From the archives
June 12, 2020
Did you know there’s a range of government co-contributions and refunds that you may eligible to receive to boost your super? Did you know that you can claim some super contributions as a tax deduction? We’ve put together some more info on three of our top super boosting initiatives out there so get you started:
1. You could get up to $500 from the government super co-contribution
PSA – did you know the government is willing to stick in up to $500 into the super accounts of low- and middle-earners if they’ve made a personal after-tax contribution into the same account? Given many of us have taken a big hit to our earnings thanks to COVID-19 I suspect more and more of us will be eligible, a sliver of a silver lining I suppose.
Basically, if you put $1,000 into your super and you’re earning less than or up to $38,564 you’ll get the full amount. Viola $500, thank you very much! Earning more? The benefit works on a sliding scale so you’ll still get some money courtesy of the government but just not as much before it tapers off completely at $53,564. The amount of you get from the government depends not only on your income but how much you put into your super yourself, the ATO provides a good breakdown here if you’ want to check out more.
As a quick example if your total income is $38,564 or less for this financial year, the government will give you $0.50 for every dollar you put in, up to a maximum of $500. So if I made a total of $400 in personal contributions into my super, the government would chip in $200. If I put in $2000, the government would add $500 as that’s the max amount. Won’t say no to that!
How do you get it? Thankfully it’s pretty straightforward, and you don’t need to specifically apply for the super co-contribution or lodge extra forms etc. But make sure your super fund has your TFN (which you need to give them to make a personal contribution anyhow). When you lodge your tax return, the ATO will work out if you’re eligible and will pay it to your super account.
IMPORTANT: If you claim any personal super contributions as a tax deduction (see point 3 below), you will not be entitled to a co-contribution from the government for those contributions. It’s like you have to pick one or the other, so make sure know which one will be best for you!
2. Get up to $500 via the Low Income Superannuation Tax Offset (LISTO)
What is it? If you are eligible for the government co-contribution then you may also be eligible for the Low Income Superannuation Tax Offset (LISTO) – yep another acronym, sorry. If you earn $37,000 or less you may get up to $500 from the government that goes straight into your super. Essentially, LISTO is a refund of 15% of your total concessional (before-tax) super contributions (e.g. regular super contributions from your employer, or if you salary sacrifice).
Because LISTO is based on before tax contributions, it’s a bit different to the Government co-contribution described above, as well as having different criteria to be eligible.
How do you get it? Even better is that as long as you’ve lodged your tax return you do not need to do anything specifically to get the LISTO – like lodge a form with your super fund. The ATO handles it all and the extra contribution is paid straight into your super fund.
Here’s an example of how LISTO is calculated:
Michelle earns $35,000 in the financial year and also meets the other LISTO eligibility criteria. Her employer makes a super guarantee contribution of $3,325 into her super fund (35,000 x 9.5%). She also salary sacrifices $660 to super through her employer.
Therefore her total concessional contributions for the year are $3,985 ($3,325 + $660).
Michelle will receive the maximum LISTO amount of $500 as 15% of her total super eligible contributions are actually $598 ($3,985 × 0.15). But because the maximum amount the Government pays is $500 she won’t get the full $598.
3. Claim personal super contributions as a tax deduction
Yep, that’s correct. Personal after tax contributions can be claimed as a tax deduction! Who said that you only get benefits from super when you retire?
So, for example I’ve currently made $400 of contributions this year through Longevity App (obviously I’m using it 😉 ) so I can claim that $400 as a tax deduction in my tax return at the end of the financial year. While you can make personal investments into your super in other ways too, these top ups are helping me boost my nest egg for a better retirement and giving me a bit extra in my tax return which is a double bonus!
How to get it: for this one you will need to fill out a Notice of intent to claim or vary a deduction for personal super contributions (NAT 71121) form and submit it to your super fund (your super fund sometimes send one out to you at tax time too which is handy).
There’s a few things to keep in mind, so make sure you have a good read and talk to your accountant if you have one. For instance, there’s a limit on how much you can put into super as a pre-tax and/or concessional contribution (which is what they become if you claim personal contributions as a tax deduction). Currently the max is $25,000 a year and this includes the money your employer puts directly into your super account (aka the Super Guarantee) – so check that first or you can get whopped with extra tax by your super fund. And as already noted in point 1 above, you may be better off receiving a government co-contribution instead if you’re eligible.
