The economists tell us that wages are stagnant so the prospect of a ‘pseudo pay rise’ – aka the Stage 3 tax cuts – is worth a celebration.

What’s the Stage 3 tax cut?  

This is my lay person’s take. The Federal Government made changes to tax rates that came into effect on 1 July 2024 – it’s given every working Australian (who earns more than $18,200), a tax cut – or as I like to think of it – a pseudo payrise.  Basically most people receiving a salary should see more money in their bank account from their employer. 

What’s my ‘pseudo pay rise?’ 
 
Try the ABC’s Stage 3 Tax Cut calculator.
 

If you’ve been fortunate enough to get a pay rise in the past, you may well have experienced ‘lifestyle creep.’ I certainly have – where suddenly, my lifestyle has crept up to my pay rise, even before the extra dollars have landed in my bank account. Since the Stage 3 tax cut was legislated, I’ve certainly been thinking about what I could do with mine.  That’s my current-self getting excited, but my future-self reminds me that this is an opportunity to boost my active saving. 

The cost of living crisis is real. And you may choose to ease some of the challenge for your current self by increasing the amount of money you spend on your Needs. You may even treat yourself to some extra fun money for your Wants.  That is understandable, but it is the perfect opportunity to actively save a little more before the unconscious lifestyle creep sneaks in.     

The Beauty of Autopilot 

Having my money on Autopilot means that saving the tax cut is easy – in fact, it will already happen automatically as my (now increased) salary already goes straight into my Savings account.  The great thing about autopilot is that I automatically save any extra income from overtime, bonuses or side hustles! 

I can then mindfully decide whether I will increase what I allocate to my Needs and Wants accounts while balancing my savings for the future.   

My future self will thank me.  And so will yours.