Don't expect any relief from Hockey's budget

OBVIOUSLY there is going to be no tax relief in the forthcoming Budget, yet a major issue for many households is that tax takes a growing percentage of their pay packet as they earn extra income.

But think about the proverb "A penny saved is a penny earned" - it may be possible to give yourself an effective pay rise by simply cutting your expenses.

Consider a person earning $800 a week ($41,600 a year).  A pay rise of $30 a week would return them only $20 a week because tax would take the other 32.5%. Thus if they wanted to have an extra $20 to spend every week they would have to get a pay rise of more than $20 - i.e. $30 a week.

But they could give themselves a pay rise of the equivalent of $30 a week by spending around $20 a week less, or by having another member of the family with no taxable income earn an extra $20 a week.  Imagine if they do both - that would be the same as getting a $60 a week rise in their packet!

Every household has different priorities, and I'm not about to suggest what you should cut out.  However I do know that almost every household can find ways to cut expenses if they have to.

The bad news is that Australia is going to suffer tough times for years to come - the good news is that most people have the power to make small changes today that will make a massive difference in the future. Resolve to be a have - not a have not.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions.