by Jodie | Feb 12, 2018 | Budget, Debt Management, Finances, Insurance & Protection, Investments, Money, Retirement, Superannuation
New Year’s resolutions are easy to make but often hard to keep. But there are real benefits to making financial resolutions. Here are some helpful suggestions to get you started.
Get back to basics
If you find it near-impossible to reach your financial goals, you may need to revisit the basics: sticking to a budget. Does temptation usually unravel all your good saving intentions? Consider opening a locked savings account that you can’t deduct money from for a period of time, then automatically transfer funds into it each payday.
Plan for large purchases
Whether you need a new fridge or are considering placing a deposit on a home, the earlier you start planning for these purchases, the more manageable they become.
Set up an investment plan
If you’re considering investing this year, developing a sound investment plan is essential for your success. This may include working with your financial adviser to identify clear financial targets, calculate how much you can afford to invest and determine how much risk you’re willing to take on.
Review insurance policies
Knowing you are properly insured may help provide peace of mind if your circumstances change unexpectedly. But identifying appropriate insurance policies and levels of coverage for your unique situation can be difficult – and getting it wrong is risky. This is why it’s important to regularly review your insurance policies with your financial adviser, especially if your situation changes.
Check your super
If you have multiple superannuation accounts – or have forgotten where your super is – you’re not alone. According to the Australian Taxation Office, there’s $18 billion of lost super waiting to be claimed nationally.1
Effectively managing your super is vital for building your retirement nest egg. Contact your financial adviser who may help you manage your super.
Set retirement goals
The earlier you set clear goals for your retirement, the more options you’ll have. Work out what assets you have – from your home to superannuation – and review your current spending patterns, then determine your goals for retirement and what lifestyle you’d like to enjoy. This will help you calculate how much you’ll need.
Create an estate plan
Estate planning involves more than writing a will. It outlines what you want done with your documents, contacts, debts, bills and assets, making the process easier for your beneficiaries after you’ve passed away.
Whatever your financial New Years’ resolution may be, seeking professional advice may help you make it reality this year.
Note:
1 The Sydney Morning Herald, 2017, ‘Almost $18b in lost super waiting to be claimed’. Accessible at:
http://www.smh.com.au/money/super-and-funds/tax-office-holds-records-of-almost-18-billion-in-lost-super-20170920-gylo3z.html
by Jodie | Jan 15, 2018 | Budget, Budgeting, Money
With the summer holidays right on top of us, it’s not too late to do your financial planning for the holidays – or start planning for later in the year. Here’s how to minimise your financial stress for a well-deserved break.
Plan ahead
The earlier you start planning, the more money you can save. And when it comes to peak travelling times such as December, typically the earlier you book your flights and accommodation the better your account balance will be.
Create a budget
Whether you choose Bali or the bush, create a budget. Account for expenses such as flights, petrol, food and activities, such as visiting museums or a spa. Research activities at your destination and see if you can book early – or if there’s some great free ones. The more you can book and pay for beforehand, the less you’ll need to worry about overspending.
Start saving
When you’ve worked out how much you will need, start saving. Even putting a small amount aside each week can add up, so you could enjoy some amazing experiences you may not have thought you could afford. A good tip is to open a high-interest savings account and set up an automatic transfer on your payday.
Hunt for bargains
There are lots of useful websites that compare deals on everything from flights to tours. Just make sure you turn on private browsing when researching online. Some travel sites track users and raise prices on the things you are researching if you return repeatedly.
And don’t worry if you have left things to the last minute – there’s a website for that too: lastminute.com.au.
While you’re on holiday…
It can be easy to splurge – you’re on holidays after all. But to avoid spending the new year paying it off, keep track of your finances while you’re away.
Set yourself a daily spending limit – or use a travel app to help you stay on track.
But if that’s too much of a buzzkill, you can transfer the exact amount you’ll need into a bank account just for your holiday. This may help you stay out of your other accounts unless it’s absolutely necessary.
Talk to your adviser
Your adviser may help you create a financial plan tailored to help you achieve the holiday you want.
Talk to your Wealth Planning Partners adviser to reach your financial goals for your holiday. Call on 07 5593 0855.
by Jodie | Dec 12, 2017 | Finances, Money, Self Managed Superannuation Funds, Superannuation
With the recent legalisation of same-sex marriage in Australia, it’s likely we’ll see a slew of marriages in 2018! But, be warned! Same-sex couples are urged to review estate planning documents, as marriage can invalidate a binding nomination… in some cases.
