Tag Archives: budget

A money-wise wedding

Creating a budget for the big day

Whether you’re planning a large, luxurious, lavish and luscious wedding or a small, intimate affair, smart budgeting could help free you from financial worries, so you can enjoy your special day even more.

Following these steps may help ensure no one’s worried about debt on the honeymoon.  And remember, even if you only plan on doing the walk down the aisle once, it’s just a day… and the rest of your life is what it’s all about.

Starting with massive debt and stress about money is a less than ideal way to continue your life together.

1. Plan early

Given that the average (is there such a thing?) Australian wedding costs $36,200[1], the sooner you start saving, the sooner your dream wedding can become a reality.  (I hope your parents are all over this stat!)

The day after the engagement is fine… tho some do start even before that… like while you’re watching the latest episode of Batchelor in Paradise and dreaming about finding Mr or Mrs Right.

2. Create a budget

Take stock of your income and calculate the maximum you can afford to spend on the wedding – and your ideal cost scenario. Will your parents be pitching in and what can you expect from them?

Knowing what you can spend in each area means that you’re all over it when negotiating with suppliers.  If you don’t have room to move, you can play hard-ball or find someone else who is willing to come to the party.

No-one will remember if you had the world’s largest bouquet or the best tablecloths or the food you serve (unless the oysters are dodgy,) it’s all about celebrating your love and new life.

3. Talk to your family

If you’re part of the bride’s or groom’s family and want to contribute, let them know. You could contribute a set figure or fund a specific part of the ceremony, such as the flowers, drinks (very brave move!) or venue.

If you’ve got friends in the right places, make sure you include them in your planning.  Chances are, they may also know some others who are happy to help.

4. Prioritise

What must you have at the wedding and what can you compromise on? For example, do you want a live band but aren’t fussed about fancy table decorations?  Do you want the Disney fairytale carriage experience, or your mate’s EH Holden will do the trick?  Agreeing on your priorities up front can help you clarify which aspects to save for and which to downplay or skip altogether.

Do you want the amazing Vera Wang frock that you can rock on the day and hang in the cupboard for the rest of your life and drag from home to home; or would you rather spend it on the honeymoon or save for a housing deposit?  Life’s full of compromises!

5. Start a spreadsheet… if you must!

Once you have an idea of your budget and priorities, it’s time to dive into the details.  OK, not everyone loves this part, but it is really necessary!

If you’re an excel nerd, use a spreadsheet to list a maximum cost for every wedding-related item from bouquet to band and compare it with vendors’ quotes. Don’t forget to take into account hidden costs like insurance, corkage and the marriage licence or celebrant as well as costs related to the rehearsal dinner and honeymoon.

Otherwise, a wedding planning notebook is fine… as long as you have something to track it all in.

6. Stay accountable

Avoid blowing out your budget by keeping your spreadsheet (or Kikki K notebook) up to date, setting up a wedding-expenses-only bank account, and sticking to your guns as far as your limits and priorities are concerned.

If you’ve created your budget and despair of affording your dream wedding any time soon, don’t worry. Here are some tips to help you reign in your costs.

  • Limit your guest list to your favourite people: At $100 per head, every 10 guests cost you $1,000.
  • Think outside the box when picking a wedding venue: A park, garden, art gallery or friend’s house may be more affordable than a hotel, and the natural ambience can save you money on decorations.
  • Book an out-of-season wedding: It can be cheaper to schedule a wedding in winter, on a week night or a Sunday morning.
  • Keep your menu simple: Stick with the specialties of the season and region, consider canapes or buffets over three-course meals, and ask for house spirits (not top-shelf varieties) or beer and wine.
  • Investigate hiring over buying: If there’s some items you don’t need forever, like suits or gowns it may be worth hiring for the day and giving back.  No dry-cleaning necessary!

Call in an expert

While you may call upon a wedding planner to help you organise your special day, a financial planner may be just as important.

A professional financial adviser may help you create and stick to your budget as well as stay accountable – so you can focus on the important things, like celebrating with the people you love!

If all that just sounds too hard, run off to the Registry office and have a party when you make the announcement!

And hey!  Congratulations!!

 

[1] Australian Securities and Investments Commission, ‘How much can a wedding cost?’. MoneySmart. Available at: https://www.moneysmart.gov.au/managing-your-money/budgeting/simple-ways-to-save-money/how-much-can-a-wedding-cost

Six ways to ease your debt burden

Debt is one of the fixtures of modern life for most people but if you feel it’s getting out of your control, it’s time to act.

Fortunately, there are straightforward ways to regain control of your money.

Start a debt management plan

This will mean prioritising your debts in order of urgency, setting a budget, cutting expenses, consolidating, and planning ahead.

1. Set a budget

Work out how much you spend each week on your debts and discretionary spending and how much income you have. It’s vital that you are honest. From this you can work out how much you need to service your debts to bring them down to manageable levels.

