Category Archives: children

Four ways to teach kids healthy money habits

DO as I say, not as i DO!

Set a good example for your little ones, with just a few simple changes.

As a parent, I’m sure you try to ensure your children have the skills to make smart financial decisions.  You know, the things you wish your parents had told you about.  Maybe you’ll tell them about the importance of savings or the power of compounding interest! But did you know that you could be sending them negative money messages without even meaning to?

Here are four common ways you could teach your children healthy money habits.

1.     Reveal the magic behind digital money

Your children have likely seen you pay for hundreds of transactions without glimpsing cash changing hands. For smaller children, it can seem like money problems are solved with magic – just tap a plastic card and the goods are yours! This makes it vitally important to discuss the value of money with them. A good way to start is to explain how your earnings get deposited into your bank account and how you use this account to pay bills. For older children, consider showing them how taxes are deducted from your salary.  Helping them understand how long you need to work to cover the groceries could be of interest.  If you’re on $30 per hour, it could take 7 hours to feed your family.  That nearly a full day, just for food!

2.     Spend wisely

Frequently buying things on an impulse could send the message that it’s fine to spend without planning. Sticking to a budget is key to avoiding impulse-buying.

To set an effective budget, consider working with a professional financial adviser or even investing in an App. Your adviser may help develop a budget that factors in your income, expenses and financial obligations.  Staying on top of it daily with some assistance from your App can help keep you on track to train the kids and kick some goals.

3.     Teach them independence

It’s convenient in those early years to do everything for your children. Seriously, it’ll take much less time, but by giving them a chance to have their own money and decide how and where to spend it, they could learn powerful lessons about budgeting.

For older, even adult children, always offering them financial help can create a cycle of dependency. Letting the wee dears make their own money decisions could just help them develop financial responsibility and realise that the Bank of Mum or Dad isn’t always going to be open for business.

4.     Include them in budgeting

Many parents keep household financial planning and budgeting to themselves, if they even do it.  While you don’t have to fully involve your children in managing all your family’s finances, giving them a role to play, such as getting them to do grocery shopping using a set budget, can teach them lessons about money.

If your children are old enough to earn some income or pocket money, why not get them to pitch in to help achieve a family goal or save for their own spending money for the next holidays.

Use your influence positively

You can strongly influence your children in relation to money, so it’s important to pass on smart money management skills.

If you don’t know where to start, consider reaching out to this  financial adviser to help you stay on top of your finances through proper planning and budgeting.  I may even have some tools to share, so feel free to ask!

Checklist for new Parents

Congratulations on the arrival of your new little bundle!

If it’s your first, there’s a veritable litany of emotions going on… and yes, nothing will ever be the same again.  If it’s another new addition to your family, guess what?  Same applies!

But amongst the joy, happiness, sleepless nights, never ending nappies and the finding of a semblance of normality again, it’s easy to overlook some important things that need to be taken care of.  Here’s a few that you may want to work through…

1.  Add bub to your Medicare card.

You’ll need to complete a Newborn Child Declaration form (usually provided by the hospital) or complete a Medicare Enrollment form with supporting docs including proof of birth – and no, the stretch marks don’t count!

2. Add bub to your Health Insurance

If you have private health insurance, you’ll need to call your provider to let them know about your new addition.  They’ll let you know what’s needed to add baby to your cover.  It’s also a good time to review your levels of cover and see if you have what you need.  The couples cover that was just right for the two of you, likely wont cut it for boisterous toddlers.

3.  Review the Life Insurance!

It’s probably the last thing you want to think about, but reviewing your levels of cover is pretty important.  You may have previously taken care of debt with a bit left over for your partner, but now you have twenty years worth of health and education expenses to also account for should something happen to a parent.  Chat with an adviser if you’re unsure of how to work it all out.  Cover can be funded personally or via your superannuation plan – the options are worth considering, especially if there’s only one working for a period of time.