As you can see, it’s always worth looking around for more ways to get better bang for your buck and there’s certainly some good initiatives around super. As a final tip if you need to make any extra contributions to be eligible etc do it sooner rather than later in case it takes a while to get sent into your super account.
Happy super boosting and stay safe!
General Advice only: the information contained in this article is general in nature and has been prepared without taking into account your financial objectives, situation or needs.
March 25, 2020
There’s no doubt things are not right in our world. Following from crippling droughts (still going on for many) and terrifying bushfires (again – still seeing thousands of people rebuilding their lives brick by brick), being slammed by a pandemic has left many of us with a heightened level of stress like we’ve probably never known.
The COVID-19 pandemic has had an unprecedented impact on so many aspects of our lives, including the global economy. In Australia, the shutdown of non-essential services and flow on economic impact has meant hundreds of thousands of Aussies are suddenly out of work and without income, entire industries have collapsed.
Money worries, let alone the thought of facing unemployment for God knows how long is always stressful, coupled the health risk and essentially being able to leave your house it’s totally understandable that we’re feeling at breaking point.
The Government has taken various actions to help the economy splutter along – one of them being the ability to access up to $20, 000 of your super early if you’re facing financial hardship as a result of COVID-19.
Before you run to the ATO to claim your super: a few things to consider
You could access up to $20,000 from your super over the next two financial years if you’ve lost income because of COVID-19. But make sure you’re across the full picture before getting stuck into your retirement fund.
There are a few reasons why you’d want to be incredibly sure it was absolutely necessary (read last resort) before taking your super out early. Because of the way super works its magic, with compound interest at its core, if you take it out now, it means there’s a lot less left to continue to grow and grow. One of the largest super funds, Hostplus, calculated that $20,000 withdrawn by a 25-year-old today would have mushroomed to around $132,000 by a retirement age of 67. So the impacts of taking even a small amount of super out are not to be taken lightly.
Furthermore, you’d be taking out your super at a very low time in the market (in other words, just a month or two ago that $20k in your super was probably worth more like $22-25k or more). Think of it a bit like having to sell your house when the market’s in a slump – it’s just not worth as much and you get a crap price. So it’s not ideal.
BUT, if things have gone to custard then that’s exactly what the Government has recognised and why they’re making it available. If that’s you – here’s what and how you need to go about seeing whether you can access your super, broken down whether you’re 1) if you’re eligible, 2) how to access it and 3) when you can access it (timing):
There are several criteria to be able to access it (such as being unemployed, on a job seeker payment, or were made redundant). You can check out the full list here.
BONUS FACT: you will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
How to apply
If you’re meet the access requirements, you then apply directly to the ATO – and can do that through the through the myGov website. You don’t apply through your super fund!
Once your application has been assessed and processed by the ATO you will be informed of whether you were successful or not for early release. Then the ATO will provide a copy of this result to your superannuation fund (which is the trigger for them to release your super payment). The super fund will then make the payment to you.
TIP – while you don’t need to contact your super fund to access the payment, you may want to think about contacting your fund to check that they have your correct details, including your current bank account details and proof of identity documents so it can be as fast and seamless for you as possible.
Applications should be able to commence from mid-April 2020. The full $20,000 payment is broken down over two financial years, accessing up to $10,000 before the end of June 2020 (the current financial year) and another 10,000 after July 2020 – when the next financial year starts. So you don’t get a $20,000 lump sum and presumably you need to go through the process twice to receive the full amount.
Whether you need to get early access to your super or not, the good news is Longevity will be here to help those of you who have had to perhaps access your super earlier due to hardship, or for those of you who need to just need to build up your nest egg after taking a bit of a hit.
Further links and resources
Thanks to Mamamia (@mamamiaus) for this handy list of support services if you need to talk about anything that’s going on for you:
Other links to related fact sheets and articles:
Treasury official announcement re early access to super: https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Early_Access_to_Super_1.pdf
Thsi information is general in nature and has been prepared without taking into account your financial objectives, situation or needs. Before making a decision in relation to your super you speak to a licensed financial professional and consider if the information is appropriate to you.
February 27, 2020
Did you know that the state of your finances has a huge impact on your physical and mental wellbeing? You can literally worry yourself sick over money.
