, ,

5 Tips For Getting On Top Of Financial Housekeeping

Remember the last time you did a good spring clean? It probably felt good. And guess what? Getting your finances in order feels just as good, and it’s even more rewarding.

The start of a new financial year is a great opportunity to clean up your act with your finances. Here are five tips to make this year your best yet.

Take a day

Set aside an entire day to do your financial housekeeping. If you can afford to take annual leave, choose a weekday when you can more easily make phone calls and work uninterrupted.

Make a fresh start

Ever calculated your net worth? Although daunting at first, it’s a helpful starting point to see where you’re at financially and to help you decide on some achievable goals. And it’s easy: subtract your liabilities (what you owe e.g. mortgage, loans, credit cards) from your assets (what you own e.g. home, super, savings).

Next, write your financial goal for the year. It might be to improve your net worth by a specific amount by this time next year, or to funnel money towards a specific debt so you can take a guilt-free holiday in 2019. Commit to it by marking a progress review in your calendar every three months.

Sort out your savings

Let your financial goal guide you here, and review your savings plan to make sure you can achieve it. Then shop around and take advantage of promotional rates that give you favourable interest. The same goes for debts.

But if you really want to clean up your act, challenge yourself to a spending fast. For one month you’ll purchase only essentials, putting all other income towards supplementing your savings or making a dent in your debt. Not only is it a fun challenge, it will teach you more about your spending habits (and why you may not be hitting those savings goals) than any spreadsheet can.

Get your bills in order

Review regular outgoings to make sure they still fit your needs. Open up your latest power, phone and internet bills and check the billing breakdown to see if you’re paying too much for services. Comparison sites like FinderGoSwitch, and WhistleOut will give you the numbers you need to start afresh or get a better deal with your current providers. While you’re there, save your sanity and the planet by requesting to go paper free — these days you only really need originals of legal or notarised documents in your paper filing.

Be good to your future self

Superannuation, mortgages and insurance might not be the most fun way to spend your money, but this last tip might save you quite a bit.

Aim to increase your superannuation contribution for every year you get closer to retirement.

Wondering whether to put more towards super or the mortgage? They’re both important, but don’t rush to put more money on your mortgage: salary-sacrificed super above your employer super guarantee is taxed at only 15%, and the returns could be greater than the interest on your mortgage. Do the sums to find the balance that works for you.

As with your savings and bills, assess your insurance needs against your goals. Many insurance policies can be tailored to fit, so consider choosing one policy to customise now. If you’re not in a hurry, mark your calendar for May 2019 to take advantage of EOFY insurance offers.

Getting on top of your financial housekeeping can save you stress and money. Make it easier by setting aside a day to work through, and by this time next year you’ll be rewarding yourself for getting closer to your financial goals. If your efforts reveal that you need more in-depth advice, a certified financial planner professional can help you develop a plan to get your finance back on track.


Article source here.

, ,

Why Location Is Crucial When Buying An Investment Property

The first thing most of us look at when selecting an investment property is its location. If the property itself isn’t quite right, you can always renovate, but it’s not as easy to move a house to a better location. That’s why you should consider the location carefully. Here are some of the most important things to look for.

Love thy neighbour

Before you buy, familiarise yourself with the local community. If possible, visit the neighbourhood during both day and night to get a feel for whether it’s a safe place to live. Are there kids playing outside or security bars on the windows? Are there trampolines in the front yards or the remnants of last night’s party? This will help you determine whether the location is suitable for the type of tenants you want. After all, if you’re looking in an area that attracts university students but you would prefer to rent to a quiet couple, then perhaps this location isn’t right for you.

Future plans

The neighbourhood might look suitable now, but things can change. It’s a good idea to investigate any future plans that could affect the value of your property. For example, the local council should be able to tell you if a freeway or large-scale construction is planned. Major works could increase or decrease your property’s value depending on where they’re situated.

Access to infrastructure

To increase your potential rental income, try to buy near desirable infrastructure and facilities. For example, families often pay a premium to live in the catchment area of a quality public school, so it’s worth checking the educational zoning.

