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We often talk about money in terms of dollars and cents, but the subject can sometimes run deeper than just numbers. Frivolous spending as a result of your emotional state is more common than you might think: one study found that more than 81 % of Australians spend in order to seek comfort, suggesting that our spending patterns are created by more than needs alone. Having an uncontrollable urge to spend can have a negative impact on your finances – especially if it’s putting a dent in your financial goals. One way to curb this spending habit is to understand your triggers and put some specific steps in place to regain control. What is unconscious spending? Unconscious spending is the act of spending money without careful thought; sometimes it may even be done on impulse. Whether it’s the latest pair of designer shoes or a new set of golf clubs, it’s the type of spending that seems to happen almost outside of your control – and often, outside of your budget. But unconscious spending doesn’t only happen with expensive, big-ticket or one-off items. Common triggers for unconscious spending habits There’s a range of emotional triggers that may tempt us into spending more than we intend to. Research has found that some people spend money when they’re feeling sad and will pay more for an item if they’re feeling this way. Boredom can also be a significant trigger: a study into comfort spending found that 47% of Australians admit to purchasing because they’re bored. The monotony of COVID-19, coupled with a need to delay many plans for travel and other experiences, could be a perfect storm for boredom-induced spending. Pinpoint your spending patterns and triggers Still unsure why you spend the way you do? These pointers may help you to identify your triggers… Uncover your spending habits Looking for a routine or pattern in your spending can offer some valuable clues and help you control your spending. What things do you typically purchase on impulse: is it clothing or kombucha? Does your unconscious spending usually represent big amounts or small amounts of money? Is it frequent, or more likely to be done in a short burst? Asking yourself these questions could uncover a few commonalities. Look closely for emotional spending cues Are there certain times of the day that you’re more likely to spend? Does it often happen during times of boredom or is it more likely to happen when you’re stressed or distracted? Do you tend to spend on credit as opposed to dipping into your savings or using cash? By isolating some of the key behaviours that surround your unconscious spending, you can better understand your personal purchasing triggers. Ask yourself: why do I feel like spending money? The way we feel when we spend money may be different for everyone, but knowing the reasons why you’re partial to purchasing at a certain time, or as a result of a certain feeling, can help you gain more clarity around your triggers. If you get closer to understanding the feeling you get when purchasing, you can try to replicate that feeling elsewhere, without needing to spend. Getting on top of unconscious spending Pinpointing your personal spending triggers is the first step towards doing something about unconscious spending. These two approaches can help you get on top of the habit: Become more money-mindful Setting specific and achievable financial goals is a great way to gain more mindfulness around your money. Without a clear end point to aim for, when it comes to spending, it’s difficult to know how much is too much. By creating an endpoint – or goal – for your money, you’re more likely to focus your aim. To stay on track, create and stick to a successful budget. If you have a clear understanding of how much is coming in and going out, you’ll have a greater sense of control over your spending decisions. Put your money where you can see it For some, the ease of online transactions is exactly what allows them to overlook the fact that they’re actually spending money. If you tend to spend without thinking, you might revert to cash or direct debit payments where possible to remind yourself that your money is real and tangible. Source: AMP

FORO – the fear of running out – is a very real issue in Australia. AMP’s Financial Wellness research indicates that almost 50% of Australians are worrying that they don’t have enough money for retirement. The realisation that you may someday soon be living off your retirement savings can be hard to confront. FORO often results in retirees adopting an ultra conservative lifestyle in order to preserve as much of their capital. Bunkering down and spending as little money as possible can impact your quality of life and prevent you from enjoying the retirement that you have worked your whole life for. The best way to make the most of your retirement savings is to speak to an adviser who has experienced retirement planning. We can ensure you have a plan in place which allows you to retire secure in your knowledge that you can live comfortably and make the most of your remaining years. Contact us today to begin your retirement planning journey and say goodbye to FORO.

