Say ‘no’ to shopping, ‘yes’ to super

The Financial Literacy Foundation is encouraging Australians to take advantage of the July 1 tax cuts by not spending the extra money they will receive in their pay packet each month.

The foundation’s advisory board chairman, Paul Clitheroe, said it was important people understood this opportunity and put the money towards superannuation, mortgage repayments or savings.

The personal income tax cuts announced in the 2007-08 Federal Budget will see people earning $30,000 a year receive $90 a month extra with those earning $50,000 or more a year receiving $60 extra per month.

According to the foundation, for someone earning $28,980 a year, contributing $60 a month to superannuation will result in more than $1,000 a year extra in super after the Government adds $1.50 for every dollar contributed.

Similarly, paying an additional $60 a month off a $200,000 mortgage with an interest rate of 8 per cent will save $40,000 over the life of the loan and shorten the repayment period by three years.

Or, depositing the $60 tax cut into a savings account each month with an interest rate of 6 per cent will result in $2,300 in three years time.

“Being financially literate means making informed choices with your money and the tax cuts provide a perfect opportunity to do something today that will benefit you and your family in the future,” Clitheroe said.

“And the great thing is, because it’s a tax saving you won’t have to take a pay cut in take-home pay.”