Access to shops, public transport and the beach are also attractive features for both tenants and prospective future buyers. And while it’s handy to be near the airport, if you’re located right under the flight path it might impact the amount of rental income you receive.

Bargain pockets

Finding a bargain pocket in a good suburb could increase your capital growth potential. By looking at demographic data, such as that collected during the Census, you may be able to spot trends. Perhaps the neighbourhood has recently been gentrified by young professional couples who are increasing the average income of the area, which is likely to increase the value of the property over time. Bargain pockets may also be found in close proximity to high-growth areas that will benefit your investment in the long term.

Searching for an investment property can be a rewarding experience. By considering the location, not just the address, you can increase your chance of maximising your rental and capital growth potential. If you need help buying your investment property, contact your mortgage broker.


Source: Your Loan Hub

, , ,

Have Your Best Holiday Ever – at Home

Love where you live but can’t seem to relax and switch off enough to make a week at home seem like a holiday? Here are five top tips from business owner and mum of four, Cath Loiacono on how to make the most of spending a holiday at home. You’ll save a fortune and still go back to work feeling like a million dollars.

Cath and Paul Loiacono have been parents for 11 amazing years and now have four kids to keep them busy, plus their own businesses to run. As two people who are self-employed, it’s hard enough to find the time to hand over the reins for a week and just relax. And with the kids to entertain, there are few opportunities on a family holiday to enjoy time together as a couple.

“Paul has run his own company for more than 10 years and I started my online sports and active wear store Fibre15 in the last 12 months,” says Cath. “The last time we went away together was a long weekend in Singapore to see the Formula One Grand Prix and that was five years ago! It was great but took a big effort to organise everything so we could get away without the kids and we just haven’t had the time or energy to do it again.”

So when the couple were out for dinner and daydreaming about having a mini-break, Paul had the idea of taking a week off and staying at home as a way of having some couple time without all the preparation involved in leaving the kids with their grandparents.

Here are Cath’s five tips for making the most of holiday time spent at home, so you can benefit from the best of their experience.

1. Stick to term time

Having the kids in school every day gave us six clear hours to spend just as we wanted. When we holiday with the kids we dedicate most of our time away to doing things they’ll enjoy. The chances of having a five-minute conversation without being interrupted, or lingering over a coffee after lunch are non-existent! And knowing we’d see the kids after school everyday was great. Although we welcome the time alone together, it’s hard not to be thinking about them when we’re away, wondering if they’re OK and that’s not very relaxing either!

2. Get ahead on…

Laundry, shopping and housework etc. A little time spent the week before can spare you from some of those routine chores that get in the way of your holiday time. I did a big grocery shop and had clean school uniforms all hung up and ready to go for the week ahead. I also did a big push on the housework so there would be less to do in the week. Plus, I had Paul around to help in the afternoons when the kids got home so that really cut down on the time it took to stay on top of chores.

3. Be spontaneous

Life with a large family can be very routine. So the thing that made it feel most like a holiday was having the freedom to just make it up as we went along. We might chat about what we’d like to do the night before and depending on the weather forecast we’d decide to check out a movie, walk to the surf club for coffee or take a drive to a new restaurant. The day we went to Sydney was fantastic, because we could just take our time, stop for coffee en route when we felt like it, linger over lunch at the Opera Bar and take a long stroll in the Botanic Gardens. Nothing felt like a rush which made a lovely change from the norm!

4. Hit the road and explore

We had about six hours between sending the kids off to school and being there to welcome them home. So once we’d waved them off, we didn’t hang about and would make tracks for a lunch outing, beach walk or a trip to the city. We’re very lucky to be living in a beautiful part of the NSW Central Coast so being in nature was very easy to do without travelling far. But even spending time in the car talking, just the two of us, was a novelty and something to enjoy. When you take a long drive to visit somewhere special, the journey itself is a rare chance to be together and chat.

5. Make time for kids at the weekend

We rounded off the holiday week by enjoying a couple of nights away with the whole family in the Hunter Valley. It was the perfect way to share the holiday feeling with our four children and give them the best of ourselves and our full attention for an entire weekend. We’d spent the whole week reconnecting with each other so it was really easy to be relaxed. Exploring the Mega Creatures expo in the Hunter Valley Gardens made it feel like a special occasion for our little ones.

