Category Archives: money

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!

Cash flow makes or breaks your business, so safeguard it!

According to a recent survey by research firm East & Partners for lender Scottish Pacific, nearly 80% of owners of small and medium enterprises said cash flow issues caused them the most sleepless nights.[1]

Which then begs the question, what might you do to improve your cash flow and sleep better at night?  Here are five tips you can take that can help!

1.   Build a cash reserve

We’ve often heard “Cash is King” but the truth is, it’s really Cash Flow!  Cash flow is the true lifeblood of any business. To ensure that it makes, not breaks, your business, it’s important to build a robust cash reserve. This may help you meet your financial obligations in difficult times and allow you to take on opportunities to grow your business.  Sometimes, that’s easier said than done, but worth working towards.

2.   Separate business & personal money

Keep business and personal expenses separate!  It makes it so much easier to understand your business’s cash position at any given point. It also ensures that you don’t use money meant for your business on personal expenses; like that holiday or your mortgage.

3.   Get paid on time

If your business hasn’t been actively pursuing unpaid invoices, you may want to make it a practice – and have a strategy – to regularly chase up payment. Finding ways to encourage prompt payment, such as offering a discount to early payers, can help.

And if that’s something that you find cringe-worthy – outsource it.  Ask your book keeper if they’ll make those calls you hate for you each week to stay on top of things.

4.   Control business costs

Controlling costs might help you to maintain a healthy cash flow. Experts suggest taking stock of your business expenses regularly to identify where you can cut costs without sacrificing growth. This may include reviewing your suppliers and negotiating better rates with them.  Review whether they’re items that you can’t avoid (like taxes) to items that you probably should do (like marketing) to the ones that you can go without (like sponsorship.)  Even if it’s just until things turn around.

5.   Protect your business

By taking out business expenses insurance and/or key person insurance, you may help ensure your business can meet its running costs if you or a key employee is too ill or injured to work. Both insurance plans provide a monthly benefit if you or a key person in your business become incapacitated.  Absolutely vital if there’s key people you just can’t do without!

Work with a professional

Your professional financial adviser tailors insurance plans to your business’s cash flow protection needs, safeguarding what you’ve worked so hard to build.  Is it time you had another look at your strategy?

Note

[1] Scottish Pacific and East & Partners, October 2018, ‘SMEs flag higher revenue growth, but prospects could be dampened by declining property market and cash flow issues,’ accessible at: https://www.scottishpacific.com/media-releases/smes-flag-higher-revenue-growth-but-prospects-could-be-dampened-by-declining-property-market-and-cash-flow-issues

5 Tips to manage with a Large Family

Take the pain out of managing your family’s finances.

Large families these days are often the exception rather than the rule.  But having said that, I do have a few friends who have decided that their families weren’t complete without four or more!

Taking care of household finances can be taxing for any family, but especially so if you have a large brood. With proper planning and budgeting tho, there’s no need to stress!

Here are some tips to help you effectively manage your family finances.

1.      Give them the once over

Sitting down as parents first and figuring out how much money is coming in and going out may help you gauge the state of your family’s finances. A clear picture of your household income and expenses could set you up to manage your cash flow better.  It’s vital to know your numbers and figuring out what your minimum cost to live is, is vital!

Then, depending on the age of your kids, include them in a family discussion about what it takes to make ends meet.  This doesn’t mean you need to burden them with your ‘we’re broke stories’ but can be great training in their financial literacy journey about what’s involved in running a household.

2.      Rein in the spending

Keeping expenses under control can be rather tough in a large household. But if you’re spending as much or more than you’re earning, you might want to consider limiting your family’s discretionary costs by buying only what you can afford.  This might mean curbing some extra-curricular activities or eating out.

Ask the kids for suggestions on what they’d like to do in place of other paid activities.  Maybe games days, puzzles, hiking, riding or picnics can substitute for movies and theme parks.  They might even surprise you with their ideas!

3.      Set financial goals

Setting financial goals as a family may help you work towards future aspirations instead of simply meeting current expenses. Whether it’s buying a bigger house or going on a dream holiday, having a financial goal may help your family set priorities and stay on track financially.  It also provides a common goal for everyone to work towards.

4.      Keep a budget

Keeping track of spending may help you to better manage your family’s finances. By working with a professional financial adviser, you could create a budget that factors in not only income and expenses, but also your financial obligations.  Some advisers may recommend an App that you can keep handy on your phone to track things daily if needed!

