Tag Archives: Women in Finance

How to make a financial plan

By Robert Wright /November 03,2020/

A financial plan can help you build wealth over time, aiding the protection of your financial future. If that sounds like a good idea, it could be good to find a trusted financial adviser who can help you on this journey.

Australians are increasingly recognising the value of financial advice with 27 per cent having received financial advice and 41 per cent of us intending to seek the expertise of a financial adviser in the future.

But that’s not all.

According to research by the Australian Securities and Investments Commission (ASIC), Australians are seeking financial advice for a multitude of reasons, including expertise in areas they might not have, their access to investments that are hard to find, as well as their assistance in helping to create a financial plan to build and protect wealth.

A financial plan helps to set out your future goals and outlines strategies to help achieve them. It’s a way to map your financial path to important events such as planning for a wedding, having a family, saving for a house or having a comfortable retirement – to name a few. Regardless of why you’re in need of one, a financial plan will be different for everyone, depending on life stage, priorities or financial goals.

Financial planning building blocks

The first part of the financial planning process is to find a financial adviser you’re comfortable with. A good place to start is the Financial Planning Association of Australia’s (FPA’s) Find a Planner web site, which hosts a range of different options in your local area, along with their specialisation to help you choose what’s right for you.

When choosing which financial adviser you’d like to work with, it’s a good idea to factor in their expertise and costs, as well as references from other clients or testimonials on their website.

Starting the journey

Once you’ve found a financial adviser you’d like to build a relationship with, sit down and discuss your goals, aspirations and attitude to money. This important fact-finding exercise will give your adviser information to help build out your financial plan.

During the financial planning journey, your adviser may give you advice on potential investments, as well as ways to increase your super balance when planning for retirement. They may also help pull together a budget or recommend insurance policies to suit you, and your family’s, needs.

Since that’s a lot to get through, for your initial meeting, it’s good to come prepared with basic information such as details about your salary, the superannuation you have already accumulated, as well as any debts or assets you have. If you can, also bring along your monthly budget and expenses so they have more visibility of your comings and goings.

It’s important this meeting is also a two-way flow of information, so you can ask questions such as:

• The adviser’s own philosophy on wealth creation
• How they will communicate with you, and, give you information about how your investments are performing
• How and when they will review your plan
• Any fees or charges.

After this initial meeting, the adviser may prepare a statement of advice, which will include a strategy for how you may be able to meet your personal goals and objectives. This will include:

• A summary of your existing financial position and your life goals.
• A list of recommended investments and an explanation for why they have been recommended. 
• Suggested insurance policies
• Fees and charges, you will pay to the adviser.

It’s also a good idea to go through this with your adviser so you understand the consequences of accepting or rejecting their advice.

Protecting your position

Part of developing your financial plan is working out how to protect your assets and your income sources along the way. This will often involve taking out different insurance policies including:

• Life insurance: to protect you and your family if you die.
• Total and permanent disablement insurance: which may pay out should you suffer an injury, accident or illness that means you are unable to work.
• Trauma insurance: which may provide cover should you be unable to work due to conditions such as cancer or heart attack.
• Income protection insurance: which may replace your wage if you are unable to work due to illness or injury.
• Insurance can help you meet your mortgage repayments and other obligations if you suffer an accident or illness or protect you and your family if you are unable to work.

It’s important to consider the right cover for you, your family and your circumstances as part of your financial plan.

Key considerations

It’s easy to assume you don’t need a financial plan because you don’t yet have substantial wealth or assets, or, even because you are too young. But the sooner you start taking control of your wealth, the more confident you will feel about your future and the financial steps you need to take to get there.

Source: BT

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.

Source: AMP

What to do next if you’re facing redundancy

By Robert Wright /October 16,2020/

Uncertainty around COVID-19 might be increasing your stress levels about losing your job, but here are five ways to soften the financial blow.

In April, Australia hit its highest unemployment rate in five years, and with the Federal Treasurer expecting an unemployment rate of around 10% by the end of the year, many Aussies may be feeling a little uneasy about their future job prospects.

Which sectors have been hardest hit?

COVID-19 has affected all areas of the workforce, but analysis by AMP reveals recruitment, retail and hospitality make up almost half of all early super release withdrawals, suggesting people in these sectors may have been more greatly affected by job losses.

Uncertainty around the reopening of interstate and international borders makes any tourism rebound also hard to predict.

