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Archives for Sue Dunne

Motherhood and Money

The birth of a child is one of the toughest occasions in anyone’s life, but also one of the most rewarding.  I will never forget the moment I realised that I was now responsible for the wellbeing of another human being who could not survive without my help, and that this responsibility remained through the rain, hail or shine regardless of my own state of health or mind on any given day.

The responsibility for having a child doesn’t end with the nurturing, but also extends to financing the child’s needs for many years after their birth.  This can be a very costly exercise, but like everything else, mothers take it in their stride and adjust their own financial and other needs to cater for the needs of the child.

The one thing that doesn’t cost anything in raising a child is the amount of love that you have available – it is limitless!  My children have brought me so much joy over the years and the rough patches are forgotten.  Also forgotten are the things we ‘did without’ in order to give our family a good education.  They simply don’t matter.

I am reflecting on motherhood as we near the annual celebration of Mother’s Day.  It now has an added significance for me because my daughter is also a mother, making me a grandmother.

Being a grandmother brings a whole new dimension to life.  Those little people make my heart sing!  The pride I feel as I see my daughter and her other young mother friends thoughtfully guiding their youngsters through childhood is immense.

I see these young mothers coping with exactly the same issues that I faced, and the financial struggle is just the same for them as it was for me.

The difference for me as a grandmother is that I don’t have to cope with sleepless nights, the school run, seemingly bottomless stomachs, the washing and so on. I can enjoy the laughter and the fun and games, and then I just go home and leave ‘em to it.

Having a budget in place will help you manage the expenses during your children’s early days and through their education years.  The costs are significant and having a plan for managing expenses will mean that you keep on top of the costs in an organised way.

There are many tools available, such as those on ASIC’s MoneySmart website that will assist you in establishing your budget. There are also apps that allow you to track expenses so you can see where your money is being spent.  Every one of these tools will assist in making ends meet and I suggest that you take advantage of these.  My budget lets me help my kids financially every once in a while because I know what they are experiencing.

 

Please note, this article is for general advice purposes only. It has not taken into account your personal circumstances or financial goals. If you wish to access more personalised advice tailored to your circumstances and financial objectives, please contact our friendly staff today.

 

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I want to be able to help my kids financially

Can I give my kids some money?

I hear this question quite often from my clients.  There are several answers to the question.  Underlying it all is the normal parental need to be able to assist our family while they are juggling the usual expenses of home and children, from an income that doesn’t always stretch quite as far as they would like.

The first part of the question is – can I afford it, and your answer to that may be that you think you can.

The next part of the question is – are there consequences for me?

There may be – for instance if you receive a Centrelink age pension there is a limit as to how much you can gift to your children.  The current limit is $10,000 per year up to a maximum of $30,000 over a three year period.

If you are a fully self-funded retiree the consequence could be that your ability to maintain your own lifestyle in retirement is compromised, so it is a question that needs careful thought.  It is recommended that you seek advice from your advisor.

Is giving cash the best way to help?

It is debatable as to whether straight out cash gifts are really the best way to help – you can’t direct where the cash is spent, and it may not be put to its best use.  What if we paid an essential expense instead?  Examples might be to contribute to the grandchildren’s school fees or to pay the life insurance premium for your son or daughter?

Paying a life/TPD (total and permanent disablement) insurance premium for an adult child may mean the difference between them being properly insured, or having little or no life or TPD insurance.  This not only protects your child and his/her family, but it protects you too, as you may be called upon for support should your child become ill or disabled.

I would like to start an investment for my child/grandchild.

This is also an excellent way to give your family a helping hand as it is a long-term solution that will provide some passive income and capital growth in the future.

A small investment in the Capricorn Diversified Investment Fund, with distributions set to be reinvested, is one way you can achieve this, and it is even better if you add extra contributions from time to time.  By the time the newest grandchild is old enough to attend university or wants to buy a car for example, there will be a tidy little nest egg they can draw from.  You can view details of the Fund here or contact us for information and assistance.

Want to learn more about helping out your children/ grandchildren? For your free initial consultation with one of our friendly advisers, contact us today! One of our advisers would be delighted to assist you.

The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.

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My HECS-HELP Debt

What is HECS-HELP?

Australian citizens studying in Commonwealth supported places are eligible to apply for assistance to fund the student contribution amount for each unit in which they are enrolled.  This assistance is in the form of a HECS-HELP loan.  There is no real interest charged on the loan but the debt will be indexed each year in line with the Consumer Price Index.  The adjustment is made on 1 June each year and applies to any part of the debt that has been unpaid for 11 months or more. Eligible students can use a HECS-HELP loan for the whole amount of their student contribution.

I’ve finished studying – how much do I owe?

The Australian Taxation Office manages all HELP debts and this information can be viewed online through the myGov website once a myGov account has been created.  You can also call the ATO to find out the details and you will need to quote your TFN to access the information.

Paying back my loan

Even if you are still studying, you will need to begin repaying a HELP debt as soon as your income, as reported on your income tax return, is above the compulsory repayment threshold.  This amount is adjusted annually and for the 2016/17 financial year, the amount is $54,869 and above.  Repayments are made through the taxation system at a percentage of your annual income.  The percentage increases as your income increases.  For example, someone earning between $54,869 and $61,119 will repay the loan at the rate of 4% per annum, while someone earning in excess of $101,900 will repay 8% of their annual income.

Voluntary repayments can be made at any time and for any amount, and before 31st December 2016, there is a bonus of 5% for doing so.  This means that if you repay $500 by a voluntary payment, an additional credit of $25 is applied to your loan.

What if I can’t afford repayments?

You can apply to the ATO to have your payments deferred if you believe that your compulsory repayments would cause serious financial hardship.  In making this application, you will need to substantiate your claim by providing a detailed statement of income and expenditure.  It is possible to appeal should your application be unsuccessful.

Do I have to repay the loan and what happens to the debt if I die?

There are certain special circumstances that may result in cancellation of a debt for a particular unit if the unit has not been completed. You need to apply to have the special circumstances taken into account.  In the case of death, any compulsory repayment relating to the period up to the person’s death must be paid from the estate, but the remainder of the accumulated debt is cancelled.

Are you interested in gaining a better understanding of your HECS-HELP debt? Do you want to put a plan in place to make sure the loan is paid off as soon as possible? Contact us today for your free initial consultation, one of our advisers would be delighted to assist you.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s Individual objectives, financial situation or needs.  Before acting on anything in this article you should consider if it is appropriate for you, having regard to your objectives, financial situation and needs.

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