Financial Health + Wellness – Does It Matter?

Many of us are aware of the importance of improving our physical and emotional health. We have heard it many times, that regular exercise and eating balanced and healthy meals can result in long term health benefits. But did you know there is a direct correlation between our physical well-being and financial health?  

What is financial health and why is it important to a happy and successful life?  

Financial health is a term used to describe the state and stability of an individual’s personal finances and financial affairsGood financial health is about taking control of your finances, having the financial freedom to make choices now, and in the future, and being ready to cope with unforeseen changes to your financial circumstances, such as job loss. It is important to review your financial health as poor financial health can lead to financial stress. Stress in itself is not necessarily harmful but when we experience prolonged financial stress, it can affect our physical and mental health.  Financial stress can create emotional exhaustion, anxiety, insomnia, depression, and can affect our relationships with family and friends.  

Understanding your financial situation is the first step to improving your financial health. Below are 6 strategies to improve your financial health. 

1. KNOW YOUR BUDGET

If you don’t already have one, create a budget to help you plan your expenses and identify areas where you can cut back on. For example, can you cancel memberships you no longer use? Work out what are your needs and wants and avoid buying under stress or impulse. Stick to your budget even though your income increases. Do an annual health check on utilities, insurance, phone bank charges, and mortgage to ensure you are not paying for expenses any more than you need to. 

2. SET SAVINGS GOALS

Once you have worked out your budget, work out a savings plan. Perhaps you are saving for a house deposit, new investment, or for a holiday. Saving for something takes time and its important to be realistic about how long it will take. But having a savings plan and sticking to it will help you reach your savings goal sooner. It will also give you a sense of achievement and satisfaction that you have worked hard for something without needing to borrow funds. Some people found setting up automatic transfers to a separate savings account which they could not easily access was helpful. 

3. HAVE AN EMERGENCY FUND

Do you have an emergency fund for that rainy day that you have set aside to access in the case of unexpected costs, such as a loss of employment, major repairs, or medical emergency? Generally, it is recommended to set aside 3 to 6 months’ worth of expenses for your emergency fund.  

4. PRIORITISE HIGHER INTEREST DEBT

 Credit cards and personal loans often have higher interest rates that are not tax-deductible and therefore considered bad debt. Focus on paying off these debts first or if possible, consider consolidating the debt to reduce what you pay in fees and interest. 

5. PAY MORE THAN THE MINIMUM

Your home loan is also another bad debt. Consider reviewing your home loan to ensure that you are getting the best deal on the market and look at whether you can increase your repayments on a weekly or fortnightly basis. By increasing your minimum repayments and making home loan repayments weekly or fortnightly rather than monthly you can significantly reduce the interest you are paying in the long run and repay your debt faster. 

6. SEEKING HELP

If you are feeling overwhelmed, remember it’s ok to ask for support. You may want to seek professional help from a Financial Planner or avail yourself of free financial counselling offered by community organisations, community legal centres, and some government agencies. 

 

Helen Yau – Manager + Financial Planner

CA, BCom, Dip Fp, SSA

Financial Mistakes To Avoid During A Crisis

Although none of us could anticipate the world going into lock down due to a pandemic, I cannot help but wonder how many of us were financially prepared for a crisis.  Prepared or not, I have witnessed some mistakes that people are making as a result of Covid-19.

1. MAKING EMOTIONAL FINANCIAL/INVESTMENT DECISIONS.

When the share market suffers sharp falls, it is a natural reaction for many to panic, or at least lose confidence in the market.  However, history shows that after every financial crisis, the market experiences a recovery.  It is important that you regularly review your investment strategy and stick with it for the long term, rather than make rash decisions as a result of market fluctuations.  When you sell assets during a downturn, you are essentially crystallising that loss.

2. ACCESSING YOUR SUPER EARLY DUE TO COVID-19

This measure was introduced to provide relief for those experiencing genuine hardship as a result of Coronavirus, but have you considered the long-term effects?  Depending on your age and current super balance, accessing the maximum $20,000 under the temporary Covid-19 early access to super could end up resulting in a loss of up to $100,000 by the time you retire.  Also, if the withdrawal results in your fund being left with $6,000 or less, this may result in a loss of insurance cover also.

