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Happy New Financial Year!

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 happy-new-year-2013-39[1]Everyone thinks about change and making resolutions when the calendar year ends but what about the financial year end?

 The new financial year is a perfect time to make some resolutions to improve your financial health. If you create simple and easy-to-follow resolutions you will be more likely to succeed.

 

To start, you can ask yourself the following questions:

 •         What do I really want to change?

 •         What are the benefits of making changes?

 •         What steps do I need to take to make changes?

 •         What will stop me from making positive changes?

 •         Are my changes realistic and long term?

 This article lists some simple, easy-to implement resolutions you could take on for the new financial year.

 

Keep your receipts

The most common reason people don’t take advantage of tax deductions when they file their tax return is simply because they don’t keep receipts. While keeping receipts for big ticket items is necessary, you don’t always need a receipt for the smaller items such as stationery and books.

 

Create a budget

Achieving your financial goals doesn’t have to be daunting; a good way to start is with a budget. Try to keep a diary for your expenses and your spending. This will enable you to track where your money is going and how much spare cash you can use to either attack your debt or build investments.

 

Cut your spending

Look at cutting unnecessary expenses. This could be as easy as making your lunch or coffee at home, cutting out optional extras such as lottery tickets or taking public transport instead of driving.

 

Pay extra

Try paying more than the minimum off your debts. Whether it’s personal loans or credit cards, paying the minimum will hardly make a dent as you will only be paying off the interest.

 

Increase your savings

Set aside a little bit of extra money each day, week or month. If you can save just $10 a day, you will have an extra $3,650 at the end of the year. You can talk to your employer about getting it automatically deducted from your pay – if you don’t see it you are less likely to miss it.

 

Contribute to your super

Think of the long term and your lifestyle when you retire. One way to increase your retirement savings is through salary sacrificing some of your pre-tax salary.

 

This will not only help to increase your super savings but could also reduce the amount of tax you pay.

 

Seek professional advice

Your financial adviser will help you keep to your resolutions and make sure your financial strategy is appropriate for the year ahead.

Source | IOOF

Save Faster!

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Get your savings moving faster

SaveFasterSooner or later, most of us find ourselves thinking seriously about our long term personal goals and how we are going to achieve them. Perhaps you have already started to save, but have found that credit card and other bills undermine your plans.

 

 

Whatever your issue, here are some quick steps to get your savings moving faster:

  1. Take a hard look at your bills and see how you have been spending your money. Then work out where you can cut down.
  2. Identify your medium to long term personal goals.
  3. Make a realistic but firm budget to help you determine your savings capacity then stick to it.
  4. Have part of your salary regularly deducted from your account and transferred to a high interest savings account.
  5. Contact your financial adviser who will assess your individual needs.

Once you have considered the previous steps to increase your savings, you might want to consider investing in a managed fund. Purchasing units in a managed fund will spread your money across a variety of investments. Your money is pooled with many other investors, so you can invest in assets that you may not be able to as an individual.

Different managed funds specialise in different areas, such as shares (Australian and/or international), property, fixed interest investments and cash, or a combination of these via a diversified fund. Investing in shares within a managed fund may also provide tax benefits. You will need an initial investment of at least $1,000 to get started. If you save just $200 per month in a managed fund earning 7% per annum, within five years your investment would grow to $14,800 and within 10 years you would have around $32,332.

Despite the volatility sharemarkets around the world have experienced, it’s important to remember that markets are cyclical and shares are a long-term investment. Eventually shares will regain their value, but in the meantime opportunities may arise.

Your financial adviser can help you clarify your personal and investment goals and advise you on the full range of investments – shares, managed funds, listed property trusts and fixed interest. After recommending the investments that would best meet your needs, your adviser can help you implement your investment strategy and keep it under review.

Wealth Health Checklist

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Wealth-CheckAre you keeping your finances healthy by doing the right thing at the right time? Taking the best action at the optimum time can be crucial to your financial future.

