All posts by Robert Wright

14 money mistakes to avoid in your younger years

By Robert Wright /February 04,2021/

Here’s a list of things you could stop doing if you no longer want to rely on the bank of mum and dad, or that credit card.

Going without a budget

If you’re looking for somewhere to start when it comes to creating a budget, jot down what money is coming in, what cash is required to cover the bills and any loans you’re paying off, and what might be leftover to split between savings and the fun stuff. This will help you identify where there’s room for movement and where you could be cutting back.

Using your credit card for everything

Credit cards are convenient, but they’re often more expensive than other forms of credit as they usually charge higher interest rates which means you could end up paying back a lot more than what you initially borrowed.

Keeping up with the Joneses

The pressure to stay up to date with your peers and even celebrities can be a subconscious but very real motivation behind some of your poor financial decisions. Try to live within your means, stick to realistic goals, and when you’re looking to make a purchase, ask yourself if it’s something you really need or if it’s something you simply want this week.

Borrowing money from those nearest and dearest

When you’re in a bind you may be tempted to ask your folks or bestie for a cash hand-out but remember it could put some strain on the relationship, particularly if it becomes a regular thing.

Buying or taking a loan out on a pricey car

The purchase price of a new car is one thing but remember added costs (such as insurance, rego, petrol and regular servicing) are another.

Pursuing higher education without a plan

While it’s possible that tertiary qualifications could increase your employment opportunities and potentially help you to earn more over the course of your career it’s also not guaranteed. With that in mind, it’s worth asking yourself whether the field you want to enter requires tertiary qualifications. After all, if you can get where you want through alternative routes, these may be worth exploring, particularly with the average debt for a tertiary student in Australia about $19,1003.

Quitting your job after a bad day

You may not like where you work but if you’re planning your exit march it’s wise to have another gig lined up, as it could be months before you find another opportunity and have cash coming in again.

Not prioritising what you really want to do in life

The benefits of thinking ahead when it comes to what you want are pretty clear. For instance, buying a car, going on holiday and moving into a new apartment all within a six-month period mightn’t be financially doable, but if you spread those things out they might be.

Saying ‘whatever’ to an emergency fund

Only one in four Aussies has savings to stay afloat when faced with unforeseen circumstances. And you don’t want a busted phone or car tyre, let alone a bad landlord or lover, leaving you financially stranded. An emergency stash of cash could give you some peace of mind and reduce the need to apply for a loan or ask someone you know for a handout.

Avoiding the money talk with your partner

Nearly one in three Australians in a relationship claims they fight about money at least once a month. So, before you set up joint accounts or make a big purchase together, think about how you’ll both contribute. And if you’re planning on moving in with that special someone, make sure you’re also across what happens to your finances if you split up with a de facto.

Spending a fortune on the wedding

The average wedding today costs around $36,200, with 60% taking out a loan and 18% using their credit card. To avoid blowing your budget, start saving, talk to your partner (and parents if they’re involved), write down what you can afford, get quotes, and look at how many and who’ll be on your guest list early.

Being blasé about protection

There will be people who’ll inevitably suffer from an unforeseen event that will leave them incapable of working at some point in their lifetime. While you may choose to go without insurance to save money, for a number of people it may be affordable through monthly premiums or paying out of their super money, but do your research.

Choosing a property that’s not within your means

Whether you’re renting or buying, it’s important to think about the upfront and ongoing costs involved, and the location you’re looking at as different suburbs come with different price tags.

If home ownership is on the cards, get a full run-down of the costs you’re likely to come across.

Not caring about your future self

It might seem like a lifetime away but with some people looking at a retirement of 20 years or more (and the Age Pension alone unlikely to be enough to support a comfortable lifestyle), putting money into super may be worth thinking about while you still have time on your side.

Source: AMP

How to start saving for your future in your 30s

By Robert Wright /February 04,2021/

Some big life changes – and big expenses – can occur in your 30s. The key to maximising your retirement savings now is making savvy, forward-thinking financial decisions.

This becomes even more relevant when you’re surrounded by the current economic uncertainty. Short-term needs and expenses are front-of-mind and you might prioritise saving more money for a rainy day. Even so, it’s still possible to balance this with preparing for retirement while in your 30s to help make sure you eventually leave the workforce with sufficient financial freedom.

