Bigger Picture Financial Goals

When it comes to financial goals, its best to attack them head on – they are the targets and priorities we set in relation to how we spend and save our money.  They can be big, small, short term, long term and everything in between.  Where we are in our life stage often helps dictate what our goals are.

The new year is a common trigger for us to think about what we want to achieve in the coming months, years and beyond, although we would encourage you to follow the guidelines and tips at any time when it comes to figuring our what your financial goals are!

Think about what is important to you and all the things you wish you could have or do, from the smallest thing to the largest, even if they seem silly and unachievable.  Then start to sort these goals/wishes by those that can be achieved fairly quickly and easily, those will take longer and require more planning, and those that need to become a long-term strategy.

It is recommended you follow the SMART format for your goals – Specific, Measurable, Achievable Relevant. Timely.

S is for SPECIFIC – be as clear as you can with your financial goal/s.  Follow the five “W” rule, ask yourself; who, what, when, where and why?

M is for MEASURABLE – how are you going to measure your progress?  How will you know when you have reached your goal?

A is for ACHIEVABLE – regardless of whether your goal is big or small, it needs to be attainable.  You may lose focus and enthusiasm pretty quickly if you have set yourself too high a target because you may feel that you are getting nowhere, and all of your sacrifices are for nothing.  Stretch yourself but ensure your goal can be met.

R is for REALISTIC – similar to the above, make sure your goal is realistic otherwise you run the risk of losing motivation.  Make sure you can commit to your goal for the duration.

T is for TIMELY – when do you expect to achieve your goals by?  Having an open-ended goal without an end date will challenge your motivation, especially if you feel there is no end in sight!

WHY WOULD YOU DO THIS?

Having a financial goal will inspire you to reach your target.  Without a goal we tend to just keep going about our business without a financial purpose and will spend money on items that we want but potentially do not need.  And if you are spending within your means, there is no real problem with that, except you will not be able to move forward financially.

Think about this: instead of buying a coffee every day, if you invested that $25 per week you would have saved over $4,000 within three years – there’s a new lounge suite!  In five years, you will have saved over $7,000 (or a year of school fees!), $11,000 for an overseas holiday in seven years, or $29,000 for a new car in 15 years’ time.  This is just an example of getting a result by having a plan and sticking to it!  Your goal may be on a bigger scale, for example you may be saving for a house deposit for preparing for retirement.  However, the principal remains the same: set yourself a target and have a plan on how to get there.  You may “fall of the wage” occasionally – that’s ok, as long as you jump straight back on!

WHERE DO YOU START?

By following these four steps;

  1. YOU NEED TO START WITH A BUDGET! It is impossible to have an achievable goal without knowing your starting position.  Capture all income and expenses to ascertain your current cash flow surplus (or deficit) and also to take stock of exactly where your money is going.  Are there any opportunities to save money before you even start with your new goal(s)?  Perhaps cancelling any subscriptions that are no longer relevant, or getting a better deal on your phone plan and/or utilities.  A budget will illustrate your financial limits (remember your goals need to be achievable).  There are many free apps available that track your spending for you – simply link your bank accounts to the app and the hard work is done for you.
  2. HAVE AN EMERGENCY FUND! Do not stretch yourself to the limit with your financial goals.  It is very important to maintain a safety net at all times in case of an emergency expense or sudden loss of income.
  3. PAY OFF ANY CREDIT CARDS! This may be your goal – unpaid credit card balances are charged excessive interest.  The advantages of saving for a financial goal must be compromised by having to pay unnecessary interest and bank fees on bad debt.
  4. DEVELOP GOOD SPENDING + SAVING HABITS! As good as your intentions to reach your financial goals may be, sometimes things happen that are out of our control.  Perhaps there is an economic downturn, or perhaps your circumstances change unexpectedly.  Sometimes “life” happens and when it does, good habits will hold you in good stead to be able to get back on track as soon as circumstances allow.  In terms of an economic downturn, again, good habits and sticking to your plan will mean that you will remain on track regardless of macroeconomic events happening around you.  And in the worse case scenario where you are relying on your investments to provide income, a good savings history will mean you have a financial buffer to fall back on until the market rebounds, or at least to “take the pressure off”.