While the parties and proposals continue Down Under, same-sex marriage reforms will bring significant benefits to same-sex couples when it comes to both death and medical decisions, as marriage ensures more rights for those legally wed. However, there are still some important estate planning considerations for those looking to tie the knot.
Some super funds include terms that specify a binding death benefit nomination (BDBN) is not actually binding if certain life changes occur.
When members sign a BDBN for most super funds, it will usually be valid for three years; but in the conditions, it can state that it will be invalidated by an event such as marriage or the birth of a child.
Don’t fret! It doesn’t mean that somebody could be automatically cut out. They’d still have a right to apply to the trustee say: ‘I was the nominee before, but now the spouse,’ but that process could open the door for others to come in and argue about why they have some entitlement also, making the process longer and more drawn out than necessary.
While this is mainly noticeable amongst APRA-regulated funds (most large super funds,) there can also be similar clauses in Self-Managed Super Fund (SMSF) Trusts Deeds where wording may suggest a binding death benefit nomination is invalid when a lifestyle change occurs.
SMSF trustees, and all couples looking to wed, will want to make sure all estate planning documents are reviewed and updated where necessary, including Wills, powers of attorney and superannuation nominations.
by Jodie | Dec 10, 2017 | In The Media
Power of Social Amanda Cassar Director, Wealth Planning Partners.
In 2015, Amanda Cassar travelled to Uganda as part of the Hunger Project. She talks to Jamie Williamson about how the experience shaped her approach to financial advice.
by Jodie | Nov 20, 2017 | Budget, Christmas, Finances, Wealth
A bit of planning and forethought may help take the financial stress out of Christmas.
Christmas for many families, is a happy time of year that brings people together, but it can also be expensive!
With a bit of early planning you may control your festive season spending.
Here are some tips to help avoid a New Year financial blowout. You don’t want a heart attack when you get that statement in January!
Draw up a budget
You know it makes sense, but it can seem a bit Scrooge-like. Start with the total amount you want to spend. Divide this into gifts, catering, entertainment and travel and list the items you need to purchase in each. Then put a spending cap on each category.
Sort your gift-giving
Draw up a gift list and allocate how much you want to spend on each person. If money is tight, consider options such as vouchers for home-cooked meals or gardening as alternatives.
It may help for big groups of relatives or friends to agree in advance upon a spending cap per gift. Another option is to do a Secret Santa by choosing each other’s names randomly from a hat. Each person then buys the person they picked a gift, instead of buying for everyone.
Open a Christmas account
Set up a special bank account early in the year and use a regular auto payment option. The sooner you start saving, the more you will have.
You’ll also be able to make the most of all those annual specials from Boxing Day forward!
Make a shopping list
Wandering through the shops without knowing what to buy may cause you to overspend. Do your research first, then set out with your shopping list in hand and stick to it.
Be prepared to bargain as smartphones make it easy to compare prices. Avoid last-minute shopping as this may result in rushed and expensive decisions. Even better, pick up bargains in the sales earlier in the year and put them aside.
Above all, keep your head and stick to what you can afford.
Travel smarter
The holiday season is one of the most expensive times to travel, so it may be worth considering house swapping, camping or having a staycation. If you are travelling, a budget will help you stay
on track.
I’d love to hear some of the ways you stay on track each Xmas without blowing your budget! Let us know in the comments and share your top tips!
by Jodie | Nov 13, 2017 | Business, Finances, Insurance & Protection
How would your organisation cope if something happened to a key person?
Unexpected events can play havoc not only with people’s lives but also with businesses.
However, business owners are often so busy they don’t stop to consider the true cost of the loss of a key employee, business partner or even themselves.
The knock-on effects may include disruption to other staff, missed opportunities, delays or penalties for late delivery of projects, lost revenue, increased expenses, significant costs to find and train a suitable replacement, loan repayment and even loss of the business.
What is key-person insurance?
Key-person insurance protects a business’s financial position against the significant impact of a traumatic event such as the death or disablement of a key person.
A key person may be an employee, owner or an individual whose contribution to the business is significant.
This cover is not a specific kind of insurance but the application of life insurance to protect against key-person risk. It can be used with buy/sell life insurance (also known as business succession insurance) which covers the change of ownership if an owner dies or becomes incapacitated.
