General advice


How to recover from a financial setback

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Financial setbacks can appear in our lives when we least expect it. Paying back a loan like a mortgage or settling debt can be overwhelming to deal with. As individuals, we must take control and choose how to react in tough times. Here are seven strategies that may help restore your financial wellbeing in 2021.

1 – Think rational and long term

First up, it’s very important to approach any financial decisions carefully and take time to think things through. People tend to overspend when they are stressed or take greater risks in the hopes of making a faster financial recovery. They may even decide to withdraw all their money out of their investment for fear of greater losses.

But history shows us that the market always bounces back eventually. Before deciding to sell up your shares or tapping into your super, it’s worth assessing your total financial situation and staying focused on solutions, without letting your emotions take over.

2 – Make an audit

Making a list of your financial losses can give you a much better perspective on what sort of impact these may have on your lifestyle and future goals. Once you have a clear sense of your financial situation, it will become easier to put together a plan. Mentally, it also helps to accept the losses and move forward with your recovery plan.

As a next step, you’ll want to draw up or review your household budget, considering all your current sources of income. You’ll need to make a list of your regular spending, such as bills, groceries, and rent or mortgage payments, as well as additional expenses that crop up from time to time. This will enable you to see exactly where your money is going and identify where you might be able to free up some cash.

3 – Prioritise your spending

Once you have a budget in place, you can look at areas of spending that are non-essential. For example, you might be able to cut out recurring expenses such as multiple streaming services, unused gym membership, or monthly subscriptions you don’t need or perhaps didn’t even realise you were paying.

If you are in a position to do so, it’s also a good idea to factor paying down debts into your budget –these might include credit cards and personal loans that you have relied upon to ride out this period of financial instability. You may not be able to pay them all off at once, so prioritise those that are most urgent or incurring the highest interest.

4 – Get a helping hand from the government

The Federal Government introduced a range of measures to assist Australians experiencing financial hardship due to the impacts of Coronavirus. The Job Keeper payment has been extended to 28 March 2021 – you may be eligible for $1,000 a fortnight if you previously worked for 20 hours or more a week. State governments are also offering Pandemic Leave Disaster Payments if you are unable to work because you are in self-quarantine or caring for someone with Coronavirus.

If you receive these payments, it’s worth considering how you can put this money towards your financial recovery. For example, as a matter of priority you could pay off any amounts that are immediately due to avoid generating a late fee – such as bills, mortgage payments, or credit card debt.

5 – Prepare for the future

While it is unlikely, we will face another crisis like Coronavirus any time soon, there will always be financial challenges ahead. That’s why safeguarding your finances for the future is a vital part of your recovery. Now is the time to start putting money away for an emergency fund, so that unexpected expenses won’t have you reaching for the credit card. Many financial experts recommend setting aside enough money to cover between three to six months of living expenses.

As an extra financial safety net, you should also review your insurance cover – and make sure it’s adequate for your circumstances. Some may find it useful to know income protection insurance can provide regular payments of up to 75% of your salary if you are temporarily unable to work.

6 – Develop a growth mindset

While everyone experiences challenges in life, it’s up to everyone how they will react to difficult situations. One way to stay positive is to consider how to best use this period as an opportunity for growth. Developing a growth mindset is an important strategy for building resilience and overcoming future obstacles. It helps to keep the endpoint in sight, as we know this current crisis will not last forever, and to focus on taking small steps towards your goals.

7 – Get the right support

If your financial situation is causing anxiety, the most important thing is to take care of yourself first. Make sure you are getting enough sleep every night, staying active, eating properly, and avoiding unhealthy coping mechanisms such as alcohol. It’s easier to manage financial stress when you are in good physical and mental shape.

Don’t be afraid to reach out to others for support – whether it is from trusted friends or family members, or a professional. It can be challenging to navigate life’s ups and downs on your own, particularly after everything that 2020 has thrown at us. So, consider talking to a therapist and a financial adviser to help get you back on your feet in 2021.


Source: AMP


The A-Z of Inheritance

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Inheritance is an emotional subject on every level. The people leaving an inheritance generally do it with pride and love. The people receiving an inheritance often receive it with gratitude – and sorrow. But while emotional, it’s also a financial transfer that comes with a whole range of legal, financial planning and admin issues attached.