People in their 20s and 30s tend to not do much with their super, and that can be a mistake in itself. It could leave them with a large gap between what they’re capable of contributing in the last 10-15 years before retirement and the level of income they want to retire on. Lots of people say, “I’d love to retire at age 60 on $100,000 a year.” But they don’t actually focus on their super until they’re 45 or older. And to achieve that sort of outcome, the level of extra super contributions that would be required is huge and probably unachievable. That means pushing retirement back or accepting a lower level of income – and therefore a lower quality of life – in retirement. Another common mistake is not watching what employers are contributing. If people aren’t getting the correct amount of contributions they’re owed by their employer, it can add up over the years and have a big impact on their retirement savings. Something else to be cautious of in your 20s and 30s is continuing to hold income protection insurance through super. One of the things that super can do is pay insurance policies, and it’s a good idea to hold life and disability insurance through super. But people who have their income protection policy inside super can’t claim a tax deduction for their insurance premiums – whereas that is possible for income protection held outside of super. And income protection policies outside of super generally have more favourable payment periods and can pay a lump sum to cover the cost of things like physiotherapy or getting domestic home help. Another mistake is not claiming a tax deduction for personal contributions. A lot of people don’t realise there are important notification requirements that have to be followed. Super fund trustees must be informed if a member intends to claim a tax deduction, and it must be done within certain timeframes. It’s generally by the time a tax return needs to be lodged, or by the end of the following financial year. We find that people make a contribution, and then by the time they get around to telling the trustee they want to claim the contribution as a tax deduction, it’s too late. The notice is invalid and the super fund can’t accept it. Source:  Colonial First State

While many Aussies will carry some debt into retirement, the good news is, there are a number of things you could do now while you’ve still got time on your side and earning an income. Get serious about having a budget A good starting point when it comes to setting up a workable budget (so you can manage the things mentioned above) is figuring out what money you have coming in, what expenses you’ve got and what you might be able to put aside. You can use our budget planner calculator if you want a hand. Perhaps you’re wondering how much money you’ll need to retire on? According to ASFA’s March 2022 figures, individuals and couples around age 65 who are looking to retire today would need an annual budget of around $46,494 or $65,445 respectively to fund a ‘comfortable’ lifestyle. To live a ‘modest’ lifestyle, which is considered slightly better than living on the age pension alone, individuals and couples would need an annual budget of around $29,632 or $42,621 respectively. Consider what money you might have access to when you stop work The money you use to fund your life in retirement will likely come from a range of different sources, including the following: Super Generally you can start accessing super when you reach your preservation age, which will be between 55 and 60, depending on when you were born. Knowing your super balance is a crucial part of planning for retirement, as it’s likely to form a substantial part of your savings. If you’ve got more than one super account, there may also be advantages to rolling your accounts into one, such as paying one set of fees. However, there could be certain features lost in the process, such as insurance, so make sure you’re across everything before you consolidate. Investments, savings, inheritance You may be planning to sell or use income you’re generating from shares or an investment property or use money you’ve saved in a savings account or term deposit to contribute to your retirement. An inheritance or proceeds from your family’s estate may also help in your later years. The government’s Age Pension Depending on your circumstances, as well as your level of income and assets, you could be eligible for a full or part age pension from age 65 to 67 onwards (depending on when you were born), or you may not be eligible for assistance at all. Know where your money is sitting and what it’s doing Having spare money sitting in the one place mightn’t be the best thing. For instance, if you’ve got cash in a transaction account, could you be earning more if it was invested elsewhere, or even placed in an offset account linked to your home loan (if you have one) to reduce what you pay in interest? Looking at different investment options inside your super could also potentially generate better returns. Do keep in mind though that a more conservative approach may be a better option as you get older, as when you’re younger, you generally have more time to ride out market highs and lows. Think about downsizing your home or refinancing Find out what you need to know about downsizing your home, as this could help you top up your retirement savings. You might also be interested to know that when you reach age 60, you can make a tax-free contribution to your super of up to $300,000 using the proceeds from the sale of your home (if you’ve owned it for 10 years and it’s your main residence). There will be potential advantages and rules however that you’ll need to be across. Refinancing, whereby you replace your existing home loan with a new one, could also create cost benefits and more financial flexibility. Remember, your living arrangements in retirement should be based on more than just your finances. Your health, partner, family and what activities you want to pursue once you stop work will play a part. Contemplate working a bit longer This could help you to boost your savings as well as your super balance, so that you have a more comfortable lifestyle in retirement. In fact, the main reason most older Aussies say they want to stay in the workforce is financial security. It’s also interesting to note, retirement isn’t necessarily a one-time event, particularly when it comes to the 45 to 54 and 55 to 59 age groups, with as many as 26.7% returning to employment annually. Meanwhile, regardless of whether you’re still working full-time, part-time or casually, if you do plan on working for longer, a transition to retirement strategy (whereby you may be eligible to access a portion of your super ahead of retirement) could potentially help you to pay off debt, without reducing your take home pay, or help you to improve your super savings.   Source: AMP

