Tag Archives: Financial Health Check
Demand for financial advice doubles in five years
By Robert Wright /November 23,2021/
If your car engine sounds dodgy, you see a mechanic. If you’re unwell, you see a doctor. If you’ve got a tooth ache, you see a dentist. But what about when you’re looking to better manage your finances?
According to 2020 figures from research group Investment Trends, 2.6 million Aussies said they intended to seek help from a financial adviser over the next two years, up from 2.1 million in 2019 and double the levels seen in 2015.
Findings also revealed that COVID-19 had prompted greater engagement between Aussies and financial advisers where a relationship already existed.
Demand for advice is on the rise
Talking about the report findings, Investment Trends Senior Analyst King Loong Choi said, against a backdrop of economic uncertainty and volatile markets, a record number of non-advised Australians realise they need assistance from a professional.
“Among these potential advised clients, the pandemic has been a major catalyst, with 44% saying the COVID-19 situation had increased their likelihood of seeking advice,” he said.
Greater engagement between advisers and clients
The research also showed three in four financial advice clients had been in contact with their adviser to discuss the impact of the COVID-19 pandemic.
“Most financial planners have proactively engaged with their clients during this period of volatile markets, and clients themselves acknowledge these efforts,” Choi said.
The topics Aussies want advice on
There might be particular goals, events or circumstances that prompt financial advice, including unexpected situations like redundancy, death or divorce.
According to a survey by ASIC, the most common topics that participants had received advice on, or were interested in receiving advice on, were:
- investments (eg shares and managed funds) – 45%
- retirement income planning – 37%
- growing superannuation – 31%
- budgeting or cash flow management – 22%
- aged care planning – 18%
Other topics also included risk protection, self managed super funds, debt management, switching or consolidating super, and estate planning.
What’s involved when you see an adviser
You may opt to receive simple advice on a particular issue, broader financial advice, or ongoing financial advice.
After you’ve discussed your goals, objectives and attitude to risk, your adviser can then provide you with recommendations and a product disclosure statement for any product they’ve recommended.
As part of this process, it’s important to understand how you will be charged and you’ll also need to assess whether the advice provided is right for you. After all, it is your money.
Source: AMP
11 things everyone should know about their super
By Robert Wright /October 25,2021/
Super is there to provide you with an income when you stop working and it may provide a tax-effective way to save for your retirement over the long-term.
What’s probably more interesting, is in time, your super may become one of your largest assets. We don’t often think about that, but it’s a good reason why you may want to pay closer attention to it.
Here are some things worth knowing or which may even interest you to investigate further.
1. Who pays your super
Generally, your super savings will build up over the course of your working life, as money you earn is put into super by yourself, or by your employer under the super guarantee, if you’re eligible.
You can make additional voluntary contributions to your super to boost your retirement savings if you choose to. However, there are limits on the amount you can contribute each year and there are separate caps, depending on the types of contributions you’re making.
2. Where your money’s invested
Any time money is deposited into your super, it’s invested on your behalf by the trustee of your super fund.
Investments can be made into property, shares, cash deposits and other assets depending on your default investment profile, or if you’ve made your own investment selections.
Most funds will allow you to choose from a range or mix of investment options and asset classes and choosing the most suitable option will typically come down to your attitude to risk and the time you have available to invest.
3. How to see what your employer’s paying you
Super guarantee (or SG) contributions made by your employer, if you’re eligible, should be at least 10% of your ordinary (not overtime) earnings if you’re making $450 or more each month. Note, others may also be eligible.
Meanwhile, as these contributions may be the foundation of your future savings, it’s important to check they’re being paid correctly. You can do this by reviewing your payslips, checking your super statements, calling your super fund or logging into your online account to see what’s been put in.
Keep in mind, employer super contributions also only have to be paid into your fund four times a year (at a minimum), on dates set by the ATO, which means your super may be paid at different times to your employment income.
4. Where to go if something doesn’t look right
If your employer hasn’t paid your super, speak to the person who handles the payroll at your work. If you’re not satisfied with what they tell you, you can lodge an unpaid super enquiry with the ATO.
5. How your current super balance stacks up
In many cases you can check out your super balance online via your super fund’s website or the statements they send you.
Meanwhile, if you’re interested to know how your balance fares and what you might need each year in retirement, the Association of Superannuation Funds of Australia puts out a report each quarter.