GIVE IT A GO!

Have a go at setting yourself some financial goals following these guidelines.  Remember to track your progress to keep yourself motivated.  We would love to hear about your results.  Or, alternatively, if you find that you were not able to reach your goals, we still want to hear about it.  Together we may be able to work out what went wrong and work on the next steps.

EG // do you need to break you goals down into smaller, more achievable parts?  Or do you need to reassess your goals all together?

We want to hear about all of your success and your attempts as the year progresses, get in touch so we can help.

 

Summer Savings l For An Endless Summer

2020, the year that was, then wasn’t, then was, then wasn’t again.  It is certainly a year to remember and to be forgotten.  Physically, emotionally, mentally and financially very testing for different reasons.  Bring on 2021!  We’ve pulled together some Summer Savings for an endless summer you really deserve!

One of the main things that I’ve been focusing on with my clients during the pandemic was budgeting.  Things became a lot tighter, and people had to really focus on what to spend and where.  Obviously, with the restrictions, it was a lot easier in some cases of where to cut expenses, but I don’t know about you, but we seemed to be getting packages delivered every few days!

BUDGETING

The important thing now that the restrictions are easing, and we return to some kind of (new) normal, is that we don’t go spending crazy!  It’s especially harder with Christmas around the corner.  We have to be mindful that we don’t undo any of the budgeting skills we’ve learnt by overspending, and accumulating a pile of credit card debt to start 2021.

According to the RBA in December 2018, spending on credit boomed to $30M.  If you calculate that on average, it is estimated that 27% of people will still be paying off this debt two years later, the interest accrued on this alone, is in excess of $100M.  This is why you can’t get too far ahead of yourselves, as you don’t want to ruin your summer, and the start of the year.

CREDIT CARDS

For those with credit cards, there is always the option of looking at those companies that let you roll over debt on to a 0% interest repayment for a period of time.  What you can do then, is every repayment you make, you are paying off 100% principal.  For example:

  • EDWINA had a $2,000 debt that was rolled over with a 0% interest rate for 18 months
  • Budgeting, she could pay $111 per month, and ensure that that debt was cleared entirely in that interest free period.

As a comparison;

  • PHOEBE had a $2,000 debt with a 17% interest rate
  • Budgeting, she could pay the minimum repayments on the debt and it would take 17 years to fully pay off that card.

This path is not trouble free though, because in some cases, any spending that occurs on these cards get placed behind the 0% interest rollover, meaning that you will not be paying off the debt that has high interested accrued on it.

SAVE SAVE SAVE!

A fun way to get the kids in to saving I’ve found useful is the Coke Bottle challenge.  Basically this is where you collect your $2 and keep them in a used (and cleaned) Coke bottle.  People have done the testing;

  • 600mL bottle you can get around $1,000 saved
  • 1.25L and 2L varieties, you can save $1,900 and almost $3,000 respectively

You can have them do it individually, or as a family and put it towards a holiday now that the pandemic is basically over!

Another one I like is where you start out by saving $1 in week one, $2 in week two, $3 in week three for example, for each week of the year.  By doing this, you will accumulate $1,378 over the year.  A fun way to do it is have a tally board off and cross off each donation.  That way you can spread out the weeks that you have to pay more in, as your budget dictates, especially as where you have November/December payments where money may be tighter due to upcoming Christmas.

UPDATE YOUR BENEFICIARIES!

Lastly, I’ve had a few cases recently where new clients have had no or invalid binding death nominations on their life insurances and superannuation funds.

Superannuation is a non-estate asset, so unless you have a beneficiary that is your Estate, your Will will not deal with your superannuation benefits.  This causes issues at time of claim, which is already a tough enough time for your loved ones, without delays and trouble with accessing funds at a time where it is urgent.  Take 5 minutes and check to make sure that you;

  • Have a beneficiary listed +
  • Make sure that it is a valid beneficiary

Give us a call to discuss whether or not the beneficiary is valid or not because your nominated superfund will not tell you if you have listed an invalid beneficiary.  Naming the incorrect person can be very costly!  Our team of experts can help you ensure you’re not making unknown costly decisions, get in touch now and we can help you with your Summer Savings for a stress-free endless summer you wont forget!