3. NOT HAVING AN EMERGENCY FUND

Everyone will have a different amount they are comfortable with having access to any point in time for those unplanned expenses.  Ideally, you would have enough to cover between three and six months of non-discretionary expenses.

4. NOT HAVING A BUDGET

Having control over your expenses and having an understanding of where your money is going, will hold you in good stead at all times, but particularly during a financial crisis.  Knowing where you could save money during difficult times can help reduce the possibility of increasing household debt.

5. NOT HAVING A WILL

Over half of Australians do not have a will.  Passing away intestate creates havoc for your loved ones.  Establishing a will is a simple process and help to ensure your assets are distributed according to your wishes.

Our team at Canny Group are here to help you and support you with all financial aspects of your life.  Nobody was able to predict what a year 2020 would be, but what we are able to do now (if you haven’t already) is plan ahead and do it the right way.  Get in touch with our team to find out how we can help you set and achieve your financial goals.

 

Samantha Butcher – Financial Adviser

BComs Dip FS

Staying Motivated With Your Money

When it comes to our finances, it’s easy to lose sight of our goals and become demotivated when unexpected events derail our plans.  It’s especially difficult during times like these where there’s likely more uncertainty and concern for our financial futures than ever before. In this article, we’ll touch on four ways to stay motivated with your finances in these trying times.

1. REVISIT YOUR FINANCIAL GOALS

In order to improve any area of our life (including our finances), we need to have a strong ‘why’ associated with our goals to stay motivated.  When setting financial goals, it’s important that we understand and define the reason behind the goal and how it will positively influence our life.

For example, will becoming debt free mean that we’ll have more surplus income to save and invest for our future?  Does contributing more to superannuation now mean that we’ll be able to afford a more comfortable lifestyle in retirement?  It’s important to focus on these reasons and remind ourselves of why we set our financial goals in the first place, if we hope to stay motivated, especially during difficult times.

2. BREAK DOWN YOUR GOALS

We often overestimate what we can achieve in one year and underestimate what we can achieve in five years.  We set audacious, sometimes unrealistic goals that cause us to become demotivated when we fall short of achieving them.  We feel excited and motivated when we set our financial goals, only to lose sight of them when unexpected life events occur.  If you feel that the financial goals you have set for yourself no longer seem achievable, a useful strategy to consider is to break these goals down into smaller, more achievable goals.

For example, you may have set a goal to pay off $5,000 of credit card debt this year.  If this goal now seems unachievable, set a new goal to pay off $2,500 this year and contact your lender to assess your options and see if you can negotiate a lower interest rate.  By breaking down your goals in this way, you’ll continue to make progress towards your larger goals while accomplishing important milestones to help you stay motivated.

3. REMAIN OPTIMISTIC

When our financial plans don’t work out as we hoped they would, we can become demotivated and feel hopeless about our financial situation.  It’s easy to stay positive when things are going well, but it becomes more difficult to maintain the same outlook in the face of adversity.  That’s why it’s especially important to take the time to identify reasons to remain positive and optimistic during tough times.

Start by acknowledging all of the financial goals you’ve already accomplished.  It’s important to reflect on what you’ve already achieved and be proud of your accomplishments.  It’s also important to identify things in our life that we’re grateful for.  This doesn’t have to be related to our finances, but it’s essential for our motivation to find reasons to remain optimistic.  This will allow us to shift our focus away from the negative and towards the positive, providing us with a more optimistic outlook on our financial future as we strive to maintain motivation towards our goals.

4. SEEK ASSISTANCE

When our motivation is dwindling and we’re finding it difficult to remain positive about our financial situation, often the best thing we can do is to seek help.  You don’t have to go through tough times alone.  Financial support is available to help keep you on track during times like these.  Our team of Financial Advisers at Canny Group are here to help with any questions you may have about your financial situation, Centrelink entitlements or retirement planning.  You may also wish to speak to a Financial Information Service Officer at Services Australia for free confidential, financial information.