Set a budget – and stick to it

Your budget shouldn’t be static, and it’s a good idea to reassess it at different stages of your life. This is particularly important from age 30, when you’re potentially faced with a lot of large expenses, both expected and unexpected.

Start saving as much as you can

You’re no longer new to the workforce and, with a decade of experience under your belt, you may be in a position to receive a promotion or pay rise.

But just because you’re earning more doesn’t mean you should spend more. In fact, as your income grows, so too should your financial and savings goals. If you developed strong savings habits in your 20s – now’s a good time to save and invest to set aside even more for your future.

Boost your super

It’s time to get serious about super, so your retirement savings are maximised – like consolidating funds where appropriate, choosing a fund that’s in line with your values and understanding where and how your money is generating an investment return, then it’s time to think about these tasks.

Next, if you were one of the thousands of Australians who withdrew their superannuation under the Federal Government’s early super access scheme, start thinking about how you might be able to replenish your super balance. You could do this by making a personal super contribution – you could then try claim this amount as a tax deduction in your tax return or potentially receive a government bonus to your super in the form of a co-contribution.

If you’re an employee, on top of the compulsory superannuation guarantee (SG) from your employer (currently 9.5%) you might also consider salary sacrificing, which is where your employer makes additional voluntary contributions to your super account. You choose the amount your comfortable salary sacrificing, and it’s paid directly from your before-tax income.

Whatever strategy you choose, by setting up payments as an automatic contribution, you’re less likely to even notice them coming out. Plus, putting these tactics in place now means you’re taking a small but vital step toward ensuring your financial wellbeing and a comfortable retirement.

Identify additional income streams

Help save for retirement in your 30s through a side hustle or by regularly getting rid of the stuff you no longer use. It’s also potentially a fun way to meet new people and spend more time doing the things you love. Consider putting whatever you earn from these side projects directly into your retirement account – you’ll be building funds for your future, while decluttering or getting your creative juices flowing.

Assess your insurance needs

With more responsibilities, and possibly debts, it’s probably a good time to make sure your financial future is protected with insurance. You might consider taking out private health insurance before you turn 31, to avoid paying a lifetime health cover loading on top of your premium.

While it may not seem like something you need just yet, income protection and life insurance are not just for oldies. They’re relevant for Aussies at all life stages, especially those of working age with ambitions for the future. Imagine if you couldn’t work because of illness or an accident – taking out insurance can protect you from having to dip into your savings to pay for unforeseen expenses whilst you’re off work.

Save and invest wisely

This is the decade where you might consider investing more aggressively for your future, however it’s important to make considered decisions with advice from those in the know.

If you’re a newbie investor, there are a lot of factors to take into consideration, including what level of risk you’re comfortable with and how diversified you’d like your portfolio to be. Start small, set clear goals and continually re-evaluate your progress.

Get personal finance advice

Whether you talk to your partner, use savvy friends as a sounding board, or get advice from your parents, it’s good to have honest conversations about personal finance. But it’s also important to understand the value of qualified professional advice. Consider making an appointment to see a financial adviser to help you better understand your financial situation, so you can set and reach your retirement goals.

Source: AMP

Rethinking retirement

By Robert Wright /February 04,2021/

If you were working towards a retirement date and Coronavirus has meant a change of plans, it can be hard to move the goal posts. Could you gradually reduce your hours to make stretching out your years at work more do-able?

If your work is stressful, consider whether you could reduce or change your responsibilities. For jobs that are physically demanding, do you have the option to shift into a role that is less hands-on – such as training others, workplace safety or compliance monitoring?

Or, if the idea of extending out your retirement date is unappealing, another option could be taking some time off. If you have accrued a lot of annual or long-service leave, then the financial impact may be negligible.

Three smart super strategies

Making changes to your super can help you get your plans back on track so you can achieve your retirement goals. Here are some strategies that can boost your super or minimise your tax in your final years of working.

