Zest! / SUPER 101

Get your finances right when times are tight

You can still save for the future if you’re feeling the pinch—here’s how.

By Ofalyn Ayuk - 3 min read


A little about Ofalyn

As a Member Solutions Consultant at Russell Investments, Ofalyn Ayuk understands all the ins and outs of super and retirement legislation, and loves to answer questions and help members.

As almost everyone has noticed, inflation and interest rates have been on the rise. After 12 interest rate hikes and an inflation rate which spiked to 7.8% in December 2022, many people are feeling the pressure of higher living costs.

Some relief may be on the horizon. As Russell Investments’ Asia Pacific Investment Strategist Alex Cousley notes, inflation has softened recently, and there are signs that we might be nearing the end of the rate hiking cycle. But for many Australians today, money is still tight.

If you’re feeling stretched, staying on top of current expenses is an obvious priority, but forward planning is also important for your future security. It can be a delicate balance, but with a few tweaks you may find that you can do both. Here are some tips on where to start.

  • Make savings where you can – If you can cut costs, you can save more. Can you get a better deal on your mobile phone plan, or your mortgage? Could you cancel a streaming service or two? Sit down and go through your regular expenses and you may find areas where you can make savings. You can then set aside at least some of that money for your future.
  • Create a budget that incorporates savings and stick to it – There are many ways to make a budget. Find a method that works for you. The government’s Moneysmart website has a simple budget planner, and choice.com.au includes reviews of budgeting apps that can help.
  • Start small – Putting aside incremental amounts can make saving more manageable when other expenses are rising. The good news is that every little bit adds up, especially when you’re talking about long-term savings such as your superannuation. Thanks to the power of compound interest, just $20 a month can add up to almost $11,8001 over 20 years if you’re earning an average of 8% p.a. returns over that timeframe. That’s made up of $4,800 of your additions and almost $7,000 in interest2.
  • “Pay yourself first” – This old advice works on the principle that you won’t miss what you never had in the first place. If you put your savings aside straight out of your pay—by salary sacrificing into your super, for example—you won’t be tempted to dip into your savings.
  • Get a top up – If you’re a low- or middle-income earner, and have some cash to contribute to super, you may be eligible for a top-up from the government, worth up to $500. The co-contribution amount varies depending on how much you contribute and how much you earn, but it is a nice bonus if you’re eligible.
  • Get a tax deductionsalary sacrifice and personal deductible contributions to super can save you tax. Contributions to super are taxed at 15% in your fund rather than at your marginal tax rate. The less tax you pay, the more of your hard-earned money you retain—even if it’s set aside for future you to spend.

A few simple changes can help you to safeguard your finances, even when you’re working hard to look after your financial situation now.

Saving for your future is important but it shouldn’t come at the expense of your wellbeing today.

If you are in financial difficulty now, prioritise solving today’s challenges.

Fortunately, there are plenty of places to get help, including:

  • Free online resources such as the government’s Moneysmart website and charities like The Salvation Army
  • Financial counselling services – it’s a free and confidential service offered by not-for-profit community organisations that can help you to manage your debts and bills.
  • Financial support if you’re in financial hardship – you may be able to get a payment from Services Australia to help you navigate those hard times, payment options include crisis payments, income support payments, special benefits, advance payments, weekly payment options and Centrepay.

For more useful tips and hints, see our fact sheet: Taking care of your finances.

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1 Figure quoted is the 'future value' based on the stated assumptions. Discounted back to 'today’s dollars' at 4% p.a. this amount would be $5,385.

2 For illustrative purposes only.

Issued by Total Risk Management Pty Ltd ABN 62 008 644 353, AFSL 238790 (TRM) as trustee of Russell Investments Master Trust ABN 89 384 753 567. Nationwide Super and Resource Super are Divisions of the Russell Investments Master Trust. The Product Disclosure Statement (‘PDS’), the Target Market Determinations and the Financial Services Guide can be obtained by phoning 1800 555 667 or by visiting russellinvestments.com.au or for Nationwide Super by phoning 1800 025 241 or visiting nationwidesuper.com.au. Any potential investor should consider the latest PDS in deciding whether to acquire, or to continue to hold, an investment in any Russell Investments product. Russell Investments Financial Solutions Pty Ltd ABN 84 010 799 041, AFSL 229850 (RIFS) is the provider of MyTracker and the financial product advice provided by GoalTracker® Plus. General financial product advice is provided by RIFS or Link Advice Pty Ltd (Link Advice) ABN 36 105 811 836, AFSL 258145. Limited personal financial product advice is provided by Link Advice with the exception of GoalTracker® Plus advice, which is provided by RIFS.

This communication provides general information only and has not been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs. If you'd like personal advice, we can refer you to the appropriate person. This information has been compiled from sources considered to be reliable but is not guaranteed. Past performance is not a reliable indicator of future performance. To the extent permitted by law, no liability is accepted for any loss or damage as a result of reliance on this information. This material does not constitute professional advice or opinion and is not intended to be used as the basis for making an investment decision. This work is copyright 2023. Apart from any use permitted under the Copyright Act 1968, no part may be reproduced by any process, nor may any other exclusive right be exercised, without the permission of Russell Investments.