Donating to a charity or cause you care about is a win-win for both you and the charity. Charities rely on the generosity of donors to help them do their work, while you get the satisfaction of supporting a worthy cause. Even better, many donations are tax deductible, meaning they reduce your assessable income. Here’s what you need to know about making a tax deductible donation. How do I make a tax deductible donation to charity? The ATO has rules that govern whether a donation can be claimed as a deduction on your tax return. To be eligible, your gift or donation needs to be made to a charity that has ‘deductible gift recipient’ (DGR) status. Most DGR charities will list this on their website, but you can also look it up on the Australian Business Register. In addition, it must be a donation of money or property of more than $2. That can include financial assets like shares. In some cases, there are special rules (gift conditions) that affect the types of deductible gifts the charity can receive. Always check with the charity before making a donation, especially if it’s a substantial sum. When is my donation not tax deductible? If you receive anything in return for your donation, the ATO won’t consider it a ‘gift’ for tax purposes, meaning it’s not deductible. For example, buying raffle tickets or paying to attend a fundraising dinner. The ATO views this as an exchange of goods for money, therefore it’s not tax deductible. If you receive something small, with no monetary value as a thank you, for example a sticker, that’s ok. Keeping track of tax deductible donations To claim a tax deduction, you need to have proof of making the donation. That can be in the form of a receipt, bank statement or other written record. Most charities will issue you with a receipt when you make a donation, although they’re not legally required to. Always ask for a receipt and save it together with your other tax deductible receipts. You can claim donations for gifts of up to $10 without a receipt.  How do I claim my donation as a tax deduction? For gifts of money over two dollars you can claim the full amount of the donation in your tax return. Simply include your deductions in the Gifts or Donations section of your tax return. Different tax rules apply for donations of property or shares, so seek professional tax advice. How much tax could I get back? Some charities have donation calculators on their website to help you estimate your potential tax benefit. Be aware that your actual tax refund may differ from this amount, depending on your overall tax position. Always seek professional tax advice if you’re considering making a substantial donation, or looking to reduce your tax bill. What else to consider when making a donation Do your research when choosing a charity, especially if you’re looking to make a regular or large donation. Choose a charity or cause that’s important to you and check their credentials. Look into the kind of activities they do and find out how your donation will be used. You can search the Australian Charities and Not-for-profits Commission (ACNC) register to find out more information about the charity, including financial information, a summary of activities and annual reports. Beware that scammers often pose as legitimate charities and may contact you via phone, SMS or email asking for donations. Always look up the charity on the Australian Business Register and/or the ACNC register as outlined above.   Source: Money and Life

The concept of investing in shares or other investment products can put a lot of people off. It can be difficult to understand, the share market is intimidating, and investment brokers generally only deal with people who have a lot of money to invest. Micro-investing came about as a way to help more people get into investing without all the complexities that usually come with it. There are quite a few providers in Australia now, and they’re all app-based with very low minimum investments (or no minimum at all). Micro-investing is often referred to as ‘pocket investing’, because all you need is a phone and some spare change to get started. It’s become popular with younger people in particular as an alternative to high-interest savings accounts. Here’s how it works. A new approach to investing Micro-investing is simply an investment platform that allows people to invest small amounts of money into specific investments (usually exchange-traded funds or managed funds) while taking care of all the admin involved with investing. While each provider does things differently, this is what they have in common: Low minimum investment. Some providers let you open an account with no money at all. Others have a tiny minimum investment amount (as low as $5). No need for an investment broker. The investing is done for you automatically, and you can make changes yourself in the app. Choose investments that fit your risk profile. Similar to managed funds, you can choose a portfolio that matches the level of risk you’re comfortable to accept. Easy to understand. Because these products are generally aimed at beginners, they avoid investment jargon and use language that everyone can understand. Low cost. The fees the providers charge (either as a monthly account fee or a brokerage cost per transaction) are a fraction of what you’d pay using an investment broker. Keep track of your balance. The benefit of being app-based is that you can check your balance at any time. Simple tax information. Most people need to declare dividends and other investment interest in their tax returns. Micro-investing apps compile all the information for you so you can pass it straight to your accountant. Accessible to everyone. All you need to do is download the app, set up your account, and make some decisions about how to want to invest. Invest as often as you want. You’re not locked into investing in any particular way. You can choose to add money to your investment whenever and however it suits you. One of the golden rules of investing is to take advantage of the compounding effect to grow your money faster. In other words, you’ll earn market returns not just on the money you invest but also on the growth that money generates. If you invest regularly and also reinvest the regular dividends you’ll earn from your investments, then compound interest will be even more powerful. Investing regularly also allows you to use a strategy called dollar-cost averaging. This is a way of reducing market timing risk by investing regularly over a long period of time rather than investing a one-off lump sum. The price of investments listed on the share market will constantly go up and down, so investing regularly helps you take advantage of these price fluctuations. Investing is never risk free Just because you’re investing with smaller amounts doesn’t mean you won’t be exposed to the same risks as other investors. Your money is still invested in the share market, and that means you will see your balance move up and down as a result of market volatility from time to time. That’s why it’s important to choose a portfolio with a level of risk you’re comfortable to accept. Generally speaking, the higher the potential return, the higher the risk of losses. As with any type of financial product, it’s important to do thorough research and understand any fees and costs that apply. Read the Product Disclosure Statement before making any financial decisions so you know what you’re getting into. If you have any questions about investing, your financial adviser is the best person to speak to. They can help you work out what makes sense for your particular financial situation and what type of investments will help you meet your financial goals. Source:  Colonial First State

