­Coronavirus has had a huge impact on our way of life, and how we spend our money is a big part of that.?

Job losses and business closures have put many of us in unexpected situations and financial stress, however, many people are saving for the first time.

Spending has been cut largely due to ongoing enforced lockdown! People can’t go out to eat, the kids can’t do their plethora of after-school activities, they can’t travel — either for a holiday or to visit our families overseas and interstate, many Australian expats are finding that they’re able to save more money throughout 2020.

Australian bank account balances have swelled this year between 5 – 12% across term deposits and regular savings accounts. We’ve also seen much of the stimulus payments added to savings account balances, with 40% of recipients surveyed stating that they’ve used the funds to add to their savings.

With all of these additional savings, cash rates at record low levels, uncertainty in every direction, where should we deploy these funds..?

This week we explore five key options for you to consider in putting your additional savings to work to ensure that you can make the most of 2020.

  1. Pay down bad debts

Bad debts generally have high interest rates attached to them, such credit cards, store cards and personal loans. Some of these loans can carry an annual interest rate of up to 25%. Bad debts are also non-deductible as such, therefore there is no tax benefit in having them.

  1. Invest in yourself

In an ever-changing world, you can always continue to upskill, retrain and broaden your knowledge base. The government has offered incentive programs as well as universities and other education providers to give easier access to many Australians who may not have had the ability before.

  1. Contribute to your superannuation.

Non-residents can continue to make superannuation contributions in Australia with the exception of Self-Managed Superannuation Funds (SMSFs), and on the assumption that the fund itself will accept the contribution. The rules regarding eligibility to make these contributions in Australia apply equally to residents and non-residents. In most cases, expats can make both concessional and non-concessional contributions while living abroad and the specific type of contribution will be dependent on your personal situation. This is why it is important to get professional advice.

  1. Boost your emergency fund

As a general rule of thumb, your emergency fund should have 3 – 6 months of your household living expenses saved up. To have an emergency fund you can set up a separate savings account specifically designed for this purpose. You can then set up an automatic savings transfer so that the emergency fund continually has funds being paid into it.

  1. Invest in the markets

Finally, you can also seek to invest your additional savings into the markets. The fundamental rule here is “time in the market and not timing the market”. This strategy is not one of a day trader looking for a quick return but having a longer time horizon and investing within your risk profile and objectives. if you’re not comfortable doing this yourself or don’t feel that you have the time to do so, seek professional advice from a trusted professional.

 

 

Ally Wealth Management is the trusted ally in finance for Australians at home and across the globe. As both Australian expats and residents, the founders of Ally have a unique understanding of the common personal financial challenges faced.

Book your complimentary appointment with our team at Ally Wealth Management to discuss how we can help you to achieve your financial goals.

Ally Wealth Management Pty Ltd is a Corporate Authorised Representative of Sentry Advice Pty Ltd ABN 77 103 642 888. Sentry Advice holds an Australian Financial Services Licence (AFSL) No. 227 748.

General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.