Have a great Christmas and a Happy New Year, and we’ll see you in a hopefully brighter and better 2021.

 

Steve Reynolds – Certified Financial Planner

BComm, Dip.FS(FP)

Spring Cleaning Your Finances

SPRING CLEANING YOUR FINANCES

Who doesn’t love spring? The days are longer, the weather is getting warmer, and flowers and trees are starting to blossom.  And, it is often a time to clean those things we don’t do regularly.  I am going to suggest it is also a great time to spring clean your finances!  Here’s how:

  • Take stock of your current position by completing a budget. There are many free apps available that link to your bank account and do all the hard work for you!  They automatically categorise your spending into different segments.  If you notice an error, it is easy to reassign the transaction to the correct category and your app will remember the next time.
  • De-clutter financial paperwork around the house. You only need to keep tax related documents for seven years.  You could even go one step further and save the remaining required documents electronically.
  • Review your life insurance policies! How much cover do you need?  Do you have enough?  Do you still have insurance cover inside super?  Many people inadvertently lost their insurances held inside inactive super funds or funds with smaller balances when some sweeping rules were introduced during the past couple of years.
  • Consolidate bank accounts. If you have multiple accounts, is there a specific purpose? If there is no valid reason, simply your affairs and potentially save on bank fees in the process.
  • Review current debts. Have you approached your lender for a better rate? If you have credit card debt, can you switch to an interest free one until you pay it off?

Canny Group have an army of financial advisers and we are more than happy to help you give your finances a spring clean!  All you need to do it get in touch.

 

Samantha Butcher – Financial Adviser

BComs Dip FS

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

2020 Tax Returns + 3 Ways To Make The Most Out Of It!

It’s that time of year again, Tax Time!  For individuals who have a tax agent, like our team at Canny Group and their accounting team on hand, we will lodge your tax return for you on your behalf and you have until 15 May 2021 to do this.  However, if you lodge your own tax return you have until 31 October 2020 to have it lodged.

Either way, we have put together some tax tips that you should consider before 30 June 2020 to help; reduce your taxable income, maximise deductions, take advantage of tax offsets, accessing free money from the Government as well as COVID-19 in many different ways, and we have put together these tips to help you be as prepared as possible and hopefully empower you to maximise your refund when it comes to lodge your tax return.

TAX TIP #1 // WAYS TO REDUCE YOUR TAXABLE INCOME

  • SUPER CONTRIBUTION // make a personal deduction superannuation contribution. Check with payroll to determine how much has been contributed so far.  The concessional contribution cap is $25,000 for the 2019/20 income year.
  • UNUSED CONTRIBUTION // do you have any carry forward unused concessional contribution from the 2018/19 income year? If your total superannuation balance is under $500,000 at 30 June 2019, you may benefit from making a catch-up deductible super contribution.  This may be especially beneficial to those who have additional income due to sale of investments such as shares or property.
  • DEFER INCOME // are you nearing retirement? It may be worthwhile to defer you income until after 30 June if your income will be smaller in the subsequent year.

TAX TIP #2 // MAXIMISE DEDUCTIONS!