If you could achieve your financial goals by simply putting money away in the bank, you wouldn’t need a financial plan. Unfortunately, life is a little more complex – it’s hard to understand the intricacies of investment, taxation and ever-changing rules and regulations, so you need professional help. Yet many of us resist seeking advice, as if our financial future weren’t just as important as our health or our children’s education. We often decide to manage our financial affairs ourselves, or leave it to a family member or friend, which is a bit like asking your butcher for advice on vegetables. Many people make the mistake of thinking that financial advice is just for the wealthy. However, financial advice can help people at all levels of financial health by providing strategies for improving and growing your wealth. It can assist you with making plans for things as simple as a holiday, to something as complex as buying a property, or retiring comfortably. Why should I use a financial planner? Financial planning is a specialist profession and you should make sure that you’re getting advice from a professional financial planner who is properly licensed and qualified. A financial planner has the technical expertise to develop the right strategy for you. They will know the latest legislative changes and ensure you feel financially informed and confident about your future. When will I need financial advice? Most people seek advice from a financial planner when they hit major life milestones. This will depend on your life stages. These include: Young to mid-life: Those aged 20-39 who are establishing and building careers, launching a business or perhaps starting a family. You may be looking at getting married or buying your first home. Mid-life: Those aged between 40-49, this is your consolidation stage – where you aspire to achieve a comfortable lifestyle and are thinking about managing your long-term future. You may be looking at investments, inheritance, tax management and healthcare. Pre-retirement: With 20 or more years of retirement ahead of you, your priorities will depend on how well you’ve prepared. Your main concerns may be debt elimination, protecting your assets, helping your children, wills and trusts. Retirement: Generally from 65-years and onwards, this is the time to indulge in hobbies or travel, enjoy your family and prepare for transferring your wealth. You may be thinking of aged care planning, gifting to your family and estate planning. While it’s important to have professional financial advice to help you through these events, you don’t need to wait in order to benefit from establishing a relationship with a professional planner. How do I identify my financial goals? People often turn to a financial planner to help simplify their finances and set financial milestones to help them achieve their life goals. These goals can include paying off a student loan, a mortgage and short-term debts, such as credit cards, through to saving for a holiday, investment or retirement. A financial planner can help you with budgeting, cash flow management, a savings plan, superannuation, tax planning, home loan repayments, debt management and reduction, insurance, investments and also planning for retirement. Your financial planner has a responsibility to provide the best possible financial advice for your situation. Ask him or her “how will you help me to reach my goals?” Your financial planner’s responsibilities are to make clear recommendations, outline the risks involved and communicate any possible strengths or weaknesses in the plan. Remember that your financial planner cannot predict the market or ensure investments are always favourable. What does a financial plan include? Every individual or household is unique and requires a unique financial plan. A good financial planner will review your lifestyle and create a financial plan specifically suited to you. The financial plan will include financial strategies that will meet your goals. Once you’re satisfied and agree to the suggestions of the financial planner the financial plan will be put into action. Source: Money and Life (https://www.moneyandlife.com.au/get-advice/financial-planning-101-your-questions-answered/)