For many people inheritance is painful and protracted. It can lead to family disputes and disappointment. In this article, we look at both the financial and emotional aspects of inheritance and at how some forethought can make the process easier for everyone.

The Process: Leaving a Paper Trail

Moving wealth from one generation to the next does not happen quickly. Let’s think about why that is and why some intelligent forward planning is required.

Consider your own finances – all the bank and investment accounts, loans, credit cards, tax, super and insurances that make up your financial life. Think of all the documents, passwords, websites and email chains they create. Then hand them to someone who isn’t financially trained and hasn’t dealt with them every day like you have. Hand them to someone who’s emotionally drained by your passing – and then has to deal with the whole series of complex legal processes we outline below.

Get a grip on assets and liabilities

Before any inheritance gets distributed, the executor (the person you’ve appointed in your will to administer your estate) needs a deep and documented understanding of your financial position; what you own and what you owe. It’s complex and detailed work, but it needs to be done so a Statement of Assets and Liabilities can be submitted to the Supreme Court.

Probate – all about a valid will

After the assets and liabilities have been accounted for, the executor of your will needs to apply for Probate. The word tells its own story – it comes from the Latin probare: “to prove”.

It means a Court must certify that the will they’re working with is the valid one. Usually, the executor needs to advertise their intention to apply for probate in a newspaper or via the court website. They also need to give creditors time to lodge a claim against the estate.

Death and Taxes

Once Probate has been granted your executor must make sure outstanding taxes are paid and a date of death tax return and other tax returns are lodged. They also need to work through any other tax complexities, including family trusts, to ensure assets are passed on in compliance with tax law.

This is one area where a financial adviser or accountant – or both – can be invaluable. If you’re preparing your estate plan, their help can make sure you pass on assets to those you care about in the most-tax-effective fashion.

And if you’re receiving an inheritance, expert financial advice can help you manage the tax decisions more effectively.

Tax management is important. Australia doesn’t have death duties and most assets you inherit don’t get captured by Capital Gain Tax (CGT) when they transfer into your ownership. But CGT does apply when you sell those assets or, potentially, if you inherit residential property that has been used for investment purposes. Expert advice can help you manage these complexities.

Rings passed down for generations

Unless a claim is lodged against the estate (and it can’t be paid or negotiated away) the next step is for cash legacies, bequests and personal items – including jewellery – to be distributed. Individuals often use their will to make bequests to charitable organisations – these are identified and treated separately to the rest of the estate.

Distributing the estate

Once all legacies and bequests have been managed correctly, the balance of the estate (typically large assets like property, equity in businesses and investment holdings like shares) are distributed in accordance with the will or subsequent directions from a court. Sometimes this is not a final process – particularly if there are minor children involved. In these situations, the administration of the estate can be ongoing (which adds to complexity and costs).

As you can see, taking an inheritance from the reading of the will to the distribution of assets has already involved accounting, advertising and two layers of Court documentation. This all takes time – and that’s assuming there are no family disputes or arguments with the tax man or the deceased’s creditors.

The Emotions

We mentioned managing the process. Now we need to talk about managing your emotions. If all parties do that – the person leaving the inheritance and the person receiving it – the result can be better for all concerned. So, let’s look at the emotions involved in leaving an inheritance and the paths they can take us down.


In the aftermath of a loved one’s death, it can be hard to manage complex tasks, particularly if those tasks stir more emotion – like family disputes. Preparing for that challenge – perhaps by ensuring the executor has some financial skills, or is trusted by all parties, or is independent – can reduce the stresses placed on a grieving family.


A simple look at the list above explains why patience is required in an inheritance situation. Understanding the probable time frame – which can vary depending on the complexity of the estate, but can often be a minimum of 12 months before an estate is settled – can make all the difference.

As we saw earlier, good advice can be crucial to setting up an estate plan that provides the maximum benefit for those you leave behind. It can be just as useful for the inheritors of an estate.