How to get on the front foot with your situation?

It’s important to know that a genuine redundancy payment is made when you’ve been retrenched because there’s no longer a need for the job that you’re doing.

Here are some ways to help make sure you get what’s yours if you’re faced with a redundancy so you can be well prepared for the future.

1. Know what you’re entitled to

What your employer is required to pay you will depend on your conditions of employment, so ask your boss or HR department (which might be easier if you’re still working), or be sure to check your redundancy payment summary carefully to ensure you get what it is you’re owed.

Fair Work’s redundancy calculator (www.calculate.fairwork.gov.au/endingemployment) can help you find what redundancy pay and entitlements to expect. It’s also a good place to find details of pay and conditions if you’re covered by a registered agreement.

Meanwhile, keep in mind that apart from your actual redundancy payment, you may be eligible for things like payout of accrued annual leave and long service leave.

When the redundancy happens, if you’re under your Centrelink Age Pension age (which will be between 65 and 67 depending on when you were born), special tax treatment is also given to genuine redundancy payouts, which means some payments you receive will be tax free up to a certain limit based on your years of service.

2. Sort out your money situation, including benefits and super

The size of your payout may determine the time you can afford to be out of work, what you’ll be able to live on from week to week, along with how you’ll tackle financial responsibilities until you find another job. With that in mind you may want to:

Create a workable budget

You can do this by writing down your daily living expenses, and what you estimate any upcoming bills and loan repayments will total. This way you’ll be across all your outgoings, as well as where you may be able to make minimum repayments and cut back on other forms of spending.

Put your money somewhere useful

It might be tempting to go on a holiday, undertake renovations or pay off all existing debts with your redundancy packet, but if you don’t find work within a certain timeframe, you may leave yourself short.

Think about where you could put your money, still have access to it and potentially reap added benefits. Options may include high-interest savings accounts or a mortgage offset account that allows you to redraw funds while reducing what you pay in interest on your home loan.

Apply for financial hardship with your lenders

If your redundancy payout starts to run out and you’re struggling to make repayments, you may be able to seek assistance from your lenders by claiming financial hardship.

All providers must consider reasonable requests to change their terms in instances where you may be suffering genuine financial difficulties and feel help would enable you to meet your repayments, possibly over a longer period.

Find out if you’re eligible for government assistance

There’s a range of Federal and State government assistance available related to COVID-19. Make sure you’re across these and don’t miss out on support you might be able to access straight away.

These may change as the economy emerges from hibernation, so bookmark the pages relevant to you, in case you’re out of work for longer than you anticipate.

Depending on your age, different benefits may be appropriate at different ages – for instance most workers may look to JobSeeker payments where they’re out of work, while the Age Pension may be more appropriate for older Aussies.

Waiting periods may apply to some benefits, so keep that in mind when it comes to any payout you receive, as you may need it to cover your living expenses for a while.

Loss of a job and income in the family could also mean that you may qualify for Family Tax Benefits, or for a higher rate of payment.

Look into your super situation

See how much money you have in super and think about the effect a break from work may have on your balance.

If you have insurance inside super and are paying premiums with your super money, consider how this may affect your retirement savings if the premiums aren’t being offset by contributions.

You might also be considering early access to super during COVID-19, where the Federal Government is allowing eligible people affected by the outbreak to access up to $10,000 of their super as a tax-free payout between 1 July and 31 December 2020.

There may be short-term advantages to this, but there may also be some disadvantages that you’ll want to make sure you’re across.

3. Create a plan for your return to work

You might have a bit of leeway to take some time off, but when you do look to join the workforce again, a good place to start will be your resume. Make sure your previous roles and responsibilities are up to date and that you’ve listed all your skills and achievements.

In the meantime, set up relevant online job searches, tidy up your LinkedIn profile, touch base with recruiters in your field and don’t be afraid to target companies directly.

4. Contemplate the benefits of training

Depending on whether you want to remain in your industry or make a career change, further training could help you gain new qualifications, keeping in mind this can still cost time and money.

A new education assistance package has recently been made available to help displaced workers upskill and retrain during COVID-19. A number of free online courses are also available from TAFE, while Open University offers a range of short and longer education courses for all levels.

5. Seek further support

There’s a range of support and resources available.

