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Renovation Tips That Can Increase Your Home’s Value

Taking care of basic maintenance tasks before you sell your home is a no-brainer, but a quick and not-too-costly renovation can add a lot of appeal for potential buyers, and may boost the final sale price.

Basics first

Fix those little faults that you no longer notice – leaky taps, rusty gutters, broken window catches. They can make a huge difference to a buyer’s perception of value.

Landscape the garden

A well-kept garden can create a low-maintenance feel before buyers even step inside.

Bring the outside in

Opening living areas to the garden can be as simple as adding big bi-fold doors that create an inviting sense of flexibility.

Take the inside out

The garden is a place to live: a barbecue area, deck, pergola or even a plunge pool all invite buyers to imagine their future lifestyle in your home.

Let the light in

Brightening dark areas boosts a home’s appeal; you can install skylights quite economically, and swap solid doors in dark areas for glass-panelled ones.

Put some colour on it

Fresh paint makes a home look ready to live in. Think carefully about colours, and maybe seek some interior design advice – although neutral colours present some people with a blank canvas, to others those spaces just seem bland.

A solid footing

New carpets make a home feel new. Again, think carefully about colour. A step further? Look under the carpet – those timber floors will be lovely when sanded and sealed.

Green it

Installing solar panels or a solar hot water system can add value for potential buyers, who will see future energy cost savings.

Bathroom fix

A brand-new bathroom can cost a lot. Instead, think of replacing shower curtains with clear glass screens and installing new taps, a water-saving cistern and even a new toilet seat. Replace small tiles with big ones, and don’t forget to clean/renew the grout.

Add storage

Buyers are looking for places to store their stuff – cupboards in the garage and in neutral spaces such as hallways are always welcome. A butler’s pantry in the kitchen is great, too.

Some simple and affordable renovation moves can make your home more desirable to buyers, potentially adding to the final sale price.

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End of financial year tax tips for employees and small business

The end of the financial year is one of the busiest and most stressful times for businesses and employees. Are your financial records in order? Do you know how to take advantage of standard deductions? While many people only see their accountant once or twice a year, you’re much more likely to identify deductions and make necessary adjustments when an ongoing relationship is in place. Whether you’re a business owner or an employee, you need to understand which deductions are available and relevant to you so you can benefit from them.

Tax tips for businesses

If you run a home office, you may be able to get a significant tax break. Sole traders and anyone who is operating a business from their home may be able to claim a deduction for occupancy and running expenses. This includes things like your mortgage and rent, which can add up to a large sum over time.

Business travel expenses are another common deduction, whereby any expenses incurred by you or your employees can be claimed. If you’re away from home for six or more consecutive nights, you need to record all of your activities and expenses.

Auto expenses are another common area for deductions. Any motor vehicle expenses by your employees can be claimed as business-related expenses, with the fringe benefit tax (FBT) also relevant if the employer uses the vehicle for private use. The salaries and wages you pay to your workers can also be claimed as a tax deduction, including any super contributions that you make for them.

Repairs, maintenance, and operating expenses can also be claimed in some situations. The amount of these deductions can vary considerably and is dependent on the type of business that you run, which is why it’s so important to keep up a relationship with an accountant.

Tax tips for employees

With the end of the tax year quickly approaching, it’s time to educate yourself so that you can meet your tax obligations and reduce your tax liability. From vehicle and travel expenses through to self-education and tools, making the right deductions now could have a huge impact on your financial health going forward.

With different deductions available for work and private purposes, and many work-related deductions requiring stringent record keeping, it’s hard to keep on top of it all. Instead of waiting until the end of June to get your financial records in order, perhaps it’s time to set up an ongoing relationship with a qualified and experienced accountant.

 

 

Article source here.

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What if your mortgage repayment falls short?

Whether you’re affected by fluctuating interest rates or by a change in your personal circumstances, the pressure of maintaining regular mortgage loan repayments can be overwhelming at times. Here is some information to help you understand the available alternatives.


What to do before it gets worse

If you’re about to miss a mortgage payment or already have, rest assured there is help available. Taking a big breath and raising the issue with your lender is the best thing you can do – in fact, the earlier you do that, the more options your lender will have to assist you.

