Category Archives: Wealth

So, what’s the Government doing?

If you’re inbox is anything like mine, you’re probably deleting everything that’s coming through to do with the coronavirus!  Somehow it feels like this is just beginning, and in other ways, enough already!

The craziness, isolation, job losses, panic buying and empty shelves have given a whole new perspective to the words ‘global pandemic.’

And, with the unprecedented times facing global citizens, it’s good to know that some measures are being rolled out by federal governments around the world to assist those who need it most.

Minimising the economic damage from coronavirus is a high priority for many and strong leadership is needed now more than ever.

So what is the Australian government doing to assist?  Here’s a bit of a “highlights reel” following yesterday’s announcement:

  • The payment of a $550 per fortnight coronavirus supplement to current and new individuals on income support payments (JobSeeker Payment, Youth Allowance JobSeeker, Parenting Payment, Farm Household Allowance and Special Benefit) for a period of six months. Asset tests and waiting periods will not apply.
  • The payment of a second $750 payment in July to income support recipients (social security and veteran pensions) and eligible concession card holders. This is in addition to a first payment of $750 from 31 March 2020.
  • Australians in financial stress will be able to get early access to their super, with the option of applying for $10,000 in each of the 2019/20 and 2020/21 years. At this stage it is only open for the first 3 months of the 2020/21 year. These payments will be tax free. Applications need to be submitted through myGov.
  • A temporary 50% reduction in the minimum pension drawdown rates for the 2019/20 and 2020/21 years.
  • A further reduction in the social security deeming rates.  As of 1 May 2020, the lower rate will be 0.25% and the upper rate will be 2.25%.
  • Funding support for small businesses and not for profits who are continuing to pay employees. This applies to entities with aggregate annual turnover of under $50 Million, who employ workers and will take the form of a reimbursement of up to 100% of salary and wages tax withholdings with a minimum payment of $10,000 and a maximum of $50,000. It seems that there will be one payment from 28 April 2020 and a further payment made from 28 July 2020. These payments will be tax free.
  • The Government will establish a scheme to guarantee 50% of new loans to SMEs, up to a maximum of $40 Billion. This is in addition to the $90 Billion of funding being made available by the Reserve Bank to Australian Banks.
  • Temporary relief for distressed businesses, involving an increase in the threshold for creditor action and a delay in the time-frame to respond. Further protections will be made available to directors.

On a cumulative basis, the Government suggest they’re injecting $189 billion into the economy, an amount equivalent of 9.7% of GDP.

If you have any questions don’t hesitate to contact us.  And if you’re one of the lucky ones who’s managed to snaffle a few loo rolls, be sure to share your bounty with those who need it most.

Be kind.

Protecting Your Small Business

Owning and operating a small business is hard work. The last thing you need is to lose it all because of poor insurance choices.

Do your homework!

So, you’ve already made the leap and started your own business!  You’ve bootstrapped it, worked from the garage or living room table, even the local cafe.  You’ve scrimped and saved, and truthfully, insurance is the furthest thing from your mind… but should it be?

First you need to work out what needs to be covered. There can be the obvious things such as plant and equipment, if you have them, and then the less obvious things such as public liability, professional indemnity, and finally protecting the financial performance and position of the business on the sudden loss of a key person.

Policies should cover a wide range of eventualities and each business should have a policy package specifically geared to its needs.

People are the most important assets, and the success of the business may hinge on key personnel.

Business expense insurance can cover certain fixed business expenses, and key-person insurance can protect the financial performance in the event of a key person or business owner dies, is permanently disabled or suffers a traumatic event.

Insufficient coverage

Owners risk losing control of their companies, serious financial losses, and complex partnership problems by being uninsured, or under-insuring against something going wrong.

Having the wrong kind of insurance is equally risky and ultimately a waste of money, which is why it’s necessary to seek advice on the right insurance for your business.

It’s also important to regularly review and update your insurance, especially when your business grows or changes.

There’s always tax…

Your accountant should assess all taxation matters including the tax-deductibility of premiums together with any potential CGT or GST issues.

Working together with your financial adviser to determine what insurances can be put in place is an important consideration when running a business.

The Insurance Council of Australia, www.understandinsurance.com.au, and the Australian Taxation Office, www.ato.gov.au, have more information, or give us a call for an appraisal and recommendations for your personal situation.

Four ways social media affects our spending

Social media could be influencing us to spend impulsively!

Can social media use be linked to spending? Research shows it can. For example, one study found that social networks such as Facebook and Instagram can motivate impulsive buying behaviours.[1]

But just exactly how does social media affect our spending?

1. Advertising

Sites like Facebook and Instagram have evolved from social networking platforms to powerful advertising tools. (I remember fondly when Instagram was purely a photography site… sigh!)  We only need to look at our social media feeds to realise how businesses use targeted advertising to expose us to brands, products and services. Targeted posts are effective at getting us to spend because they’re typically developed based on our demographics and even our behaviours.  They aren’t called ‘influencers’ for nothing!

2. FOMO!

Social media creates a tendency among users to compare their lifestyle to those of others.  You know, those beautifully curated feeds that make you feel like a complete failure at nearly every part of your life? your house? your wardrobe? your socials? This comparison can trigger a ‘fear of missing out’ or FOMO, leading us to buy and consume just to fulfill the urge to keep up with everyone else.  Leave that behind!

3. Encouraging imitation

Images of products or aspirational lifestyles posted on social media by people we respect or admire might influence us to spend unnecessarily or indulgently.  Be wary! This can happen when we look to them (celebs, sports starts, influencers etc) for cues or guidance when we don’t know how to act and simply copy what they’re doing. Psychologists call this social proofing.[2]

4. A seamless shopping experience

Social media platforms can also encourage spending by also providing a seamless shopping experience. As an example, Facebook enables retailers to sell on the platform itself, and Instagram allows links to products and services mentioned in posts so users can purchase them online. This makes it extremely easy to spend!

I’ve been sucked in with those great outfits pictured on Insta, that arrive from China and would be hard pressed to fit a primary school aged child, let alone the curvy woman who ordered them!  And getting your money back… seriously!!!

Making smart choices

Social media can help us make better choices by exposing us to more products and services and enabling us to learn about other people’s experiences using them. It can also save us a fortune if we can compare retail vs Gumtree or Ebay and know what we’re looking for and can compare what’s in front of us.

But it can also influence us to spend unnecessarily or impulsively.  So, be aware!

By setting financial goals, you can make smart choices with your money. Your professional financial adviser can help you get started by creating a plan and budget to help you secure your financial future.

 

NOTES

[1] Aragoncillo, L, 2018, ‘Impulse buying behaviour: an online-offline comparative and the impact of social media’, Spanish Journal of Marketing, accessible at: https://www.emeraldinsight.com/doi/full/10.1108/SJME-03-2018-007.

[2] Psychology Notes HQ, August 2015, ‘What is the Social Proof Theory?’, accessible at: https://www.psychologynoteshq.com/social-proof.

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.

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.