According to research by Perpetual, some 53% of parents have not discussed their will and legacy with their children. More striking still, 80% of Australians who believe they will inherit something haven’t discussed that inheritance with their parents.

That lack of communication is at the heart of many fraught inheritance experiences. But to ensure that the transfer of wealth from one generation to the next happens with the minimum of complexity, cost and angst, all those involved need to be clear about their intentions – and their feelings.

Source: Perpetual


Property investment vs shares

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An age-old question is whether it’s better to invest in property or shares. There is actually no right or wrong answer. It all comes down to your preferences and approach to risk.

Growth investments

Both asset classes – shares and property – are considered to be growth investments. In other words, over time, a quality investment in shares or a property could generate capital growth and also produce income from rent (property) and dividends (shares).

The case for shares

Ease of entry into the share market is a big plus for share or equity investors. You can buy into the share market with as little as a few hundred dollars. In comparison, home and apartment prices in our capital cities could easily cost upwards of $1 million. The transaction costs of investing in shares such as brokerage and transaction fees are also significantly lower than the stamp duty and legal fees you pay as a property investor.

Finally, with a share market investment, you could get almost instant access to your money when you decide to sell. Equally, you don’t have to sell the entire investment to get access to some cash. With an investment property, you can’t sell a bedroom to free up some cash – it’s the entire property that goes to market or nothing.

The case of property

A major appeal of owning a property is its perceived stability relative to the share market, where values can vary from day-to-day as a consequence of how easy it is to buy and sell shares. If you’re approaching retirement, this level of volatility may not be for you.

A property investment, on the other hand, gives you a tangible asset that can deliver a sense of investment security as well as some capital growth and income.

Property buyers have the ability to fix the interest rate of a loan, which is another valuable security measure. This means your mortgage repayments will be set for an amount of time, which could be a good option for someone who prefers stability.

Holding an investment property in a self-managed super fund (SMSF)

It is possible to set up an SMSF primarily to invest in property, but be aware, some rules apply to ensure your fund remains compliant. ASIC’s Money Smart website lists the following rules:

  • The property must meet the ‘sole purpose test’ of solely providing retirement benefits to fund members.
  • The investment property can’t be acquired from a member or related party of a member of the SMSF.
  • The property can’t be occupied by a fund member or any fund members’ related parties.
  • The property must not be rented by a fund member or any of the fund members’ related parties.

As this shows, there are many reasons to invest in shares and property. For further information about investing in property or shares, or to discuss whether it may be a suitable strategy for you, please get in touch.

Source: BT


What is risk appetite?

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For some people, risk means excitement and opportunity. For others, it invokes feelings of fear and discomfort. We all experience a degree of risk in our everyday lives – whether it’s simply walking down the street or having investments in the share market.

Everyone has a risk profile that defines their willingness to accept risk. It’s usually shaped by age, lifestyle and goals and is likely to change over time.

Risk is about tolerating the potential for losses, the ability to withstand market movements and the inability to predict what’s ahead. In financial terms, risk is the chance that an outcome will differ from the expected outcome or return.

It includes the possibility of losing some or all of your original investment. Often you may not be aware of your risk appetite until you’re facing a potential loss, so loss aversion becomes a significant factor when making decisions related to risk.

As an investor, you should have a good understanding of your attitude towards risk. If you take on too much risk, you might panic and sell at a bad time. But if you don’t expose yourself to enough risk, you may be disappointed with your returns and potentially unable achieve your objectives.

How do I work out my risk appetite?

Generally speaking, your age, income and investment objectives all help determine your risk appetite.


Generally younger investors with a longer time horizon to invest are more willing to take greater risk with their money to earn higher potential returns. Older investors with a shorter investment timeframe may be more cautious as they’ll need their money to be more readily available and have less time to recover from a loss.


People who earn more money and have a higher disposable income can typically afford to take greater risks with their investments.

Investment objectives:

Be clear about why you’re investing and when you think you’ll need to withdraw your money, as well as how long you need the money to last. Saving for a holiday or a deposit on a home is quite different from investing for your retirement.

Risk and Return

The relationship between risk and return underpins all financial decisions. The more risk an investor is willing to take, the greater the potential return. However, investors expect to be compensated for taking on this additional risk and should realise that taking on more risk doesn’t guarantee higher returns.

