Tag Archives: money

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.

What a brilliant idea!

Did you know that it’s been almost 30 years since the superannuation guarantee was introduced in Australia, yet 40% of single women are retiring in poverty, and the fastest growing demographic of homelessness is the 55 year old woman?

In the financial services profession, there’s a couple of lovely ladies I know, who truly believe that it’s shameful a country as rich as ours has let its elderly women, after a lifetime of service and caring for others, go without enough money to care for themselves.  They’re also:

  • tired of hearing empty promises on policy change
  • overwhelmed by frightening statistics on super / gender equality
  • worried for our daughters’ futures.

So, they got to thinking!!  ‘What if we could monetise the $2.2 trillion p.a. of unpaid work performed by the 1.8 million women? What if we could create an income stream into super for the 76% of women who either don’t work or work part-time?’

Together, they’ve come up with the brilliant concept Super Rewards. 

Super Rewards is cash rewards, for women, for super.

Super Rewards is compatible with any super fund or SMSF. It’s free to join, and there are no upfront charges.  How beyond cool is that?

Each time you shop at the 120+ retailers on the Super Rewards platform, you earn money into your super. The more you shop, the more super you earn. So a percentage of what you earn, is going straight to your retirements savings, simply for doing what you may do best… SHOP!

There are some incredible brands on the platform, many of whom are Australia’s leading retailers, including Woolworths, The Iconic, Country Road, Apple, Booktopia, etc.  I had a bar fridge break down recently, so signed up and got shopping!

There are 6.7 million women in Australia aged 18-64 years old, and all of them would benefit from knowing about Super Rewards.  Together, they’re hoping to set generations of women free and improve their futures.  Together, they’re hoping to help women build their super the way it was originally intended: to live your best life, the way you choose, free of fear, doubt or financial worries.

And don’t you just love the tagline?

We are Super Rewards. Helping all women find their super power.

Check it out for yourself and see what you think!! I’d love to hear your thoughts.

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

Your Super is too Important to Ignore

Superannuation is the one thing you could do for your financial future this year, that could make a big difference to your retirement income. But how much do you really need?

That’s the million dollar, half a million dollar…? question.

Everyone’s needs are different.  Unexpected expenses just crop up, life gets busy and none of us have any clue how long we will actually be in retirement.

Of course, we’d like to think that the safety net of the age pension will still be around in years to come, but just how generous the country can afford to be with this payment, and who will be eligible, is also unknown as this may change year to year.  Sadly, none of us have a crystal ball, and we know it isn’t a lot!

So what exactly are some of the big expenses in retirement we need to budget for?

  • Healthcare
  • Aged Care
  • Food and Beverages
  • Utilities
  • Travel
  • Entertainment
  • Planned or unplanned expenses, i.e. a new car or home renovations

What major impacts could affect our superannuation?

  • How long you live
  • Your health
  • The rate of inflation
  • How much you earn on investments
  • Whether or not you have dependents – yes some retirees still have dependents!

It is wise to have a plan when it comes to your retirement income and a professional financial adviser can help you get a plan in place that is easy for you to manage now, and meets the needs of your ideal retirement.

If you want to start to get your super sorted this year, give me a call on 07 5593 0855.

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!