Sleeplessness, anxiety and depression, weight loss/gain, strained relationships is just a start of the impact that worrying about money can have on ourselves physically.
With money becoming an increasing source of stress for Australian’s we think it’s so important that we pay attention to our financial situation for so many reasons – including our health. We love that people like nib are starting to focus on the crucial links between money & health and had a great time talking with them on on how you can build some money muscles and boost your financial health, which will no doubt pay dividends on your physical health too!
You can check out the full article on their website The Check Up here.
November 29, 2019
Need to save a bit of extra cash here and there after a Christmas blow out? Check out some of our fave easy things you can do to boost you savings today.
Make use of cash back programs. This was a popular one that many Aussies have started using, with a few providers now in Australia such as Cash Rewards, Cashback Club and Shopback whereby any time you shop online via their portal you’ll get a bit. It’s the retailers way of saying thank you for shopping with them. While you do need to do a fair bit of shopping for it to add up (and it all needs to be done through the rewards porta to make it count so can be a bit clunky), the holiday time is a good opportunity to make all of the present shopping and extras work in your favour.
Potential Savings – one of our staff members recently purchased a pet insurance policy through the Cashback site and got $85 cash back!
Demand a deal – you may not always feel like it, but you’re in control to who you bank with and who gives you insurance and yes – even where your super is! So review some of thee major expense items such as how much you’re paying for health insurance, home loan and savings account rates, telephone and internet bill etc and compare what’s on offer. If your current provider isn’t best on offer the call the up an ask if they’ll match it (or even better – beat it). If they won’t then pick yourself up and move!
Sell your unnecessary crap – sites such as eBay, Gumtree and Facebook marketplace provide an easy way to turn your trash into someone elses treasure.
Potential Savings – as an example last Christmas we sold a bunch of furniture on Ebay and scored nearly $500 plus saved money in needing (as well as the hassle) to have to hre a van to take out stuff to a re-seller or junkyard. On the flip side as a buyer – you can save a small fortune buying items that are still in top notch condition via these sites.
Do a cook up – we know, meal prep insta posts were so 2018 so no need to tell the world about it, but seriously doing a massive food shop so that you can buy in bulk can save a lot of money. Not only can you save by buying in bulk but you also avoid the need to stop off at the supermarket every night on the way home from work and buying a tonne of stuff you don’t need. If you cook up a few different meal options so that you’ve got lunches sorted (save $$$$) and some dinner options too covered for the week. You’ll not only save money but time during the week prepping and cooking which is a double win.
Potential Savings – Nutritionist Amelia Phillips says we can save more than $1,000 a year by cooking our lunch at home and bringing it to work (plus it’s normally loads more healthy).
Sell your snaps – taken some cracker happy snaps lately? There’s a range of stock image sites you can sell them on and so long as they’re good, high quality images that meet the guidelines you could actually get a bit of cash for them on sites such as shutterstock. May not set you up for life but it’s better than a slap in the face surely.
Potential Savings – This one’s really variable as it depends on how committed you are to contributing photos here – it really be anywhere from a few bucks to thousands. Read more in this blog if you’re interested.
Have a “No Spend” Day – it really doesn’t matter which day you pick – the idea here os that your mission should you choose to accept is to go a full day without spending a cent on any item. Ok fine, you may need to shell out for some basics like public transport or tolls to get to work but for the most part you don’t have to spend any money if you need to. Instead, eat what’s the in the fridge and brew your own coffee in the morning. Take your own lunches to work, have home happy hour at yours with friends, if it’s the weekend then do some freebie activities like catching up with friends at a park or the beach.
Potential Savings – Even just adding up how you’d save on a work day by buying catching the train to work (save $15 on road tolls and more if you pay for parking), taking your own lunch and coffee (save a good $20) and catching up with a friend for an after work walk as opposed to dinner out ($40) could save you a shed load in just one day!
And, if you want to take this to the next level there are people who are on weekly and even annual challenges to not buy anything – or a weekly no spend day could easily become a regular part of your money saving life.
WARNING: just like all fasts – whether it be food or finance – make sure you don’t binge on stupid crap you don’t need the next day.
So if you’re after some extra cash for the holiday season try out these tips this weekend and see how much you can save.