4.  Adjust the budget

If you haven’t already made adjustments for the loss or reduction of income, now is a really good time to review that.  With only one income or reduced cash flow it may be time to cut back on some expenses, but others will be going up.  Your fried brain may not want a reality check, but it could stop some reckless or unnecessary spending.  Babies don’t actually care if they have the latest cot or pram, but your budget should!  You may also be surprised at the level of love and hand-me-downs that head your way too.  And for those who ask what you need, be practical!  Nappies, wipes, consumables or a prepared meal all go a long way to helping out.  Family may even want to help and pitch in for the bigger ticket items.

5. Childcare expenses

At some stage, the new little love of your life will likely need care and it’s good to be prepared and know what’s on offer.  Are you happy with the services in your neighborhood?  Is family day care available?  Ask some parents with older kids in care and see if they’re happy with the centres they use… and try and get your head around the Centrelink offers if you’re eligible.

6. Education costs

And guess what, the expenses don’t stop when you’re out of childcare and heading to school.  Even if you choose state based education, you still need to fund books, uniforms, excursions, donations and tuck-shop treats.  It’s good to start stashing away for this early.

If you’re wanting a private education, you may need to put the future Prime Minister onto a waiting list from birth.  Starting to save for the costs early is vital.  Knowing what the fees are, and add ons can help you plan from now.

And do you want to mix it up?  Public school for the early years and private school later?  Who knew there was so much to prepare for?

7.  Estate Planning

And don’t forget the Will.  Chances are you might want to include the little people if something were to happen to you and your partner.  Speaking with a professional can be vital if your situation is a little complicated too.  If you’re no longer with the parent of your children but want to provide for them, make sure your Will takes care of your wishes.  That way, your voice from the grave will have a much greater chance of being heard… and acted on.  But then, there’s also assets that don’t go through the Will such as superannuation or your jointly owned family home, and you need to understand where these assets will end up too.  You also likely need to appoint a guardian for your wee bairns should something happen and that’s a decision that needs careful thought.

But don’t let it all overwhelm you.  One thing at a time and it’ll all get done… eventually.

In the meantime, enjoy every smile, treasure every cuddle and know that it’s completely ok to regularly fall apart.  Nobody else has it completely together either… despite what their Insta feed says.

Saving for retirement: Hacks for parents with dependents

You can build your retirement savings while supporting your dependants.

Providing for the kids doesn’t have to come at the expense of stashing funds for retirement. There are ways you can build a sufficient nest egg while supporting your children.  And chances are, you’ll be spending a lot longer in retirement than previous generations… who knew?

Saving for retirement

Forced saving can be your best ally in building your retirement fund. Making voluntary contributions to your super through salary sacrifice can seriously boost your nest egg.  You can make concessional super contributions of up to $25,000 each financial year (which includes your employer’s super guarantee contributions.) The government will tax your salary-sacrificed contributions at 15% which may be much lower than your marginal tax rate.

It may also be worth looking at how and where your super fund invests your money. Choosing a different investment option may help you earn better returns and grow your super.  Do you know what your Investor Risk Profile is?  Conservative?  Balanced?  Aggressive?

Super can be a difficult subject to get your head around. Have a chat with your adviser about how you can boost your super by making voluntary contributions or changing your investment options. Your adviser can also knows about retirement saving options beyond super.

Protecting your income

While you’re building your fund for retirement and still supporting those eating you out of house and home, it’s important to protect your current income in case you’re unable to work due to an illness or injury. Taking out income protection insurance is an incredibly wise precaution against any event that can prevent you from working. This policy may provide a monthly income to support you and your family during your recovery and help you stay on track with your financial commitments.  Premiums are tax deductible.  And if you think about it, why wouldn’t you insure your most important asset? – the ability to earn an income!

It’s also crucial to ensure your dependants are looked after if you die or became seriously ill or disabled. Having life insurance, total and permanent disability cover, and trauma insurance can help you protect what’s important to you.

