Work on your savings goals by setting up automatic debits. Plan ahead for big bills, such as health insurance, annual passes and so on, by putting a bit aside each month.

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