There are many reasons we fall into the trap of overspending. One reason is we get bombarded with very effective advertising on social media where data scientists and algorithms seem to know what we will be tempted by before we do. Perhaps we are emotional spenders and buy things because it feels good. Maybe we’re trying to keep up with the Joneses, or perhaps we lose track of how much we’re spending when we pay with plastic or we never set up a budget in the first place. Whatever the reason, the temptation to overspend is real and powerful. Which is why it’s crucial to teach kids to be smart with money, particularly how to spend wisely. By taking the time to teach your kids about money, you’re giving them a better chance to enjoy financial wellbeing as adults. But where do you start? Here are some ideas for games and activities for kids at different ages: Fun for toddlers to age 5 Cash register or shopping games are a fun way to introduce your kids to the idea of how money works. You can write shopping lists together, and practise paying for things and counting out change. These games can also be a simple way to introduce basic maths – adding and subtracting. Activity for 5 to 10 year olds Give your child money at the supermarket – around $5-10 – and ask them to make choices about what fruit to buy within guidelines that you set. This gives them a direct, personal and economic experience about what it feels like to make choices with money within a budget. Activity for pre-teens Give your child the responsibility of planning one category of shopping for the week – for example, fruit. They can plan and write a list and look for specials. If they manage to come in under budget, they can keep the change. Activity for teenagers Find a deal – Giving teenagers real responsibility with money in the household can teach them important money skills for life. For example, give them the responsibility of finding the cheapest petrol each week to fill up the family car. Or get them to shop around among electricity providers and see if they can find a better deal. If they succeed, a good way to reward them is to give them part of the discounts they find as cash or pay them a ‘commission’. Stick to a budget Also find opportunities for your teen to make choices within a budget. For example, get them to select and pay for their own data plan for their phone. If they go over their data allowance, they’ll have to forego spending on other items. Becoming wise with money Remember that making mistakes is an important part of becoming wise with money. If your children have overspent, think twice before bailing them out. It can be a good opportunity to learn about the implications of not sticking to a budget and not spending wisely. Role model smart money habits As well as learning by doing, kids learn by watching and listening. It’s helpful to role model and explain the types of healthy money habits you’d like them to develop, and to start conversations about the choices you make with money. For example, if you have young children, start by having conversations while you’re out shopping. If you’re at the supermarket, try explaining to your little ones that the reason you bought the ‘home brand’ sauce is because it costs $1 less and tastes the same. Or talk about why you stocked up on the detergent while it was on sale, or that you can get frying pans cheaper at another store, or the reason you bought paper towels in bulk was because it worked out cheaper per item. For children at all ages, it’s useful to demonstrate shopping around for better prices. This could be done online together at home, or out and about when shopping. Also talk to them about sticking to a budget. It’s never too early to start your children on the road to financial wellbeing as adults. Source: AMP

Regardless of where you are in life, everyone can benefit from financial advice from a qualified professional. Whether you’re just starting out, saving for your first home, looking to invest in property or shares or planning for retirement an effective financial strategy can help you to reach your goals sooners. Our approach is an open and transparent one, where we aim to explain what can often be complex financial solutions and strategies in easy-to-understand terms and simple language. We believe in sharing our knowledge and empowering our clients to make smarter decisions about money. Because making certain financial decisions can have an impact on other areas you may not have considered. Ultimately, our goal is to help each client make their financial and lifestyle goals and aspirations become a reality through careful, disciplined financial planning. To find out how we can help you, please contact us.

“Do I really need this insurance?” It’s probably a question you’ve asked at some point when deciding whether to part with your money. But maybe the real question should be “What if I became ill, how would we cope?” Your health and wellbeing is the most important asset you have, so it pays to put in the hard yards and get your head around the tricky topic of insurance. Illness or injury can strike at any age or life stage, and it certainly doesn’t wait for the most convenient time to happen. Having peace of mind about having enough money if things take a nosedive could be your best investment yet, as well as helping you sleep at night. When insurance is a good idea Often insurance can come on your radar off the back of someone you know falling really ill, or when you read something scary in your news feed. These events can make you stop and think but you don’t need to wait for a warning signal. In fact, getting on the front foot ahead of major life changes is often the best reason to get your insurance sorted. Here are some scenarios to have a think about: Landing your dream job – no job is completely secure and if you’re about to ramp up your income your lifestyle is probably going to upgrade too. If one day you lost your income, how long would you be able to pay the bills? Switching to an income that’s up and down – while the gig economy or a well-paying contract has its lifestyle benefits, there is a trade-off. You don’t benefit from things like sick leave or annual leave and if your income takes a sudden downturn, you might be left struggling for cash. Starting a family – when you settle down with a partner or have kids, It’s not just about you anymore. You’re going to have someone who truly depends on you and what happens to you will have a big knock on effect on them. Starting a family might also mean taking on a bigger mortgage. Getting your head around the important lingo – insurance jargon is one thing you’ll need to make peace with as you navigate your options. If you’ve looked at the insurance section of your super statement, you may notice ‘Death’ insurance – but did you know it may also cover you for a terminal illness diagnosis? And what on earth is TPD? How do you know what constitutes Total and Permanent Disability? Don’t worry, we’ve got all the details below. Insurance is about removing the stress of not having enough money if you become unwell. What works for you might not work for someone else. To find out more, get in touch with us.   Source: IOOF (https://www.ioof.com.au/news-and-insights/look-after-whats-yours/why-you-need-insurance-what-are-your-options#Read)