Get advice

Balancing your need to prepare for retirement and your responsibility to your partner and kids can be tough, but keep in mind that help is always available. Speak to your adviser about how you can provide for your dependants while building a nest egg for a comfortable retirement.

Your future self will thank you for it!

Money hacks for teens

Help your teens and young adults manage how they spend and save.

So your teenagers and young adults know how to spend, but do they know how to budget for the things they really want? Learning good money management should be an essential life skill.

A reason to save

For many teenagers and young adults with part-time jobs, spending their entire pay each week is easy if they don’t have pressing financial obligations. This is why it’s important to discuss a long-term goal and find a reason to save.

Perhaps this goal will be a car, a holiday with friends, higher education – or even a rental bond if they want to move out. Just make sure you emphasise that they will still need money after the purchase, either for running costs or to enjoy their social lives, so they shouldn’t blow the lot.

Budget benefits

The envelope method is a great way to learn about budgeting. Label real envelopes – or use tags in an app – with categories such as clothes, nights out, transport, phone, food, and university or school supplies. These should cover all their current expenses. Then allocate money to each envelope every pay day.

They can also use MoneySmart’s Budget Planner and apps such as TrackMySPEND to help them work out their goals and how much to allocate to each envelope.

A handy budgeting formula is the simple 50/30/20 rule. Urge them to dedicate 50 per cent of their pay to bills (if they don’t have many, they could reduce this amount), 30 per cent to fun activities and purchases, and 20 per cent to savings. This will get them into the habit of planning their spending and eliminate the habit of living from pay day to pay day.

Learning budgeting and savings skills early will help them build a solid nest egg for their future.

Get advice

Young adults face many big decisions, but helping them get serious about money management early can make life easier as they get older.

A visit to your financial adviser with your child may also help them develop good money management skills from an early age and avoid some of the mistakes we made along the way.

Have you heard about Child Trauma Cover?

If you’ve got kids, then one of the biggest things to concern you is their health.  Sniffles and colds are par for the course, as are bruises, bumps and scrapes.  But sometimes, life takes a much more serious turn… and I don’t just mean a broken arm!

Serious childhood illnesses can include cancers and tumours, organ failure, severe burns, traumatic head injury and blood borne illness.  Most of us know someone who’s had to nurse their little ones through leukemia or heart surgeries from quite young.

Many I speak with however, are unaware that Child Trauma cover even exists.  When I first heard about the cover, I made sure my children were signed up as soon as eligible. They have to be aged 2 to qualify.

In the event of a claim, the funds can be used to cover medical costs that may otherwise leave you well out of pocket.

A major factor in a child’s ability to pull through a major illness or injury can be the ability to spend time with parents, both preferably, through their convalescence.  So the lump sum received isn’t just about costs, it may also allow time off work as unpaid leave to allow you to just ‘be there’ for your little poeople.

But if you’re thinking the cost is prohibitive, think again.  Cover is approx. $1 for $10,000 cover, per month.  So, $100k is around $10 per month or $120 per annum and can be added to your existing personal insurances like your own Trauma cover (and only outside of superannuation.)  And, when the kids turn 18 or 21, cover can be converted to Adult Trauma cover with no underwriting.

 

 

If you’d like to investigate this cover further, don’t hesitate to give me a call or chat with your financial adviser.

Mother’s Day

Most of us wouldn’t doubt for a second the love and advice of our mothers.

From when we were very small, they’ve watched over us, with those eyes in the back of their head, and given us the wisdom of their guidance (which we may now have passed on to our own children… or view as incredibly bizarre!)

And whatever you do to celebrate Mother’s Day, we hope it’s a good one for you.  For those who’ve lost their mums or a having their first Mother’s Day without mum around, it’s going to be a tough one.  Try and remember all the wonderful times you had, the love and smiles and great moments you shared.

