YALARI FINANCIAL LITERACY
WHAT IS FINANCIAL LITERACY?
Financial literacy is a term used to describe a person’s ability to understand and apply financial skills. These include budgeting, understanding interest rates and understanding debt management. When it comes to being the expert in your financial destiny and feeling confident about making financial decisions, building your level of financial literacy will help, no matter what life throws at you.
Tax is the money paid by individuals and businesses to the government: local, territory or state and federal. These governments use their tax revenue received by you to provide public goods and services needed by the community.
Who pays tax?
The amount of tax each person’s pays in tax depends on how much is earnt over the financial year. If you earn over $18,201 in a financial year you are required to pay tax in which your employer will deduct from your pay unless you are self-employed, this is something you self manage. Below is a table which is also located on the ATO website. It shows how tax is paid depending on your income.
How is tax paid?
If you are employed your employer will pay your tax which is taken out of your weekly, fortnightly, or monthly income. If you are self-employed, you pay your tax yourself. (See resources for tax tables)
What is a Tax File Number (TFN)?
A tax file number is free and identifies you for tax and superannuation purposes. You keep the same TFN even if you change your name, change jobs, move interstate, or go overseas. You can apply for a TFN online through the ATO website or apply at an Australia Post or complete the form and send via post.
A tax return covers any income and expenses through the financial year, starting on July 1 and ending 30 June the following year. At the end of the financial year, you have a limited window to lodge your individual tax return. Generally speaking, if you’re lodging your tax return, the deadline is the 31st October.
If you earn an income, you’ll usually have to pay tax on that income. As a salaried employee, your employer will deduct tax from each pay and transfer it to the ATO on your behalf. This is known as Pay As You Go (PAYG) withholding. If you’re a self-employed contractor and use an Australian Business Number (ABN), you’ll need to pay your tax and super.
A tax return is a form in which you complete online, on paper or get a tax agent to help you with which notifies the ATO of
- How much money (income) you earn
- And if you are claiming any deductions.
The ATO then uses this information to check if you the individual has
- Paid enough tax or too much
- Need to pay the Medicare levy or surcharge
- Can get any tax offsets (e.g. low- and middle-income tax offsets)
If you pay more tax than you need to this is when you receive a tax refund, but if you don’t pay enough tax, you will receive a tax bill.
Tax tips and tricks
- Speaking tax lingo
- MoneySmart – Income Tax
- ATO – Australia Taxation Office
- Lodging a Tax return
- Australian Salary calculator
- Tax return – Seeing an accountant or doing it yourself
- Weekly Tax Table
- Monthly Tax Table
- H&R Block Tax Checklist
- Tax Return for under 21 and Students
- Understanding your HECS-HELP Debt
- How to read a Pay slip
- Beginners guide to Salary Sacrificing
- Fortnight Tax Table
Superannuation, or ‘Super’ is a part of your income your employer pays into a super fund. Your super builds up over your working life. You use super money to live on when you retire from work. Your employer should pay at least 9.5% (unless you are a contractor or freelancer, you pay it yourself)
Types of Super Funds
In the Super world there are two types of super funds. These are defined as benefit funds and accumulation funds. Most Super funds are accumulation funds.
- Accumulation Funds
In an accumulation fund, your money grows or ‘accumulates’ over time. The value of your super depends on the money that you and your employers put in (known as super contributions), and on the investment return generated by the fund after fees and costs.
- Defined Benefit Funds
In a defined benefit fund, your retirement benefit is determined by a formula instead of being based on investment return.
Most defined benefit funds are corporate or public sector funds.
Many are now closed to new members.
Typically, your benefit is calculated using:
- The money put in by you and your employer
- Your average salary over the last few years before you retire
- The number of years you worked for your employer
How do I choose a super fund?
When you commence work for the first time you can elect your own super fund, or you can have your employer choose it for you.
Although this is the easiest option to have your employer select it for you, it is sensible to do some research on other super funds to find which super fund’s benefits are right for you.
Can I access my super?
Generally speaking, most people do not access their super until retired age. There are some circumstances in which you can access your super savings, such as severe financial hardship and specific medical conditions.
What if my employer is not paying the correct super?
Check your pay slip, if you can’t see Super contributions on their then have a conversation with your employer. Ask how often they are paying your super, where they are paying for it and how often they are paying for it. If this does not resolve the issue you can phone the ATO on 131020.
If you have changed your name, address or your job, it may be that you have lost track of some of your super. Having more then one Super account can also mean you’re are paying unwanted fees on more then on account in which case you will have less money by the time you retire.
Some ways that may assist you in finding lost super:
- Australia Taxation Office through your MyGov Account
- Check with previous employees as they may have created a super account on your behalf if you never gave them your Super details
Super tips and Tricks
A budget is simple. Its records and show you where your money is coming and going. Having a budget helps you to feel in control of your money. You can put aside money for big bills when they arrive, and plan savings to achieve your money goals. You don’t need an accountant or special software to set up your own budget. Start by looking at where you are right now and where you want to be.
Why is it important
Budgeting allows you to create a spending plan for your money, whilst also ensuring that you always have enough money for the things you need, and the things that are important to you.
Setting up a budget
Setting up a budget is simple. For some, it may be something you think about a lot and not actually getting around to it. If you don’t start now, then when? Here are some key points to start with
- Know your income – employment income, Centrelink payments, other income
- Work out your expenses – fixed expenses, debt expenses, unexpected expenses
- Set up your budget – there are so many resources out there, even apps these days
This could be easy, like writing it all down on a piece of paper, or downloading an app and filling everything in.