If you’re curious to know how your super balance shapes up against others your age, check out the average super balances for employed people of different age groups across Australia.
6. How to find your lost or unclaimed super
At last count, there was more than $13 billion in lost and unclaimed super waiting to be claimed across Australia.
That can happen when you set up a new super fund and forget to roll over what you accumulated in a previous one, or if you forget to update your details with your providers when you change them.
You can search for lost or unclaimed super by doing a super search with your current super fund or by logging into your MyGov account to find your super funds.
7. What to look out for if you roll two funds into one
If you have more than one super account, there may be advantages to rolling your accounts into one, such as paying one set of fees and less paperwork.
If you do decide to consolidate, make sure you don’t risk losing features and benefits including life and other insurance that may be attached to the account you’re considering closing
8. How to check your insurance if you have it
Most super funds let you pay for personal insurance out of the money in your super fund, but there are pros and cons worth weighing up.
For instance, insurance through super can often be cheaper than personal insurance bought outside super, but you may not get the same level of cover.
9. How to make sure the right people get your money if you pass away
If you don’t nominate a beneficiary with your super fund, your super fund may decide who receives your super money when you pass away, regardless of what you have in your will.
There are generally two types of beneficiary nominations you can make, binding and non-binding.
If you make a binding nomination, your super fund is required to pay your benefit to the person or people you’ve nominated, as long as the nomination is valid when you pass away. Keep in mind, some binding nominations are lapsing and may only remain valid for three years.
If you make a non-binding nomination, your super fund will have the final say as to who receives your super benefits, but they will attempt to find all potential beneficiaries and decide who’s the most appropriate.
10. What age you can withdraw your super
The government sets general rules around when you can access your super, which typically won’t be until you reach your preservation age (which will be between 55 and 60, depending on when you were born) and meet a condition of release, such as retirement.
At this time, you may choose to take the money as a lump sum, income stream, or even a bit of both.
Meanwhile, there may be some special circumstances where you may be able to withdraw your super early.
11. When can you no longer contribute to super
Once you turn 75, generally you can no longer make voluntary contributions to your super, with some exceptions, which may include if you’re selling your home and making a downsizer contribution. Compulsory SG contributions made by your employer, if you’re still working, can still be paid.
Many people think of their super as an investment that takes care of itself, but the choices you make about your super today, could make a big difference to your quality of life later on.
Source: AMP
Money worries and your mental health
By Robert Wright /September 08,2021/
It’s been a trying time for many people, with our collective mental health taking a toll as the COVID-19 pandemic rolls on. The Melbourne Institute says one-in-three Australians are now reporting financial stress, while one-in-five are feeling ‘mental distress’.
It’s well known that our financial wellbeing and mental health go hand in hand. Severe or prolonged financial stress can trigger symptoms of anxiety and depression, relationship breakdowns, trouble sleeping and anti-social behaviour. This in turn can lead to further poor decision making when it comes to money.
Fortunately, there are things you can do to improve your financial security and wellbeing. If you’re experiencing financial stress, here are some practical steps you can take to get back on track.
Give yourself a financial health check
When you’re experiencing financial stress or hardship, it can be tempting to avoid the problem altogether; but this only makes things worse. Once you gain a clear understanding of your financial position, you’ll feel more in control and can take steps to improve your position.
Start by doing a financial health check to assess where your income is going. Use a spreadsheet or budget planner to list your income, debts, and expenses. Then look for opportunities to reduce your expenses, pay down debt and increase your savings.
Renegotiate your bills
Renegotiating what you owe is a smart way to free up some cash flow for daily living and ease the pressure you feel about meeting your obligations.
If you’re having a hard time meeting expenses, it’s important to speak to your service providers as soon as possible. Let them know you’re doing it tough and ask to negotiate lower repayment amounts and extended timeframes.
Don’t be shy to ask for a better deal on any services you use, including phone bills, internet, and utilities. Most organisations will try to work with you – it’s better for them to get paid (albeit slowly) than for you to default on what you owe them.
Pay down debt
With more cash flow available, you can concentrate on clearing your debts, a key step on the path to financial freedom. If you have lots of debt, it’s worth seeking the advice of a financial adviser. They can advise you on the most efficient and cost-effective way to repay what you owe. You might be able to refinance, take advantage of ‘no-interest’ periods or consolidate your debts into a single monthly repayment at a lower rate.