So was Cath and Paul’s experiment in holidaying at a home a success? “This is something we’ll be doing every year from now on,” says Cath. “The money you save on travel and accommodation is just the beginning of the benefits of taking a break at home. When you go on holiday, there’s a lot of luck involved in choosing the right location and accommodation that has everything you need. Holidaying at home takes away all that uncertainty and you don’t need to worry about packing enough of the right clothes for changeable weather or extra activities you might want to do. All in all, it’s a really easy way to relax and switch-off without all the stress and hassle that can be part of travelling with a big family.


article source here.

, , ,

10 Tips For Choosing An Investment Property

So, you’re thinking of buying your first residential investment property? There are a few things to consider before making the move. Here are our top 10 tips for avoiding potential difficulties and ensuring success.

  1. Know your goal

Understanding your financial objectives is key to finding the right investment property. The actual property itself is rarely the end goal when it comes to investing – the financial elements should be your key focus. First, decide what your investment goal is and then create a plan to achieve it within a realistic time frame.

Are you looking for a plan for retirement? An income-generator to fund your children’s education? Or building equity to gain a regular income? Define a plan and review it regularly as your situation and the market changes.

  1. Research, research, research

Understanding which property is going to work best for your situation is key. It needs to be one that will be of high demand from renters and, possibly, owner-occupiers down the track. Be sure to research which types of properties are in demand and rents quickly in particular areas, and those that don’t. Is this an area popular with families who want three- or four-bedroom homes, or with singles looking for studio apartments? Speak with property managers and check ads to find out what renters are currently looking for, and how their needs may change in the future. What developments are planned nearby? Get to know the neighbourhood you’re planning to invest in.

  1. Old or new?

It’s the age-old debate: should you buy a renovator’s delight or something you can rent straight away? It’s great if it can be rented out as is, but potential to renovate should also be considered. The ability to easily and economically add value to a property is a plus, as it could increase rental returns. Don’t immediately write off a property just because it needs a paint job or the kitchen cabinets need replacing, but at the same time avoid overcapitalising if it’s not going to deliver returns. It’s a balancing act, so consider your skill levels, the extent of makeover required, and your access to funds to pay for renovations.

  1. Location, location, location

Location is critical to performance. Some of the things to consider include:

  • How far is the property from the CBD or business areas?
  • Are there schools nearby?
  • How’s the shopping? Can tenants walk to local shops or will they need to drive?
  • What and where are the public transport options?
  • What other amenities are close by? Are there cafes, a medical centre, a pharmacy, a gym?
  1. Do your sums

Always check your finances before deciding to purchase a property. Get pre-approval and make sure you can cover repayments as well as extra upfront costs such as conveyancing, inspections and taxes. There are also ongoing costs to consider including landlord insurance, strata and property management fees, property maintenance, council rates and utilities.

You need to set yourself a realistic picture of a property’s cash flow, rather than vague idea of whether rent will cover expenses, so use a spreadsheet to calculate all foreseeable expenses. If cash flow is negative, can you afford to maintain the property? What happens if it’s vacant for a couple of months? Do your sums carefully and always ensure you factor in a financial buffer to avoid mortgage stress.

  1. Choose the right setup

When it comes to investing, it’s important to understand how to set up the purchase to receive the most benefit. The entity should be tax-effective and protect any existing assets. You can purchase in your name, through your super or through a trust, but always understand how the purchase will affect you and your family. Expert advice can assist in maximising your benefits.

  1. Pick the right features

You want to appeal to the highest number of tenants, so look for properties that offer that little something extra, like a second bathroom or a lock-up garage. Also, look at properties that appeal to many segments. For example, a lift may appeal to both retirees and a young family, as both will be looking to avoid stairs. Just make sure the benefits outweigh any extra costs.

  1. Check your emotions at the door

Remember, you won’t be living in this home, so there doesn’t need to be an emotional connection to the home or the area. Your decision should always be about which property will give you the best return, not which one is most suited to your own tastes and lifestyle.

