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Archives for Sue Dunne

Why Budgeting Is So Important

Are you managing your cash flow effectively?

A well-constructed budget is the key to good financial management.

Do you find it difficult to manage your money so that you have enough to pay your big bills when they are due?  Having a proper budget that you update regularly will make all the difference.

I hear you say ‘but I don’t know where to start’!

The first step is to find a tool to help, one you like using and find easy to use.  There are lots of free budgeting options available on the internet and the Money Smart website is a good place to begin.  Another really useful option are apps on your smartphone, there are many different options including; Pocketbook, YNAB (You Need A Budget), Mvelopes and Mint.

Find your last pay slip and record in your budget tracker the amount of each payment and the frequency that it comes in.  Record any other income and then begin on your expenses.  Start by identifying what are your needs and what are your wants.  Needs are things that just have to be paid e.g. rent, groceries, etc. and wants are the discretionary expenses like dining out, a morning coffee on the way to work.

Populate your spreadsheet with all of the needs for the current week and for the months ahead so that you know when the car registration bill is due and you can leave enough money to pay that bill when it arrives.  How much is left over each pay period after you have paid your necessary expenses?

That amount is all that you have left for the wants.

Do you want to plan for a holiday or a new car?

Identify what you want to do, how much it costs and when it is to be – say you have decided that you want to take a holiday that will cost you $2,000 and you want to go in 6 months’ time.  Look at your budget – you have allowed for the needs, and you know what is left after they have been paid.  Factor in an amount to save each pay as you are entering up your discretionary expenses, or wants. This will tell you if your savings expectation is achievable.  If it is not, then you have to adjust your budget – where can I trim something off the discretionary expenses so I can save what is needed, or do I have to wait longer for the holiday?

Once you are in the habit of watching and tracking what you spend, you will find a budget easy to work with and that you can achieve your goals because you have planned for them.

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 its appropriateness to you, having regard to your objectives, financial situation and needs.

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The Costs of Aged Care: What You Need To Know

What are the aged care options?

  • Help at home

Subsidy is available from the government for home care services.   Your adviser will be able to provide you with further information about these services (they are not the subject of this article).

  • Care through an aged care facility

Residential aged care provides care on a permanent basis or for a short stay known as respite.  There are different levels of care available and range from a fairly independent lifestyle through to 24 hour nursing care.

What are the costs of entering an aged care facility?

You must first be assessed by an Aged Care Assessment Team (ACAT) to identify your eligibility to receive care and which services you will need.

The costs of entering and living in an aged care facility include:

  • Accommodation Contribution (Refundable Accommodation Deposit – “RAD”)
  • Daily Accommodation Payment (“DAP”)
  • Basic Daily Fee
  • Means Tested Care Fee

How much will I need to pay?

The facility will charge you an accommodation contribution, or if your income and assets are below the prevailing threshold, the government will pay your accommodation costs.

If you have been assessed as having the financial means to support your own aged care, the accommodation contribution may be paid by RAD or by DAP or a combination of the two.  Interest charges may apply for any outstanding accommodation payment and residents must be left with at least a minimum amount of assets.  As an example, if your accommodation payment is $300,000 you may pay this:

  • in full as by RAD; or
  • by DAP; or
  • a combination, say $150,000 by RAD and the remainder by DAP.

Every aged care resident will pay the same basic daily fee.  This is a fixed fee, indexed semi-annually for inflation.

The Means Tested Care fee applies only to residents whose assets exceed the asset threshold at the time and it is also paid at the maximum rate if the resident does not complete an annual Assets and Income Review with the Department of Human Services.

How can I get help to make my financial decision?

Contact an adviser at The Investment Collective to assist you in making your decision about aged care so that you have the best financial outcome.  Information is also available on the internet at https://www.myagedcare.gov.au/

Please note the information provided in this article is general in nature only. It has been prepared without taking into account your individual objectives, financial situation or needs. Before acting on anything in this article you should speak with your financial adviser to discuss whether it is appropriate to you in regard to your objectives, financial situation and current aged care needs. An adviser at The Investment Collective to assist you in making your decision about aged care so that you have the best financial outcome. Some of the details in this article may fluctuate from state to state and it is best to speak to an adviser about your specific circumstances before considering any of this information.

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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? For your free initial consultation with one of our friendly advisers, call our office today, toll-free on 1800 679 000 for our Rockhampton office and 1800 804 431 for our Melbourne office.  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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Are You Prepared For Retirement?

I have just read my Super statement…

I am turning 65 in about 3 months’ time and I plan to retire the week after my birthday, but I have just received my super statement and I am not sure if I have enough money to last me.  I have $175,000 in my accumulation account and I plan to take out enough for an overseas holiday next year and to buy a new car.  I’m going to apply for the age pension and then I want to draw enough from my super account to give me the same kind of income I’ve been getting from work.  I need the same income because I still owe some money on my home and my wife doesn’t work.

Does this scenario sound a bit far-fetched?

Do you think that everyone plans their retirement for years ahead?  We find that some people do, but many don’t give that matter much thought until the time comes to quit their job.  This conversation is one that happens with frightening frequency and it means that many people are unable to live the life that they have dreamed of in their later years.

What can I do now so that I am prepared for my retirement?

Like everything that we do, planning and preparation are key factors.  Seeing a financial adviser is a good starting place, as an adviser will be able to advise you on the most appropriate path.  Sooner is better, so that there is time to make changes that will make a difference well ahead of your planned retirement date.  Setting proper goals and objectives is vital.

It is really never too early to take this step.  For example, small things put in place when you first begin to earn a salary will compound over time and place you in a much more substantial position than if you were to do nothing. A simple strategy such as saving a small amount from each and every pay will make a large difference to your retirement savings not only from what you have saved, but from the effect of compounding.  It’s a good idea to increase your savings every time you get a pay increase.

Don’t rely on a credit card to fund your living expenses, unless you pay it off in full every month so that you don’t incur any interest charges.  If you don’t have the cash available now, don’t buy it!  Save a little each pay period so that you can afford to pay cash for it.  You will have the added satisfaction of having earned something that you really wanted!

If you have a home loan, make sure you have your repayments scheduled at the most effective frequency – your adviser can assist with this.  Pay a bit more than your required minimum payment, and don’t decrease the amount that you pay because your interest rate has dropped.  They won’t always drop and it will be a real benefit to have made a big hole in your outstanding balance while rates are down.

Is it ever too late to seek financial advice?

No, not really, because there will always be advice that will benefit you.  It may well be too late to realise some of your dreams and aspirations, but careful advice and planning can help you to make the best of what you have.

Are you interested in planning for your retirement? Are you ready to retire now? For your free initial consultation call our office today, toll free on 1800 679 000 for our Rockhampton office and 1800 804 431 for our Melbourne office.  One of our friendly advisers would be delighted to speak with you and help you plan for your retirement.

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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