2. Save on easy things

The most obvious way to reduce debt is to cut down your spending on non-essential items. Simple ways include doing things yourself that you previously paid others to do, such as cleaning your house. Eat out less. Cook at home and eat your leftovers at work. Don’t buy things you don’t need at the supermarket and turn off lights and computers when they are not in use. Walk more or take public transport.

3. Stop using your credit cards

Pay cash. Put your credit cards away. The simple logic is that you won’t be tempted to overspend if you only have cash.

4. Pay the minimum on each debt

Service each debt, be it phone, mortgage or credit card each month. Pay off as much as you can but at least pay the minimum, which will protect your credit score.

5. Consider a consolidation loan

You may be able to reduce your interest charges by consolidating your debts into one low-interest loan.

6. Talk to a professional

Your Adviser will work with you to develop a debt management plan that’s specifically tailored to you.

But if you are feeling really overwhelmed, seek help from your doctor.

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.

Top 5 Financial Tips

So it wasn’t that long ago that 2017 kicked in and you promised to get on top of your finances this year!  How’s that going for you now that we’re around six weeks in to the new calendar year?

You know what they say about “the best laid plans of mice and men” right?

If you want to break it down into a really easy to follow guide, I’ve got five top tips for you to help get on top of things over the rest of the year…

1. Set goals

Take charge of your financials this year by working out your goals, objectives and priorities and put a plan in place to reach them.  If you want to get rid of credit card debt, increase savings, pay off your mortgage more quickly or boost your superannuation savings, the MoneySmart site has tools to help you work out a plan.  Alternately, hooking up with a financial planner can help you work with a professional money coach to assist you to make it happen, articulate what you’d like to achieve, and give you someone to be accountable to.

2. Map with a budget

As any successful journey begins with a reliable map or an up to date GPS, the path to wealth starts with going back to basics and having an accurate budget.  The thought of doing a budget might make your eyes glaze over, but a budget helps you see where your money is being spent and where you can make changes that will help you build wealth. You can use MoneySmart’s simple money manager to create your budget.  I often recommend clients use it for their budgeting needs.  It’s online, simple to use and comes in a few different languages too.

3. Get a better deal

It’s good to regularly check and make sure you aren’t paying too much for your mortgage, investment or personal loans or insurance policies. Shopping around regularly for the best deals could save you thousands of dollars over the long term. Talk to your lender or mortgage broker about what they can offer.  Different banks have different deals, so they’ll search around for a better deal if they want to keep you as a customer. If they won’t help, feel free to shop around yourself and switch to another option or lender.

Before automatically renewing insurances, check whether your current insurer is giving you the best value for money. You might be able to get a better policy for a lower price or with better conditions.  Often it’s worth asking a broker or agent for help as they have access to different policies and can run comparisons for you based on what’s important to you.

4. Improve your knowledge

It’s long been acknowledged that “knowledge is power.”  Before you commit to any investment opportunity, make sure you understand the features, costs – upfront and ongoing, benefits to you, and all possible risks.  Does the investment fit in with your plan? Don’t invest in something you don’t understand, and “if it sounds too good to be true, it probably is.”

Forewarned if forearmed, so equip yourself with as much knowledge as possible. Subscribe to investment magazines, download popular books on the subject, follow experts on social media or if you still feel clueless, engage a financial adviser to assist.

5. Manage Risk

Investing wisely helps build your wealth for the future.  You’ve probably heard of the benefits of compounding interest, so the longer time frame you have, the better off you should be.  All investments involve an element of risk – and often, “higher the risk, the higher the potential return.” Before you invest any money, take the time to understand the risk versus return.  You need to work out your own personal style of investing.  Are you conservative?  balanced?  or an aggressive investor?  Often, we’ll have a different profile for different types of investment.  If you’re younger, you’re likely to have a much more aggressive approach with your superannuation than you would with funds being saved for a housing deposit.

You’ve probably heard “don’t put all your eggs in one basket.”  This is what diversification is all about. By spreading money across different asset classes and industry sectors, you are less likely to be affected by a particular economic event, like a drop in real estate prices, a fall in the share market or in a particular industry or sector.

So work your way through these five tips.  I’d love to hear how they’ve helped you get on top of your finances!!

Holiday Tips Time!

So, you’ve waited all year and finally it’s here! Your time off is sorted, bags are packed, and you’re ready to go! It’s holiday time!

Most people love their vacations and look forward to them for a long time. But instead of coming back to a maxed credit card, what are some ways you can ensure things run smoothly – and return home debt free, with great memories?

Usually, you’ve got a fair idea of when you can travel, where you’d like to go and how long for. With the internet now, it’s easy to work out how much everything will cost, far in advance.  Sites like TripAdvisor and Booking.com amongst many others mean you know what you’re getting, and just how much you’ll be paying.

It’s always a good idea if you can pay off all your travel, flights and accommodation prior to heading off to take advantage of lengthy booking time discounts, and also work out how much you’d like to have as a daily budget. If I’m heading to the USA, I like to average around $250 per day spending money, if it’s Asia, I’ll likely need a lot less. (This is to cover meals, transfers, sight-seeing and day-to-day activities outside of travel and accommodation costs.)