  1. Timing is key

It’s a great idea to keep on top of the market’s movements and its dynamics. While there are investment opportunities available most of the time, some market conditions are more favourable. Do plenty of research and, if you don’t fully understand it, ask for help.

  1. Get expert advice

Your broker can put you in touch with experts when it comes to real estate and investment. This means accountants, real estate agents, lawyers, and valuers. These people are immersed in the industry and will be able to guide you in your decision-making.



Article source here.

, ,

Self-Managed Super Funds: The Importance Of Getting The Right Advice

The Australian Securities and Investment Commission (ASIC) has released a report detailing its findings from a large research project undertaken into self-managed super funds (SMSFs). The research looks into member experiences in setting up and running an SMSF and whether advice providers are complying with the law when providing personal advice to retail clients to set up an SMSF.

Since the introduction of SMSFs in 1999, many consumers, motivated by a desire to gain control over their investments and financial futures, have opted for SMSFs over retail superannuation products. Today, there are more than 590,000 SMSFs holding assets worth nearly $697 billion. This figure represents 30 per cent of all funds held in superannuation. Amazingly statistics from the ATO show that people under 40 are the fastest growing segment of the sector. People who earn less than $60,000 a year now account for 55 per cent of SMSF members, and 20 percent of members are under 45 years old.

Considering the immense and growing popularity of SMSFs, ASIC saw the need for consumers to be fully aware of the risks and obligations involved with moving their superannuation into a self-managed super fund, and wanted to highlight the important role that access to quality financial advice plays in guiding consumers to make the right decision.

Consumers can be caught out by the complexities of SMSFs

The report highlighted a number of areas where consumer expectations around SMSFs are misaligned with the reality of running one. The research found that 32 per cent of members found setting up and running their SMSF to be more costly than expected, and 38 per cent found running their fund to be more time consuming than expected[1].

Additional findings that highlight the lack of understanding consumers have around their SMSFs and their corresponding legal obligations as SMSF trustees include[2]:

  • 33% of members did not know that an SMSF must have an investment strategy;
  • 30% of members had no arrangements in place for their SMSF if something happened to them;
  • 29% of members thought they were entitled to compensation in the event of theft and fraud involving the SMSF; and
  • 19% of members did not consider their insurance needs when setting up an SMSF.

Adviser advice inadequate when it comes to SMSFs

The research report also reviewed 250 client files where an adviser had provided personal client advice to set up an SMSF. Unfortunately, the results indicated that there were a number of instances where the advice provided was non-compliant, ranging from poor record-keeping and process issues to situations where clients were at risk of significant financial detriment.

It’s a big wake up call for both clients and advisers. Clearly, lots of people are setting up self-managed super funds without knowing whether this is the best option. Also the report highlighted that some advisers aren’t doing a good enough job in this space to support their clients.

What should I do if I am interested in setting up an SMSF?

If you’re interested in setting up an SMSF, you should not be put off by the findings of this report, however, we urge you to seek reputable advice to ensure that an SMSF is the right approach for your finances.

When selecting a financial planner, you need to ask about their credentials and get an overview of their education to ensure they have the right knowledge around SMSFs. Additionally, they should be open-minded in regards to options outside of SMSFs. Actively ask your planner to outline the benefits and risks of SMSFs vs other super investment options to ensure they are the best option for you and your goals for the future.

How do I find the right financial planner for advice on SMSFs?

Firstly, don’t be afraid to shop around. Ideally, a relationship with a financial planning professional will be long-term, ensuring you are working towards and achieving goals that benefit you over the course of your life. It is crucial that you feel comfortable with the planner you select, so it can be a good idea to have initial meetings with a few planners to ensure that you are aligned in terms of how you want to approach financial planning, and that you feel like they understand your needs and can provide appropriate advice.

Secondly, ensure they are licensed. You should always look for a financial planner who works for a firm that holds an Australian Financial Services (AFS) License issued by the Australian Securities and Investments Commission (ASIC). If you have any doubts, you can use the ASIC Financial Adviser tool on the MoneySmart website to verify whether the financial planner is licensed.

