Financial Planning

The end of the financial year is the cue for most of us to look at our financial position heading into tax time. Hopefully you’ve made progress towards your goals. But if you find that your expenses are trending higher than you’d like or—shock, horror!—higher than your income, this could be the perfect time for a fiscal makeover. The starting point is gathering up as much information as possible, beginning with the household budget. Take a budget snapshot You can’t set realistic financial goals and savings targets without knowing how much money you have at your disposal. If you don’t already track your income and spending, then take an annual snapshot as you go through your records to prepare your annual tax return. Deduct your total spending from total income and what’s left is what you have to work with. Any surplus could be...

Australians buying their first home or downsizing in retirement are about to receive a helping hand thanks to new superannuation rules which come into effect on July 1. From that date, first home buyers will be able to contribute up to $30,000 into their super fund towards a home deposit while downsizers can put up to $300,000 of the proceeds of selling the family home into super. This new measure has been devised to assist first home buyers, many of whom have struggled to save a deposit as rising prices put even entry level properties out of reach. At the other end of the scale, the change is envisaged to help older homeowners who frequently find themselves in large houses while trying to survive on a modest super balance or the aged pension. Here’s how the Federal Government hopes to improve the situation...

Parents with adult children still living at home have the best of intentions to help their kids get ahead, but they might be putting their own financial futures at risk. At the time of the 2016 census, almost 400,000 non-dependent children aged 25 to 34 were living at home1, an increase of 20 percent from five years earlier.2 Why the increase? Record high levels of house prices and rents3 and a challenging job market4 are two factors keeping kids in the parental home longer. Also contributing are the trends for young people to participate more in higher education, marry and have children later.5 Kids paying their way Gold Coast solicitor, Ashley Bennett and his retail merchandiser wife, Julie have two daughters, Hayley, 24 and Lauren, 22. Both daughters have paid around $100 per week board since they left school and started in their first jobs. In the...

Aged care can be a tough subject for many families to broach, but as we enjoy longer lives, there’s a growing likelihood that at least part of our final years will be spent in formal care. The decision to move into aged care doesn’t just come with a raft of emotional issues. There are also financial considerations. That’s because nursing home accommodation can involve substantial costs, especially for self-funded retirees. The costs involved New residents entering aged care are often asked to pay an upfront accommodation bond. There is no set level for this bond – the only proviso is that residents must be left with at least $46,500 in assets (excluding the family home) after the bond has been paid. An accommodation bond works like an interest-free loan to an aged care home. Any income earned from the bond is used by the...

In May 2016, the Government announced a raft of proposed tax changes to the superannuation regime as part of the 2016-17 Federal Budget. The legislation was finally passed by Parliament on 29 November 2016 however a number of regulations which effected parts of the legislation were not finalised until February/March 2017. We've spent the past few months sifting through the legislation in order to gain an understanding of how these changes will impact your superannuation. The key superannuation reform changes which take effect from 1 July 2017 and are likely to impact many clients’ superannuation strategies are as follows: Non-concessional contribution cap reduction from $180,000 pa to $100,000 pa Concessional cap reduction to $25,000 pa for all age groups Earnings tax exemption removal on assets backing Transition to Retirement (TTR) pensions Removal of “10% test” to claim a tax deduction for personal superannuation contributions ...

Financial resolutions are easy to make but harder to stick with. Here we’ll look at what you can do to ensure that 2017 really is the year that you make lasting improvements to your finances. Know where your money goes The starting point for saving money and paying off debt is to work out where your money is going. Use a free app like ASIC’s TrackMySpend to record your daily expenses and track spending by categories. Once done, you are now one step closer to setting up a budget. Use technology to do the work for you Thanks to technology we can say goodbye to the daunting task of setting up an excel spreadsheet DIY budget. There are now countless online-based budget planners and calculators that have done the hard work for you. Many of these tools will show visualisations of your financial data,...

Whether you dream of being a millionaire or just wish you had more money, there are actions you can take to set you on the path to wealth creation. Here are the top tips most commonly recommended by wealth creation experts. 1. Be clear about what you want Create a list of goals, things you want to have and dreams you want to realise. Use words and images to create a vision board of these aspirations and position it somewhere you will see every day. 2. Get right back up each time Setbacks happen and it may seem like you are never going to reach your goals, but it is important to keep plugging away. When things don’t go as planned, look for another way. 3. Put enjoyment first If what you are doing to make money is draining and oppressive, it might create financial wealth...

Cash is on its way out as Australia continues to embrace the use of electronic payments. According to the Reserve Bank of Australia, cash dropped from 70% to 47% of transactions from 2007 to 2013. The demand for coins has declined by a quarter in the last three years and almost 70% of credit card transactions are now ‘tap and go’. Mobile payments This year’s launch of mobile payment services like Android Pay and Samsung Pay is an indication of our increasing appetite for cashless options. Mobile payment gives you the ability to pay for purchases by tapping your phone over the terminal in the same way you would tap your card at the point of sale. You need a card-linked mobile phone and authentication is achieved using either your fingerprint or a one-time use code. Sweden rejects cash Sweden is another country well on its...

With some research, preparation and expert advice, smart property investors can turn an ordinary tax return into one that will help kick off the new financial year with a smile. Claim every allowable expense There are around 20 expenses you can claim as tax deductions, including interest on loans, advertising for tenants, phone calls, cleaning, body corporate fees, legal fees and water charges. Refer to the Australian Taxation Office website for a detailed list. You can only claim deductions for the period during the year that the property is rented or available for rent. If the total borrowing expenses are $100 or less, you can claim a full deduction in the income year they are incurred. It’s difficult to remember every expense you incurred over a year if you don’t keep accurate records. Detailing your income and expenses as they happen rather than waiting...

When it comes to personal protection, Australians are making a worrying return to a ‘she’ll be right’ approach, with fewer than one in five checking their levels of personal insurance. BT’s Australian Financial Health Index1 (AFHI) found that overall, the nation’s financial wellbeing has remained relatively stable. However after positive shifts in attitudes towards insurance in 2012-2013, the more recent 2014 AFHI found an uplift in levels of confusion and indifference in regards to personal protection. See the infographic here. We’re more likely to insure our car than ourselves As a guide to how personal insurances often play second fiddle to other types of cover, 76% of Australians claim to insure their car, yet only 33% also claim to have life cover and just one in five (20%) claim to have income protection insurance. Indeed, tangible assets are typically seen as more worthy of...