Failing to resolve the situation may force the lender into taking action against you. This can include:

  • Fees being applied.
  • A higher default interest rate on missed payments.
  • Taking recovery action on your home loan, forcing a property sale.
  • Enforcement charges, plus court and legal costs.


A two-way relationship

Your lender will want to help you maintain your mortgage. One option is to give your lender a hardship notice. It looks like this:

  • First, you contact your lender to explain the situation, which may require a person-to-person meeting at their office.
  • Before the meeting, consider what options are available and define a ‘plan of attack’. This will show the lender that you’re proactively searching for an answer. After all, people are more likely to want to help you if they can see you’re trying to help yourself.
  • Whatever plan you decide on, you can give your lender a hardship notice orally or in writing that you are unable to meet your obligations – your lender can guide you in this.
  • Your lender has 21 days from receiving your hardship notice to ask you for any further information it requires. If it does not require further information, it has 21 days from receiving your hardship notice to decide whether or not it will agree to change your loan.
  • Depending on your situation, the lender may come back with a scenario to ease payments for the short term, increasing them later. This may escalate your overall loan costs, but you will maintain your home and mortgage, and will be better off in the long run.
  • Your lender must give you a notice as to whether or not it agrees with to change your loan following a hardship notice. If the lender does not agree, it must give you reasons why.

Lenders do have an obligation to consider your request, so don’t think that it’s a lost cause. If the lender will not assist you, you may be able to make a complaint to an external dispute resolution scheme of which your lender is a member. Your lender can give you details of how to contact that scheme.


Helpful support

Believe it or not, you’re not on your own – every month there are mortgage holders having issues with making payments, and just as there are legal rights for home buyers, there are also legal services for mortgage holders.

Perhaps there are also other financial issues, or bills, that also need attention, in which case we offer financial advice so feel free to contact us.

Albeit a difficult and somewhat embarrassing issue, you can speak to your mortgage broker about your loan issues. They will explain your options, suggest a plan, and work with you to minimise worries and achieve a resolution.

Whether you’re a client or not, if you require more information or advice contact your local broker as soon as possible. They can help with sorting through what options are available to resolve your financial difficulties.

You can also visit Moneysmart.gov.au, another great resource for tips to help you keep up with your mortgage repayments.

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Australians give income tax cuts thumbs up.

It may only be $10 a week but the budget’s tax cut has been enough to make Australians happy.

Consumer confidence jumped to the highest level since early February in response to Treasurer Scott Morrison’s third budget released a week ago which had personal income tax cuts as its centrepiece.

The three-stage tax plan kicks off with a $530 cut for the average earner and comes at a time of slow wages growth.

The weekly ANZ-Roy Morgan consumer confidence index – a pointer to future retail spending – rose one per cent, the fifth straight increase.

In contrast, the index has dropped 1.2 per cent on average in response to the budget over the past five years.

“Consumers are in good spirits. And why not?” Commonwealth Securities chief economist Craig James said pointing to the tax cuts, a stronger sharemarket and a more settled property market.

And the Reserve Bank has again indicated it isn’t about to pour cold water on the brighter mood with an interest rate hike any time soon.

Deputy central bank governor Guy Debelle told a conference in Sydney while the economy is expected to grow faster over the next couple of years, the Reserve Bank board does not see a strong case for a near-term adjustment in the cash rate.

He expects the jobless rate to gradually decline from here.

“The unemployment rate has declined 0.25 percentage points over the past year – we are expecting something similar over the year ahead,” he told the CFO Forum.

The jobless rate was 5.5 per cent in March.

He said forward indicators like vacancies and hiring intentions remain positive, and with economic growth expected to pick up, he was reasonably confident that unemployment will resume a gradual downward trend which will also lead to a pick-up in wages.

Minutes of the Reserve Bank’s May 1 board meeting were also released and again found its members predicting the next move in the cash rate will be up, rather than down.

The cash rate has held at a record low of 1.5 per cent since August 2016.

The latest wage price index – the central bank and Treasury’s preferred measure of wage growth – is released on Wednesday.

Economists expect the index rose by 0.6 per cent in the March quarter which would keep the annual rate around 2.1 per cent and only just above the pace of inflation.

 

Article source here.

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Couple’s finances: Being in tune with one another.