It’s then easier to work out your total spend based on your research. As an example, you might allow for the following if heading to Asia:
Flights $1,500
Accommodation $2,000
Spending Money $2,000
Total trip cost: $5,500

If you have a year to plan, this means you’ll need to set aside $106 per week. Break it down into how often you’re paid. If it’s fortnightly, that’ll be $212 per pay period.

This is also a great way to work out whether or not what you’d like to do is affordable. If you can’t take the appropriate amount each pay period out to cover costs, and still make ends meet, it’s time to rethink. Can you wait for happy hour or a sale on flights? Do you need to rethink your accommodation options or planned experiences? Should you go for a shorter amount of time? Or find somewhere else to head to altogether?

Also, if you’re going overseas, send your spending money to a Travel Money card where it can store your funds in the appropriate currency. Most banks offer this service, as do Virgin and other providers. Make sure the card is chipped too, so it’s accepted in more places and that you can take cash withdrawals of your funds at ATM’s when you’re on the move.

It’s also a great way to average out the ups and downs of currency fluctuations instead of waiting for ‘the right time’ to buy. Even if you’re travelling domestically, this is still a great way to keep funds segregated just for your holidays.

And if you’re someone who has to buy gifts and ‘stuff’ and often need to grab an extra suitcase before you head back, my top travel tip is to throw in a large vacuum storage bag. This way you can suck the air out of all your clothes, and leave room for those extra items, without the last minute cost of excess luggage or another new suitcase!  Most hotels are happy to supply the vacuum!

And never, ever leave home without your travel insurance! I hope you’ll never need it, but for the peace of mind, it’s totally worth it.

Taking control of your finances after divorce

The key to managing finances after a divorce is to get organised early.  Grab a cuppa and have a read through this short guide for six tips on taking control.

Divorce can be one of the most financially and emotionally stressful experiences of a person’s life. The key to taking control is to get organised early. Acting quickly to organise accounts, update details and make financial plans may help start the next phase of life with more peace of mind.

The following steps are a great place to start.

1.      Get organised

It’s important to keep track of key dates, such as when the separation occurred. It’s also a good idea to arrange a redirection of mail for the party moving out, so you continue to receive mail at the new address.

Both parties should gather all financial information, making sure there are copies of
all documents. Also write a list of all financial and property assets, liabilities and policies, making a note of whose name each document is registered under. This may include:

  • bank, brokerage or investment accounts
  • credit cards
  • vehicle registration
  • life, health, home, car, health and other insurance policies
  • utility bills for electricity, gas, internet and phone
  • property documents such as deeds, mortgage papers and home loan details
  • recent tax returns and tax file numbers
  • superannuation account details
  • will and estate plans
  • rental agreements or leases.

    2.      Close any joint accounts

    It is important to close accounts or credit cards that are in both names and cancel any redraw facilities. This will protect the finances of each individual and ensure no more debt accumulates. Each should then open an account in their own name, which only they can access. They will also need to redirect any income that previously entered a shared account into the new account.  Also check any shared social media or other accounts such as eBay – change of passwords may also be required.

    3.      Review your finances

    Update any remaining accounts, loans or policies so they are registered in just one name.  This can be time consuming, so make a list and tick them off as they’re completed.

    Insurance

    It’s crucial to update insurance policies as any individual not named will not be covered. This individual will need to make sure that they have other cover in place that is adequate and affordable for their needs. Also, remember to update any nominated beneficiaries on new or existing policies.

    Loans

    The person whose name is on a loan agreement is responsible for any debt, regardless of changed personal circumstances. It’s vital for the necessary party to remove their name or for both individuals to pay off the loan.  Sometimes agreements need to be reached prior to the changes being allowed.

    Superannuation

    Superannuation is usually a significant financial asset. Any nominated beneficiaries of the parties’ retirement nest eggs will need to be updated.

    Rent and Utilities

    Updating rental agreements and utilities will be crucial, as the listed person may be left with damage or unpaid bills to cover.

    4.      Change Wills, Powers of Attorney and Beneficiaries

    Many Australians don’t realise that divorce can affect their will. Different states have different laws.

    In Western Australia, for example, divorce automatically revokes a current will. It is vital to update wills to reflect new circumstances as soon as possible.

    To be valid, a will needs to be signed by two witnesses. Drawing up a will can be complex so it is often best to consult a solicitor.  Ask also about reviewing or starting Powers of Attorney.

    5.      Create a new budget

    It can take time to adjust to relying on one income. Creating a budget and financial plan early on can make it easier to track expenses and feel confident that bills and payments will be covered.

    6.      Reach out

    Most of us know someone who’s been there, and that divorce can be a very difficult time. There are many online government resources, as well as legal aid services, counsellors and financial advisers that can provide helpful advice on how to make the process as painless as possible.

    Getting in touch with nearby support services or creating a supportive group of friends is the best way to get a helping hand.