  • MOTOR VEHICLE EXPENSES // individuals who use their car for work related travel can claim 68 cents per kilometre up to 5,000km for business travel or claim under the logbook method of car expenses. Canny Group’s team of accountants will be able to determine which method yields the greatest deduction for you.
  • WORK-RELATED EXPENSES // consider if you need any work-related items such as tools for trade, computer, subscriptions or work clothing and whether you could purchase or pay for those expenses before 30 June to increase your deductions.
  • DONATIONS // or gifts of $2 or more to a deductible gift recipient are tax deductible. Where spouses are on different marginal rates, consider making donations by the spouse that is in the higher tax bracket to maximise the benefit of the deduction.
  • HOME OFFICE // if you have been working at home due to COVID-19, you may be eligible to claim a rate of 80 cents per hour for all of your running expenses from 1 March to 30 June. Multiple people living in their house could each individually claim the 80 cents per hour rate.
  • PROTECTIVE CLOTHING // did you buy protective items such as gloves, face masks, sanitiser to use at work due to COVID-19? If your specific employment duties require you to have physical contact or be in close proximity to customers or clients while carrying out your duties or you are involved in cleaning premises, you can claim a deduction for protective items.  The ATO considers those that work in the following industries or occupations are exposed to the risk of illness in the course of working:
    • Medical Industry
    • Cleaning Industry
    • Airline Industry
    • Hairdressing + Beautician Industry
    • Retail, Cafe + Restaurant Industry

TAX TIP #3 // TAX ADVANTAGE OF TAX OFFSETS!

  • SPOUSE OFFSET // receive a $540 tax offset by making a person contribution up to $3,000 to super on behalf of your spouse. Only available if your spouse’s taxable income is less than $37,000.  A lower offset may be available if you contribute less than $3,000 or your spouse earns between $37,000 and $40,000.
  • LOW + MIDDLE INCOME OFFSET // individuals on a taxable income of $37,000 or less will receive up to $255 tax offset and those on taxable incomes between $48,000 and $90,000 will receive the maximum of $1,080 offset. Incomes between $90,000 and $126,000 will receive partial offset.  This is not a tax refund but a tax offset.

TAX TIP #4 // ACCESS FREE MONEY FROM THE GOVERNMENT!

CO-CONTRIBUTIONS // receive a Government co-contribution of up to $500 paid into your superannuation by making an after-tax superannuation contribution of $1,000 or more.  Full amount is available to those with taxable income less than $38,564 and a reduced amount is available to those with taxable income less than $53,564.

TAX TIP #6 // RETIREES!

  • REDUCE PENSION // the minimum drawdown requirements for account-based pensions has been halved for the 2019/20 and 2020/21 income year. This will benefit retirees with account-based pension by reducing the need to sell investment assets to fund minimum drawdown requirements.
  • SOCIAL SECURITY // in light of the low interest rates on savings, the Government has reduced social security deeming rates from 1 May 2020. You could be eligible for Centrelink entitlements such as the age pension or Commonwealth Seniors health care card with the lowering of deeming rates.

Now that we have your sorted for maximising your tax return outcome, let’s talk about what you’re going to be doing with the hard-earned money you’re hopefully on the way to receiving back!

Did you know that the average Australian received a tax refund of $2,381?  That’s enough to splurge on some new furniture or an LED Smart TV, right?  Well, before you head down to your local shopping centre with your tax refund in hand, take a look at three ways we’ve come up with to spend your tax return.  We’re confident that the following strategies will help you make the most out of your tax return and create positive change in your life.

STRATEGY #1 // SET UP AN EMERGENCY FUND

Research conducted in the last year’s Financial Consciousness Index found that a concerning 13.4 million Australian’s do not have emergency savings to fall back on if they were unable to earn an income for more than three months.  The study also found that 7.5 million Australian’s struggle to pay their bills and are not saving money regularly.

So, with this in mind, why not use this year’s tax return to set up an emergency fund and make this the start of your savings plan?

STRATEGY #2 // MEET WITH AN ESTATE PLANNING LAWYER

As the saying goes, there are only two certainties in life; death and taxes.  Unfortunately, more than half of Australian adults do not have a Will.

So, with this years tax return, why not protect your loved ones and sit down with an estate planning layers to draw up a Will or Testamentary Trust?

STRATEGY #3 // STARTING YOUR SIDE HUSTLE

If you have an idea of starting a side business, use this year’s tax return to kick-start this one and for all.  It doesn’t take much more than $2,381 to get started these days: a basic website and some Facebook and Instagram paid advertising campaigns to attract your first paying customers.

So, why not make this the start of your side hustle and see if you can generate a return on investment and get your business off the ground?

