This is good timing as tax changes are afoot, new tax rates are effective 1 July 2024... couple this with past research that shows it doesn’t take long for people to chew up pay rises (or tax breaks) in lifestyle creep and in situations like this, you get two things, temptation and opportunity cost.

The changes, according to the Budget, mean the average Australian will see approx. $1,650 per year, or $31per week, more in their pocket... It would be easy for that to be gobbled up if you don’t have a plan for it.

Most people see these situations as ‘free money’... but it’s not.

Remember, you still worked for that money... you swapped your time (your most precious asset), to earn that cash. You’re just being charged less tax on it.

So, what to do? You need a Money Date.

- The two of you need to get together to discuss the options. Lay them all out on the table and think about what are the (often invisible) tradeoffs each option creates. Then overlay this with your top ‘team’ financial goals. If you have financial goals you’ve both agreed on, these conversations become much easier, because they are, in effect, your north star to guide your decisions. Without these, you're basically just pitching to each other until is worn down and the other person wins... which is never how I would suggest you tackle money conversations. Leave your emotions to the side (easier said than done), your job is to tackle this as a team... not start an argument.

- If you really want to do both, are there ways you can achieve that? Can you cut or reduce other line items in your cashflow so you can have a fair chunk of cash for each? Can you use a small amount of the funds for an inexpensive trip away and bank most of it towards your offset/rainy day fund/additional mortgage repayments?

- Do you already have a holiday fund? If not, is it time to start one so you already have an amount building up for future trips and therefore the temptation to spend additional funds on this reduces?

Often this comes down to people’s values... and whilst I am hardly a relationship expert, in my experience most couples tend to have one person who is more driven by security and the other freedom.

This can often create tension points, and how you manage this and compromise so each of you feel like you are being valued and seen is really important. It would be easy to put my figurative money hat on and say you should put it on the mortgage... but unless that’s going to fit a goal you both have (like to be debt free by age ____), then it’s likely one person becomes angry and frustrated at the other and then spending spirals often ensue (not always maliciously, but it can be because they feel restricted and frustrated and spend to gain a level of independence and autonomy).

So, book in a Money Date (if you’re single, go and grab a coffee solo) and figure out what you intend on doing with any extra that lands in your lap thanks to the tax changes.

Figure it out before you get the money, so you have a clear plan for it, then, once you get it, set up automations so you know the money is going exactly where you want it to without the chance of you forgetting or being tempted to spend it.

Have a money dilemma?

Money dilemmas can be a nightmare! They can leave you up all night ruminating about what to do, have you feeling alone and isolated or just plain ol' stuck. So, we are here to help. I am going to tackle one a week and give you my unbiased, no BS general thoughts on how to tackle your conundrum. We would love for you to send yours (or someone you know) in. 

Obvs all of this is general advice only... especially important to note any and all of the comments above do not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs.