All posts by Robert Wright

Take stock of how much conveniences are costing you

By Robert Wright /June 01,2020/

With weeks, and perhaps months, of self-isolation ahead, many of life’s conveniences like streaming and delivery services will become our essentials. But if you’re used to spending unlimited amounts to make life that little bit easier, now is a good time to look at what you can live without to make your budget go further.

These days it’s easy to order just about anything on demand. With the tap of a button, you can stream the latest music, have food and drinks delivered to your door and choose a new outfit with next-day delivery. But convenience could be costing more than you realise, with serious consequences for your future financial security. And with the growing number of ‘set and forget’ payments for subscriptions and services consumers are often footing the bill for things even when they’re not really using them.

There are also costs to society and the environment that come with the convenience of online shopping. All that packaging and fuel consumption that comes with home deliveries can really add up to big problems for landfill and climate change.

If convenience is troubling your conscience, as well as your hip-pocket, take a closer look at these five areas where it’s easy to overdo it. Also, get these ideas on what you could do to put some sensible limits on your convenience spending.

1. Entertainment

The convenience of online streaming services has made them essential for many people looking to enjoy entertainment at home and on the go. Unfortunately, free trial periods and automated payment schedules make it easy to forget exactly what you’ve signed up for.

To get a handle on your spending, do an audit of your subscriptions. Check your bank account and credit card statements for the last three-months at least to find any automatic payments. Then select the services you want to be using in line with your entertainment budget. If you don’t have a fixed amount in your budget for entertainment, try limiting it to one service per category.

2. Food and beverages

Consumers splurge a whopping $238 a month (or nearly $60 a week) on food delivery services, research shows, with a further $140 a month on takeaway and coffees.

If you find yourself regularly turning to apps to satisfy your hunger pangs, here are some strategies you can try to limit the splurge.

• Keep healthy snacks with you to curb those cravings when they hit. Things like fresh fruit, nuts and muesli bars can help take the edge off your appetite, so you’re not tempted to hit order when you get too hungry.
• Plan your meals a couple of days in advance, so you know what you’re going to make and can have the ingredients on hand.
• Take an online cooking class. Learning a bunch of fun new recipes can make it easier to enjoy some excitement with your home cooking instead of turning to take-away to add variety to your mealtimes.

Swapping even one home-delivered meal for a home-cooked meal each week really adds up. A saving of just $40 a week would put over $2000 back in your pocket over the course of a year.

3. Transport

On demand transport apps have changed the way we travel. If you live in a big city, chances are you use apps like Uber fairly often. But since the fees come directly out of your account, you may not even realise just how much you’re spending on travel.

There’s also the environmental impact to consider. Each private trip produces much more carbon pollution than public transport. When you weigh up the true cost, is it really worth it?

The answer is simple: when social distancing rules are relaxed you can swap private rides for public transport, walking or cycling wherever you can. There are some great public transport apps around that make it quick and easy to catch a bus or train, so you can still rely on technology to make travel simple.

4. Technology

Apps, games, smartphones, tablets, eReaders… how much do you spend on technology that you don’t even use?

With many devices costing upwards of $1000, delaying that upgrade until you really need it could be a win for your pocket – and for the environment.

App subscriptions are another sneaky expense that really adds up. They may seem inexpensive and often have free trial periods, so it’s really easy to forget what you actually end up paying for. Check your subscription list at least once a month and delete anything you don’t need. Your bank balance will thank you.

5. Easy payment services

Buy now, pay later (BNPL) arrangements have exploded onto the scene in recent years as a popular way to finance a variety of purchases. Figures show that 30% of Aussies have at least one BNPL account, spending around $7 billion a year. Most of that is going on fashion, followed by appliances, entertainment, food and drinks.

But there’s evidence that BNPL services lead to overspending. A full 60% of BNPL users surveyed by Mozo reported purchasing things they normally wouldn’t, thanks to the easy payment instalments.