Make additional contributions. You can add more to your super using either your before-tax salary or your take-home pay. The most common ways to do this are by salary sacrificing, making a tax-deductible personal contribution, using some of your unused concessional cap from previous financial years in a catch-up contribution, or using the bring-forward rule to make a large, one-off contribution to your super.

Transition-to-retirement (TTR) strategy. A TTR strategy lets you access some of your super while you’re still working. It’s only available for people who are aged 60 or above. The most common way to use this strategy is to continue working full-time and salary sacrificing into super while drawing a tax-free income from your TTR pension. So while you’re growing your super you’re also paying less tax in the lead up to retirement.

Review your asset allocation: Seek financial advice to review how your super is being invested to meet your retirement needs.

Try a different kind of work

If you’re not enjoying your work, or your work has finished up, then consider lifting your gaze towards something new:

Learn. Flexible learning options have never been more accessible or plentiful. They can also be very affordable, with low cost or free courses bringing easy learning within reach. The time it will take you to complete a course is a small investment for the benefit of undertaking more satisfying work.

Start a business. Business ownership is a popular option for 8% of Australians aged between 50 and 64. What’s more, if you start a business as an older person, you have a better chance of success than if you’d started at an earlier stage of life. This is because you’ve accumulated valuable work experience, built broad and deep professional networks, and developed life skills, wisdom and resilience that could help your business succeed. It’s important to remember that starting a business requires upfront capital investment and there are risks involved in running a business, so it’s best to seek professional advice before you do so.

Career coaching. If you want to change what you do for work, a career coach can help you explore your options and advise you on your next step.

Get a sounding board

When you have plans in place, it is unsettling when they are disrupted. Your financial adviser can explore your options with you, advise you on the impact of different strategies and recommend away forward. So it’s important to check in with them, especially before you make any changes to your super.

Source: Colonial First State

Get your affairs sorted with an estate plan

By Robert Wright /February 04,2021/

It’s an uncomfortable truth, knowing that one day we will pass away. No-one likes to think about the distress it will cause their loved ones or what kind of burden they’ll be left with. That’s why death is often considered a taboo topic of conversation, along with money and politics.

When you pass away, hospitals and funeral directors will ask a lot of questions that your family may not have the answers to. If you’re prepared and organised, you can provide them with many of the answers in advance. We know sharing your funeral wishes and end-of-life admin with your family isn’t the most uplifting topic of conversation. But it can make the process of passing away far less stressful to the ones you leave behind.

Six ways to get organised

Getting organised early can eliminate some of the difficult conversations your family may have to deal with later. Here are six things you can do now:

Have a Will and ensure it’s up to date. Surprisingly, just over half of Australians don’t have a Will.

Consider an Advance Care Directive. It’s a way to say what healthcare treatments you would like to have or refuse if you’re ever in a position where you’re seriously ill and unable to make decisions about your treatment.
If aligned with your wishes, join the organ donor register.
Check that the beneficiaries nominated in your super and insurance are still current.
Keep the records for all your bank accounts, investments, and assets in one place so it’s easier for someone to sort through them and find relevant information.
Put easy-to-access money aside to pay for your funeral or buy a funeral bond, since it takes a long time to process your estate. Funerals are estimated to cost between $4,000 and $15,000

Talking to specialists

Sometimes extra planning and financial advice is needed to ensure that your assets are passed into the right hands in the most efficient and tax-effective way.

It’s important that your Will is clear, complete and not open to legal challenge. Estate planning advice may be required in cases of divorce, remarriage and blended families to protect the interests of vulnerable family members and to ensure that your wishes are carried out.

Talk to your financial adviser about these things. They can also suggest anything you may not have thought of.

Getting the conversation going

Sharing your preferences provides those you leave behind with the comfort and certainty of knowing they are carrying out your wishes. It might make for an awkward conversation, but it’s better to discuss things over a family dinner than in an emergency room.

Here are a few topics you might want to discuss:

Who do you want to be the guardian of your children?
Who will take care of your pets?
If you have an extended stay in hospital, do you have a preference about which hospital you want to go to?
What type of funeral do you want? Would you prefer a cremation or a burial? Do you have any preferences for the venue, flowers, music or readings?
What are your preferences for your valuable or significant belongings?

Source: Colonial First State