Advice on Managing Wage Increases from Certified Financial Planner Toby Perkins

With the upcoming wage increase, certified financial planner Toby Perkins shares valuable insights for individuals looking to maximize their financial benefits.

Perkins, who has 15 years of experience with NGS Super, cautions against ‘income creep’—a situation where pay increases lead to higher lifestyle expenses rather than increased savings. This phenomenon can occur frequently, especially given the high inflation rates in recent years.

For those experiencing a genuine increase in disposable income, Perkins advises careful consideration of how to allocate these funds. He emphasizes the importance of setting aside money for savings rather than allowing it to be absorbed by everyday expenses.

One key strategy suggested by Perkins is the power of compound interest, particularly through regular superannuation contributions. “If you’re looking to save for retirement,” Perkins states, “salary sacrifice can be an effective method as it directs money straight into your super without you needing to manage it personally.”

Perkins explains that salary sacrificing can also be a tax-efficient way to contribute to superannuation. For example, individuals on a 32 percent marginal tax rate may find that, through salary sacrifice, the tax saved ends up allowing greater investment in their super.

He notes that whether through employer contributions or self-managed approaches, starting small with retirement savings is completely valid. Perkins encourages individuals to gradually increase their contributions over time, highlighting that the earlier one starts saving, the more they can benefit from compound interest.