If this sounds like you, it might be time to step away from Afterpay, Zip and other BNPL services and get back to good old-fashioned saving in order to get what you need.

 

Source: Money and Life

How to keep your head while keeping your distance

By Robert Wright /June 01,2020/

There are people who are better at the whole social distancing game than others. If you already normally work from home, for instance, you might be laughing into your elbow as you listen to the newly homebound lament that their desire to binge on Netflix on the weekend isn’t so appealing when they can do it 24/7.

But whether you’re an old hand at this or still an apprentice, the uncertain and often frightening course of this rapidly unfolding pandemic can upend even the most stoic of temperaments.

One thing we can control, however, is our behaviour. Hiding under the doona isn’t going to offer anything more than a temporary reprieve from reality, so it’s important to find ways to make the most of your quarantine.

Psychologist Dr Nellie Lucas says creating “opportunities for calm” in the storm of worry and stress can be done with a sense of purpose.

“Begin by noticing the small things – appreciating the sunshine in the garden, the smell of coffee in the morning,” says Lucas, who is principal clinical psychologist at Melbourne Clinical and Child Psychology.

“Schedule times for social media and the news. A morning slot and an afternoon slot can work well for most of us. Similarly try and plan your day so work does not flow into rest and other activities. Recognising a need for balance can sustain you at a time when worry can escalate,” she says.

Space patrol

If you’re literally boxed in, with few options for outdoor pursuits beyond the supermarket, it might be useful to seek guidance from someone with experience being confined in tight spaces.

Astronaut Anne McClain, who was a flight engineer on the International Space Station (ISS) in 2019, recently shared some of tips with her 125 million Twitter followers.

Most are surprisingly applicable to those of us here on earth and focus on basics like self-care, including “hygiene, managing time and personal stuff, getting sleep, and maintaining mood”.

And because she had to share the ISS, there was advice on team care and group living, from respecting roles and responsibilities to being accountable, giving praise freely and keeping calm in conflict.

Another tip from astronauts: keep busy. They don’t have a lot of time to sit around and stare into space. Okay, they do a bit of that. But like grandma used to say: an idle mind is the devil’s workshop. In other words, engaging in physical and mental activities is a great way to stop your mind wandering into worst-case scenarios or terminal boredom.

Setting tasks and sticking to them not only provides structure to your day, completion brings the satisfaction of seeing a job well done, no matter how mundane. Your challenge is to recognise when you’re slipping into an apathetic state (every now and then is fine) and refocus on a worthwhile pursuit.

Bills, bills, bills

Until very recently, few of us would have imagined that not having to spend hours commuting would result in an abundance of spare time to sort out all those pesky admin tasks we typically put off until they’re overdue.

She advocates the time-honoured practice of allocating one-third of your income for housing costs, one-third for lifestyle-related activities, and one-third for savings.

Structuring your day when you’re isolated can restore a sense of purpose and normality to your daily life. The Australian Psychological Association recommends scheduling chores and activities you enjoy helping you stick to your routine.

As it happens, precarious times call for a keen eye on one’s financial situation, so get stuck in. Drag out those receipts and take a deep dive into your taxes. Before you know it, you’ll have everything ready to send to the accountant months before your return is due.

Household budgets, bank accounts, insurance policies and superannuation are also good candidates for review.

Don’t try to do everything at once. Set aside a few hours a day and imagine that once this crisis is over, you’ll be so organised you can focus on getting back to normal, whatever that may be.

Structuring activities around mealtimes and bedtime can also help you keep to your schedule while ensuring you eat regularly and get enough sleep.

Another way to celebrate your achievements is to shift gears and take your focus off you. It turns out altruism is often an unexpectedly beautiful benefit of calamity. We saw it during the recent bushfires and floods and the Australian Psychological Society says positive social connections can help us cope in times of stress, especially when we’re being asked to distance ourselves from others.

Maintaining social networks can be as simple and easy as phoning a friend to share your experience, using video conferencing technology to check in on an elderly relative, or spending quality time with the people you live with.