Finally, ask about their education, qualifications and associations. Make sure your financial planner is properly trained to provide advice, and don’t be afraid to ask about what financial planning qualifications they have achieved. You should also look for a planner who is a member of a professional body, such as the Financial Planning Association (FPA). Members of the FPA must meet stricter criteria and higher standards than currently required by law.

In order to provide advice that will specifically benefit you, your financial planner should spend time asking questions and gathering information to gain an understanding of your current circumstances, your financial habits and your goals in order to develop a personalised financial plan that encompasses all areas of your finances, including the right approach to superannuation. If you encounter a planner who seems overly invested in selling you a particular product, particularly without spending time getting to know you, you should treat that as a red flag that they are not the right adviser for you.

I already have an SMSF, what now?

If you already have an SMSF, remember that you are not locked in to this investment structure. If you do some further research, or seek additional advice, and decide an SMSF is not right for you, there are options for winding up your SMSF and moving your super to a more traditional product, and the ATO provides some general direction on winding up your SMSF.


Feel free to contact us should you have more questions, we’re willing to set up a meeting with you.



Article Source Here.
[1]Pg 8, ASIC, “SMSFs: Improving the quality of advice and member experiences”, June 2018,https://download.asic.gov.au/media/4779820/rep-575-published-28-june-2018.pdf
[2]Pg 8, ASIC, “SMSFs: Improving the quality of advice and member experiences”, June 2018,https://download.asic.gov.au/media/4779820/rep-575-published-28-june-2018.pdf

, , , , ,

Top 10 Legislative Updates For Financial Year 2018-2019

As we kick off the new financial year, we thought we would provide you with a list of the top 10 legislative updates that are due to take effect in the 2018-19 financial year – either on or after 1 July 2018.

Please note: Some of the below listed legislative updates were proposed measures in the 2017-18 and 2018-19 Federal Budget, some which have now been legislated, whilst others are yet to pass through the legislative process. As such, where applicable, we have noted legislative updates that are still pending.

Importantly, changes could be made or the proposals may be rejected.


1. Contribution Caps and General Transfer Balance Cap.

Please note: From 1 July 2018, the new carry forward provision will apply for concessional contribution caps; however, the first year that you will be entitled to carry forward unused amounts is the 2019-20 financial year.

  • The general transfer balance cap will remain unchanged at $1.6 million.

2. Downsizing Measure. From 1 July 2018, the Downsizing Measure will allow those aged 65 or over to use the proceeds from the sale of their home, to make a downsizer contribution of up to $300,000 each into superannuation (subject to complying with some finer details).

3. First Home Super Saver Scheme. From 1 July 2018, the First Home Super Saver Scheme (FHSSS) will allow eligible prospective first homebuyers to withdraw their voluntary superannuation contributions, and an amount of associated earnings, to assist with the purchase or construction of their first home.

4. Superannuation Guarantee and Employees with Multiple Employers. From 1 July 2018, individuals who have multiple employers and earn more than $263,157 will be able to nominate their wages from certain employers are not subject to the Superannuation Guarantee. This will help them avoid breaching the concessional contributions cap of $25,000. This proposal has not yet been legislated.

5. Government Co-contribution. From 1 July 2018, the income thresholds for the 2018-19 financial year will be increased due to indexation. Moving forward, the maximum co-contribution of $500 will be reduced by 3.333 cents for each $1 of income earned over $37,697 (previously $36,813), and cuts out when your total adjusted taxable income reaches $52,697 (previously $51,813).


6. Personal Income Tax Plan. From 1 July 2018, the top threshold of the 32.5% tax bracket will be increased to $90,000 (previously $87,000). Below is a brief overview of the Personal Income Tax Plan income levels and tax rates for the 2018-19 financial year, as well as the other legislated changes due to take effect in the 2022-23 and 2024-25 financial years. This proposal has recently been legislated.

7. Personal Income Tax Plan – Continued. From 1 July 2018, a new non-refundable Low and Middle Income Tax Offset will be introduced, which is aimed at providing a benefit of up to $200 for taxpayers with a taxable income under $37,000; up to $530 for taxable incomes between $37,001 and $90,000, before phasing out at $125,333. This proposal has recently been legislated.