If you need any help or financial advice, please get in touch with us and we would be happy to assist you!

 

Chris Graham – Client Services

COVID-19 + Accessing Your Super Early

As of 20 April 2020, people affected by the COVID-19 pandemic may be eligible to apply to access up to $10,000 of their super in FY 2019-20 and a further $10,000 in FY 2020-21.

ARE YOU ELIGIBLE?

You can apply to access your super if you meet one or more of the following requirements:

  • you are unemployed
  • you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment [which includes the single and partnered payments], special benefit or farm household allowance
  • on or after 1 January 2020, either
    • you were made redundant
    • your working hours were reduced by 20 per cent or more
    • If you are a sole trader, your business was suspended or there was a reduction in your turnover of 20 per cent or more

If you meet these requirements and decide to withdraw super, you won’t pay tax on super you withdraw. It won’t affect Centrelink or Veterans’ Affairs payments.

HOW DO YOU WITHDRAW SOME OF YOUR SUPER?

You can register your interest today through myGov. Applications open 20 April 2020.

People who are eligible will be able to apply online [through myGov] to access up to $10,000 of their super between 20 April and 30 June 2020. Applications to access up to a further $10,000 will be open from 1 July until 24 September 2020.

ASSESS ALL OF YOUR OPTIONS FIRST

Before you withdraw super, it’s important to assess all of the options available to you. Access Government assistance and talk to your bank or lender about how they can help.

GOVERNMENT PAYMENTS

As part of the COVID-19 response, there are specific Government payments to help you:

  • Income support payments – crisis payments and a temporary fortnightly $550 coronavirus supplement
  • Household support payments – two automatic $750 Economic Support Payments
  • JobKeeper Payment – $1,500 a fortnight for 6 months may be available to employers to keep paying eligible employees whose hours have been reduced

CONTACT YOUR BANK

All banks and lenders have hardship teams ready to help customers in tough times.

You may be able change the terms of your loan, or temporarily pause or reduce your repayments for 6 months.

CHECK YOUR CURRENT SUPER BALANCE + CONSIDER THE IMPACTS ON YOUR INSURANCE

Your super balance as displayed through myGov may be as at 30 June 2019. Your super balance may have changed since then, so it’s a good idea to check your current balance by getting in contact with your super fund.

It’s also important to consider the impacts that withdrawing some of your super may have on your insurance. More than 70% of Australians that have life insurance hold it through super. If your super balance falls to zero or is too low, you may lose your life and income protection cover.

CONSIDER THE IMPACT ON YOUR RETIREMENT SAVINGS

At a time when you may be struggling to cover basic costs such as rent, groceries and utility bills, a payment of $10,000 or even $20,000 could be a very welcome injection of cash. However, it’s important to remember that withdrawing some of your super has the potential to make a significant difference to your level of income in retirement.

Your super is your retirement savings. Consider what impact withdrawing super today will have on your retirement by using the simple superannuation calculator available on the moneysmart.gov.au website to work out how much super you’ll have when you retire.

According to Ben Marshan, Head of Policy and Standards at the Financial Planning Association of Australia [FPA], “Conservatively, every $1,000 that you have in super at age 30 will be worth about $4,500 at age 60. If you take $1,000 out now, you have to put in $4,500 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.”

WE ARE HERE TO HELP

If you need assistance, our financial advisers at Canny Group are available to help you navigate these changes and discuss your current financial situation, superannuation and retirement savings in more detail.

 

Chris Graham – Client Services

Market Downturns + Your Retirement Savings

The Coronavirus [COVID-19] has had a significant impact on financial markets and global asset prices.  With wider economic and social disruption now evident and expected to continue in the short-term.  We understand that you may have concerns about the effects this pandemic and subsequent disruptions may have on your superannuation balance.  That’s why we’re going to talk about how to remain calm amid this crisis and avoid becoming an ‘April Fool’ when it comes to your retirement savings.

CONSIDERATIONS for investors?