“As our worries build this can flow into stress upon our relationships,” says Lucas. “Making time to plan and problem solve your approach to the day can ease this stress. It can also get you into the habit of problem solving rather than worrying and feeling compassion rather than frustration.”

And if you find you sometimes still struggle with bouts of stress or anxiety, it’s normal. But don’t be afraid to seek professional support. A psychologist or counsellor may be able to help.

 

Source: Colonial First State

How to reduce spending after a job loss

By Robert Wright /May 08,2020/

How to reduce expenses after a job loss and get back in the driver’s seat of your finances.

With many thousands of Australians experiencing job losses and reduced hours as a result of the COVID-19 (coronavirus) pandemic, many will need to take a look at their expenses to continue living within their means.

The average Australian household spends almost $75,000 each year on living expenses, excluding major expenses such as rent or insurance. That adds up to between $1,100 and $1,700 per household each week that’s spent on personal care, pampering our pets, transport, alcohol, fashion and more.

The good news is that there are some simple ways to cut back on these expenses. Whether you need to slash your costs significantly or simply tighten up your spending after a job loss, here’s where to start.

1. Know where you’re spending money

The first step is to evaluate where your finances stand today. If you already have a working budget, use it as a starting point, but expect that you may need to make some adjustments if your financial circumstances have changed. Itemise your monthly expenses as much as possible and separate out essential needs like housing, food and utilities, versus “wants” like entertainment, takeaway meals or online shopping. This will help you to see where you can realistically cut back, find cheaper alternatives and help save extra money.

2. Cut back housing expenses

When you need to make immediate changes to your budget, starting with the largest targets can have a big impact. For many of us, this means housing costs – either a mortgage or rental payments, as approximately 20% of Australians’ gross household income is spent on housing. If you’re paying off your home, many banks are offering “mortgage holidays” to clients experiencing financial challenges.

If you’re ahead on your repayments, there may be other options, including reducing repayments or using your offset or redraw facilities to get access to additional money. You might also consider temporarily switching from a principal-and-interest mortgage, to one that’s interest-only.

Paying off only the interest will instantly reduce your repayment amount. However, it may also take you longer to pay off the mortgage as a whole. Speak to your financial adviser or lender to discuss which options are right for your circumstances.

If you rent and have been impacted financially you may seek a rental reduction. The Australian government has agreed to a six-month moratorium on at least some evictions. The Tenants’ Union is posting up-to-date information about landlord obligations during this crisis, as well as pointers for how to negotiate with your landlord.

3. Save money on your phone and internet

Next, cast a ruthless eye over regular utilities like phone and internet bills. Many telco companies make it easy to bundle all your devices into a single plan, which can work out cheaper in the long run. If you and your family have separate mobile and data plans with different providers, look at whether consolidating them can help you save.

On the other hand, you might find you’re still paying for old devices that are attached to a bundled plan. Take a close look at all your plan inclusions and get rid of any phones or tablets that are sitting unused in a drawer.

You may also discover that you can get by with less data on certain devices, because you’re using them through your home network rather than being out and about. If you’re out of contract, talk to your telco about how much you can save by cutting back on your wireless data.

4. Trim the costs on food

Until recently, Australians were spending around $11.7 billion a year at restaurants and $10.6 billion on takeaways. While you’re probably not eating out right now, takeaway food can still make a hole in your budget, so use the extra time at home as an opportunity to get into the kitchen.

Take a savvy approach to home cooking by adding more vegetables and legumes to your diet, and staying away from expensive cuts of meat. Avoid shopping at the grocery store when you’re hungry, buy home-brand products where possible and always take a shopping list. Try cooking bigger batches of food so you have enough for a couple of meals, without doubling the cost (and always eat the leftovers). Be mindful of waste at home, the average Australian household throws away almost 300kg of food per person each year.