In our article, ‘Recognising and dealing with financial stress’, we discussed that close to a third of Australians find dealing with money stressful. In light of this, one of our suggestions for dealing with financial stress was to talk to your partner. One of the reasons behind this is due to the conflicts and stresses that may arise between couples when there is a difference in their beliefs on money and/or their money personalities, and these differences are not appropriately recognised and addressed.

Importantly, beliefs on money and money personality can be interconnected.

Consequently, we discuss ways to help you with recognising and addressing the differences that may occur in both of these areas through the fostering of communication, mutual understanding and teamwork.

Beliefs on money

The experiences that you have throughout your life (and your interpretation of these experiences) can shape the way that you view the world and your engagement within it on a conscious level. Importantly, the same may be said in terms of the formation and shaping of your beliefs on money.

Briefly, your beliefs on money are protective or liberating ideas, thoughts, or opinions that you hold about money. Depending on your personal circumstances, these beliefs on money may or may not be beneficial or desirable to you as they can influence your financial attitudes and behaviours.

If you are unsure about how to discuss your beliefs on money with your partner or even what your beliefs may be in the first place, consider completing the following together:

Identifying your beliefs on money through language

  • Write several short sentences about money, starting each sentence with ‘I should…’ For example, ‘I should invest more for my retirement’.
  • Repeat above, but now change the start to ‘I believe my partner should…’ For example, ‘I believe my partner should save more’.

Identifying your beliefs on money through feeling

  • Write down how you are feeling right now. For example, joyful, grateful, hopeful, helpless, depressed, jealous, or angry.
  • Repeat above, but now write down
    • The feelings you believe someone who is financially insecure would have.
    • The feelings you believe someone who is financially secure would have.

Once done, read out your answers to one another and discuss how you both feel. Now take some time to engage in ‘perspective shifting’, in this instance, seeing your beliefs on money as ideas, thoughts, or opinions rather than truths. A simple way to do this may be changing ‘should’ to ‘could’ in the first exercise above and discussing how you both feel afterwards. By practising perspective shifting, you may find that you not only allow yourself to gain a better understanding of your partner’s beliefs on money, but also open yourself up to the possibility of replacing your existing beliefs on money with new ones.

Money Personalities

Why do you manage money the way you do? Many of the decisions you make when dealing with money, such as how you earn, spend and invest your money, may be done on a subconscious level. We explore this in our Money Personality learning module.

Briefly, your money personality is the set of preferences you have with regards to dealing with money. Importantly, your money personality, like your beliefs on money, can influence your financial attitudes and behaviours.

When it comes to preferences in dealing with money we are all unique, which is why we developed four money personality animals to help broadly describe the differences that can arise from one person to the next. Here is a brief overview of each money personality animal:

If you are unsure about how to discuss your preferences with your partner or what they may be in the first place, consider completing our Money Personality quiz together. Our Money Personality quiz assesses your preferences for dealing with money with regards to three key metrics:

 

Continue reading the article here.

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Sharp rise in living costs for pensioners.

Workers may be getting a little excited about the prospect of a tax cut in next week’s federal budget to help with their cost of living pressures, but new figures suggest it is retirees who may need a greater helping hand.

Consumer confidence, according to one survey, has risen for three straight weeks heading into next Tuesday’s budget where personal income tax cuts are expected to be its centrepiece.

However, despite this better mood, respondents may have been a little surprised by the benign result of the latest quarterly inflation figures released last month, particularly if they are struggling to make ends meet in a low wage growth environment.

The consumer price index, which measures a basket of goods and services, rose just 0.4 per cent in the March quarter for an annual rate of 1.9 per cent, below the Reserve Bank two to three per cent target band.

However, the Australian Bureau of Statistics also produces its cost of living indexes every three months, which measure the impact of inflation on various households.

They gauge how much after-tax incomes need to change to allow different types of households to purchase the same quantity of consumer goods in a given period.

For employee households, the cost of living is calculated to have grown at a slightly higher rate than the CPI would suggest, increasing at 0.5 per cent for an annual rate of two per cent.

The bureau blames this on a 2.8 per cent increase in education fees at the start of the new school year and a 1.1 per cent rise in transport costs through rising petrol prices.

