Don’t See a Pay Rise on the Horizon? Do More with Your Money with Salary Packaging
The wage growth in Australia seems to be slowing down while the cost of living continues to rise. With a pay rise less than likely to happen in the near future, it’s more important than ever to stretch your dollar further. Luckily, there are a few great ways to save yourself money while still being able to splurge on what makes you happy.
Many consumers believe the only way to get a new vehicle is to either save up the whole cost or take out a consumer loan. But if you’re looking to buy a new car, there are ways to do more with your money. One way is by getting a novated lease, but I will explain that in more detail later in this post. First, let’s go over some of the worrying signs of low wage growth.
Wage Growth at Record Lows
Wage growth in Australia is at a record low, meaning the chances of a pay rise at work is not likely in the foreseeable future. With the cost of living, especially health insurance premiums and utility bills rising, it is becoming harder for Australians to maintain their usual standard of living. Most Australians still, even if they are on an above-average wage, hope for a raise in the near future to keep up with these rising bills. Unfortunately, not even the experts can predict when, or even if, a raise will happen.
Recently Philip Lowe, the governor of the Reserve Bank said:
“From the mid-1990s until a few years ago, Australians got used to average hourly earnings increasing by around 4 per cent a year. Over recent years, growth has been a bit less than half of this”.
With the unpredictability of when this will change, it is important to understand that we may be stuck in this slump for a while yet. Making your money work smarter and stretch further is more important than ever before.
From a broader perspective, if the Australian dollar moves higher against the American dollar, it’s less likely there will be an upward increase in wages. Workers need to understand that it will be more difficult than ever to negotiate a pay rise with their employer. With policymakers unlikely to make a dent into low wage growth, it looks like workers are all alone in this fight.
Australians Still Love Buying Cars
Even with the slowing of wage growth over the past few years, Australians still love buying new cars. A record number of new cars are being sold suggesting consumers are still willing to splurge their income on the right products.
According to the Australian Bureau of Statistics, car ownership has grown in the last year from 770 motor vehicles per 1,000 people, to 775 per 1,000 people this year. This puts Australia in the top 10 motor vehicle loving nations with one of the highest percentages of cars per capita.
One factor that has likely kept this trend growing is due to car prices barely rising in Australia since 1995. In 1995, a new Toyota Camry sold for around $23,910. Move forward in time to 2017, and you can pick up a brand-new Toyota Camry for only $23,990, an increase of only $80 in over 20 years. When you compare this to the average weekly wage shifting from $647 to $1,533 over the same period, it starts to make sense why buying new cars is still so popular.
Best Way to Get A New Car
With all this information in mind, you might be asking “what’s the best way to get a new car?”. With a range of options available, you can often get lost in which option is the best for your situation. Should you get a consumer loan? Or are there better options out there?
One great way to save money and get the car of your dreams is to take out a novated lease with easifleet. By talking to one of easifleet’s experienced consultants, you can rest assure that they’ll find the perfect leasing agreement for you. Using easifleet’s online calculator, you can see what you’ll save taking out a novated lease rather than a consumer loan.
A novated lease is an agreement between you, your employer and a financier. The employer leases the car on your behalf and puts it under your name. Running costs such as fuel, maintenance and insurance are all included in a single scheduled repayment plan. The payment comes from both your pre and post-tax salary, which could reduce your taxable income and in turn mean you pay less tax.
Why Should I Get a Novated Lease?
Novated leases are a great way to make the most of your dollar and save on tax in the process. With easifleet’s huge buying power, they’ll get you the best discount possible on the cost of your car. Here are just some of the great benefits of novated leasing:
- Massive discounts on the purchase price (usually upwards of $6,000)
- No deposit required
- Your choice in vehicle
- The lease can be taken with you if you change employers
- A higher net salary due to reduced taxable income
- All costs are included in the easy to manage repayments, avoiding those large lump sum payments throughout the year
Regardless, if your employer is not currently offering salary packaging, easifleet can still provide you with a great novated lease.
A great free tool to use to see how much you can save through a novated lease is easifleet’s novated lease calculator. It is a common misconception that novated leasing only benefits high-income earners. However, this is simply not the case. No matter how much you earn, you’ll benefit immediately due to paying costs from pre-tax dollars.
The numbers speak for themselves. The free online novated lease calculator give you information instantly to show how much you could save compared to taking out a consumer loan.
To find out more about how easifleet can assist with a novated lease, contact one of our friendly staff today.