Whatever your risk appetite, you should always consider both risk and return before making decisions about what to do with your money. Although shares and property are generally considered to be higher-risk investments, even more conservative investments like bonds can experience short-term losses. No investment is completely risk free.

This explains why smart investors typically have a diversified portfolio that includes several different types of investments.

Risk and Diversification

Don’t think that just because your friends invest in shares you should too. If you don’t have a lot to invest or you’ll want to access your money in a few years, shares may not be the right type of investment for you.

By understanding your risk appetite and being honest about what you want to achieve, you’re more likely to be comfortable with your investment decisions.

The simplest way to minimise investment risk is through diversification. A well-diversified portfolio will usually include different asset classes, like shares, property, bonds and cash, with exposure across different industries, markets and countries.

The idea is to reduce the correlation between the different types of investment and have a good balance of assets which move in different directions and at different times. So, if some of your assets perform poorly, others may be performing well, offsetting the poor performers.

Although diversification doesn’t guarantee you won’t suffer a loss, it’s an effective way to minimise risk and help investors realise their financial goals.

Make informed decisions

You should monitor both your risk appetite and your investment portfolio over time. Your risk appetite is likely to change as you get older, and as your income or family situation changes.

Similarly, you should review your portfolio to ensure the risk level is still suited to your overall investment objectives. Financial markets are constantly changing, which means the underlying assets you’re invested in could change too.

If you’re a confident investor, you should check that it’s still on track to generate the level of return you want and importantly, at a comfortable level of risk. If you prefer to speak with a financial adviser, they too can help you undertake regular reviews and rebalance your portfolio, as necessary.

By understanding your risk appetite, you’re in a better position to make well-informed and transparent financial decisions. It will help you identify opportunities to take on more risk where appropriate or see where you’re exposed to unnecessary risk and adjust accordingly. You’ll also avoid being caught up in the emotion of market activity, where panic can lead to a poorly timed and costly decision.

Source: BT


Five simple but effective financial strategies for 2021

By | General advice, Holistic | No Comments

2020 may be remembered as the year we’d rather forget. The terrible health consequences and fatalities associated with the spread of Coronavirus both here in Australia and around the world has taken a heavy toll on many of us; particularly for those who have lost loved ones and livelihoods.

While nothing can replace the loss of a loved one, and our sympathies are with those affected, if you are heading into 2021 with accumulated debt or other financial worries, here are some strategies that may help.

1 – Review your household spending

Taking the time to review and assess your household income and expenses is the first and most important step in gaining a clear understanding of your financial position. First, list your total income from any earnings, allowances and investments. Then, factor in all your weekly, monthly and annual expenses, including the costs to repay any debts such as credit cards, personal loans or your mortgage. That way, you’ll know exactly how much you have left over each week (or month) for leisure and entertainment – or where you might need to tighten your belt.

2 – Focus on clearing debt

Clearing your debts might be easier said than done – but whatever you do, don’t stop chipping away at them. Remember, the longer your debts stay with you, the more you’ll have to spend on interest.

If your debts are getting you down, talk to us. We may be able to help with a strategy that could make managing and reducing your debts a bit easier. For example, if you’re surrounded by credit card bills, you may be able to consolidate your debts onto a single card with a lower interest rate than you’re currently paying. Or if you feel like you’re not making any progress paying off your home loan, consider switching to another provider with a more competitive rate.

3 – Manage your cash flow

If you find yourself living from pay cheque to pay cheque, it’s time to examine your incomings and outgoings to see if there’s a more efficient way to smooth out your cash flow. One option may be to set up automatic payments for regular bills so that you avoid late payment penalties and to take advantage of discount rates offered by a number of utility companies for payments received by the due date.

If your income is insufficient to meet your outgoings, consider whether there may be opportunities to supplement your income either by working more hours in your current job, or doing some extra work on the side, or finding a new role that pays more. If neither of those options are realistic, you may need to revisit your budget to see where other savings measures can be made.