The benefits
Often a cash injection to an affected business may keep a bad situation from becoming worse or even catastrophic. The insurance proceeds may be used to:
- minimise or eliminate the potential loss of revenue, sales or profits
- help cover the often significant costs of finding or training a replacement
- service or repay any debts that are called in
- cover the impact of a writedown in the goodwill of the business
- provide needed liquidity
- help keep staff and maintain essential supplier relationships.
Are there alternatives?
A business may have other strategies to help manage their risks, including asset sales, promoting staff or reallocating workloads even temporarily, using profits, borrowing more, or drawing down existing loan facilities.
However, insurance is the only practical alternative where a business doesn’t have the capacity to cover its risks.
by Jodie | Oct 23, 2017 | Finances, Money
Feeling generous and want to make a difference? Here are five tips on giving to consider.
An estimated 14.9 million Australian adults (80.8 per cent of the population) gave $12.5 billion to charities and not-for-profit organisations in 2015–16.[1]
For many people, donating comes as a response to a specific request, but if you feel strongly about helping out, why not budget for it?
As well, many people plan to leave money to charities in their wills and with some extra thought in estate planning, a bequest can be made in a tax-effective way.
Regardless of how you give, it’s always important to keep accurate records of your donations to give to your accountant at tax time.
Here are five things to consider before donating.
1. Why giving is important
Giving to the less fortunate is a good thing to encourage from a young age. Certain schools make volunteering part of their programs but even parents can encourage philanthropy through their own actions. Giving is good for both the donor and the recipient, and it makes the world a better place.
2. Do you know what the charity does?
It’s an obvious question, but at the very least the charity’s mission and goals should align with yours. Is it doing good works in the areas that concern you? Do you feel strongly about what it is doing with your money?
3. What has the charity achieved?
Most organisations are happy to advertise their successes through videos, photos, testimonials, and their annual reports to help you get a more complete picture.
4. Can you volunteer?
Being charitable can also mean pitching in and helping, which is a great way of finding information and making connections. This will help you decide whether the organisation fits your values and goals, and make you feel more fulfilled knowing you are making a difference.
5. How much are you comfortable giving?
Giving circles are a solution for people who don’t have a lot to give. This just means getting a group of 100 or so people together who each contribute perhaps $1,000 to create a pool of $100,000. They donate the lot to one charity to make a big impact.
If you would like to make giving part of your financial plan, your adviser can help you get the most out of your philanthropic efforts.
[1] www.philanthropy.org.au/tools-resources/fast-facts-and-stats/
by Jodie | Oct 17, 2017 | General
A new study links stress with heart disease, but there are easy ways to stay healthy and protect your heart.
Stress is part of modern life but a new study shows that being stressed takes a serious, and lasting, toll on your health and increases your risk of heart disease.
The multi-year study published in the medical journal The Lancet is the first to pinpoint how stress affects the body. Stress apparently triggers the amygdala – the part of the brain keyed specifically to respond to stress – which then activates bone marrow and inflames the arteries.
This is a survival mechanism that would have been essential for the earliest humans as it prepares the body to deal with a harmful experience. Bone marrow produces the white blood cells necessary for tissue repair. Wider arteries increase blood flow.
However, today, the over-production of white blood cells can cause a build-up of plaque in the arteries and lead to heart disease.
The people in the study with higher amygdala activity had a greater risk of cardiovascular disease and developed problems sooner than those with lower activity.
“Eventually, chronic stress could be treated as an important risk factor for cardiovascular disease, which is routinely screened for and effectively managed like other major cardiovascular disease risk factors, such as smoking, high blood pressure and diabetes,” says study author and cardiologist Dr Ahmed Tawakol.
“So far, it appears that things like mindfulness and other stress-reduction approaches seem to really nicely tamp down on the amygdala, and they appear to even cause benefits in other areas of the brain.”
The other stress-reduction approaches are diet and exercise.
Regular exercise triggers feel-good chemicals in the brain such as dopamine and endorphins. It also reduces the damage the stress hormones cortisol and adrenaline cause.
Physical activity relieves tension and helps enrich your brain with oxygen and nutrients, which can improve cognitive functioning and leave you feeling energised and alert.