Make bank accounts your best friend
Keeping all your money in one bank account makes it hard to keep track of how much you have and how much you owe. One simple strategy to help you manage your money is to set up several bank accounts, each with a different purpose. For example, one to receive your income, another to pay household expenses, one for discretionary ‘spending’ and one for saving.
You can set up automatic payments to transfer the right amount of money into each account when you get paid. That way, you’ll always have the money put aside to pay your bills as they arise. Make sure to set up direct debits or automatic payments for each of your regular household bills from your expense account, so there’s no chance of falling behind in future.
Build your savings
Feeling financially secure goes hand in hand with having a good financial safety net in place. The more you have put aside for a rainy day, the less stressed you’ll feel when things don’t go to plan. Aim to build up your emergency fund to cover six-months’ worth of living expenses for yourself and your family. Again, creating an automatic transfer of funds to your ‘emergency’ savings account each month is an easy option. Then sit back and watch your savings grow.
Where to get help
If you’re experiencing financial hardship, struggling to make ends meet, or find yourself on the wrong end of one too many late payment notices, remember, there is help available.
Source: Money and Life
6 steps to help you feel more positive about your finances
By Robert Wright /July 16,2021/
With one in four Australians reporting more financial stress after COVID, it’s no surprise many of us are concerned about the future. Between mounting bills, unexpected expenses and a lack of understanding around our needs in retirement, getting our savings on track and seeing the big picture can seem overwhelming.
It doesn’t need to be. If you break things down into small, manageable actions, you can create a simple plan to take immediate positive steps towards a healthy financial future.
Assess your debts
Debt is a reality for many Australian households, whether it’s a home loan, credit card, student loan, car finance or personal loan. It’s not uncommon to lose track of how much you owe and how much interest you’re paying as a result.
Understanding your debts can help you put a plan into action to pay them off sooner and in the optimal order, potentially saving you a lot of money. There are steps you can work through to manage what you owe and work out your priorities – such as making a list of all debts and their sums and categorising each as ‘good’ or ‘bad’.
Plan how to pay your bills
Some 14% of Australians report they have been unable to pay one or more bills on time in recent months, a reality that may be compounded through winter as extra heating sees utilities skyrocket.
One way to manage irregular bill amounts and unexpected rate spikes is to consider bill smoothing, a process where you establish automated payments of a set (and known) amount to cover utilities over the course of a year.
Establish an emergency fund
Putting aside extra money for that rainy day sounds simple, but it’s one that many Australians neglect – in fact, one in four of us believe we wouldn’t be able to raise $2,000 in a week if we needed to do so in an emergency.
If you are that one in four, it’s a good idea to set up an emergency fund as a separate account – it acts as a buffer from debt, helping you prepare for life’s curve balls. Keeping it away from your day-to-day savings account means you’re not tempted to dip into it for known, budgeted expenses such as rent or mortgage, groceries or school fees.
Look at your super
The government’s Early Release Scheme in 2020 saw 3.5 million Australians take advantage of the ability to dip into their super early. For many, having access to these funds helped ease immediate financial stress. If you’re not sure how to build this money back, you’re not alone – 30% of those who accessed their fund report a lack of awareness of how to recover their balances.
A good first step is to calculate how much money you’ll need in retirement – there are various online tools to help you do this – then you can consider some of the ways you could rebuild your super and work out which one suits your circumstances.
Work on a savings plan
Deciding to pay yourself first – say, 10% of your income – is one simple way to boost your savings and improve your financial future, making you contribute a set amount of money into a savings account before you manage other household expenses.
It’s also a good idea to set up a separate savings account with a high interest rate. Then make sure that set amount of your salary, as well as any surplus in your day-to-day account, is automatically rolled over into your savings at the end of the month. Automating your accounts allows you to set and forget, so your nest egg will automatically grow every time money is deposited.
Think about any long-term financial goals
At what age do you want to be able to buy your first house? When do you want to retire? Do you know how much you need in your superannuation fund to retire comfortably? Many of us sweep these big questions under the carpet, but understanding them can help you prepare for your financial future.
Once you’ve mapped out your current financial position and established your long-term goals, you can use a range of online tools and calculators to help you get there.
You can also speak with your financial adviser to help get your savings goals on track and make sure you head toward retirement with peace of mind. Source: AMP