7 tips to make your money work harder for you

We get so many things from our work – skills development, new friendships and of course, a source of income. But as American entrepreneur Marshall Sylver noted, “either make your money work for you or you will always have to work for your money”, explains financial advisor and money mentor, Helen Baker.

If you want to ensure your money works harder for you, try these seven steps:

1. Don’t believe everything you hear

Unqualified ‘finfluencers’ are now illegal in Australia, but the books, podcasts, etc., of so-called money ‘experts’ still live on.

And well-meaning family and friends often talk from personal experience, but your circumstances are different, so what worked for them may not be right for you. Conversely, if they had a bad experience, doesn’t mean you have to.

Be sure advice you take on money matters is tailored to you and comes from qualified and experienced people.

2. Negotiate with employers

It’s a jobseeker’s market right now – use this to your advantage! Negotiate with prospective employers instead of blanketly accepting their initial offer:

• Salary/wages: ask for more but be realistic; use examples of other similar pay rates if you can.
• Work hours: can you get the same pay for fewer hours? That means a higher hourly rate and either better work/life balance or more time for a second job/side hustle for additional income.
• Perks: Some employee perks save you money – free/discounted gym memberships, meals, coffees, dry cleaning, childcare, discounts on their own products/services. Others make working life more enjoyable – additional paid leave, rostered days off, dog-friendly workplaces. Ask prospective employers what they currently/would be willing to offer.
• Paid study leave: Build extra qualifications and fast-track promotions/payrises.

3. Weigh up your debts

Generally, the aim is to pay off your most expensive debts (those with the highest interest rate) first.

• Indexation on student loans is currently 3.9 per cent, the highest in over ten years, so it may be worth paying extra if you can – or ask your employer to make higher repayments in lieu of a payrise.
• But if you have a mortgage, car loan or credit card debt, it likely has a higher interest rate and so should be top priority.
• Reduce interest paid and simplify repayments by consolidating multiple debts into one with a lower rate.
• Explore tax benefits – are you financially better off making extra superannuation contributions than paying debts faster, when factoring in tax deductions and government co-contributions?
• Protect your credit score – paying bills on time improves your ability to get loans in future.

4. Give superannuation a super start

Give your super room to grow over your working life:

• Don’t compare apples and oranges. No funds’ investments are identical, so consider the pros and cons of each.
• Get good insurances. You’ll enjoy better coverage and cheaper premiums on policies taken out while you’re young.
• Go for growth. You can afford to take bigger risks in your early life.
• Consolidating multiple super funds doesn’t always save you money, such as rolling into a higher fee fund and/or losing superior insurances attached to the terminated fund.

Remember, diversity is key – consider exposure risks across various investments, including stocks, cryptocurrencies, property, unlisted assets, private equity, etc.

5. Start investing now

Remember your high school maths teacher banging on about compound interest? The same applies to investing – the sooner you start, the bigger the compounding effect. $10,000 now could be worth $200,000+ by retirement.

Examine what delivers the best overall returns – would the First Home Super Saver scheme help you build a deposit faster than a savings account? What are the Capital Gains Tax implications on various investments?

6. Plan for the future

Failing to plan is planning to fail. Future-proofing your finances means having a plan:

• Establish an emergency fund: You never know when you could be made redundant, be unable to work, or need to leave in a hurry. Even a few dollars from each pay quickly adds up.
• Private health insurance: Don’t be penalised for joining late. It also has tax benefits.
• Inheritances: Can your parents/grandparents provide for you in a protective, tax-effective manner?

7. Avoid STDs – ‘sexually transmitted debts’

Your partner may not be as financially savvy as you, poor at managing money, or earning less – especially if they are younger and not yet working full-time.

Have open, honest discussions. Retain some financial independence – like a joint account for joint living expenses but separate accounts for your pay. A contract/pre-nup may be useful if one of you has kids from a previous relationship or existing assets.

Remember – you can’t start working life on the right foot if STDs see you left behind!

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