The right times for financial advice
By Robert Wright /December 04,2020/
COVID-19 has created uncertainty everywhere and impacted not just our health but our wealth too. From millennials to retirees, we’ve had to review our finances and adapt to the changing environment.
We’ve seen volatile share markets, slashed dividends on bank stocks, record-low interest rates and sectors like airlines, tourism and traditional retail struggling to survive. On the other hand, online shopping and e-commerce have surged, and more people are saving now than before the pandemic.
During this uncertainty, many people have found their financial adviser to be a critical source of guidance and a valuable sounding board. In many cases, the adviser-client relationship has been a long-term connection. It’s built over many years and based on trust and confidence that the adviser has the client’s best interest at the centre of every decision.
Demand for advice doubles
The financial advice industry is full of examples of clients reaching out to their advisers in recent months, leveraging these long-term relationships at a time of worry and crisis.
Recent research from the Investment Trends 2020 Financial Advice Report showed three in four financial advice clients had been in contact with their adviser to discuss the impact of the COVID-19 pandemic.
Advisers are also fielding an unprecedented number of calls from potential clients who are confused by the current markets and understand they need help.
The instability of recent times has undermined the confidence of those who are retired or are about to retire, with many wondering if they’ll be left with enough superannuation savings for a comfortable retirement. But those who have a long-term relationship with their adviser can rely on the fact their adviser knows them well, understands their unique circumstances and life goals, and can deliver advice tailored to them.
Advice for different life stages
Financial advice can be helpful at a range of life stages, not just when thinking about retirement. Some common things advisers can help navigate financially are:
- saving for and preparing to buy your first home
- getting married or starting a family
- budgeting and money management
- growing wealth
- estate planning
- planning for retirement
- retirement and aged care.
Advisers can help with practical advice in all these scenarios. But more importantly, they can help you focus on your financial priorities and goals and create a plan to achieve them.
Life’s journey has many twists and turns and points at which priorities change. For many people, it’s a journey best navigated not only with partners, family and friends but with a trusted financial adviser by their side.
Six steps to building good financial habits
By Robert Wright /November 03,2020/
How financially secure do you feel? Recent research into Australians’ financial wellness – which is a person’s satisfaction with their current and future financial situation – revealed that people with good financial habits feel more financially secure.
It sounds like a no-brainer. But adopting good financial habits isn’t always as easy as it sounds, start building good financial habits with these six steps.
Make your own fresh start
Why do we always start a healthy eating plan or new exercise regime on a Monday? It’s called leveraging the context. And while we find it easier to form new habits during a significant life change like moving house or having a baby, there’s nothing to stop you finding opportunities in your day-to-day routine to instil your new habit.
- Review household costs as they crop up. For example, can you reduce the amount spent on groceries when doing the weekly shop? If your health insurance premium is due, check the plan still meets your needs. Starting a new job? Consider if it’s right for you to consolidate your super. By committing to reviewing one thing at a time, you can start building good financial habits as you go.
- If you’re now working from home, consider transferring your weekly travel allowance into your savings account each Monday morning.
Piggyback to an existing habit
It’s often easier to tag a new habit onto the end of an existing one. Think about how much easier it is to remember to floss after you’ve brushed your teeth.
- When doing your yearly tax return, why not review your financial goals for the coming year?
- When it’s time to renew your car insurance, take some time to check you’re getting the best deal from your utility providers too.
Make it easy
If we think something’s going to be hard, we often give up before we start. Keeping it simple and making sure we have the tools to succeed can help.
- Tackle one area of your finances at a time to avoid feeling overwhelmed.
- Dedicate a consistent time each week or fortnight to do your financial admin and block it out in your diary.
- Use technology like banking and budgeting apps and direct debits to make things quicker and more automated.
Cues and rewards
When we start a new habit, it’s important to use cues to remind us to perform the new habit and feel rewarded for doing it.
- You might decide to tackle your finances every Wednesday straight after dinner. Then you can reward yourself with a yummy dessert afterwards.
- If you’re saving for a new car, you might consider transferring surplus cash from your current account into your new car fund each time you fill up with petrol. You’ll be rewarded with your new car even sooner.
- Don’t underestimate the power of ticking something off a list. This simple act can make you feel great.
Practise and repeat
It takes an average of 21 days to form a habit when we’re focused and want to achieve it. Regularly practising your new good financial habits is key to making it stick.
- Pop a daily, weekly or fortnightly reminder in your phone or diary. It can help until you remember automatically.
- Mentally commit. If we have enough time to be on social media, we have enough time to form good financial habits.
Use meaning for motivation
Think about the meaning behind your new habits to help keep you motivated, both while forming the habit and once it’s part of your routine.
- If you’re saving for a house, it doesn’t just mean having your own place to live. It’s creating a home, providing security for yourself and your family into the future, and it shows you have the willpower and commitment to achieve long-term goals.
- Likewise, for putting money aside for emergencies. It doesn’t just mean you have the funds to cover a burst pipe. It means you have greater peace of mind and are better protected to weather times of financial uncertainty.
COVID has made us value feeling financially secure, and staying on top of your money can be hard. However, with a little work and commitment to creating good habits, you’ll soon be on the road to taking control.