4 – Create a savings plan

Once you have your cash flow and debts under control, it’s much easier to create a realistic savings plan and stick to it. To stay motivated, remind yourself that every bit you put away adds up – and could make an enormous difference in the long run.

Saving can become easier if you open a dedicated savings account and keep it separate from the account you use for everyday expenses. And by setting up a direct debit, you can automatically deposit a fixed amount from your everyday account as soon as you get paid (in other words, before you even notice it’s gone). This will give your savings a better chance of growing without you having to put in the hard yards.

This can also be a helpful way to budget for larger expenses that come around once a year, like your home insurance or car registration, so they don’t sneak up on you.

5 – Focus on the future

Once you have your finances under control, you’ll be in a stronger position to start thinking about your longer term wealth and wellbeing.

Source: Capstone


Many Aussies in the dark about retirement

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There’s always been a lot of unknowns when it comes to retirement but throw a global pandemic into the mix, and we’re feeling more uncertainty than ever before. Things we once thought of as quite certain– like being employed, getting decent returns on investments and savings, and a continual rise in house prices – seemingly changed overnight.

And while that’s all led to a whopping 76% of us believing it’s more important than ever to plan for a secure financial future, we still don’t know what that means when it comes to retirement.

The first step is figuring out how much you need. Once you know the figure you’re aiming for, how much you currently have, and how many years you are away from finishing work, you can put a plan in place to help you reach your retirement savings goals.

Ways you might consider doing this include:

  • Topping up super with additional contributions. (Be aware of contribution caps);
  • Replacing any super that’s been accessed through the COVID early release of super scheme;
  • Paying down personal debt like loans or credit cards;
  • Making additional home loan repayments so you own your home sooner.

Consolidating your super accounts so you aren’t paying multiple fees. (Check you don’t lose important insurance benefits or won’t be charged an exit fee first).

Plan to protect retirement savings

COVID has made us pay closer attention to how our retirement savings are invested and some people may have seen their super balances drop. If you’ve got 15 or more years before you retire, chances are, your balance will likely have time to recover with the usual long-term market movements. But there’s no guarantee, and it doesn’t mean you can just sit back and relax.

It’s worthwhile checking what type of superannuation investment product your retirement savings are invested in. Diversified or balanced options can help offer some protection against volatile market swings because they’re made up of assets other than shares, like buildings and other infrastructure (although these are still susceptible to fluctuations).

One of the most important things to do is avoid making hasty decisions. Do your research, and if possible speak to your financial adviser if you’re wondering whether it’s the right time to switch investment options or move your super from one fund to another. There may be a risk of locking in losses or unfavourable tax components that could have a significant impact on the kind of retirement you’d like.

Don’t bank on working for longer

Given what we’ve seen with COVID and the economy, it’s hardly surprising 30% of people said they were worried about sequencing risk – a market crash or downturn which significantly reduces the value of super savings. And if that happened, over 50% of us say we’ll work for longer to build our retirement savings back up.

However, that might not be a failsafe backup plan. ABS data shows that of the people who retired in 2018-19:

  • 21% had to stop working due to sickness, injury or disability
  • 11% retired because they were made redundant or couldn’t find work

Add to that the average retirement age was just 55.4 years, working for longer to top up your super isn’t an option for everyone.

Educating yourself and taking control of your financial future can help alleviate concerns about retirement. Having a plan and feeling financially prepared can give you peace of mind. You spend your life working hard, and deserve to feel excited, not anxious, about retirement.

Source: AMP

Saving in your 20's

How to start saving for your future in your 20s

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If you’re in your 20s, chances are that life could feel like a bit of a rollercoaster right now. The economic fallout of the coronavirus (COVID-19) may have knocked your personal finances for six and at the same time, you could be juggling new expenses and experiences for the first time, such as moving out of home and starting your first full-time job. Learning to juggle competing financial priorities and save for the future is essential.

While these lessons may be confronting at the moment, they can also teach valuable skills that your future self will thank you for. If you do things right in your 20s, you can lay the foundations for a solid financial future and set yourself up for life. Here’s how to put some sound plans in place to give yourself more choices about how you live your life in the years ahead.