5. Find value in your lifestyle

Now is an opportunity to consider what you value most. By looking closely at your current spending, you’ll probably find ongoing monthly payments for expenses that are really not important to your household: music lessons for a child who hates the instrument; subscriptions to publications no one’s regularly reading; apps and software that are on auto-renew payment.

More than 14.5 million Australians – that’s over half of us – have at least one pay TV subscription in their home. If you still keep returning to free-to-air, it’s time to reassess. Cutting out things you don’t use or value is painless and gives you extra money that you can better use elsewhere.

There will also be areas where you can get the same value for less money. You hold a gym membership to be healthy, but while they’re no-go zones, freeze your membership payments and look for inexpensive or free at-home workouts instead. The same applies to beauty treatments like hair colouring and manicures, which can be done at home.

6. Forego any guilty pleasures

In tough times, it can be tempting to find solace in an occasional treat or guilty pleasure. But when you look at the expense, those seemingly cheap thrills could be costing you a lot of money. For example, Australians spend $14.9 billion each year on alcohol and $21.5 billion on clothing and shoes.

Be honest about where you’re most likely to splurge and remove any triggers like email newsletters (hit unsubscribe) or social media (unfollow those too-tempting accounts).

 

 

Source: AMP

Withdrawing Super: what to consider

By Robert Wright /May 08,2020/

The federal government has been releasing details of financial support available to Australians who have lost income due the economic impact of the COVID-19 pandemic.

A huge number of us have been affected in some way and many have been left feeling stressed and confused about what to do to keep afloat.

Although concern about money isn’t the only problem we’re grappling with, financial stress is likely to be on the rise, even among those of us who are generally pretty good at staying on top of our finances.

A sudden and unexpected loss of income can send anyone into a panic and many will be looking for ways to replace that income to stop them from racking up debts or running out of savings in a matter of weeks.

Who can withdraw super and how much can I get?

One option Australians in need may be looking at is applying for early access to their super savings.

Here’s a quick summary of some of the more important details of this temporary measure to ease financial hardship:

• Eligible Australians will be able to access up to $20,000 from their super fund or funds.
• If you meet the financial hardship criteria, you can apply for $10,000 before 30 June 2020 and a further $10,000 after 1 July 2020.
• Early withdrawal is available to people who are unemployed, have had their working hours/business income reduced by 20% since 1 January 2020, or are receiving Centrelink payments.

Playing catch-up

A payment of $10,000 or even $20,000 is a very welcome injection of cash at a time when you may be struggling to cover basic costs like your rent, groceries and utility bills. However, it’s really important to remember that these super savings have the potential to make a significant difference to your level of income in retirement.

If you dip into your super now, you could find yourself lagging behind in having the savings you need to live comfortably when you’ve stopped work for good.

“The ramifications of accessing super early could be really significant,” says Ben Marshan, Head of Policy and Standards at the Financial Planning Association of Australia (FPA).

“Conservatively, every $1000 that you have in super at age 30 will be worth about $4500 at age 60. If you take $1000 out now, you have to put in $4500 over the next 30 years to get back to the same position. Financially, for a lot of people that can be a massive struggle and they’ll never actually catch up.”

Multiply that $1,000 by 10 or 20 and you can start to see what you could be sacrificing from your retirement nest egg by making a substantial withdrawal now. And this is why it’s so important to get expert advice before making a decision, as well as exploring other options.

“Consider getting professional financial help to understand the implications for yourself, Marshan advises. “Accessing your super early should only ever be a last resort.”

What are my other options?

If you already have a financial planner, it’s definitely worth reaching out to them at this time to talk about whether you should be using your super as a temporary income boost.

Seeking advice is particularly important if you are told by any service provider that you have no other option but to access your super.

The financial services regulator ASIC has recently taken steps to caution landlords and property agents against suggesting that tenants should be accessing super to keep paying their rent.

Making such a suggestion could be seen as giving financial advice, and real estate agents are neither qualified or licensed to provide such advice.

 

Source: Money & Life