How not to lose money

One way to build wealth is to make sure that you don't needlessly give it away. That starts with making sure you are getting your fair share to start with.

1. Understanding what you are worth is the first step in making sure you are getting the right of reward for your work. It doesn't matter whether you are under an award, a contract or self employed.

If you are covered by an award, make sure you are getting paid the correct amount under the correct award. You can check which award and pay rate you are suppose to be under by checking the FairWork Australia website.

If you are under a contract, again make sure you are getting paid in accordance in the contract. When you are negotiating your contract ensure that you understand how your super is getting paid. For example, your salary package of $100,000 includes super or your package is $100,000 plus super. There is a difference between these two contracts is $9,500 per annum.

2. Claim all your allowable deductions. These must be legitimate because the ATO does do random audits and if are claiming something that you shouldn’t be, you will need to repay the tax owed and sometimes a penalty interest rate on top of this. Keep your receipts, log books etc. Records need to be kept for 5 years after the date of lodgement of the return.

3. Get professional advice before making a big decision. This goes for everything from buying a house, doing a business deal, signing an employment agreement. Many a lawyer will tell stories about clients coming to them with signed contracts to purchase a property only to find the wrong names on the contract. This can mean double stamp duty if it needs to be changed because you are changing the beneficial owner of the property. Always check first and take the unsigned contract to your lawyer to get them to look over it first.

4. Don’t rely on what your friends have said at the weekend BBQ. The story will start with… I heard about a bloke who did….. and they didn’t haven’t to pay any - insert word – tax, capital gains tax, stamp duty etc…. Chances are the story has taken a bit of detour from the actual facts and tax etc was paid, or they had very specific circumstances that don’t mirror your own. Get advice based on your own circumstances.

5. If it sounds to good to be true it probably is. If someone rings you up, sends an email, even knocks on your door offering you an investment that is guaranteed to double your money, all they are doing is setting you so they steal your money. There is a rule called the rule of 72. If someone if offering to double your money in a set amount of time then divide that time period into 72 and you’ll see what level of return you need to earn to double your money. Eg, someone says they can double your money in 2 years, this means that the investment needs to earn 36% per year for two years. Given that bank interest is currently sitting at 2.5% to 3%, a 36% interest rate seems very unlikely and very very risky. So high, in fact that you are more likely to lose all your money. ASIC the government regulator has set up which has a list of companies you shouldn’t deal with.

6. The ATO does not call people up and threaten them with legal action out of the blue. If you get one of these calls DON’T return the call. If you want to check that all your tax details are in order call either your accountant or the ATO directly on 13 28 65. If you do get a call just hang up, you control your phone not them, just put the receiver down, they tend not to call back, they move onto the next person.

7. Your bank does not send you emails asking you to change your pin number or confirm your banking details. Again, if you aren’t sure, call your bank directly on a number you get from their internet page or from the phone book. Or just pop into your local branch. Some of these emails look very similar to the real emails from your bank, just delete them, don’t even reply to them.