It’s important to remember that superannuation is and always has been a long-term investment.  With that in mind, long-term performance is one of the key factors to consider during events like this.  While it’s confronting to see the global market experience a downturn of this scale, we remain confident this trend will reverse, as we have seen on previous occasions.

There’s no doubt this Coronavirus pandemic is a serious event.  However, as a result of this, we’re likely to see global fiscal stimulus, low valuations on equities and low interest rates for a long time.  Another thing to bear in mind is that the world economy has experienced and overcome many challenging events over the last 100 years, including World War I and World War II, the Spanish flu, the Great Depression and more recently the 2008 Global Financial Crisis [GFC].  The below graph demonstrates how shares climb a “wall of worry” over many years with numerous events pulling them down periodically.  As we can see, the long-term trend of shares is ultimately upward while providing greater returns than other more stable assets.  The takeaway message from this is that periods of volatility are the price we pay for higher longer-term returns from the share market.

Australian Shares "Wall of Worry" - Source ASX, AMP Capital
Australian Shares “Wall of Worry” – Source ASX, AMP Capital

WHAT CAN I DO… to protect my superannuation?

We mention the above because as we experienced during the 2008 Global Financial Crisis [GFC], many investors are now electing to switch their superannuation investments to cash or very defensive options in search of lower volatility and greater stability.  Unfortunately, it’s near impossible to predict when market confidence will return and recover.  As a result, efforts to mitigate risk by attempting to time market movements simply lock-in, and in many cases, magnify losses.  For example, the share market fell some 40% in 2008-9, but recovered near all of the fall in the following 12 months, and subsequently went on to exceed the pre-GFC levels.

The Coronavirus pandemic has escalated rapidly during the early months of 2020, resulting in the fastest share market drop of this magnitude in history.  It has left us all questioning how long this will last and when global markets will rebound and return to pre-COVID-19 levels.  The sharp market falls and headlines blaring that billions of dollars have been wiped off the share market are stressful for all of us.  It’s only natural to want to take action and do something about it to protect your retirement savings.  However, if history is any indication, those who are unlikely to draw on their superannuation in the short-term are often best to take no action.  We know it may seem counter-intuitive, but panicking and switching your superannuation investments to cash or very defensive options in the midst of a market downturn can lock-in losses and significantly impact your retirement savings in the long-run.

In times like this, it’s often best to turn down the noise.  We have always recovered, and we’re confident that we will come through this crisis as we have in previous times.  With this in mind, we encourage you to consider your immediate and long-term requirements.  As always, you should also continually consider your own objectives, financial situations and needs which are not addressed in this general article.  If you have any concerns or queries, please don’t hesitate to contact us and we will discuss your personal circumstances in more detail.

Stay healthy + safe!

 

Chris Graham – Client Services

COVID-19 // Economic Stimulus + Survival Guide

The Federal Government and State Government have together announced multiple stimulus packages to help support everyone affected by Covid-19 [Corona Virus].  With that in mind, we want to try to provide you with a brief and up-to-date rundown of the benefits for individuals and Small to Medium Sized Businesses [SME’s].  Please note that this is not exhaustive, and we have provided links to original Government releases, so you can double check all information and keep abreast of developments.

April 2020

April Announcements
If you are an EMPLOYER – click here.  

Also important for employers to register with the ATO here AND here.  If you are an employer and have a State Revenue Office payroll tax registration click here.

If you are an EMPLOYEE – click here

If you are a SOLE TRADER – click here.  

Also important to for sole traders to register with the ATO here AND here.