Get budgeting

It might seem obvious but getting in the habit of budgeting when you’re young is one of the best ways to boost your future financial wellbeing.

Start by tracking what money you have coming in (your income) and going out (your expenses). It’s important to understand where your money is going and what proportion you’re spending on essentials, like rent, food and utilities, and non-essentials, like entertainment and clothes.

Practise mindful spending 

No matter what your financial situation is at the moment, this is an ideal time to learn savvy spending techniques. Practising mindful spending is an easy way to ‘trick yourself’ into saving money. And when you do need to buy a big-ticket item, do your research, shop around and where possible, look out for seasonal sales to help stretch your hard-earned dollars further.

Compound your interest

When you’re in your 20s, your budget is usually pretty tight and there are plenty of other demands on your income. But if you can spare a few dollars from your pay, it can make a big difference later on.

By starting to save in your 20s, you have a great opportunity to maximise the growth potential of compound interest. This means that you not only earn interest on whatever funds you deposit into your savings account, but you also earn interest on that interest. It’s extra money – without the extra effort.

For example, if you begin with $100 in an account earning 2% interest a month, and deposit just $10 into the account every month, in 10 years you’ll have $1,449 in the account – $149 of that pure interest. If you keep doing that for your entire career, say 50 years, when you retire, you’ll have $10,568. Of that, $4,468 – almost half – is pure interest.

Watch your super grow

Once you earn over $450 a month, superannuation is compulsory in Australia for most employees, which typically means you’re in the fortunate position of being able to start planning for your retirement as soon as you get your first job – whether full-time, part-time or casual.

So, rather than thinking of super as a burden, think of it as an easy way to save for retirement in your 20s. It can be tax effective and harnesses the benefits of compound savings.

If you withdrew your super early 

If you’ve been affected financially by the coronavirus (COVID-19), you may have withdrawn some of your super early, under the government’s early super access scheme.

While it might have helped in the short term, it’s important to consider the long-term implications of withdrawing any money from your super. Just as compound interest works to grow your retirement savings over time, the reverse is also true, and any money that was withdrawn this year could be worth much more by the time you’re ready to retire.

If you did withdraw some of your super early, think about whether you can commit to a plan for paying it back, once you’re back on your feet. You can do this by making personal contributions to your super.

Ditch personal loans and credit card debt

Falling into credit card debt at an early age can quickly spiral into an unhealthy financial future.  If you do have any spare cash at the moment, it may be a good idea to prioritise debt repayments.

Write down all the money you owe, then rank each debt in terms of the interest rate on the amount. Payday loans and credit cards generally have higher interest rates, so you should prioritise paying them off first.

Learn to invest wisely

While you’re in your 20s, retirement isn’t just around the corner, which means you have more flexibility with your finances than someone in their 60s who may be planning to leave the workforce in a few years.

With fewer financial responsibilities, you may be in a position to take a few more risks with your investments – the thinking being that if things don’t work out, you have time to fix them.

Start early and consider talking to a financial adviser about choosing a mix of investments that will bring you gains you feel comfortable with, given your financial investment style.

Source: AMP

Tax cuts

Majority of working Aussies to benefit from personal income tax cuts

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Tax cuts proposed in the recent Federal Budget were passed in parliament on Friday 9 October, and you might see some of the benefits before Christmas.

The government has brought forward tax cuts originally planned for 1 July 2022 and backdated them to 1 July 2020. Plus, low and middle-income earners are still able to benefit from existing tax offsets.

Has my marginal tax rate changed?

The upper thresholds have increased for some tax brackets, as highlighted in the table below.













Can I benefit from the tax offsets?

If you earn up to $126,000 per year, you may be eligible for the low and middle income tax offset (LMITO). This was previously introduced as a temporary measure and scheduled to end when the 1 July 2022 tax cuts kicked off. But the good news is that despite bringing forward these tax cuts, the government has kept the LMITO for the 2020–21 financial year.

And, if you earn less than $66,667 per year, you may be eligible for an additional tax offset called the low income tax offset (LITO). As part of this package of tax cuts, this tax offset was increased from $450 to $700.

How much will I save from the tax cuts?