 

 

Accumulators (aged 25–45)

Start a monthly investment plan

  • ‘Pay yourself first’ rather than create unrealistic budgets.
  • Salary sacrifice into super while other financial obligations are low and stop when current needs are more important.
  • Use any pay rises to fund your regular savings.
  • Be clear about what you’re saving for and the best structure and investment options for that.

Control debt

  • Reduce unnecessary spending.
  • Pay off the credit card, it’s probably costing you more than 15% pa interest.
  • Consider consolidating credit card debt into a personal loan and potentially paying less interest. If you do this, resist the temptation to accumulate more debt into your credit card.

Check out the government co-contribution

  • If eligible you could get up to $500 added to your super for free every year.

Consider using a mortgage offset account

  • This could reduce your loan interest while giving you access to the cash if you need it.
  • Make sure you have sufficient death, disability and income protection insurance.

 Builders/Pre-retirees (aged 45–65)

Stay cash flow positive

  • Live within your means.
  • Reduce the mortgage and other non-deductible debt such as credit cards and personal loans. This may free up cash flow for other investment opportunities.
  • Consider part-time work for a non-working spouse.

Increase contributions to super

  • At age 50, the concessional (pre-tax) contribution cap is $25,000.
  • Consider transferring non-super assets to super. You’ll need to take into account any capital gains tax on the transfer and the super rules covering what assets you can transfer.

Split income where possible to save tax

  • Consider investing money in the name of the spouse who pays the lowest tax.
  • Consider splitting super contributions between spouses. Up to 85% of concessional contributions within the contribution cap, including Super Guarantee and salary sacrifice contributions, can be split.

Look into a pre-retirement pension if you’re aged 55 or more

  • Consider salary sacrificing, and drawing down regular income from your super to replace the lost income – this saves tax and builds your super without affecting your cash flow.
  • Make sure you have sufficient death, disability and income protection insurance. Also consider taking out trauma insurance.

Retirees (aged 65+)

Ensure you don’t run out of money

  • Understand your plan for spending in retirement – set a budget for essential expenses and additional lifestyle expenses and how you’ll fund each.
  • Ask yourself if you’ve invested your assets too conservatively – maintaining and growing your capital today can help you provide the income you’ll need in the future.
  • Consider whether you need to downsize your home.
  • Investigate how your income and assets affect your Centrelink benefits. Simple changes can help ensure that you maximise your total income.
  • Consider setting up investments to help grandchildren with education costs, a deposit on their first home or an investment nest egg. You’ll need to include this in your retirement spending or estate plan.
  • Think about aged care now. When the time comes, decisions often have to be made very quickly, so plan ahead for which care options you’d like to use and how they’ll be paid for.

Review your estate plan

  • Consider a Non-Lapsing Death Benefit Nomination for your super or a reversionary beneficiary for your pension.

Ensure your Wills and enduring power are in order.

Investment Tips

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We all need to have financial goals. You may want to provide the best education opportunities for your children or you may want to build an investment portfolio so you can live comfortably in retirement. Whatever these may be, saving to meet those goals is important but regular investing is critical.

 

Saving versus investing

Regular saving is a familiar concept; however, saving in your bank account will only give you a few percent per annum in return. Investing can deliver much more.

 

Saving and investing – make your money work harder

 

Clarify your investment goals and set a plan to ensure you save while investing wisely to make sure you can reach them.

 

One of the easiest ways to keep your saving plan on track is to ‘pay yourself first’. Set aside a part of your pay packet for yourself, before you pay anyone or anything else such as bills, groceries, shopping, car, phone, rent or mortgage. By setting aside an amount straight from your bank account when your pay goes in, you can make sure that you get paid regularly and on time. But how much can you afford to pay yourself? Start by making a budget. List all your expenses and then work out how much you can afford to save each month.

 

Invest your savings to grow

The next step is to make the most of your savings by investing them. The type of assets you invest in will depend on your financial needs and objectives.