8. HECS/HELP Loan Repayment Rates and Thresholds. A bill has entered the Senate that if legislated in its current form (third reading*) would see the repayment rates and thresholds for HECS/HELP loans amended. Below is a brief overview of both the legislated and the proposed repayment rates and thresholds. This proposal has not yet been legislated.

Social Services

9. Child Care Subsidy. From 2 July 2018, the Child Care Benefit and Child Care Rebate will be replaced with a new financial assistance payment, the Child Care Subsidy. Moving forward, the level of Child Care Subsidy that you may be entitled to will be assessed against several interconnected factors: combined family income; activity test (the activity level of parents); and, hourly rate cap applied in relation to the child care service type and age of your child.

Please note: This is not an automatic transition process. You will be required to complete a ‘Child Care Subsidy Assessment’ task with Centrelink. If you do not complete the required assessment, the Child Care Subsidy will not be paid to your approved child care provider.

10. Age Pension Residency Test. From 1 July 2018, new applicants will be faced with enhanced residency requirements (however, existing exemptions would still be preserved). This proposal has not yet been legislated. The enhanced residency requirements to be deemed eligible to receive the Age Pension are as follows:

  • 15 years of continuous Australian residence, or
  • 10 years of continuous Australian residence, with at least five years of this during their Australian working life (i.e. between age 16 and Age Pension age), or
  • 10 years of continuous Australian residence, and not have been an activity tested income support payment recipient for a five-year cumulative period.

Moving forward

If you would like to discuss any of these legislative updates and their relevance to your financial situation, goals, and objectives, please do not hesitate to contact us.




Article source here.

, , ,

5 Bookkeeping Tips For Your Small Business

Setting up your business is exciting and challenging, and will hopefully bring you the rewards you deserve, along with the autonomy you dream of. However, if your business is going to be profitable, it’s vital that you get the accounts right. That starts with making sure you set up the books correctly.

1. Comply with the law

All businesses must register for an ABN. If you turn over more than $75,000, you will also need to be GST registered. Registering for PAYG Withholding Tax is also essential if you employ staff.

In addition, it’s vital that you keep all records relating to income tax, GST, payments to employees, superannuation, fringe benefits tax, fuel tax credits and business payments. The law requires you to keep all these records for five years and have them accessible on request.

2. Know what bookkeeping is about

Bookkeeping is the process of organising, recording and reporting on the financial transactions of your business. This involves several different processes:

  • Keeping track of daily transactions.
  • Sending out invoices and managing accounts receivable, including chasing late payments.
  • Managing accounts payable, including payment of supplier invoices, expenses and petty cash.
  • Maintaining the balance of income to expenses, to make sure the business doesn’t run out of day-to-day money.
  • Making sure the books are valid and up to date whenever the accountant needs them.

Good bookkeeping will keep your business running smoothly day to day, and will make your accountant’s job a lot easier.

3. Choose what type of accounts you want to keep

There are two main types of accounting systems:

  • Cash-based accounting. This records transactions at the time the cash was paid or received, not when the transaction actually occurred. It is a relatively easy system and involves little paperwork, but it can be prone to errors. It is usually used by small businesses who mainly deal with cash transactions.
  • Accrual-based accounting. This records transactions at the time they occur, even if the money has not been paid yet. This is the most widely used method and is more accurate but can be more complicated, although it makes it easier to record transactions like wages and credit.

Some businesses use a combination of the two. If you’re not sure which would work best with your business, check with your accountant – he or she is the person who will be helping you out come tax time.

4. Choose your system

Most businesses these days use some form of electronic bookkeeping. There are a variety of options to choose from here, but all require you to be accurate on a computer and have a good backup procedure where information is stored off site. Options include:

  • These are the simplest electronic option and are ideal if you’re accurate at data entry and don’t want to spend out on a full accounting package.
  • Accounting software packages must be compatible with Standard Business Reporting. It’s also vital that you make sure you choose a package that meets the needs of your business.
  • Web-based. “Cloud” systems have the advantage of being able to be accessed from any location, and also solve the problem of off-site data storage. They are usually cheaper than standard software, but are thought to be slightly less secure at present.