The question is, how will you spend your tax return this year after you’ve put into place our tax tips on maximising your refund?

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.  It’s common to come up with New Years’ resolutions in January that reflect the way we feel after all the celebrations over the Christmas and New Year period. These resolutions may relate to health, work, family and/or finances with a high number of resolutions being; partying less, eating more healthily and exercising more.  That’s all great, however these generally only reflect only the prior three weeks!

We 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.  What if we could put together resolutions that reflected the prior year or several years?  These resolutions could generally revolve around; holidaying more frequently, spending more time with family and friends, purchasing a house or paying off the one we have and becoming more financially independent and secure?

These resolutions are great to work with, and the good news is that they don’t exclude the first set of resolutions – there is no reason why we can’t do both!  Let’s get down to setting New Year resolutions to get you on the road to a “kick-ass” financial future!

WHEN SHOULD YOU START?

NOW, NOW and NOW!  It’s easy to think that you don’t have anything yet and don’t earn a lot so can’t start – but it’s wrong!  One of our directors started saving at 18 years old by putting away $70 a month in a savings plan.  This isn’t a lot but she found she didn’t miss the money.  When it was time to buy a house 12 years later, she was well on the way to a deposit.  Remember, everyone has to start somewhere!

HOW OLD SHOULD YOU BE TO START PLANNING A “KICK-ASS” FINANCIAL FUTURE?

There’s no age required – but as we said before, start NOW!  The sooner you start the sooner you are on your way.  We have probably all heard the Chinese proverb “A journey of a thousand miles begins with a step” and I suspect we all use this when we are gearing up to complete a mammoth task.  Runners often count steps on long runs, cyclists count kilometres, and we all count sleeps to Christmas – the best way to achieve anything, is to simply start!

OK… YOU’RE GOING TO START – WHAT DO YOU DO?

There are several things to do – all steps count and are important on your journey to a “kick-ass” financial future!  Don’t be overwhelmed and don’t think you need to do them all today.  Here are a few things we would recommend aiming to tackle one item per month:

  • INCOME PROTECTION INSURANCE // review it! You may or may not need it, and it totally depends on your circumstances.  However, if you are the main income earner for a family and you have others relying on your income, you at least need to review it!
  • WILLS + POWERS OF ATTORNEY // review it OR prepare it! Again, horses for courses, but if you have children you at least need to consider who will look after them if you are no longer able to.  Make sure you document your wishes and it isn’t enough to verbally pass them on or think that everything will automatically go to your spouse or who you would generally think would be the best or next person in line.
  • DEATH COVER // review it! Once again, you may or may not need it, but if there will be debts within your family should you pass, you need to at least consider whether you should have death cover that is sufficient to pay off the debts.
  • SUPERANNUATION // review it! Your superannuation may be able to include income protection and death cover, so you may want to review this first and see what is going to be most beneficial to you and your circumstances.
  • START SAVING // now! A financial plan. Or even a small savings goal will put you on the right path.  Set a simple budget and put away even a few dollars each week.

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 and you’re left saying to yourself – “I don’t have enough money to invest yet” or “I can’t afford it” – we would argue that you can’t afford not to see one!  In terms of not having enough money to invest, there are many reasons why you could be benefiting from professional advice:

  • SPEAKING TO 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 as we have been saying – you just have to start somewhere!
  • FINANCIAL GOALS // you may have many competing financial goals but with limited funds, and not sure which way to go. For example. Should you start saving or reduce a personal loan?  A financial adviser can provide one off advice relating to a particular question or need you may have.  Financial advisers can help you formulate realistic goals in order of priority.
  • PERSONAL INSURANCE // are they 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 even death.

Overall it is important to understand that you don’t 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 superannuation invested appropriately?  Are your insurances adequate?  Are you paying too much for your insurance?  A financial adviser is the person you need to cover off all of these questions and ensure that you are setting yourself up for the best “kick-ass” financial future!

Our team of advisers is able to help you with each and everyone of these steps!  Make the call today to take control of your financial future and set achievable goals so you can see the difference you can have on your own life.  All you have to do is – start!