This assumes employee households are raising children and need to travel to and from work while enjoying falls in international holiday travel if they took advantage of winter off-peak sales.

However, age pensioner households are deemed to have a greater reliance on health products and services, which rose 5.5 per cent in the March quarter.

The bureau also calculated such households would have endured a 0.7 per cent increase in housing costs, including electricity.

Overall, pensioners would have seen a cost of living increase of 0.8 per cent over the quarter, double the quarterly rate of CPI.

 

Article source here.

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Fairer wages for Aussies with disabilities.

Working Australians with disabilities should get fairer a pay deal after the Fair Work Commission ordered a new classification and wage structure to address the loopholes in the existing framework.

Stakeholders and the federal government are expected to work together with the commission to develop the new wage framework within a “reasonable time” for supported employees’ fair pay.

Australian Disability Enterprises employ people with disabilities at award wages and who need ongoing support, with tasks adjusted to suit abilities.

But under the current award, they are required to use the Supported Wage System tool to determine wage rates for supported employees which the commission found was inadequate.

“It does not take into account the proper range of work value consideration used to assess award wage rates … it may not adequately measure non-productive time at work … does not provide a sufficiently objective and relevant means of identifying the performance benchmark by which any SWS assessment is conducted,” the April 16 statement reads.

It comes after another wage assessment tool was removed from the award list in 2015 after it was found to have discriminated against workers and breached the Disability Discrimination Act.

The report found employers were able to make their own rates and classification structures, pay people differently for equivalent tasks and may even be in contravention of the Disability Discrimination Act.

Despite a modified version of the SWS to take effect on July 1, the commission found it did not go far enough to resolve the problems.

“We consider that the use of all existing wage assessment tools should be phased out over a period of time. They should be replaced by a redesigned classification structure for Grades 1-3 of the award which sets the full award age rates for supported employees,” it states.

The new national wage assessment tool will give an assessment of the size of the job and the output of the supported employee compared to a full award rate at the same grade, the report states.

The new mechanism would be trialled early in the phase-out to determine wage cost impacts and any other issues before the commission approves it into the award.

NSW-based disability enterprise The Flagstaff Group CEO Roy Rogers said the commission listened to the ADEs, supported employees, families and carers.

“It is an informed and practical decision that we can work with to ensure secure, supported, and long-term employment for people with a disability now and in the future,” he said.

 

 

Article source here.

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How to add maximum value with renovations.

Renovating is one of the best ways for property owners to increase the value of their homes. If you’re looking to add value to your home, but don’t want to renovate every room, it can be difficult to decide where to start.

Here are some ideas to help you decide which part of your property to focus on for the best results.


The kitchen

The kitchen is widely regarded as the best place to start when renovating – and while it can be a lot of work, the rewards can be substantial. Despite being one of the most expensive rooms in the house to renovate, there’s no need to break the bank.

An updated kitchen can make a huge impact on potential buyers, by giving your home a ‘ready to move in’ feel. The Housing Industry Association of Australia report that the average cost of a kitchen renovation(PDF) in Australia is $21,862, but the difference a modern kitchen makes when you’re selling can be substantial.

As far as appliances go, you might choose to purchase a single-brand suite to give a cohesive look and feel to the room. However, there’s often no need to go ‘top of the line’ when it comes to elements such as ovens. Adding value is about keeping costs to a minimum while refreshing the room.


The bathroom

Next on the list is the bathroom, a key element in any house – especially if the structure isn’t particularly modern. Similar to kitchens, an updated bathroom can provide a home with a much-needed contemporary boost, and it doesn’t have to cost the earth.

There are a number of cost factors to consider when renovating a bathroom that don’t apply to other rooms in the house, such as plumbing and waterproofing. Moving the location of sinks, toilets and showers can add a lot to the overall cost, and this money probably won’t result in a lot of value being added in the long run. Therefore, a key tip for doing up a bathroom: don’t overcapitalise.

It’s important to consider the home as a whole, and the features you believe will be desirable for your location and target buyers. If you’re hoping to attract a family, for example, consider installing a bath.


The great outdoors

Another area ripe for high-impact renovation is gardens and back yards. Opening up the rear of your home to create an outdoor entertainment area is effectively the same as adding a whole new room.