If you need information on ACCESS TO CREDIT for small business – click here

If you employ APPRENTICES – click here

If your income falls BENEATH $1,075 p/fortnight you may be entitled to the Coronavirus Supplement – click here

If you are a VICTORIAN small business with a turnover of +$75,000 – click here

If you are a TENANT – click here

 

March 2020

March Announcements
Small – Medium Businesses – https://treasury.gov.au/coronavirus/businesses

  1. Businesses with turnover of less than $50M who employ workers will be eligible for the “Boosting Cash Flow for Employers Package”.  All employers will receive a minimum payment of $10,000 [increased from the initial $2,000 announced in mid-March] and the maximum is calculated as 100% of the PAYG withholding withheld from employee wages up to a maximum of $50,000.  The amount is calculated on PAYG withheld between January and June 2020 and calculation varies depending on how often you lodge your activity statements.
  2. An additional payment is being introduced from the July – October 2020 period.  This amount will be exactly the same as the original amount received by the business.  This effectively doubles the amount received to a minimum of $20,000 and a maximum of $100,000 https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf.
  3. The Victorian Government has announced that SME’s with a yearly payroll of less than $3M, will be provided with 12 months Payroll Tax relief.  Businesses that currently pay payroll tax [ie. business with payroll, including superannuation, of greater than $54,166 per month] will receive a refund to their bank account of any payroll tax paid for the period 1 July 2019 to 29 February 2020.  In addition, there will be no further payroll tax payable up to 30 June 2020.  The Victorian Government advises that refunds will be accessed by 27 March 2020 https://www.premier.vic.gov.au/economic-survival-package-to-support-businesses-and-jobs/.
  4. There are also measures to temporarily assist businesses in financial distress, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_temporary_relief_for_financially_distressed_businesses.pdf.
  5. Instant asset write-off is increased from $30,000 to $150,000 for those of you who are not concerned about cash-flow and view this as a good time to invest in assets for your business, https://treasury.gov.au/sites/default/files/2020-03/Fact_Sheet-Delivering_support_for_business_investment.pdf.  There are also measures around depreciating fixed assets faster, https://treasury.gov.au/sites/default/files/2020-03/Fact_Sheet-Delivering_support_for_business_investment.pdf.
  6. Wage subsidies are available for up to 50% of an apprentice or trainee’s wage for the nine months from 1 January to 30 September 2020.  Employers will be reimbursed to a maximum of $7,000 per quarter per apprentice/trainee, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf.

March Announcements
Support for Cash Flow Needs for Small – Medium Businesses – https://treasury.gov.au/coronavirus/business-investment

  1. The Federal Government will provide a guarantee of up to 50% of loans made to SME’s https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Supporting_the_flow_of_credit_1.pdf.
  2. Lenders will be provided with a temporary exemption from the responsible lending obligations to provide loans to existing small business clients to enable faster approval and provision of loans to SME’s, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Supporting_the_flow_of_credit_1.pdf.

March Announcements
Individuals + Households – https://treasury.gov.au/coronavirus/households

  1. Income support payments and coronavirus supplements to existing and new recipients of some Centrelink payments, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Income_Support_for_Individuals.pdf.  There will also be streamlined application for Centrelink benefits and reduced waiting times for payments.
  2. Two separate payments to recipients of social security, veteran and other support payments from Centrelink.  These are due to be paid as $750 on 31 March 2020 and $750 on 13 July 2020, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Payments_to_support_households.pdf.
  3. Temporary early release of superannuation amounts up to $10,000 for the financial year 2019-20 and again for the financial year 2020-21.  There will be no tax payable on the amounts withdrawn and they will also not effect Centrelink or Veterans’ Affairs payments, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Early_Access_to_Super_1.pdf.
  4. Temporary reduction in superannuation minimum drawdown amounts for those receiving a pension from their super fund, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_support_for_retirees_to_manage_market_volatility.pdf.
  5. Reduced Centrelink deeming rates to support retirees, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_support_for_retirees_to_manage_market_volatility.pdf.

Super Women

RETIREMENT!  The very thought of it appeals to many hardworking persons.  They think about a time for doing the things that bring them pleasure, recreation and fun.  Sadly, many, in particularly women, will not have sufficient superannuation savings to fund the lifestyle they are hoping for in retirement.

On average, women retire with 39% less super than men and surprisingly an estimated 40% of older single retired women live in poverty in retirement.  This group of single retired women are the fastest growing cohort of homeless people in Australia.  What are the reasons for this?  Australia’s gender pay gap is currently 13.9% so on average, women earn less than men and since compulsory employer super is based on wages, women will have less in super in retirement.  Women are also more likely to take time off work for maternity leave and to care for their families.  As a result, a lower superannuation balance may mean a reliance on receiving a government pension.  For some, this may limit their independence and affect their quality of life.

