How to get the most out of your federal budget booster
June 1, 2011
The 2011 federal budget has promised to bring financial relief to some Australian families who, with the right investment strategy, are set to turn a minor boost into significant long-term gain.
For families, one major coup to arise from the May 10 budget was a $4208 boost to family payments. Families with dependent children aged 16 to 24 years, who are either enrolled in full-time school or equivalent training to complete higher school certificates, have completed that qualification or earn less than $13,010, will be eligible for the extra funding.
Damian Smith, chief executive of financial comparison site RateCity, says it's good news for low-income earners and their children.
"Parents will obviously welcome the additional family support payments for older children," Smith said. "At a time when interest rate increases have pushed up the cost of repaying the average $300,000 mortgage by about $250 per month over the past 18 months, additional financial support will be welcome.
"For those parents who have the ability to save this extra money, they should be considering either high-interest term deposits, or even a long-term investment for their children's eventual first home purchase, using a first home saver account."
The first home saver account scheme was introduced by the federal government to help prospective first home buyers to save for a deposit by contributing an extra 17 percent interest for the first $5000 you deposit per year.
But there are strict conditions with these types of accounts, including that your money is locked away for at least four years and the balance can be used only for the house purchase or transferred to a superannuation fund.
A high-interest fixed-term deposit account is a popular choice, because it's a straightforward, secure and typically a high yield investment option. You can choose the length of time you want to lock in your money and the amount you wish to invest and a term deposit account doesn't have the same rules that a first home saver account has at maturity.
You can find a high-interest term deposit by comparing rates online, and now you can go one step further at RateCity and request a "better rate" than the ones available to the public, thanks to our new search platform.
No matter which option you choose, by investing the extra funds from the budget wisely where possible, families will help to set their children up for life.
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