Should You Consider Salary Sacrificing?

by Dominique Schuh

The Australian share market reversed early losses to finish in the black following soothing words from Chinese Premier Li Keqiang. He said China would fasten its "seat belt" and rein in risks as it pursued a mid- to high-speed growth, while he also played down risks of a trade war with the US and said the country would continue to support global growth. The S&P/ASX 200 index bounced to close up 14.9 points, or 0.26 per cent, at 5774 as markets shrugged off US rate rise caution.

What this means for you:
We talk a lot about the benefits of salary sacrificing, but do you know when to consider it? The decision basically comes down to two things: 1.) whether your personal taxable income is greater than around $37,000, and 2.) whether you can do without the money as "take-home pay". If your taxable income is over $37,000, there will be a tax saving for you to do some salary sacrificing, particularly by contributing to super where the tax rate is lower at 15%. However, you need to find a balance between keeping enough money aside to be able to live on.

Do you have savings goals? Consider setting up separate fee-free online accounts to automatically save into from your income. This is a similar concept to the "jam jar" saving strategies of old, but it really works. If you've got a home loan, contact your bank to see if they'll allow you to set up separate offset accounts against your home loan. That way you can still do your saving for specific items such as holidays, and reduce your home loan at the same time.