Alan Lakein, a well-known author on personal time management said, “Planning is bringing the future into the present, so you can do something about it now.”

What little steps can you take now to prepare for the kind of retirement you want?

  1. CONSOLIDATION… Do you have multiple super funds?  If so, consolidating your super will likely reduce the management fees you are paying to different funds.
  2. INVESTMENT CHOICE IN SUPER… Most super funds allow you to choose from a range of investment options and asset classes.  These may include, growth, balanced, conservative and cash.  Do you know what investment options are available to you and have you reviewed how your super is invested?  Your investment choice will affect the earnings in your super and ultimately will impact the balance you have in super in retirement.
  3. INSURANCE IN SUPER… Most super funds offer life, total permanent and disability and income protection insurance for their members.  Premiums are deducted from your super to pay for your insurance cover.  Have you reviewed your level of insurance cover?  Do you know if you are over or under insured?  Do you know how much you are paying in insurance premiums for your cover?
  4. CONTRIBUTIONS… You can boost your super and get the power of compounding to work for you by making additional contributions.  If you make personal [after tax] contributions, you may be eligible for the super co-contribution and the low-income super tax offset of up to $500 each.  You can also salary sacrifice part of your salary and have it paid to your super fund.  By salary sacrificing to super, you may be able to reduce your tax because you are only paying 15% tax on your contributions you make rather than your marginal tax rate.  Salary sacrifice to super is considered employer contributions so its important to ensure that you don’t exceed the annual contribution cap of $25,000 for concessional contributions.  From 1 July 2019, if your super balance is less than $500,000 and your employer contributions have not exceeded $25,000 for the year, you are able to carry forward the unused part of the contribution cap for up to 5 years.  This may be a valuable opportunity for those who suddenly have a lump sum assessable income resulting from a disposal of a property.

If you would like to know more or come in for a free 30 minute appointment to speak to one of our team on how you can make the most of your superannuation, get in touch here!

 

Helen Yau – Manager + Financial Planner

CA, BCom, Dip Fp, SSA

New Years’ Finance Resolutions

The new year is a time when a lot of us make well intended resolutions to kick start the year.  These resolutions may relate to health, work, family, and/or your finances. I say ‘well intended’ because we make them with the best of intentions to commit to them and benefit from them in the long term.  However, come February or March, and we find ourselves feeling guilty because we have not fulfilled our goals.  There can be many reasons why we do not always follow through with our resolutions, but I want to hone in on one in particular – finances.

You may want to get professional help with your finances but something stops you from picking up the phone to make an appointment with a financial adviser– “I don’t have enough money to invest yet”, or “I can’t afford it”.  I would argue you can’t afford not to see one!  In terms of not having enough money to invest, there are many other reasons why you could be benefiting from professional advice:

  • A financial adviser can illustrate the benefits of compounding interest over the long term even if you are only able to save a small amount each month. It is never too soon to start saving and we all need to start somewhere.
  • You may have many competing financial goals but with limited funds, and not sure which way to go. For example, should you contribute to super or pay more off your home loan?  Should you start saving or reduce a personal loan?  A financial adviser can provide one off advice relating to a particular question/need you have.  We can help you formulate realistic goals and implement strategies to help you achieve your goals in order of priority.
  • Are your personal insurances up to date? Even if you have not yet built up a pool of assets, you still need to ensure your family, your income and your lifestyle is protected in case of illness, injury or death.

In summary, you do not need a large sum of money before you seek professional financial advice. What you do need to do is ensure what you are doing, or planning on doing, is the right option for you.  Is it the most tax effective option?  Is your super invested appropriately?  Are your insurances adequate?  Are you paying too much for your insurance?