If your home already has an outdoor entertaining area, it’s worth considering whether there are elements that could be updated. Adding an outdoor kitchen or designated barbecue area can have a positive impact on the value of the property.

And because first impressions count, don’t overlook the front yard.  ‘Curb appeal’ can be the difference between potential buyers driving by or stopping to take a look inside.

There’s more to adding value than giving your property a quick lick of paint and hoping for the best. The right renovation, in the right area of the house has the potential to add tens of thousands to the value of your home – and choosing the right way to invest your time and money could mean a better result when you decide to sell.

 

Source: (Your Loan Hub)

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Child care benefit and rebate

Raising a family can be one of your toughest, but most rewarding experiences. The decision to return to work after a given period may be due to one or a culmination of many factors. For example:

  • The child reaches a certain age and you have more free time
  • The added income to the household to help reduce debt, accumulate wealth and plan for retirement.

When you do decide to return to work, you may need to consider your options for child care.

In recognition of the costs associated with child care, the Government provides eligible families with financial assistance payments, such as the Child Care Benefit and Child Care Rebate.

Please note: From July 2018, the Child Care Benefit and Child Care Rebate will be replaced with a single Child Care Subsidy. Under the new system, families with an adjusted taxable income equal to or lower than $65,710 could receive a subsidy of 85% of the actual fee charged, up to an hourly fee cap. The subsidy will taper down as a family’s adjusted taxable income increases, reducing to nil at $350,000.

Child Care Benefit

The Child Care Benefit helps with the costs for approved or registered child care. To be eligible for the Child Care Benefit, certain criteria apply. For example:

  • Your child needs be attending approved or registered child care
  • You need to ensure that your child meets the immunisation requirements
  • You must be the person responsible for paying the child care costs
  • You meet the residency requirements
  • You must meet the income test (for approved care only).

The payment options for the Child Care Benefit can be:

  • Fee reduction (approved care only). Paid directly to your chosen child care service provider to reduce the child care costs you pay throughout the year.
  • Lump payment. You pay the full child care costs throughout the year and then lodge a claim at the end of the financial year to receive a lump sum payment.

To claim the Child Care Benefit, you will need to apply online or in person through Centrelink.

Approved Care
Approved care is where a child care service provider has been given approval from the Government to pass on the Child Care Benefit to eligible families.

Examples of approved care may include long day care, family day care, in-home care and occasional care to name a few.

If you intend on using an approved child care, the Child Care Benefit can generally assist with:

  • Up to 24 hours per child per week for all eligible families, or
  • Up to 50 hours per child per week if, for example, you and your partner are working, looking for work, training or studying for at least 15 hours per week or 30 hours per fortnight. You may also be eligible if you meet an exception.

For the 2017-18 financial year, the approved care rate for a non-school aged child is $4.30 per child per hour, or $215.00 per week. Whereas, for school aged children, the applicable payment rate is 85% of the non-school aged approved care rate.

It’s important to note that you may receive a different approved care rate depending on your circumstances. For example, the rate payable will depend on your household income, number of children attending child care (and, their hours of attendance), the type of child care service and any special circumstances that may apply.

In terms of the Child Care Benefit income test for approved care, the maximum rate is payable if your family’s adjusted taxable income is less than $45,114 per annum. However, you won’t be entitled to any Child Care Benefit for approved care if your family’s adjusted taxable income is more than the following thresholds:

  • One child and a household income greater than $156,914.
  • Two children and a household income greater than $162,633.
  • Three children or more and a household income greater than $183,655 (plus $34,724 for each child after the third).

Registered Care
Registered care is where individuals are registered with Centrelink as registered care providers.

Examples of registered care may include preschools, kindergartens, outside school hours care services or child care provided by grandparents/relatives/friends/nannies to name a few.

If you intend using a registered child care, you can receive the Child Care Benefit up to 50 hours per child per week if, for example, you and your partner are working (or looking for work), training or studying in the week that child care services are provided. You may also be eligible if you meet an exception.

For the 2017-18 financial year, the registered care rate for a non-school aged child is $0.719 per child per hour, or $35.95 per child per week. Whereas, for school aged children, the applicable payment rate is 85% of the non-school aged registered care rate.

It’s important to note that you don’t need to meet an income test to qualify for the Child Care Benefit for registered child care.