The below table shows indicative tax cuts, based on the legislative changes for an individual in 2020-21, to the tax rates, thresholds, and offsets that were applicable for 2020-21 (before these changes):












When will I receive the new tax savings?

Your take-home pay should reflect the new rates before Christmas. The Australian Taxation Office (ATO) has given employers until 16 November to make changes to payroll processes and systems.

As you’ll have already paid personal income tax at the original rate since 1 July this year, you’ll receive your entitlement to the reduced tax payable for the entire 2020–21 income year when you lodge your income tax return.

Source: AMP


Don’t let overspending be your undoing

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Do you struggle to control your spending around your friends and family? If the urge to ‘keep up’ with a certain lifestyle is stretching your finances, it could be time to take action.

From splitting the bill at an expensive restaurant, to having the ‘right’ house, car and clothes, many of us fall victim to overspending. But if you regularly suffer from buyer’s remorse, or spend over and above your means, it’s time for a serious reality check.

Overspending can quickly spiral into long-term debt, especially if you use credit cards to try and bridge the gap.

Young Australians are particularly at risk, taking on debt at a far earlier age and carrying it longer than ever before. Research by RateCity shows that 42 per cent of those aged under 24 have between $10,000 and $30,000 in personal debt, not including a mortgage.

Even if you’re not living paycheque to paycheque, overspending will prevent you from reaching your longer term financial goals, like financial security and financial freedom.

Fortunately spending habits are just that – habits – and they can be changed. Here’s how to avoid the debt spiral and get your finances on track.

1 – Identify your risky behaviours

Do a financial health check and work out where the majority of your overspending happens.

Is it a penchant for designer clothes? An addiction to expensive electronics? Or a love of fine dining? We all have vices that threaten to throw us off track, so look at the numbers and be honest with yourself about which behaviours are forcing your finances off course.

If those behaviours are closely associated with certain friends, family or work colleagues, it could be time to re-evaluate your unhealthy relationships.

2 – Associate with people who share your values

Once you know what’s driving your poor spending habits, use it to take action. Distance yourself from any negative influences and find others who better fit in with your long term plans. Being surrounded by likeminded people will help restore your bank balance in no time.

3 – Find alternatives

If your social life is at the centre of your overspending it could be time to make some healthy swaps. Try suggesting low-cost alternatives such as bush walking, art classes or the beach. You might even meet new people who share your values.

Lead by example and encourage good financial practices among your friends and family. Be upfront about your goals and values, without being pushy. True friends will be supportive and want to spend time with you anyway.

4 – Make a financial plan

Taking control of your spending starts with evaluating your priorities and setting long-term goals. By making a financial plan, you’ll identify what is really important to you – and the steps you need to take to get there.

You can do much of the groundwork on your own, although consulting a financial planning professional can help you to nail the details and act on your plans. You could be experiencing financial freedom sooner than you realise.

5 – Stick to a budget

It’s much easier to maintain your new spending habits and make a real change if you have a budget in place. Make sure to allocate funds for clothing, entertainment and ‘fun’, so that you still get to indulge in some of your favourite interests.

6 – Create a ‘want to buy’ list

Every time something comes up that you want to buy, add it to your list then wait at least seven days before purchasing the item. In the meantime, find at least three prices for the same item. This reduces the risk of splurging on things you don’t really need and makes it more likely that you’ll get a good deal.

7 – Focus on the bigger picture

It’s easy to get carried away trying to keep up with a certain lifestyle and you may not even realise it’s happening until you’re already in debt. Good financial planning and a focus on the bigger picture will help keep your overspending in check.

Source: Money & Life


What you need to know if you deferred your loan repayments due to COVID-19

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With the initial six-month deferral period coming to an end, lenders have started contacting customers who deferred their home and business loans due to COVID-19.

Over the next month, Aussie lenders will contact more than 450,000 borrowers to assess whether they can start repaying their loans.

This includes at least 260,000 mortgage deferrals and 105,000 business loan deferrals. More than 900,000 loans have been deferred in total since the beginning of the pandemic.

So, what are your options if you deferred your loan and you’re yet to resume paying it?