One of our advisers would be happy to meet you to discuss your goals and put you on the right path.  Now, pick up the phone…

 

Samantha Butcher – Financial Adviser

BComm DipFS

Christmas + Gift Giving

Christmas is a weird and wonderful time of the year, filled with family, friends, good times, presents, and that confusion of what day of the week is it, and how many days of leave are left.  Not to mention the confusion of still writing 2019 down as a date, three weeks in to the new year.

Christmas can also be very stressful when it comes to the awful topic of money, and spending money.  For those that are running a tight ship, it’s a stressful time, because they might not be able to do everything they can or want to.  Then there are those people that won’t be able to achieve what they can or want to.

The age-old adage of Charity begins at home doesn’t hold true as much as it may have in the past.  There are a lot of people doing it tough, and they need a hand through times such as this.  There are many great ways in which this can be done, whether it’s buying extra presents to donate under wishing trees, making up hampers as a work place, and donating to families in need, or simply through a cash donation to one of the many charities that help families have a great Christmas as well.  I know this is something we do at the Canny Group, and something that I do personally as well.

One hangover that you don’t want to have to deal with after Christmas, is the debt that we tend to rack up from overspending.  It’s not just credit cards, it is zip pay and afterpay as well.  As of 30 June, there was almost a billion outstanding in afterpay, and 60% of that was attributed to people aged between 18-34, which is staggering.

In December last year, $30 million was borrowed in Credit Cards.  Want to hear something scary?  If you owe $2,000 on a credit card and make the minimum repayments, it takes 17 years to clear the debt!  I guess the moral of the story is to not overspend or start planning earlier.  I know that in my family, on one side we do Kris Kringle, that way everyone gets one good present, rather than lots of presents that end up being forgotten or put away to never see the light of day again. Try not to let this time of the year overwhelm you and have loads of fun!

See you in 2020!

 

Steve Reynolds – Certified Financial Planner

BComm, Dip.FS[FP]

Superannuation Nominations – Make It Legit!

Don’t be trapped by the pitfalls of superannuation nominations – make it legit!

Have your circumstances changed recently?  Have you married, separated, divorced, had kids, or are your kids now over 18 years old?  It may be time to consider and/or review your superannuation nomination.

A superannuation nomination is a notice to your superfund trustee outlining who you want to receive your superannuation benefits after your death.  However, your superfund trustee is only bound by a nomination that is valid [in accordance with superannuation laws].

Many superannuation funds will not guide you through what constitutes a valid superannuation nomination, which makes it all the more difficult.

So, what constitutes a valid superannuation nomination? Your superfund trustee will look at the following hierarchy of people when considering how to distribute your super:

  1. Your spouse or ex-spouse;
  2. Your children [or other financial dependents]; and
  3. Your Estate.

Let’s break these categories down a bit further…

1. YOUR SPOUSE OR EX-SPOUSE

It may seem common sense that a superfund trustee would pay your super benefits to your partner automatically.  And this is true, particularly if you have made a nomination directing the payment to your spouse.  However, if, since making the nomination, you have separated or divorced from your spouse, the nomination is not revoked and, in fact, remains valid. Thus, your benefits may be paid to an ex!

2. YOUR CHILDREN

The intention of superannuation is to fund the retirement of you and your dependents.  Accordingly, a spouse and children who are considered to be financially dependent upon you will receive the most beneficial treatment under superannuation law.  Your children who are under 25 or have a disability will be considered dependents.

You must be careful with nominations to children as there can be pitfalls, including:

  1. You cannot nominate nieces or nephews [invalid];
  2. If the children are under 25 and you have a spouse or an ex-spouse who is alive, that person will be considered the guardians and your super will be paid to them [to hold upon trust for your children until they attain the age of 18];
  3. Children who are over 25 are determined as not being financially dependent upon you, and if the super benefit is paid to them then they will be heavily taxed upon receiving the death benefit.
  4. The taxation consequences can be different for children depending on their ages at the time of your death, which will create an uneven division in real [net] terms;
  5. As long as your children are over the age of 18 years, the superannuation fund will pay an entitlement directly to nominated children, meaning you cannot protect that benefit for your children until they attain an older age.