October 2, 2019
Did you know that for many Australians taking time off for parental leave, you may get some money from your employer to replace your wage for a certain number of weeks, but most people don’t receive any superannuation? In fact taking time off to raise a young family is one of the key moments in life where the gap in retirement savings between men and women begins to blow out.
Well the good news is that businesses across Australia are starting to address this, with a number of large corporates such as HSBC, Woolworths, Unilever and more recently consulting firm PWC have having started to pay superannuation to staff that are taking time off for parental leave – which as you’d imagine is still typically women who are taking time out of the workplace to look after young babies. It’s for the most part an initiative to help to close the super gap, which sees women on average retiring with nearly half of the retirement savings as men.
As with the introduction of many an initiative, once one starts others follow suit and this is a copy cat trend that we’re delighted to see. Most recently Bain and Co have announced that consulting form Bain & Company will superannuation contributions for the unpaid portion of primary parental leave.
While this no doubt is a function of organisations wanting to “do the right thing” by their employees it’s also certainly seen as a business issue. Spokespersons within Bain & Company in Sydney recently stated that “organisations with greater diversity have greater retention, higher levels of employee advocacy, overall better performance and faster growth.” So naturally companies are looking for ways to retain women employees as of course it’s a central part of maintaining workplace diversity.
Either way you examine the issue, it’s a massive and positive step forward, we’re looking forward to seeing more companies taking up this initiative – just as we’re looking forward to seeing gender parity in those taking time off on parental leave too.
We’ve started putting together a list of companies that have started to pay superannuation on the unpaid portion. Let us know if there are others on the we can add to the list:
Bain & Co
Corrs Chambers Westgarth
Others? Let us know and we’ll add them to the list. firstname.lastname@example.org
August 20, 2019
This year Equal Pay Day falls on Wednesday August 28. Today represents the extra 59 days women have to work this financial year to earn the same as men do in a year. Calculated using the 14% gender pay gap for full time workers, with women earning $241.50 less per week then men do on average, women therefore need to work an additional 59 days a year to earn the same amount that men do (currently, average weekly wages for men working full time are $1,726.30). It’s not to be taken literally of course, but as a symbolic reminder of the disparity between earnings.
As with most things relating to gender equality (or anything topical really), with most people being generally supportive, Equal Pay Day can be a divisive topic, with some camps finding it difficult to see why we should be making a fuss, questioning why we can’t just get on with things and stop the complaining. Why do people keep banging on about the same stuff year in year out?
But symbolic days such as Equal Pay Day provide an important way to keep the conversation going. In reality we need to have moments like this etched into our busy calendars because it’s an important conversation to have for a few reasons. These reasons can in short be put down to the sentiment of “the playing field is so far from level it’s not funny”. Here are a few wildly horrifying statistics to give you a taste for what the financial future looks like for many women:
- Firstly, women retire with a lot less than what men do. Owing to a complex combination of workplace patterns, increased likelihood to take time off work in order to provide care for younger (and older) people as well as differences in the way we value and remunerate the jobs performed by (mostly) women in a highly gender segregated workforce is just the tip of the iceberg as to why women accumulate less super over their working life. But retiring with estimates of just under half the super as men, means that we’re have a lot less to live off that we now need to stretch it even further given that we live longer than men. In fact latest research indicates that women will outlive their retirement savings by 12.6 years.
- Women are more likely to live in poverty – with this significant shortfall in superannuation and a greater reliance on the aged pension as a result, women are therefore more likely to face financial insecurity and poverty in older age. In fact around one in three retired women on the single rate of the Age Pension will remain in poverty.
- Women are experiencing homelessness at higher rates than ever- the number of women aged 55 and over who experience homelessness in Australia has grown by 31% between 2011 and 2016 and this is now the fastest growing group of homeless people in Australia. Primary reasons behind women’s homelessness are violence, income inequality along with unaffordable property prices. Often considered as the “hidden homeless” in that you don’t see them “sleeping rough” – they may be living in their cars, or moving from couch to couch or wherever they can find respite in a shelter. But just because you may not see them – please by no means do not think that this enormous group of homeless people are not there. They are very much there.
Hopefully by now you’re seeing that this level playing field analogy is really putting things mildly. And that’s not changing any time soon. Until we transform the way we value women and the work they do in society: by paying those who look after our loved ones just as well as we pay those who clean our teeth or run companies, by having unpaid work more evenly shared between men and women, and by overhauling the way we work so both genders can spend less time at their desks and more time caring for our families – women will always face a financial shortfall.