Please note: Your Child Care Benefit may still be paid if you’re charged for child care when your child is absent on a day that they would have usually attended. The annual limit of approved care is 42 absences per child per financial year; however, other conditions apply for occasional care. There is no absence limit for registered care.

Child Care Rebate

The Child Care Rebate is an additional payment to the Child Care Benefit, that helps with the costs for approved child care. To be eligible for the Child Care Rebate, certain criteria needs to be met. For example:

  • You child needs to be attending approved child care
  • You claim and are eligible for the Child Care Benefit for approved child care, regardless of whether your income is over the income thresholds to receive a payment
  • You and your partner are working (or looking for work), training or studying in the week that child care services are provided (unless you meet an exception)
  • You need to ensure that your child meets the immunisation requirements
  • You must be the person responsible for paying the child care costs
  • You meet the residency requirements.

To claim the Child Care Rebate, you’ll need to first apply online or in person through Centrelink for the Child Care Benefit. During this process, you will automatically be assessed for the Child Care Rebate and payment will commence upon being deemed eligible.

The payment options for the Child Care Rebate can be:

  • Fee reduction. Paid directly to your chosen child care service provider to reduce the child care costs you pay throughout the year.
  • Paid to your nominated bank either fortnightly, quarterly or annually (if you opted for this option with your Child Care Benefit, then it will also apply to your Child Care Rebate).

For the 2017-18 financial year, the Child Care Rebate can assist with up to 50% of your out-of-pocket costs associated with child care, i.e. total child care fees less any Child Care Benefit payments and Jobs, Education and Training Child Care Fee Assistance received. This is capped at an annual limit of $7,613 per child.

It’s important to note that you don’t need to meet an income test to qualify for the Child Care Rebate.

Please note: Your Child Care Rebate may still be paid if you’re charged for child care when your child is absent on a day that they would have usually attended. The annual limit of approved care is 42 absences per child per financial year.

These Government financial assistance payments may help make the transition back to work easier for your household.

You may also find our article, ‘Parents returning to work’ useful, this runs through other things to consider when returning to work such as reviewing your personal insurances and your Will, as well as your superannuation.

Article source here.

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Financial attitudes and behaviours: The power of perspective

In our article, ‘Financial mindsets of the super wealthy’, we discuss that whilst on the path to financial freedom, occasionally it can be helpful to gain perspective along the way, by considering and then reflecting on the financial attitudes and behaviours of others.

It’s this gained perspective that can sometimes allow us to look inwards and evaluate our own financial attitudes and behaviours, and where applicable, make adjustments.

In this article, instead of focusing on the super wealthy, we look at the financial attitudes and behaviours of everyday Australians as reported in the Australian Securities and Investments Commission’s (ASIC’s) latest Australian Financial Attitudes and Behaviour Tracker (Wave 5).

 

Australian Financial Attitudes and Behaviour Tracker
The Australian Financial Attitudes and Behaviour Tracker was launched by ASIC in 2014 to track a number of financial attitudes and behaviours among adult Australians. Below are several of the findings from the five main areas focused on.

Financial attitudes – the attitudes towards managing money
Around 6 in 10 Australians feel confident about managing their money, but more Australians find managing their money stressful. Within these overall findings, younger people, including those with children, expressed higher levels of financial stress when compared to other groups that responded to the survey.

In our article, ‘Recognising and dealing with financial stress’, we discuss the fact financial stress can arise at any point in your life. In these situations, it’s important to recognise and deal with financial stress when it does present itself. Furthermore, you may find that financial stress can occur when confidence around managing your money is a little low. As such, getting your personal finances in order can often be a great first step in the right direction to gaining confidence in the management of your money and alleviating financial stress.

Keeping track of finances – approaches to managing everyday expenses
Around 8 in 10 Australians have a budget and 9 in 10 are keeping track of their finances in some way; however, despite these overall findings, checking for unusual or suspicious transactions on either bank or credit card statements was a noticeable exemption for some.

In our animation, ‘Tracking your spending’, we discuss the importance of keeping track of your day-to-day spending habits. Tracking your spending is a great way to make sure your spending is aligned with the budget you have set for yourself, so that you can continue to work towards achieving your financial goals and objectives. It’s also an important means of assessing whether unusual or suspicious transactions have occurred, and where applicable, bringing these to the attention of your relevant financial institution so that they can be appropriately addressed.