Why financial wellbeing is a pillar of good health
By Robert Wright /August 07,2020/
When we talk about financial wellbeing, what do we mean? More than just earning an income, financial wellbeing is about having financial security and the freedom to make choices. There are three interrelated aspects to good financial wellbeing:
- The ability to meet your expenses and have money left over.
- Feeling and acting in control of your finances.
- Being financially secure and not needing to worry too much about money.
It’s considered normal for your financial wellbeing to vary over the course of your life. This is particularly true during major life events such as moving out of home, having a baby, changing jobs or retiring. Unexpected financial shocks can also have a big impact on your financial wellbeing.
How fit are our nation’s finances?
The Financial Wellbeing Australia report (2018) describes four categories of financial wellbeing. Around a quarter of all respondents (extrapolated to 4.5 million Aussies) were classed as having the highest level of financial wellbeing.
Around 40% (or 7.4 million Aussies) fell into the category of “doing ok”. They described their situation as “fair” or “good” and were relatively confident about the next 12-months. A further 23% of respondents (around 4.4 million people) were just getting by, while the remaining 13% (2.4 million people) were considered to be “struggling”.
How can I improve my finances?
Developing good financial habits will help you improve your financial health over time. That includes:
- Having a budget or spending plan.
- Making regular cash savings.
- Building an emergency fund of at least six months living expenses.
- Paying down debt and maintaining a good credit rating.
- Having adequate insurance.
- Building up enough superannuation to retire comfortably.
Much like your physical and mental health, your financial health needs regular check-ups to stay in good condition.
How can a financial planner help?
Think of your financial planner like your family doctor: as your partner in good health. Having the right financial planner on your team can help you navigate life’s ups and downs.
A financial planner is able to support your changing needs at every stage of life. For example, in your twenties and thirties a financial planner can help you save, invest and plan for a family. They can help you consolidate and protect your wealth into your forties and prepare for retirement in your 50s, 60s and 70s.
When you go to see a financial planning professional, they’ll look at your overall financial wellbeing and develop a plan tailored to your circumstances. Again, much like the family doctor, financial planning is an ongoing relationship, not just a one-off meeting. So, look for someone that you feel comfortable with and can work with long-term.
Source: Money and Life
Essential apps for budgeting and saving money
By Robert Wright /July 20,2020/
Determined to master your money and stick to a budget in 2020? It doesn’t have to be boring or difficult if you keep it simple, and easier still if you let technology do the heavy lifting for you.
Pocketbook automatically organises your spending into categories like clothes, groceries and fuel, showing you where money is being spent. You can also set up budgets for each category, see your balances and view your transactions. The app ensures all your bills are automatically detected and in the one place. Plus, you get notified when bill payments are coming up and if you have enough money to cover them.
Want to have a personal financial assistant in your pocket? According to their website, that’s just what you’ll get with MoneyBrilliant. This app is similar to Pocketbook as it connects your bank accounts to help you monitor your finances. The basic version also allows you to connect your credit cards, loans, superannuation and investment accounts. Other basic features include creating budgets, getting bill notifications, categorizing expenses, working out your net worth, and generating spending reports.
With the plus plan, you get access to a whole host of other features and services. The upgrade provides alerts for better deals from service providers, recommendations for optimising your accounts and products to making your finances simpler and sorts your expenses into tax deduction categories.
In its basic version PocketSmith is similar to MoneyBrilliant and Pocketbook, with automatic imports of bank transactions and access to reports summarising your financial activity. It also offers features like digital and cash spending projections, calendars and a choice of either daily, weekly or monthly flexible budgeting options to suit your lifestyle and financial needs.
If you’re a fan of the old-fashioned ways of managing your finances, this could be the app for you. And as you can’t sync it to your bank accounts, you might also prefer Goodbudget if you’re not completely comfortable with sharing bank details with an app.
Goodbudget takes the envelope system digital. Instead of dividing cash for rent, bills and savings between paper envelopes, you get to create up to 10 virtual ones with the basic version of this app. By doing this you can direct your income to where it’s needed, making sure essential expenses are covered and stopping you from overspending on extras. The Plus plan gives you access to unlimited envelopes and the ability to use the app from more devices.
With more of a focus on helping you save this app brings a couple of extra elements to managing your budget and bills. It’s designed to help you spend less on your food bills, with features for comparing product prices and getting family members working together on shopping lists.
You can also keep track of loyalty points you’re earning as you shop and plan to save even more with app notifications when your favourite products are on special. It has some handy features for keeping on top of your other bills too. Simply take a photo of each bill and the app will store all the important information and alert you before the due date.
Launched in 2020, the Finder app brings together the money-tracking capability seen in other apps with their well-known comparison data for financial products and services. Not only can this app sync with your bank accounts, it also gives you regular updates on your credit score and savings tips based on analysis of what you’re spending money on.
7. Beem It
An independent company backed by Commonwealth Bank, NAB and Westpac, Beem It is an Aussie version of the popular US bill-splitting app, SplitWise. With Beem It, you can take the hassle and awkwardness out of sharing expenses with friends by making it easy to calculate each person’s share and make requests for payment as well as transfers.
Source: Money and Life