To fully address these structural impediments will clearly take some time – let’s not be naive about the magnitude of the changes required, and that’s exactly why we started Longevity App – to provide people, especially women, with a bite sized way to support a life time of work. To make the 80% of household purchasing decisions that they make today actually count towards their future down the track without having to outlay huge sume of money. But there’s no doubt there’s no overnight fix – which is why this is a conversation that we simply cannot afford to stop having. We need to have it not just one day a year but every day of the year.
August 16, 2019
Most of us are across the fact that superannuation is how most Aussies put money away for our twilight years, but many of us don’t think too much about the fact that we can also get some more immediate benefits from our super, particularly at tax time (given it’s that time of year).
So whether its claiming for voluntary investments you made into your super last financial year or making sure you get the most out of each tax paying dollar in 2020 and beyond, we’re sharing three of our fave top tips to make your super work for you today.
Tip 1 – Made a Personal Contribution to Super? You can claim it as a tax deduction.
Seriously. You can.
So, for example if you signed up and were using Longevity App to make automated super contributions prior to June 30th you would have made a personal contribution to super in the 2019 financial year. While you can make personal investments into your super in other ways too, not only are these top ups helping your future by building that nest egg for a happy retirement (go you!) but you can likely also claim it on your personal tax return as a deduction. There’s a few things to keep in mind, such that there is a limit on how much you can put into super as a pre-tax and/or concessional contribution (which is what they become if you claim personal contributions as a tax deduction). Currently the max is $25,000 a year and this includes the money your employer puts directly into your super account (aka the Super Guarantee). You also need to fill out a form and submit it to your super fund (they’ll sometimes send them out to you at tax time too).
What’s flippin’ sweet aside from the fact that who doesn’t love a tax deduction is that, if you claim these as concessional contributions (their fancy technical term) on your tax return you’ll only be charged 15% tax within your super fund, a whole lot less than the rate most Aussie’s are paying to the taxman*.
Take this as an example: The average Aussie earns about $85,000 per year. If they were to make $2,000 in concessional contributions to their superannuation in 2019 and claim it on their tax return they’d more than halve the tax paid on that income!
Tip 2 – First Homebuyer? You can user you super to put towards your house deposit.
I know – I don’t know why people aren’t talking about this more either! Saving for a first home is a mission, so we’ll take any help we can get around here. So did you know that you can put money into superannuation, earn money on your investment and then pull it back out to put towards your first home deposit? It’s a government initiative called the First Home Super Saver Scheme.
Essentially how it works is that if you’ve made contributions into your super fund since 1 July 2017 you can apply to have these funds released and their associated earnings to help you purchase your first home.
Side note on the FHSS detail:
- Non-concessional contributions can be withdrawn for first home deposit tax free.
- Concessional contributions and total earnings will be taxed at marginal tax rates with a tax offset of 30%.
- Superannuation Guarantee contributions (ones made by your employer) can’t be accessed under this scheme.
Sounds pretty cool, right? Now of course there are eligibility requirements that you need to meet – for example you need to live in the premises you are buying (or intend to do so ASAP). There’s also a maximum amount of $30,000 that you can pull out as part of the scheme and the earnings you make on the money in your super is also a bit different. But to be honest, this one really makes me wish I could’ve taken advantage of the scheme when I was trying to scramble together a deposit for my first home! It may not get you the whole deposit in one swoop, but every little bit helps!
Tip 3 – Low Income Earner? Earn an immediate return of 50%!
This one’s an oldy but it’s a dead set goody. Basically the government is willing to plop up to $500 into the super accounts of low- and middle-earners if they’ve made a personal after-tax contribution into the same account.
Now I’m sure many of you are asking so what’s the catch? Well not a catch so much, but there’s two bits to it – how much you’re earning and how much you’re putting into your account. If you put $1,000 into your super and you’re earning up to $37,697 you’ll get the full amount. Bam $500. Thank you very much. Earning more? The benefit works on a sliding scale so you’ll still get some money courtesy of the government but just not as much before it tapers off completely at $52,697.
So there you have it. As always make sure you read up on all the details, and consult an accountant or financial advisor so that you don’t trip up on anything if you’re still unsure. But hopefully these three tips that not only help to fatten up wallet in your twilight years, but also help you get more out of your super savings today!
