Have you been struggling with the COVID-19 pandemic? Has the global pandemic affected your income adding financial stress not only to your household, but to your overall mental health?
The markets took a major hit going up and down but whilst it is now starting to stabilise as we slowly loosen the restrictions, it’s never been better timing to look at your financial position.
You might say… “But I’m late bloomer when it comes to finances?”
To everyone who is asking the same question, know that you’re not alone. We’ve had clients in their 30’s who’s been focusing on saving for home and to be honest, it’s been rough. We’ve heard stories of journey’s full of pitfalls, late-night tears and anxiety. Lamenting and wishing they’d saved more in earlier years.
Despite the tumultuous changes in the market, it’s important to find balance. There’s been remarkable shifts not only how people view their personal finances but also how they view money and their money, also known as ‘money mindset’.
Now this article isn’t written to make you feel bad about being a late bloomer. It happens at different ages, but this age is proving to be the trickiest to navigate when it comes to financial independence and security. Many have utilised this period of time to review their goals. Here’s a few lessons they’ve learned when finding their feet and getting those house keys.
DO NOT put your investments on a credit card. In fact, if you can avoid a credit card all together do it.
The idea of a credit card to spend on the things we can’t afford can be quite tempting. Making sure you understand the risks before you get a card is vital but what happens when you’re trapped into paying one off? It makes sense that if what you earn goes onto paying off these high-interest rates you will sink deeper into debt regardless. The best thing to do here is reassess what you have and then see if you can afford paying this debt off even if you did have a home loan.
Pay off your debt slowly – even if it’s over time. JUST MAKE SURE IT GETS PAID!
Student loans, credit card debts, car loans seem pretty good at the time when we borrow the money but remember that after some time, they actually gain interest. Paying off debt before you buy a house is a little tricky but not entirely impossible. Implementing automatic direct debit payments will help you pay it on time, every time. Paying this off over time is fine but making sure you do this as quickly as possible is the priority!
Everyone wants everything now but goals take time… be patient!
Our generation struggles with patience. They seem to want everything right now, from iPhones to houses, we decide to risk all of it for what we want. Do you stop and think,” have I the income to support everything that is coming out of our bank account?” Asking yourself the question of not only “can I afford it” but “can I save 10% on top of” will allow you to stop and think before you buy and invest in something new. Ensuring you have clear goals for your financial plan will put your mind at ease. Taking these measures can assure ways to increase your finances and what avenues to invest in. Take the time to contribute and invest in your superannuation fund and don’t spend so easily when you have the money available.
If you are going to buy a house make sure you know all of the pros and cons.
Home loans and investment properties can be frustrating when you first look at everything. You need to know how much you have saved for the portion of your investment as well as the 10-20% saved before you even make the purchase. Savings, purchase costs and home loans can be a balancing act and this is why it pays to speak to someone who understands not only the market but how much financially you may need to reach your goal.
Seek the advice of a qualified Financial Advisor
Finding a financial planner is important as they not only help you with your financial mindset but also look at your roadmap of how, what, when, where and why on all areas of investment – right up to retirement. Understanding the broader picture will help to move forward and succeed with your specific goals.
Everyone has different journey’s and pathways to go on, but if you can invest in the bigger things earlier on whilst increasing your savings you will be better off further down the track.
So, if you are a ‘late bloomer’ it’s ok, I can help you plan for your future with a view to getting you where you need to be.
To schedule an online appointment, click here.
Amanda Cassar (Financial Advisor at Wealth Planning Partners) found when interviewing case studies for her book “Financial Secrets Revealed” that most children haven’t been taught how to manage or the value of money.
With the technology changes and advances, can you think back to the last time your children purchased something using cash?
Apple and Google Pay and pay later schemes have given us multiple options to choose from, making handing over cash a thing of the past.
With contactless payments becoming increasingly popular, many parents are struggling to help children understand the value of money.
So, how do you set up your children for financial success?
It all starts by setting an example and putting thoughtful consideration on what you do with, and say about, money in your own home.
Amanda explains “our children are sponges, so we need to be very careful about how we speak and the messages they receive about money”.
How your children perceive managing money all depends on how and how often you talk about money. As a parent do you give the perception of managing money as being difficult, private or secretive, easy, burdensome or associate it with a negative emotion or outlook? Most people have heard the expressions used in the households “Money doesn’t grow on trees, it takes money to make money” and so on. We need to think, as parents are we building a scarcity mindset rather than one of abundance?
Being transparent about your finances can help turn negative emotion into a less daunting subject whilst showing how it can be successfully managed and have value if managed correctly.
Secondly, help them understand the emotion around money by explaining the psychological aspect of why they want to spend. Explain the hurdles and obstacles they will face in life. Something as easy as getting caught up in the emotional pitfalls of FOMO (fear of missing out), having to keep spending to keep up with their friends, the latest trends or what everyone is buying to maintain their image.
These pressures can be really hard control emotionally, but it’s important our children are given the tools to understand why they want to purchase something and whether the item or memory will hold value for them.