5.      Build up emergency and retirement funds

Unplanned expenses such as medical bills and replacing that poor burnt out washing machine, can put a dent in family finances. But, by growing your emergency fund to cover six months’ worth of expenses, you may be better positioned to handle unexpected events.

While it’s easy to neglect your own financial future when providing for your family, saving for retirement should not take second place. Keep in mind that the earlier you start saving, the better chance you have to grow a sufficient nest egg.

Working with an adviser

Managing finances for a big family need not be a painful exercise. By working alongside a financial adviser to keep track of your spending, and discussing money matters and setting financial goals as a family, handling household finances is a task you can achieve.

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.

Five ways to Stick to your Resolutions

Did you set a financial goal for the New Calendar Year? Did you take steps to make it work?

Is your New Year’s Resolution now a dim, distant memory?  If you’re like most, chances are, it’s now in the too hard basket, life got in the road and you’ve really moved on…

But how can we boost our chances of sticking to our financial resolutions? Here are five practical tips to help you get back on track…

1. Was it an attainable goal?

It’s good to be ambitious, but you may have a better chance of sticking to your resolution if you have a smaller, and more reachable goals along the way.

Using the well-established and well-known SMART formula may help.  SMART stands for:

  • Specific – make your goal as clear as possible.
  • Measurable – specific goals are usually more measurable
  • Achievable – can you reach your goal in the foreseeable future
  • Relevant – do you really want this goal and you’re sure it would benefit you?
  • Time – set a timeline to achieving your target

2. Having a plan

Creating a plan that can help you take small but regular steps toward reaching your financial goal is vital. The key is to set specific milestones and a time frame for each. You may wish to talk to a friend who will keep you accountable, or your financial adviser about setting a plan for your financial situation and goal/s.

3. Announce it

Tell your family or friends about your resolution, or post it on social media. Shout it from the rooftops!  By making your resolution known, you may feel more responsible for sticking to it.

4. Track progress

Record and analyse your progress against milestones. Are you reaching those smaller goals along the way?  It could help to get your financial adviser to check your progress every so often.

5. Enjoy the process

Enjoying the process of reaching your goal may help you stick to your financial resolution. Give yourself a small reward or high-five every time you hit one of your milestones.

Whether you want to boost your savings, pay down debt or up your retirement fund, your financial adviser may be able to help you stay on track to achieve your resolution.  We’d be happy to be your accountability buddy!

Four ways to manage the rising cost of living

Be smart with your spending.

The increasing cost of goods and services is a reality most Australians have to deal with.  It’s certainly not getting any easier to ‘make ends meet.’  Data from the Australian Bureau of Statistics (ABS) shows that living expenses for employee households were up by 2% in September 2018 compared to just a year ago.1

But there’s no need for panic! By being organised and smart with your finances, you could manage rising costs without draining the savings… provided you have any!

1. Cut back on major expenses

Trimming your expenses is one of the easier ways to manage the high cost of living. But rather than taking a piece-meal approach, it may be more effective to cut back on some of the large drains on your earnings, such as food and transport costs.  Take those leftovers to work!  Compare the costs of major must haves like energy bills and be sure to review insurance expenses.  There’s many comparison sites, brokers and advisers who can help you get a better deal or ensure what you have is right for you.

2. Reduce lifestyle costs

It may be worth auditing your lifestyle costs to see if these too could decrease. While you don’t have to give up all the things you enjoy, cutting down on, for example, your overseas holidays or dining out could go a long way in reducing your costs.  Maybe instead of a meal out every week, you cut that to fortnightly.  Perhaps every second year you go off-shore rather than every year.  Check for those cheaper vouchers or groupon deals before heading out to the movies, shows or restaurants.

3. Create a budget

Having a budget and sticking to it may also help you minimise unnecessary expenses. As boring as it sounds, a budget tracks your weekly or monthly spending and may help ensure you have enough money to cover essentials, build up your savings and handle unexpected or increased costs. You may wish to consider working with a professional financial adviser or using software that links with your bank accounts to create a budget that factors in your income, expenses and financial obligations.

Knowing your numbers is vital to staying on top of it all.  Being frugal has a whole new lease of life – check out those dedicated to keeping on top of it all online.

4. Supplement your income

Increasing your income may be another way to ride out the rising cost of living.  Go ahead and ask for that pay rise!  You could take on extra work in your spare time or start a side hustle.  Perhaps you could become a private tutor in your field of expertise, rent out your spare room sometimes or pet sit.  Even selling old unused clothes, sporting equipment or items no longer needed could assist.