Planning ahead – planning for the short, medium and long-term, including retirement and beyond
Around 1 in 2 Australians have a short to medium term financial plan (3-5 years), whilst around 1 in 4 have a long-term financial plan (15-20 years). Furthermore, roughly 2 in 3 Australians reported monitoring their progress in the last six months.

In our article, ‘Running the retirement plan race’, we discuss that financial plans are important individualised road maps devised to help you reach your financial goals and objectives. Along the way, it’s important to assess your progress, and where applicable, make adjustments so that you continue to move in the right direction.

Think about one overall long-term financial plan (where you want to be) that has multiple short to medium-term financial plans (how you are going to get there) within it – and, the markers of progress towards realising your overall long-term financial plan can be measured by reviewing your achievement of these short to medium-term plans over time.

Staying informed – use of information, tools and guidance when needed
Financial institution websites, followed by talking to family and/or friends, continue to be some of the most common sources of information Australians consulted in the last six months when considering bank accounts, credit cards, home loans and personal loans. However, in terms of investments, seeking professional advice was the most common source of information Australians consulted.

When it comes to your personal finances, an important consideration is the power of leverage gained when a team of professionals (such as a financial adviser, accountant, solicitor and mortgage broker) are built around you and appropriately utilised. In our video, ‘Teamwork, leverage and achieving a common goal’, we discuss the importance of recognising where your limitations lie (in terms of knowledge and skillset) and the subsequent circumstances where the benefits of teamwork may be appropriate in achieving your financial goals and objectives.

Ultimately, seeking professional advice in areas of your personal finances (cashflow, debt management, insurance planning, investments, and superannuation) will enable you to receive appropriate guidance that is tailored to your financial situation, goals and objectives.

Financial control – savings behaviour and managing debt
Around 1 in 5 Australians reported that they did not save any money over the last six months. In addition, a small percentage reported that they would not be able to cover three months’ living expenses if faced with a sudden loss of income.

Given the rising cost of living (such as electricity and grocery bills), and a relatively sluggish wage growth environment, at present you may have started to feel a slight pinch in the hip pocket when it comes to the availability of surplus income to put towards a savings plan or the repayment of debt. In our article, ‘Household expenditure: Finding surplus income’, we discuss that by completing or reviewing an existing budget, you can gain a better understanding of the movement of your money (inflows and outflows) and areas where surplus income may lie. By itemising your household expenditure and then taking the time to do an assessment of your spending habits, you can see whether adjustments can be made here or there to find surplus income.

In addition, in terms of managing living expenses with a sudden loss of income, it’s important to consider the establishment of an emergency buffer and appropriate personal insurances, so that if such a situation does arise you do not need to rely on other sources, such as credit cards and borrowing.

Financial literacy – level of understanding of several key investing concepts
Less than 1 in 3 Australians report understanding the risk/return trade-off concept and only 4 in 10 understand the investing principle of diversification.

In our article, ‘Diversification fundamentals in portfolio construction’, we discuss the importance of ‘not putting all your eggs in one basket’ and how diversification can be achieved through spreading your funds across different asset classes and markets and regions. Furthermore, we also discuss how your risk tolerance, financial situation and financial goals affect how diversification is applied when it comes to devising an appropriate investment mix to meet your needs within a specified time horizon.

Ultimately, words and our understanding of them can help us to comprehend in a meaningful way the information that we receive and make informed decisions in relation to our own personal circumstances. Although, jargon is prevalent in many industries, in terms of investments, the risk/return trade-off concept and diversification principle are two important things to understand.

 

Moving forward
Our ideas, thoughts and opinions can invariably influence our financial attitudes and behaviours, which can in turn influence how we manage our personal finances. Sometimes comparing similarities and differences to our own personal circumstances, via gained perspective from others, can allow us to look inwards and see whether there are things that we need to take the time to consider, improve upon or give ourselves a pat on the back for.

Please remember that we are here to help and support you on your journey towards financial freedom. As such, if there is an area of your personal finances (cashflow, debt management, insurance planning, investments, or superannuation) that you would like to discuss then book a time to have a chat with us.

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