* The one exception here is big earners who take home $250,000 or more a year – you’ll be paying 30% on your personal super contributions which while not quite as great as the rest of us is probably a whole lot less than your current tax rate. TBH if you’re earning that much you probably don’t need this blog.
August 7, 2019
Ok – let’s start off with what even is “micro-saving”? I mean if you’re going to go to the effort of saving money, why not just go hard or go home? Well as its name suggests micro-saving or micro-investing is depositing a small amount of money into an account – whether it be a bank account, superannuation account, or other investment account and ideally doing it regularly. Yep that’s it peeps, it’s really not rocket science. But, in reality, it’s a fairly different approach to the typical saving and investment mindsets that meant many feel we need to be sticking in huge amounts of money to be build our castle on the hill at the end.
So let’s take a look at exactly how micro-savings work, and why these teeny tiny bits could possibly worth your while.
It’s all about compound interest
Think of compound interest as literally the best thing since sliced bread. And in a nut shell that’s why micro-savings tools are the butter on top. The turbo charger on your car engine. The push up bra for your, oh – never mind. In fact, stay tuned for our post in upcoming weeks where we’re going to devote an entire post on compounding because we love it THAT MUCH!
But let’s start with a super quick overview – compound interest 101. In laypersons terms, compound interest is the phenomenon of what happens when you invest some money, it makes a bit (aka interest), and then instead of taking out the bit of interest that you made, you add it to the original investment amount – which means you’ve got even more money to make money from the next time around. If you do that again and again (and probably again) over a set amount of time and “nek minnit” you’ve seriously boosted the initial amount that you invested. Here’s an example from Host Plus :
“Let’s say $2000 earns 10% interest in the first year. That’s $200 interest earned.
In the second year, your original investment of $2000 has grown to $2200 thanks to the $200 interest. Your new balance of $2200 earns 10%. This time you get $220 worth of interest after a year.
In the third year your primary sum is $2420. And on we continue until we realise that we’ve (hopefully) made a hefty chunk of cash thanks to compound interest!”
So what’s that got to do with micro-savings?
Well now that we all can see that compound interest is pretty awesome – even Einstein says so, think about what would happen if you could tip in just that little bit extra to what was already going in? If you hop onto something like MoneySmart’s Compound Interest tool you can play around with how your “regular” compound interest vs “turbo charged” compound interest (thanks to even small additional micro-savings) works – and the difference it makes! It’s literally the snowball effect in action.
Now that’s great but want a pain in the rear when you have to transfer these tiny amounts each time by yourself. Will you (hint – nup). That’s the joy of micro savings tools that automate the entire process for you, and more importantly how something like Longevity App makes sense from cents. If your employer (for those lucky enough to have one) is the engine that pays 9.5% on top of your salary into your super, we’re the turbo charger for your nest egg. There are other options out there too for those who want to put their loose change towards other types of savings. But there’s no doubt that making small behavioural changes no matter how small, done often enough can produce pretty impressive results!
Whatever you decide to do with your money, and the choice is up to you, it’s always good to know that whether your budget is large or small there’s always something out there to help you be more engaged and hands on with your financial future!
DISCLAIMER: information provided in this article is for general information only and and is not intended to act as specific financial advice. It has been prepared without taking into account your financial objectives, situation or needs.
August 6, 2019
August and September are big months for the topic of gender equality. With the latest ABS data on average weekly earnings (used to calculate the Gender Pay Gap) coming out in August and Equal Pay Day following shortly after there’s lots to talk about.
If anyone saw Q&A this week, where Ricci Bartels shared her story about struggling to find employment later in life and the toughest time of her life that she lived through as a result. While highlighting a range of political and social issues that no doubt needs our focus and attention, it was a scarily important reminder of why it’s vital to be as proactive as possible about preparing for our future because it’s so easy for things in our lives to change. Women in particular find themselves particularly financially vulnerable later in life, making it a perfect time to focus on ket gender equality issues such as women and financial insecurity with the imminent release of up-to-date data on the pay gap and its progress being released.
As a part of it, we’ve got lots of great content and articles planned to continue the conversation on financial equality. And, as a little warm up our CEO, Carla Harris got to speak to the awesome team at Women Love Tech about why the stubborn gender pay gap got her on a mission to change our financial future whenever we spend. Check out the article here.