Talk to your financial adviser as they may pick up on things that could otherwise be missed 

Check out AMP’s free webinar – Managing through a redundancy

Find a range of articles on AMP’s COVID-19 support hub

Check out our FAQs on ways AMP is helping clients experiencing financial hardship 

Seek free financial counselling from the National Debt Helpline on 1800 007 007 

Take a look at the government’s Moneysmart website for further financial education.

If you’re finding it difficult to cope and need to speak to someone, there’s a range of mental health and family support services available through: 

Beyond Blue – 1300 22 4636 

1800 RESPECT – 1800 737 732

Lifeline – 13 11 14

Source: AMP Insights

How is your credit score affected by COVID-19?

By Robert Wright /August 28,2020/

If you’re one of the many Australians financially impacted by COVID-19, who have deferred $218 billion worth of payments this year – fear not. Your credit score is unlikely to be affected by payment deferrals or mortgage holidays due to the current state of the world.

While that’s good news, it’s still important to maintain a high credit score by understanding how it’s calculated and what you can do to maintain it in future.

So, what is a credit score?

A credit score is a number between zero and 1200 that reflects how much money you have borrowed, the way you use credit and your history paying off any loans and credit cards. This is calculated based on many sources of information including:

• Your personal details like your age, income and living arrangements.
• Financial information like how many loans and credit cards you have.
• Your bill paying history for expenses like energy and phone bills.

While your credit score is a record of positive information, such as your track record making repayments on time and in full, it also encompasses negative information such as late payments, court adjudications, bankruptcies and insolvencies.

All in all, the higher the score, the better and the more likely lenders will be to approve loan or credit card applications you might make. The lower the score, the riskier you will be perceived by lenders, making them less inclined to approve your application for a loan, which is why having a high credit score is important.

How is it calculated?

Credit bureau are responsible for consumers’ credit scores, which are calculated across the bands below:

• Excellent: 841 – 1,200
• Very good: 756 – 840
• Good: 666 – 755
• Average: 506 – 665
• Below average: 0 – 505

What is a credit report?

A credit report sits alongside your numeric credit score and contains all the information used to determine that number. The report includes detailed information about the way you handle credit, such as your repayment history, as well as any defaults or overdue payments. It also encompasses information about your active loans and credit cards such as their value and repayment amounts.

Be aware your credit report will include a record of any defaults if you miss a payment valued at $150 or more that’s overdue for more than 60 days.

What’s it used for?

Banks and other financial institutions check your credit score and your credit report to see how likely you are to be able to make your repayments on new loans or credit cards for which you apply. Banks, telcos and energy companies also check this information every time you apply for credit with them.

What might cause your credit score to drop?

There are a range of reasons your credit score could drop, such as when you pay off a loan or cancel a credit card. While this might be confusing, this is because lenders have less information to assess how reliable you are at paying off debts or assessing loan applications.

Your credit score can also drop when you successfully take out new credit. This is because the average ‘age’ of your debt drops with the new loan. Over time, when lenders see you making regular payments on your new card or loan, your credit score should increase once more. Your credit score will also drop if you miss a payment, are routinely late making payments, or, if you go bankrupt.

How can I improve my credit score?

There are lots of steps to take to improve your credit score, including:

Pay your bills and loan repayments on time, and, in full. It’s an idea to set up direct debits so all of your obligations are automatically paid. This could help minimise the risk of missing a repayment and having this affect your credit score.

Don’t apply for too many new lines of credit, for instance multiple credit cards, at the same time. Lenders can take this as a sign you’re experiencing a cash flow crisis and need access to money fast, which can put you in the higher-risk category as a borrower.

Lower your credit limit. Lenders like to see borrowers using credit responsibly by paying off their repayments on time, and, in full.

Will my credit score be affected if I have deferred my mortgage repayments?

Banks have allowed borrowers who have been affected by COVID-19 shutdowns to defer loan and mortgage repayments for up to six months. Rest assured your credit score will not be affected if you have deferred your loan repayments.

This means that your credit report will not include a record that you have missed a payment as a result of deferring your repayments due to COVID-19. However, your credit score may be impacted if you have missed a payment on a loan or credit card for other reasons.

What should I do if I think my credit score is wrong?

You can take steps to correct your credit score if you think it’s wrong. Contact the credit reporting agencies to amend details such as your name and address. If the error involves incorrect defaults or information on your file that is a result of identity theft, contact your credit provider.

Source: BT