A new financial year – a new start

As we approach the start of the 2025 financial year on July 1, 2024, there are several important considerations for us as individuals. Let’s explore six key financial aspects to keep in mind:

• Begin by defining your financial objectives. What do you want to achieve in the coming year? Whether it’s building an emergency fund, saving for a specific purchase, paying off debt, or saving for retirement, clarity is essential.
• Use tools like the government’s Money Smart savings goal calculator to determine how much you need to save and by when.

• Revisit your budget or create one if you haven’t already. A realistic budget covers day-to-day expenses, medium, and long-term goals.
• Consider budgeting methods like the 50/30/20 rule (allocate 50% to needs, 20% to savings or debt payments, and 30% to wants), the bucket method (organise expenses into different accounts), or the zero-based method (income minus expenses equals zero).
• Alternatively, your financial adviser may have resources to assist you in preparing your budget.

• The 2025 financial year brings significant changes to personal tax rates in Australia.
• Stay informed about revised thresholds and tax cuts across various income brackets as most Australians will find they will have more disposable income.

• With uncertainty and cost of living pressures being experienced by so many, having a fully funded emergency fund, that is separate from other savings, can make a huge difference to your financial and mental well-being.
• Aim to build an emergency fund. Start with $1,000 or $2,000 – perhaps your 2024 income tax refund - but aim to build on it over time so that it covers three to six months’ worth of living expenses to provide financial security during unexpected events.
• Calculate how much you need based on your lifestyle and commitments.

• From 1 July 2024, the amount of super your employer must contribute on your behalf is increasing from 11% of your earnings to 11.5%. This is a bonus that, over time, will add considerably to your retirement nest egg.
• In addition, the amount that can be contributed to super on a concessionally taxed basis is also increasing from $27,500 to $30,000 per annum. Contributions covered by this cap include those made by employers for their employees and personal contributions for which a tax deduction will be claimed.
• The beginning of the new financial year is a good time to review your super to ensure it is on track to provide you with the type of retirement you have always dreamed of. The secret is starting as early as possible.

• Consider investment opportunities. Whether it’s shares, property, or other assets, diversify your portfolio.
• Avoid investment schemes that offer overnight success – get-rich-quick schemes - and investments you don’t fully understand.
• Seek professional advice if needed, especially if you’re new to investing.

Remember, proactive financial planning sets the stage for a successful year ahead. By addressing these key areas, you’ll be better prepared to navigate the 2025 financial landscape in Australia.