If you have enough savings on top of your contingency fund, you may want to invest to grow your capital and earn interest. Your financial adviser may recommend strategies to help you generate an income from your investments.

The high cost of living may affect your savings and lead to money-related stress. But if you’re smart about your finances, you can still keep your cost of living in check and remain financially secure.

 

1. Australian Bureau of Statistics, September 2018, ‘Selected Living Cost Indexes, Australia’. Accessible at: 

http://www.abs.gov.au/ausstats/abs@.nsf/PrimaryMainFeatures/6467.0?

Five financial moves to make in your 40’s

In your 40’s? Here’s 5 moves to make so you can get financially ahead.

Being in your 40’s can involve balancing many different responsibilities and it becomes easy to neglect your own financial well-being. But it’s not too late to secure your future. Here are 5 tips that may help you financially make the most of your 40’s.

1.      Create a plan

If you don’t have a financial plan, then it’s totally time to get one. Ensure that it’s based on your needs and priorities. By working with a professional adviser, you may be able to tailor a plan that can help you maximise your ability to save and invest.

2.      Grow savings

Your 40’s could be your peak earning years, so it may be a good idea to ramp up your savings and funnel some of your income into superannuation or investment accounts. Be sure to do your homework and consult with a professional financial adviser about your options and reducing debt.

3.      Check your superannuation

A quick super health check may help you optimise your retirement savings. For example, by choosing a different investment option or type of risk, you may be able to earn better returns on your super. If you have a few funds, consolidating your accounts may help save on fees. Again, seek advice from a professional adviser before acting as you may leave yourself open to losing some important benefits.

4.      Avoid lifestyle creep

People usually have a tendency to inflate their standard of living as they earn more and can then afford more things, such as a better car or house. While it’s natural to want the finer things in life, you’ll likely end up with little to no financial gain if your spending rises as quickly or more quickly, than your income. Try stick to your long-term financial goals and remember the big picture.  You lived on your income until you got the pay rise or bonus, so chances are, you still can, and stash the difference.

5.      Invest more

Your 40’s may be a good time to invest more – or diversify your investments – to help you grow your long-term savings.  Keep in mind that it’s important to choose instruments that suit your risk appetite and time horizon. Developing a strategy with your financial adviser might make it easier achieve the return required to reach your financial goals.

6 ways to get the most out of a financial windfall

Received a large sum of money? Lucky you! By taking practical steps, you can ensure your newfound wealth goes much further…

Research has shown that on average, people who receive an inheritance spend about half of it.1  So how can you be that amazing and eminently sensible one who makes sure your windfall doesn’t just vanish but helps you build a secure financial future? Here are six smart ways.

1. Set money aside

To avoid the temptation of spending it impulsively, rashly and super quickly, you could put the money away temporarily in a deposit account or short-term investment. Leaving the sum aside for one or two months may give you more time to plan, have a think about what you’d like or to engage a professional financial adviser for guidance on using the money wisely.

2. Settle debts

Using a windfall to clear debts can put you on a better financial footing. Consider working with your financial adviser to create a budget that considers all your debt obligations, income and windfall. This can also be a good chance to discuss the opportunity to invest and grow your money.

3. Grow the emergency fund

Building up your emergency fund – or creating one if you haven’t got one – can be another way to make good use of the funds. By increasing the emergency stash to cover expenses for six months, you may be better positioned to handle unexpected events such as a job loss, illness or accidents.  Working out where best to put that can also be done with the assistance of an adviser.

4. Beef up retirement savings

Making extra contributions to your superannuation may help you optimise your windfall. Whether you make non-concessional contributions or, if you are employed, arrange to have a portion of your pre-tax salary paid to your super, increasing your retirement savings can help you secure your financial future.  And don’t get me started on how compound interest can help you out here over all those years to retirement too!

5. Fund your goals

Take the opportunity to build savings for some of your personal goals, such as higher education or travelling to places on your bucket list.  Maybe consider doing this only after you’ve paid off debt and built up that emergency stash!

6. Give to others

Receiving a large windfall can be a chance to help others in need. If you decide to give some money away to those less fortunate, consider donating it to an organisation that’s entitled to receive tax-deductible gifts, so you can claim a tax deduction.  Being philanthropic feels good too!  Websites now also have to tell you how much of the money actually gets to where it’s needed and what is spent on administrative purposes.