I came across one very special gift that i think mums of young ones everywhere would approve of:

  • Celebrate your kid’s mother this year by giving her a time machine – that is, a return to a life before diapers, sleepless nights, and the pressure to always be thinking of everything at once.

Sounds like a winning idea to me!

And whether you get breakfast in bed, a pasta necklace or something amazing, I don’t know too many mums who won’t value the greatest gift of all, your time.

Saving for the Kids’ Education

Preparing for higher education

Like most parents, you want your children to have the best education possible, yet school and university expenses and fees are undeniably costly. The money you spend on your kids’ education could be one of your family’s biggest expenses.  Depending on where you’re based, it may be right up there with your Mortgage repayments.

Not that many of us begrudge the spend, viewing it more of an investment in our children’s futures.

Some will need to decide whether 12 years of formal schooling will be undertaken in the private space or whether just the high school years will be funded.  Others are also happy to help with University costs and some allow Fee Help (formerly known as HECS) to pick up that tab.  Whatever you choose, there’s costs attached and it’s best to be prepared.

Once you’ve worked out your family’s preference, starting to save early will help your children have a high-quality learning experience.

It pays to do your homework.  Research what schools in your area charge each term so you have an understanding of what is required.  Will you need to move to be in the catchment area of your preferred school?  Do you know other parents or students of the school you can ask for testimonials about their experience there?  Do you need to register your child years in advance to get into your preferred school?  Knowing your costs early will give you greater time to save and help avoid disappointment.

The decision to send your children to public or private schools and then to university will determine just how much you need to put aside to start saving.  Despite your wishes, it’s also hard to know whether your children will want to go on to University until they’re some way into their academic career and begin to form some idea about what they’d like to do for a living.  Will a gap year needed to figured into the equation with money for travel?  Or will they fund that by working a part-time job from when they’re able.

What will you need?

As an example… if you send two children to private high school for six years each, which costs around $20,000 a year for each child, by the time they graduate you’ll have spent $240,000 on school fees. And that doesn’t take into account any extras like school uniforms, textbooks, trips and excursions, tutoring, extra-curricular activities, sporting clinics and the like.  This could see costs closer to $275,000 by the time they’re through.

If you only wish to save only for high-school years, you’ll have around 11 to 12 years to save for each child.  If the figures seem out of reach, you may need to rethink what you have to put aside, or review the schools your child will attend.

Public schools are much cheaper but there’s still no such thing as ‘free education.  There are extra fees for textbooks, uniforms, trips, stationery and school camps to pay for. These can easily add up around $1,000 per annum.

Trade Colleges are dearer than public schooling but for those looking to enter trade’s or take over dad’s business, these can be a great option for later high school years.  Often they’re around $4 – $7,000 and only two years is required.

The cost of going to university or college can also vary. If your child is eligible for HECS-HELP (a government loan available to tertiary students) they can choose to defer payment of university fees until they’re earning a living.  Entering the work force with large student loans may not be ideal, but in many cases is unavoidable.

Even if you (or they) aren’t paying upfront tuition fees, there’s still books, textbooks and materials, union and sports fees, lunches, accommodation and transport costs. Contact the university or college and find out how much each of these things will cost each semester, so you have an idea of how much money you will need to save.  And if you’re thinking ahead, don’t forget to allow for inflation too.

The earlier you start saving for your children’s education, the better. Education costs are usually a long-term goal that can take more than 5 years to achieve so stashing early is your best bet.

Then, once you’ve got a ballpark figure in mind to reach for, work out where you’ll put that money.  Are you happy with high interest, web based savings accounts and term deposits or want to invest in education funds or bonds for the longer term?  With interest rates at historical lows, it’s hard to find good returns on conservative styles of investments.

If there’s a top tip to getting set for education costs, it would be to research, plan, track and manage your savings goals on the go.  And be sure to review on at least a half yearly basis to make sure you’re on target.