 

Managed funds are one way to put your plans into action as they pool your savings with many other investors. You can then access a wide range of quality investments which are managed on your behalf.

 

Diversification can also be important. It means spreading your risk across each of the main investment types (shares, property, fixed interest and cash) with an aim to achieve more consistent returns.

 

Power of Compound Interest

Once you’ve set your investment goals and decided where to invest your money, another reason for regularly investing into a managed fund is access to compound returns. Each dollar you invest earns a return. If you reinvest that return, it can earn more dollars, allowing your investment the potential to grow much faster.

 

Turn your savings into earnings

Turning your savings into an investment which can help you to reach your goals does not have to be difficult. With just $1,000 to start, you can make regular investments of $100 or more each month, switched directly from your Australian bank account to a managed fund.

 

Things to start thinking about …

  1. Is your savings account providing you with a competitive interest rate?
  2. Keep your credit card receipts and check them against your monthly statement. How much are you spending?
  3. Put together a savings plan (your personal budget planner).
  4. How much of your income do you save?
  5. Should you get the help of a financial adviser?

Source | Colonial First State

Adelaide Financial Advice - Seven Deadly Sins

Seven Deadly Financial Sins for Women (and some men!)

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Seven Deadly SinsSeven Deadly Financial Sins for Women (and some men!)

Unless we’re rubbing shoulders with A-listers or running a multi-million dollar fashion business, we need to invest time and effort if we want a successful financial future.

It seems that today’s woman can be easily distracted by the comforts that short term material wealth can provide and these ineffective money management habits are best described as Seven Deadly Financial Sins.

 

Sin: Sloth

People who stick their head in the sand and are happy to take the lazy approach when it comes to their financial situation may suffer from the financial deadly sin – Sloth.

Rescue yourself by…
Taking charge of your financial affairs, starting with your superannuation and find lost super by logging onto the ATO’s Super Seeker website at http://www.ato.gov.au/super.

Sin: Anger

Finding excuses or others to blame for your financial situation doesn’t make it go away.

Rescue yourself by …
Take a reality check by doing a budget based on your income and expenses. You may be surprised. Visit the budget planner tool on the ATO website. If it helps curb your needless spending ways, then you shouldn’t be angry any longer.

Sin: Greed

People of today live in a ‘now’ society and the risk of this behaviour is that it may trap you into spending more than you earn.

Rescue yourself by…
Building your wealth through sound financial strategies that suit your financial and lifestyle needs. This can give you peace of mind to have all that you want – with a little discipline.

 

Sin: Damsel in distress

Ladies (or fellas) in-waiting on the lookout for a knight in shining armour to rescue them from the burdens of their financial situation is otherwise known as Cinderella syndrome.

Rescue yourself by…
Saving regularly – just $20 per week can add up to over $7000 in five years in an online high interest bearing account.

Sin: Gluttony

Ladies with an appetite for debt and credit cards to feed their addiction may suffer from the financial deadly sin of Gluttony. Online shopping and VIP nights at your favourite department stores feed on gluttonous appetites and before you know it, you’re in way over your head.

Rescue yourself by …
Spring cleaning your debt – start with cutting up store cards and start to seriously consider protecting your wealth.
Income protection insurance will provide you an income when you’re sick or injured and unable to return to work.

Sin: Lust

It can be hard to resist a good deal and retailers enhance their businesses to appear irresistible with ambient music and designer scents – all to put shoppers in the mood for spending money.

Rescue yourself by…
Take control of your financial future and put a portion of your regular income into savings and investments so it’s not all lost through the temptation of impulse shopping.

Sin: Envy

Don’t hold a vendetta, do something about your financial situation if you’re not happy with it.

Rescue yourself by …
Consider an investment plan that works for your short, medium and long term goals.

Be your own fairy Godmother

It’s never too late to rescue yourself and take control of your financial destiny. Your financial planner (hint! hint! ) can provide straightforward and transparent financial advice by helping you with your current situation and implementing a plan to meet your needs in every stage of your life. 

Source | MLC