This tax time, it pays to remember my ‘guaranteed’ secret for wealth

Thirty-seven years ago, I released Making Money Made Simple, a book that has helped thousands of Australians and been named one of the 100 most influential books of the 20th century. Even now, seldom a day passes when I don’t receive emails from people telling me how much it changed their lives.

As of today, the book has sold over 2 million copies, and we’ve just released the 25th edition. The information is as relevant now as it ever was.

In a few weeks, everybody will have a fatter pay packet because the tax rates are changing. Smart money managers will put the extra to good use.Credit: Louie Douvis

One feature of that book was the suggestion that people pay their loans fortnightly instead of monthly. The banks scoffed then, but they had missed the main point – if you’re paying $2000 a month and move to $1000 a fortnight, you increase your repayments from $24,000 a year to $26,000 a year. That’s an extra $2000 a year off your mortgage and you haven’t even missed it.

This led to my next concept – which I call the guaranteed secret of wealth. Put simply: you never miss money that you don’t see. That is, you don’t miss money that is deducted from your account automatically.

Back in 1993, to practise what I was preaching, I opened a savings account with Heritage Bank. In it, I captured all the money I received that was not salary or investment income. This included things like tax refunds, automatic payments from health funds on the rare occasions I went to the doctor, and even the one-off $1000 payment I got from Centrelink when the 2011 floods hit Brisbane.

Noel Whittaker has been writing about money for decades.Credit: John Shakespeare

It was fun to use the passbook, as I also enjoyed going into the Heritage Branch and chatting to the staff about my guaranteed secret of wealth while I watched the balance rise as they updated the passbook.

Every time the balance hit $10,000, I withdrew that amount and paid off a loan I had for an investment property. Using that strategy, the investment property was paid off effortlessly – I would probably still have that loan if I had not used this method.

Recently, reflecting on this, I decided to find out exactly how much money had gone through that account in those 20 years. It was just a matter of going through all the old passbooks and adding up the withdrawals.

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