Finally, teaching your children to make smart, practical choices with how they spend their money. Show them how they can implement a thought process when making purchases. Teach them to stop, pause and think about why they want to purchase an item. Ask the question “Is it worth exchanging this money for this item? Or should I save it and use it for something else?”
“Learning to make conscious choices is a really important tool to help children value money, especially if they can’t count it in their hands like cash.”
Get ready for Queensland storm season! Yes, it’s “Get Ready Queensland” week (12th -18th October) and the Queensland Government are preparing everyone for this disaster season by providing as much information as possible.
Give yourself the best chance by preparing your household this storm season by completing these 3 simple steps:
- Have a planEnsuring your family is equipped with an emergency and evacuation plan will ensure that everyone knows what to do in the event of a disaster.
You might like to team-up with your neighbours for added assistance where required.
The Queensland government have put together a Household Emergency and Evacuation Plan form to be completed for your use.
- Pack SuppliesHaving an emergency kit during a natural disaster will provide a collection of essential items that will equip your household for at least 3 days of isolation. Your kit should be contained in a sturdy waterproof
storage container and stored in a safe, yet easily accessible please within your home. However, ensure that this is made childproof if necessary). Make sure the kit’s location has been documented in your emergency plan.
Please click here for a list of what to include.
- Make sure you’re covered
The importance of having home and contents insurance cover over your property and assets is paramount. Many people have been in the situation where they have found out too late that they did not have adequate insurance cover in the event of an emergency. The Queensland Government has stated that Queensland has been impacted by over 70 significant natural disasters since 2011.
Therefore, step 3 is to make sure your insurance is enough to cover the costs of rebuilding your home and or replacing your possessions.Both home owners and renters should check their policies and ensure they are fully aware of what their policy covers, along with any terms and conditions.
Questions to ask your insurance provider are as follows:
- What disasters does the policy cover?
- How do they define each disaster?
- How much will the policy cover?
- Does the policy provide enough insurance to cover the cost of rebuilding your house and any extra costs you might incur?
- Is your insurance adequate to cover the replacement of your possessions?
- Are your possessions covered for damage caused by potential local hazards, such as storm, cyclone, flood and bushfire?
- In what circumstances will the insurer reject the claim?
- Are you covered for the cost of temporary accommodation if your home is uninhabitable?
- Does pre-existing damage caused by a previous natural disaster or lack of home maintenance impact eligibility of insurance claim payouts?
For further information, please visit the Qld Government website.
The announcements in this update are proposals unless stated otherwise.
These proposals need to successfully pass through Parliament before becoming law and may be subject to change during this process.
The 2020 Budget is all about jobs, jobs and spending to make more jobs. We already have JobSeeker and JobKeeper, and now we have JobMaker and JobTrainer.
Each announcement the Treasurer made was translated into jobs. Tax cuts for 11 million taxpayers equals 50,000 new jobs; expanding the instant asset write-off and the carry back of current losses is another 50,000 jobs. Bringing forward the Stage 2 personal income tax cuts were the order of the day, and there will be no increases in tax in order to pay for spending. So unlike other economic downturns, there will be no deficits tax on high income earners.
One key theme throughout the Budget, is that the Government is keen to improve outcomes for young people. We know this recession has hit young people hard and many have taken early release of their super.
For more information about how the Budget may affect your family, click here for more information
Are you affected by the increase in the Age Pension’s qualifying age? Take steps now to avoid getting caught short on retirement income.
The minimum age to qualify for the Age Pension has started going up. For those born on or after 1 July 1952, the qualifying age increases by six months every two years until it reaches 67 in July 2023. It rises to 66 in July this year.
So if you’re turning 45 this year and plan to retire when you reach 60, you will need to wait until you’re 67 before you can apply for the Age Pension. You’ll have to rely on your own savings and super in the interim, making it crucial to ensure you have enough money put away for later years. But the good news is that there’s still time to grow your retirement savings.
Boost your super
Contributing more to your super can be a reliable route to bolstering your retirement fund. By making extra contributions through salary sacrifice, you can grow your super and at the same time reduce the amount of income tax you pay. The government will tax your salary sacrificed contributions at 15 per cent, which could be much lower than your marginal tax rate.
Making non-concessional or after-tax contributions is another option. You can contribute up to $100,000 each financial year if your total superannuation balance is less than $1.6 million. To understand how these contributions work, it’s wise to get professional advice.
Beef up your savings
Your personal savings can supplement your super payments in retirement. But are they growing enough now to provide you with some income when you retire?
To build up your savings, you may have to invest part of it and make sure it’s growing faster than the rate of inflation. Investing in a managed fund or buying an investment bond may help you increase your nest egg, but you should seek professional advice to see if these instruments are appropriate for you.
Know your entitlements
Besides the Age Pension, you may be eligible for other government benefits and concessions. The Seniors Card, for example, offers individuals over the age of 60 discounts on some commercial and public services. Concessions that allow you to buy prescription medicine at a discount are also available.
But keep in mind that these benefits have strict eligibility rules. There’s also no guarantee that these entitlements will still be available by the time you retire. So take charge of your retirement. By working with your financial adviser, you can develop a strategy that helps ensure you’ll be well provided for regardless of changes to pension policies.