If you intend for your super benefits to benefit your children, and any of the above issues are in concern in your current circumstances, one solution may be to nominate your Estate as the beneficiary [provided you have an up-to-date Will].  Your Will then controls the distribution of the super death benefits to your chosen beneficiaries and much can be done to reduce or avoid the tax consequences described above!

3. YOUR ESTATE

As mentioned, nominating your Estate is a great way to cover most pitfalls of superfund nominations.  Tax can be avoided or reduced where you have children under and over the age of 25, you can implement asset protection strategies for your personal and superannuation assets for your children, and you can distribute your super death benefits to third parties [who aren’t your spouse or child] through your Will.

The potential consequences of this option are that this can create a further delay between your date of death and the distribution of the superannuation death benefits, and it also has the effect of increasing the value of your estate.  If your Will is challenged after your passing, the superannuation benefits will form part of the asset pool which can be claimed against.  Some food for thought regarding the significant asset that is your superannuation.

So, maybe it’s time to review your superannuation nomination – and for the greatest benefit, we suggest reviewing it concurrently with your Will and Powers of Attorney.

Contact our Legal Team for an appointment to review your Estate Planning to find out how we can help.

 

Katherine Taylor – Solicitor

BCriminology [History], LLB

Financial Plans Are COOL

IT IS PRETTY COOL TO HAVE AN ACTUAL FINANCIAL PLAN AND NOT JUST ‘ONE IN YOUR HEAD’

Whilst seeing a client, our discussion often turns to managing personal cash flow.  Some people are happy just living from pay-to-pay and don’t give much consideration to plans for the medium or long term.  Others haven’t really given the idea any thought but think it will all be “OK”.  However, more and more people are thinking about this, but don’t know where to start.

Financial management and retirement planning help people determine their personal saving targets, what they can afford to spend, and how best to arrange their financial affairs.  Retirement planning can quantify how much you need to have saved to retire.  When you are years away from retirement and your personal finances are ever-changing, this can seem like a challenging concept, but it is important to remember that a financial plan is a process, not a product.  It is something that requires discipline to start and at least annual maintenance and review.

A financial plan should include:

  • INVESTMENT PLANNING;
  • INSURANCE + RISK MANAGEMENT;
  • FINANCIAL MANAGEMENT;
  • RETIREMENT PLANNING;
  • TAX PLANNING; +
  • ESTATE PLANNING + LEGAL ASPECTS

Most people insure against at least some of the risks of financial loss due to death, medical issues and damage to property.  You could look at a well-structured and maintained financial plan as insuring against financial difficulty later in life.

Estate planning may also be an overlooked financial planning exercise.  The thing about estate planning is that it should go beyond simply preparing a will just to check off a box and say that it is done.  In a financial planning context, it is important to consider things like who your beneficiaries will be, joint asset ownership, income tax liabilities.  In the same way a married couple may plan for retirement together, it is important to consider what might happen if one spouse or the other died prematurely.  This may be as much a financial planning exercise as an estate law one.

Our financial planners – Samantha Butcher and Helen Yau can get you started on this journey and will assist and advise along the way.  Why don’t you call and make an appointment today, it’s that easy!

 

Amanda Wilkens – Director

B.Comm CPA

Buy Low Sell High

Buy Low Sell High is the first seminar in our free Property Seminar Series.

Buy Low Sell High is designed to provide an overview of the sale process, from engaging a real estate agent right through to handing the keys to the purchase.

We delve into:

  • WHO // you will need to engage to sell + why
  • WHAT // who does what, from the agent to the stylist right through to the broker + lender
  • CONVEYANCING // the general conveyancing process
  • SETTLEMENT DAY // what to expect + what happens if there is a delay
  • TRAPS + PITFALLS // that you should be wary of when consider to sell your property

So when the time is right to move on to your next dream home, selling your property for the best price will be a breeze!

Secure your FREE ticket through Eventbrite here.. https://www.eventbrite.com.au/e/buy-low-sell-high-tickets-75801936633

REFRESHMENTS INCLUDED + ALL CHILDREN WELCOME!