There is no denying that the budget announced last Tuesday will bring hip-pocket pain, but it also serves as a timely reminder to take greater control over our personal finances and make the most of opportunities that are out there.

On a big picture level, the overall theme of the budget is to reduce spending to get on top of growing national debt. You can think of the federal budget as being fundamentally no different to your household budget.

Consider this. On the left is a snapshot- straight out of the budget papers- of the federal Budget expenses. Simply re-categorising some of the spending areas gives us a not-too-far-fetched picture of what your household budget might look like.













Of course, the big question is… Where is the surplus? For there to be a surplus the total outflows needs to amount to less than what is coming in. With increases likely to impact your budget in the areas of tax, health and education and an increase in qualifying age for potential government retirement benefits, it is more important than ever to have a good understanding of your personal budget and the opportunities available to help maximise your budget surplus and put this to work in strategies that can help to build wealth.

As with the federal budget, establishing a personal budget is a powerful tool and can provide control and clarity to help you achieve your personal goals, be they resolving a deficit, education funding, or splashing out on a fleet of jets, um, I mean a flight in a jet.

So, you mentioned some good news?!? Yes, as well as putting the spotlight on the importance of having a balanced personal budget, it is really what wasn’t announced that masks the real opportunity in this budget.

  1. No new announcements regarding superannuation contribution caps. This means that for the first time since 2009 the amount that can be contributed to super and be concessionally taxed is set to increase from 1 July 2014 to $30,000pa for those under 50, and up to $35,000 for those who turn 50 or older next financial year.
  • Those who are able to make use of this opportunity could make an immediate tax saving of up to $11,900* per year.
  1. No new announcements regarding the proposed paid parental leave scheme. Whilst this is yet to be legislated, the government has re-affirmed its commitment to the paid parental leave scheme which is set to come into effect from 1 July 2015. This has now been budgeted for and will certainly help those looking to start a family (and those they rely on…) by providing the financial support and added flexibility to make those all-important lifestyle decisions.
  1. No new announcements regarding the proposed corporate tax rate reduction. The government has re-affirmed its commitment to reduce the company tax rate from 30% to 28.5% from 1 July 2015. The flow-on effects should be significant by making Australian business more competitive- this will particularly help the 700,000+ small businesses and the millions that they employ.

There are, of course, many other details that were delivered in last Tuesday’s budget and they affect each of us differently. The key is to look through the noise and focus on the areas you can control. As is always the case with change- it can be tough- but change brings opportunity and now is the time to act to capitalise on opportunities and optimise your wealth creation strategies.

* assuming age 50+ with taxable income between $180,000-$300,000


Written by Yosha Steeghs – Wealth Adviser, Odyssey Financial Management


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This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs.
Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.
Odyssey Financial Management is an authorised representative of Securitor Financial Group Ltd.