Chances are, your future self will be pretty chuffed with you doing such great ‘adulting!’

infographic_six-ways-to-get-the-most-out-of-a-windfall_v2_fsp

 

1. The Ohio State University, 2012, ‘Most Americans Save Only about Half of their Inheritances, Study Finds’. Available at: https://news.osu.edu/most-americans-save-only-about-half-of-their-inheritances-study-finds—ohio-state-research-and-innovation-communications/.

Tips to manage your money when in a relationship

It may sound bleedingly obvious, but couples can reach their shared goals by keeping their finances healthy.

Whether saving for a house or holiday or seeking to grow or preserve wealth, couples can reach their common goals by managing money well. Here are some practical tips for managing your finances together.

Talk about it, talk about it, talk about it, yeh…

At the risk of sounding like a lyric, it’s important for couples to talk to each other about their finances and how to manage them, to avoid any potential conflict. Discuss your financial situation and goals, and any concerns you may have.  Chances are, you may have grown up with wildly different parenting styles when it comes to money, and your personal ideas about money are brought to the joint kitchen table. The American Psychological Association also suggests talking about your beliefs about money to help you better understand each other and set the stage for healthy conversations.[1]  You may hold the ideas your parents instilled, or have vastly different beliefs about money.

Set goals

Couples often have wide ranging and different priorities, but this doesn’t mean you can’t set common financial goals and work together to save for them. Keeping an open line of communication about your aspirations may help you adjust personal priorities to achieve shared goals.  Everything from big ticket household items, new cars, holidays and babies can be covered here.

Divvy up responsibilities

Sharing responsibilities for paying joint expenses and building savings may help ensure you and your partner are on the same page when it comes to finances. You can opt to split those responsibilities equally or put the main breadwinner in charge of most of them. Whatever you choose, it’s important both are happy with the decision.  Some enjoy maintaining their own personal accounts and contribute a set amount to a ‘family account’ to cover all joint expenses and debts.

Create a budget

A budget usually tracks your spending on a weekly or monthly basis, but often the very mention of the word can make eyes glaze over and you suddenly find that doing the ironing is actually more interesting. So, if a budget isn’t your thing, simply agree on how you will spend – and save – your money.

Build your funds

If you are married or in a de facto relationship, you may want to consider helping each other build retirement funds. You might explore contributing to your partner’s superannuation account if your partner is not working or earns a low income.

Before you make such an arrangement, it is wise to get professional advice on how it works. Your financial adviser may talk you through the rules of spouse contributions and the requirements to become eligible for a tax offset.

Bet we can help with some other stuff too!

 

[1] The American Psychological Association, ‘Happy couples: How to avoid money arguments’. Available at http://www.apa.org/helpcenter/money-conflict.aspx.

Here’s why you need income protection

Your ability to earn an income is usually one of your biggest assets, so why not protect it?

Income Prot

A sudden illness or injury can keep you from working and leave you in financial difficulty. You may get help from a worker’s compensation payout or personal savings, but are they enough to help you meet your expenses and financial obligations?

Taking out an income protection (IP) plan may help provide peace of mind that you’ll be able to meet your financial responsibilities and focus on recovering. IP cover may provide a monthly income while you’re unable to work as a result of illness or injury. It generally replaces up to 75 per cent of your income for a set period of time.

Standalone or through super?

Getting your IP cover through your superannuation fund may be a good idea if you want to avoid paying for your insurance out of pocket. But keep in mind that the policies offered through super may not cover all your financial obligations for an extended period of time.

A standalone IP policy may provide more adequate coverage. It may also offer you tax benefits – IP premiums are usually tax deductible when you fund your cover outside super.

Making your policy affordable

If cost is a concern in taking out a standalone plan, there are a few ways you may be able to make your premiums more affordable. One of them could be choosing a longer waiting period before you receive benefits after being unable to work due to illness or injury. Generally, the longer you wait, the lower the premiums you have to pay.

Opting for indemnity cover may also help you keep your insurance costs down. You’ll have to choose between indemnity and agreed-value cover for your IP plan. Under an indemnity policy, your insurer bases the monthly benefit you would be paid on your income at the time you make a claim. For an agreed-value policy, the benefit is based on your income when you apply for coverage. Premiums for indemnity cover are usually lower than for an agreed value policy.

But indemnity policies may vary among providers, so speak to your adviser about which cover may suit you. Your adviser may also help you tailor your plan to meet your income protection needs.