5. Stay on top of it and have a great accountant!

It’s vital that you stay on top of the books in order to make sure your business is running as it should. Allocating a set time each week to devote to your books ensures that this habit becomes part of your work routine. It also should help you maintain your profitable business, without getting you too confused in the process.

Make sure you choose an accountant who you feel comfortable asking questions of, and who can guide you through the setup of your books. Great accountants can act as advisers and really make a difference to the success of your small business.


Article source here.

, , ,

Farmers Offered More Financial Flexibility

Australia’s biggest agricultural lender has admitted it lost touch with farmers as it moves to relax rules around loan repayments and make it easier to save for droughts.

National Australia Bank will allow primary producers to offset farm management deposits against loans, with other banks being urged to follow suit.

Farm management deposits allow farmers to remove money from their taxable income during good years to later use during tough times.

“The royal commission and other inquiries reveal that in some cases we have lost touch,” NAB chief executive Andrew Thorburn said in Wagga Wagga on Monday night.

The bank will also no longer charge penalty interest payments on farmers who fall into debt on loans.

NAB came under fire during the banking royal commission for charging struggling Queensland cattle farmers more than $2.6 million in default interest over more than five years.

Agriculture Minister David Littleproud wants other banks to follow NAB, encouraging farmers to “vote with their wallets” and tell banks who refuse to “bugger off”.

Rural Bank has until now been the only lender to allow the FMD offset since it was introduced in 2016.

One in three farmers bank with NAB, meaning the other big banks will face increased pressure to join them in making the change.

National Farmers’ Federation chief executive Tony Mahar is hopeful other lenders will allow greater flexibility for primary producers.

“We need to make sure farmers get through these challenging times and are able to continue to produce food and fibre for Australia and the globe,” Mr Mahar told Sky News on Tuesday.

Mr Littleproud tore shreds off the foreign-owned Rabo bank for “turning up its nose” at Australian farmers last week by ruling out an FMD offset product.

“You have to ask how serious that bank is about agriculture in Australia. It’s fantastic an Aussie owned bank has shown a social conscience and led from the front,” the minister said.

Mr Littleproud also wants other banks to follow NAB on removing penalty interest payments for farmers in drought, urging lenders to reassess the practice more broadly.

“I don’t think the charge truly reflects the cost to the bank. It’s really a kick in the guts when someone’s down, which isn’t the Australian way,” he said.



Daniel McCulloch and Matt Coughlan

Article source here.


, , ,

The Relationship Between Saving Motives And Saving Habits

Before we dive in, take a moment to consider which of the following best describes you and your household in terms of your current saving habits?

  • Save regularly by putting money aside each month.
  • Spend regular income and save other income (such as investment income, bonuses etc.).
  • Save the income of one family member and spend the other.
  • Save whatever is left over at the end of the month (no regular plan).
  • Do not save.

Saving motives and saving habits 

When it comes to the saving habits of households, there are often three distinct camps, the regular savers, the irregular savers and those that do not save (the non-savers). Interestingly, there is often a relationship between saving motives and saving habits*.

Importantly, saving motives can include things such as, for retirement, for children’s needs, to buy a house or consumer durables (e.g. fridges, motor vehicles etc.), for holidays, for emergencies and to have funds in reserve for necessities.

Here are some interesting findings regarding the relationship between saving motives and saving habits:

  • Someone that has a motive around saving for emergencies and/or retirement is more likely to be a saver, whether regular or irregular.

Also, if we look at people that save regularly versus irregularly, regular savers have a more positive relationship with a retirement saving motive, a high income and/or a long-term saving horizon.

With the above in mind, it’s important to remember that the source of your wealth creation is you. For some of us, saving may be second nature or come easy due to circumstance, whilst for others, it may be more of a struggle. What is important is to enjoy life now whilst also taking the time to make sure this enjoyment flows through and is experienced by your future-self as well.

By having a clear picture of why you need (or want) to save, as well as the motivation and roadmap to achieve it, you might just find this makes all the difference.

The current climate affecting savers

Admittedly, the recent economic environment, namely slow wage growth and the rise in the cost of living may be disrupting the efforts of savers through the need to divert more of their disposable income away from saving to spending.