Exercise should be teamed with a healthy diet low in refined sugar, saturated fats, salt and alcohol, and high in fruits, vegetables, grains, legumes, lean meats and unprocessed foods.
As an added bonus, you may even lose weight.
by Jodie | Sep 18, 2017 | Budget, Budgeting, Debt Management, Finances, Savings, Wealth
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.
by Jodie | Aug 21, 2017 | Finances, Retirement, Superannuation
Many of the federal government’s superannuation reforms came into effect on 1 July. Here’s what’s new.
The government says it has tried to make the superannuation system more sustainable and has introduced more flexibility to suit modern work patterns. This is what has changed.
Additional 15 per cent tax for high income earners and concessional contributions cap
The income threshold at which high-income earners pay additional 15 per cent tax on certain concessional contributions has been lowered to $250,000 from $300,000. The annual cap on concessional (before-tax) contributions has also been lowered to $25,000.
The reduced threshold will affect about 1 per cent of account holders,[1] while the lower annual concessional contributions cap will affect about 3.5 per cent.[2]
Non-concessional contributions
The annual non-concessional contributions cap has been cut to $100,000 and $300,000 for those eligible to use the bring-forward provisions. Non-concessional contributions will no longer be available to people with total super balances of $1.6 million or more by the end of the previous financial year. People under the age of 65 will still be able to bring forward up to three years of non-concessional contributions.
This measure is expected to affect less than 1 per cent of fund members.[3]
Access to concessional contributions
Previously, only people who earned less than 10 per cent of their income from salary or wages could claim a tax deduction for personal superannuation contributions. Now, generally, anyone under the age of 65 – and those aged 65 to 74 who meet the work test – can claim a tax deduction up to the concessional contributions cap.
This will benefit the 800,000 or so people[4] who are partially self-employed and partially wage and salary earners, and individuals whose employers do not offer salary sacrifice arrangements.
The transfer balance cap
There is now a $1.6 million cap on the total amount that can be moved into the tax-free retirement phase. However, subsequent earnings on balances in the retirement phase will not be capped or restricted.
People with existing super income streams were required to take action by 30 June 2017 to ensure that they had no more than $1.6 million in super income streams. Additional time to comply is available for those who have a breach of $100,000 or less.
Less than 1 per cent of account holders[5] will be affected, as the average superannuation balance for a 60-year-old is expected to be $240,000 in 2017–18.
Low-income superannuation tax offset
A low-income superannuation tax offset replaces the low-income superannuation contribution. Under this measure, eligible individuals with an adjusted taxable income of up to $37,000 can get refunds on the tax paid on concessional contributions up to a cap of $500.
This avoids the situation where low-income earners pay more tax on contributions than on their take-home pay. The refunds will go into the superannuation account.
It is estimated that about 3.1 million low-income earners will benefit, including about 1.9 million women.[6]
Catch-up concessional contributions
People with a total superannuation balance of less than $500,000 before the start of a financial year can use any carried forward unused concessional contributions for up to five years. In 2019–20, this will help about 230,000 people.[7]
The spouse tax offset extended
The spouse tax offset is now available to more couples as eligibility has been extended to people whose recipient spouses earn up to $40,000. This is an increase from $13,800, and about 5,000 people are expected to use the change.[8]
Innovation barriers removed
The tax exemption on earnings in the retirement phase has been extended to encourage the creation of a wider range of products. This will provide more flexibility and choice for retirees to help them avoid outliving their savings.
Transition to retirement income streams
Taxable income from assets supporting transition to retirement income streams are no longer tax-exempt at the super fund level. Instead they will be taxed at 15 per cent.
Pension payments continue to be tax free if the individual is 60 or over.
Individuals will also no longer be allowed to treat certain superannuation income stream payments as lump sums for taxation purposes. About 110,000 people will be affected.[9]
Anti-detriment rule abolished
The anti-detriment provision that allows superannuation funds to claim a refund of the 15 per cent tax on contributions paid by the deceased member over their lifetime has been abolished. However, lump sum death benefits will continue to be tax-free.
Seek advice
As these changes are very complex, it’s a great idea to talk them through with an expert who may help you safeguard your financial future.
[1] Australian Government, The Department of the Treasury, ‘Superannuation Reforms’.
[2] Ibid.
[3] Ibid
[4] Ibid
[5] Ibid
[6] Ibid
[7] Ibid
[8] Ibid
[9] Ibid