Budgeting tips and tricks
- Everyday (transaction) Accounts
An Everyday account is designed to give you easy access to your money. An everyday account with a debit card you can use to buy things and withdraw cash at an ATM.
- Savings Accounts
Savings accounts are designed to help you save your money. This type of account is usually an online account with withdrawal restrictions that make it harder to dip into your savings.
If your bank statement includes account-keeping fees and overdrafts, you do not have a no-fee account. You may be able to get an account that has fewer, or no, fees. Check with your bank.
If your only income is from Centrelink payments, ask your bank for a no fee or low fee account.
Avoid direct debit fees
Internet banking is a sign of the times. All banks these days have internet banking, its like being your own bank teller, having instant access to your bank accounts and the money in it. Whilst this is handy its also something to be mindful of. Keep in mind If you use a shared computer, make sure you log out afterwards. If you don’t, the next person using the computer may be able to access your account. Also, use strong passwords. Get tips to protect your information online from the Australian Cyber Security Centre. .
Direct debit (or automatic payment) allows a company to automatically withdraw money from your account at set times. Direct debits are often used to pay for things like your electricity bill or phone bill, or to make a loan repayment.
Direct debits can be a good way to manage your money, but they can become a problem. If you don’t have enough money in your account when the payment is due you may be charged a fee. To avoid this, set up the direct debit to come out of your account the same day you get paid.
Before you set up a direct debit, make sure you trust the direct debit service provider. You are allowing them to take money from your account.
ATM fees are a small fee that you may be charged with when using a machine. Some banks offer free ATM balance enquiries and withdrawals to their customers in select remote communities. If you have an account with a participating bank and use an identified fee-free ATM, you wont have to pay fees.
Lending money to family and friends
Although it is good to help family and friends out with money if needed make sure you are not leaving yourself short for your own financial commitments.
“Humbugging” is when family members regularly ask for money. They come to you every day, or ask you to buy them things if they know you have money.
- Watch out for banking and credit scams and if you are unsure contact your bank
- Make a habit of checking the details on your bank statement.
- Make a habit of checking on your direct debits of what is coming out
- If you notice an unfamiliar activity on your account, contact your bank straight away. They will assist you with this.
- Keep your pin and internet banking details private and confidential – safe
What is it?
A neobank is a type of direct bank that operates exclusively online without traditional physical branch networks. Neobanks is an app-based platform.
Here are some of the Neobanks currently floating around in Australia
Make your money work for you by taking care of your bank account. Pay fewer fees, check your bank statement, and keep your bank details safe.
Credit cards can offer cash back rewards and fraud protection. But if you don’t keep on top of one, credit cards can lead to debt, Interest charges and damage to your credit rating.
It is important to know some of the pros and cons of obtaining a credit card. Some of these are listed below
|May earn rewards||Interest is high|
|Safer then holding cash||It can hurt your credit rating|
|Handy in emergencies||Its easy to dig yourself into a hole|
|Convenience||Credit Card fees|
If you still decide that it is you still want to obtain a Credit Card, ensure that you can afford it. Choose wisely, stay up to date with payments and interest and hidden fees. And if you are paying the minimum it will take you longer to pay of the credit card and you will end up paying more in interest also.
Banks Tips and tricks
MORE MONEY TALK
Buy Now pay later platforms
Buy Now Pay Later platforms have been the upcoming for a while now. It’s easy and convenient and you get what you want right there, and you can worry about the payments later. It can also dive you into big deep debt, quick and fast.
|Convenience||May encourage impulse spending|
|Fast and easy||Late payment fees|
|Interest free terms||Can affect your to apply for loans|
|Spread out payments||Spending money you don’t have|
|An alternative to a credit card||Minimal credit checks|
Services like Netflix, Disney+, Stan, Prime Video are just to name a few of the of the paid subscriptions now out there. Depending on a plan it can determine how many screens can be hooked to the account, as well as 4k streaming. Although these are all great things, means you don’t have to line up or even step foot in a cinema like it was once upon a time. Here are a few pros and cons that we have come up with in determining if it is worth your while, or having more then one to service.
|You can see the latest movies from the comfort of your own lounge room||Having more then one service can become pricey|
|No ads||Some movies you may have to pay for on the service
(Prime video you can rent and buy movies, in particular new releases)
|Can watch it on most devices, other then a TV||It could make your internet run slow|
|Access to old shows||Some take a bit to update shows|
|Can share with family, setting up multiple||May have same shows on multiple services|
There are also free to air services that have their own apps and often have a whole bunch of the same stuff and you don’t have to even pay for it
- ABC iView
- SBS on Demand
HECS-HELP is a scheme that assists eligible Commonwealth supported students to pay their student contribution amount with a loan. HECSHELP loans are available at all public universities and at a handful of private higher education providers. Important note: you must be studying in a Commonwealth supported place at an approved HECSHELP provider in order to access a HECS-HELP loan: https://www.studyassist.gov.au/help-loans/hecs-help
The government offers a range of financial assistance and below is an explanation of these:}
There is much to find on the net. Podcasts, reading material – books and blogs. Also websites and financial literacy programs that have been created for first nations people. The table below are just a few useful resources the pathways team has found.
HELP INDIGENOUS CHILDREN RECEIVE A QUALITY EDUCATION, TO DREAM BIG AND ACHIEVE!
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Yalari respects our Elders, past and present, and acknowledges that our office is on Kombumerri country within the lands of the Yugambeh language group