Unfortunately, the impact of this may be evident in the survey results from ASIC’s Australian Financial Attitudes and Behaviour Tracker (Wave 5). For example, of the Australians surveyed:

  • 23% saved money using a savings account that was automatically linked to their pay. This is down from 24% in the previous survey (Wave 4).
  • 31% saved money using a savings account that was not automatically linked to their pay. This is down from 38% in the previous survey (Wave 4).
  • 16% saved money but not through a savings account, for example, put money in an envelope or money tin. This is up from 13% in the previous survey (Wave 4).
  • 12% saved money by making voluntary contributions to their superannuation account. This is down from 13% in the previous survey (Wave 4).
  • 20% saved money by paying more than the minimum amount off their mortgage or other personal loan. This is down from 22% in the previous survey (Wave 4).
  • 21% did not save any money over the last six months. This is up from 19% in the previous survey (Wave 4).

Moving forward

When it comes to saving, it’s important to understand the positive effects associated with saving a portion of your income from employment each payment cycle. For example, saving can help with:

  • Your capacity to establish and build-upon an emergency buffer (e.g. for unexpected events, such as job loss, medical/dental emergencies, or home/car repairs).
  • Your capacity to utilise and rely on your cash/debit cards, as opposed to credit cards, to meet lifestyle expenses.

For those savers impacted by the current economic environment, some relief may be on the horizon if several of the Government’s 2018 Budget proposed measures are legislated and come to fruition, such as the 7-year personal income tax plan.

In the meantime, it’s important to take stock of your existing financial situation, goals and objectives. This may involve, a closer look at your household expenditure to see whether there are areas were surplus income could still be realised, as well as the continuation of tracking your spending and comparing the results to your budget planner.


Article source here.


Renovating The Smart Way? Avoid These Four Mistakes

Never renovated a property before? Here are four mistakes to avoid when it’s home improvement time.

Mistake 1: Not doing enough research

Don’t start work without knowing the details. You need to research building materials and tradespeople and understand the legal and regulatory aspects of a renovation.

Find out how much materials and tradies cost. You can request several quotes to get a realistic price range. You can also find out if there are discounts on offer – for example, for bulk-buying or early payment – or opportunities to negotiate.

Before you start, ask your local council whether you need any permits. Fines for unlawful renovation can be hefty, as can the cost to repair or rebuild.

Mistake 2: Failing to plan properly

Poor planning can cause big problems. Your budget or schedule could blow out, the property might end up worse off, or you might not achieve what you really wanted to.

Planning should include these three elements:

  • Scope: What you want to do and the resources you need.
  • Schedule: When different aspects of the renovation should happen.
  • Budget: How much you plan to spend.

If you’re having trouble, consider hiring professionals. This may be an architect to provide drawings, or a construction manager to juggle the different elements.

Mistake 3: Underestimating costs

First-timers often make the mistake of setting a budget – “we’ll spend $50,000” – without knowing what it will buy. Don’t fall into that trap. If you research building materials, you’ll be more likely to buy the right quantities at the right price. If you make detailed plans, your trade quotes will be more accurate. Good research and planning will help you create a realistic budget.

Remember to build some contingency ¬into your budget in case things don’t go to plan. Adding 10 to 20 per cent to the final budget is a good rule of thumb.

Mistake 4: Hiring the wrong people

Labour is one area where you’ll want to cut costs, but quality should trump price.

  • Hire for the job: It’s tempting to hire a jack-of-all-trades, but try to hire specialists for important jobs. For example, hire a plumber, not a handyperson, to install a sink.
  • Make sure the tradesperson is licensed: The tradie is accountable for his/her work, plus the renovation comes with a warranty.
  • Check references: Word-of-mouth recommendations are often the best reference. Also look for genuine testimonials and signs of quality work, such as industry awards or positive media coverage. Your house has a better chance of becoming your dream home when you avoid the most common renovation pitfalls. When it comes to financing your renovation, your mortgage broker can help.

This article is not intended to be comprehensive nor does it constitute legal advice. If you have questions, feel free to talk to us.


Article source here.