July 22, 2019
Moreover, what even is super?
Let’s start the journey here, right in aisle 3 – breakfast foods. The most important meal of the day, so we’d better get it right. Pouring over packets and boxes of cereals (oats, fruit& nuts, no fruit but nuts, no fruit or nuts – you get the idea), loaves of bread (wholemeal, rye, sourdough, gluten free) and milk options (full cream, skim, almond, soy, rice – the list goes on). We agonise over ingredients. Are there additives, preservatives, what are the carb:sugar:fat ratios, what it might do to our waist lines, cholesterol, and muscle mass, bone density – it really goes on an on. We know the ins and outs of everything we purchase from Aisle 1-12, we’ve got it down pat. Everyone’s a google-tritionist these days. And hopefully our bodies will thank us for it, especially when we get older.
Of course (within the realms of moderation) it’s fantastic to see people looking after their bodies and trying to keep it in amazing shape. Many consider their body (or parts of it) to be their greatest asset. But isn’t it interesting to think about other aspects of our lives that don’t get any where near that attention? Like one of our biggest financial assets – our superannuation. Now bear with me – let’s not switch off here, there are at least three spectacular reasons why I think it’s way more deserving of our attention than it’s given credit for:
1. It’s your money
The majority of your super is money that your employer has, instead of putting into your bank account, put into a “special account” for you aka your super account (essentially it’s to save you from yourself – we all know deep down if that extra cash was put into our bank account we’d blow it on trips to Bali – me included). Aside from what your boss puts in, there may be other super contributions which could be from money that you may have put in yourself, or perhaps the government has chipped in a little too.
But here’s what it’s not – it’s not your employers money. It’s not the governments money. It’s not the super funds money.
IT’S . YOUR. MONEY. If you had 30-40k (the average super balance of someone in their 30s) sitting in a bank account would you be thinking about it a fair bit? Dreaming of what you could do with it? Pouring over how you could make it that little bit bigger? Probs.
At the very least – give a damn about it.
2. It’s a ready-made investment portfolio
Our super is essentially an investment portfolio – your investment portfolio. It’s a pool of money that fund managers invest in a range of things on your behalf. Instead of having to go through the palaver of finding brokers, opening up trading accounts, trying to ‘play the stock market’ or managing it yourself every year (and probably messing it up) it’s all done for you. Property, shares, cash – you can pick how you want it invested, you can go ethical, you can go high risk, you can go somewhere in between. My fund even allows me to see the actual shares of the companies that I have my stash-o- cash invested in. Now I’m sorry but that’s friggin’ cool because I’ve not had to do a thing! I have an investment portfolio, managed by a team, making some good returns, and I don’t have to lift a finger. #ripper.
The catch is of course that we can’t really touch it until we retire (unless you’re eligible for the first home super save scheme, or some other special circumstance), but if we reframe it as an investment portfolio of our hard earned money rather than something “the government made us do”, I bet we’d start to think about our super a little differently.
3. Compounding isn’t exactly a terrible idea.
We’ll write an article solely devoted to compounding interest because it really is so hot right now. In the interim, just wrap your head around this: If you save $5 a day in an account with a 10 percent annual return, you’ll have around $30,000 in 10 years, $330,000 in 30 years and $2.3 million in 50 years. (https://www.cnbc.com/2018/08/09/how-investing-5-dollars-a-day-can-lead-you-to-1-million-.html)
Vastly different to “simple interest”, compound interest is pretty much interest earning interest. For example, suppose you saved and banked $100 a year ago. It earned $2 in interest last year. This year, you’ll be earning interest on $102 (original savings plus the interest earned). That might not seem like much, but understanding that simple fact can have a major impact on your financial success.
Why is compound interest important to you? Because it can turn just a few dollars today into big money over the course of a lifetime.
That’s a core pillar of what superannuation is based on and why it really is pretty spectacular. Because whatever your nest egg makes (and there’s such a long time period involved with super odds are it will) is re-invested year after year after year. And admittedly while it does feel like an age to get your mitts on it, the beauty is you don’t have to put that much on to get a lot out as long as you start early enough.
And that’s what makes me ♥ super.
DISCLAIMER: information provided in this article is for general information only and and is not intended to act as specific financial advice. It has been prepared without taking into account your financial objectives, situation or needs.