If you can afford to resume loan repayments

Borrowers who are in a position to resume their repayments will be asked to do so. This means if you’re employed, or your business is in a better position than when you deferred, you’ll need to start making repayments. But don’t worry, that’s actually a good thing.

This is because lenders can capitalise unpaid interest from your deferred payments into the balance of your loan. So, the longer you defer your payments, the more unpaid interest will accrue. You could end up with a higher loan balance – and higher repayments – than when you started the deferral.

If you can’t afford your full loan repayments

The Australian Banking Association says banks are keen to work with borrowers to find a way for them to resume making repayments. That might mean restructuring the loan, converting to interest-only payments for a period of time, or extending the loan term.

All of these options are designed to reduce the size of your repayments in the short term, which might be just what you need to get through the pandemic.

However, be aware that there may be longer term implications. Always do your due diligence and ask your lender what you’ll end up paying over the life of the loan. And if you’re in any doubt, seek professional financial advice before making a decision.

If you can’t afford to start repaying your loan yet

Some mortgage holders who are still struggling financially due to the impact of COVID-19 may be eligible for a further four-month extension to repay their home loans.

The extension won’t be granted automatically, but it will be determined by lenders on a case-by-case basis. If you think you’ll be in a better position to start repaying your home or business loan in a few months’ time, speak to your lender about it.

But once again, don’t forget to find out how much more you’ll pay over the life of the loan, and what your repayments will be.

If you’re in severe financial difficulty

If you don’t think you’ll be able to start repaying your home loan in future, and you’d like to understand your options, speak to a financial counsellor as soon as possible.

A financial counsellor can work with you to understand your true financial position and, if possible, put a budget in place to meet your mortgage repayments. They can also help consolidate and restructure other debts, and negotiate the best possible terms with creditors.

If you are thinking about selling your home, speak to your bank and find out whether any fees apply for exiting your mortgage early. Whatever you do, don’t make any major decisions without speaking to a financial counsellor or your financial adviser first.

Get your financial foundations right

Whatever your current circumstances, there’s never been a more important time to get your finances on track. That means sticking to a budget, reining in your cash flow and seeking professional financial advice.

While many people think financial advice is only for the wealthy, in reality you can benefit significantly at any age or stage of life. In such an uncertain environment, getting professional financial advice can give you peace of mind and put you on track to emerge financially stronger than ever.

Source: FPA Money & Life


Aussie’s saving for a rainy day instead of a holiday

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Not many people can say they’ve been unaffected by COVID-19. Whether you’ve lost work, had hours reduced or been fortunate to maintain employment, COVID has been a wake-up call for how we manage our money and set financial goals.

How are we managing?

Many of us are doing smart things such as:

  • 29% are cancelling non-essential services
  • 25% are reducing spending/expenses
  • 42% are putting money aside for unforeseen events

But worryingly there’s been an increase in people relying on credit cards to pay for everyday expenses and taking out personal loans. And 23% of 18-35yr olds surveyed had also accessed some of their superannuation early.

How has it changed our goals?

For starters, more of us are actually setting goals than before COVID. It’s made us more determined to gain control of our money and be better prepared for whatever life throws our way. And the goals we’re aiming for now are all about paying down debt and saving.

Goals we’re mostly on track for:

  • 73% have reduced spending/expenses
  • 65% have paid off the mortgage
  • 61% have paid off personal loan/credit card
  • 60% have put extra money aside for retirement

However, the COVID curveball has meant we’ve had to do a bit of fine-tuning. We’re extending the timeframe it’ll take for us to reach our goal, or we’re abandoning it altogether if it no longer suits our situation.

  • 43% have stopped saving for an investment property
  • 40% are no longer saving for a big-ticket item like a holiday
  • 35% postponed investing in the stock market
  • 31% decided to put on hold saving for a house deposit

Goodbye holiday, hello rainy day

Pre-COVID, saving for a holiday was a priority goal for almost half of us. Whether it was an annual trip overseas or regular cheeky getaways, Aussies were big travellers. But with the world shut down and travel greatly restricted, we’re realigning that goal to something that makes us feel more secure – saving for a rainy day.

Because we’re more focused on saving, we’re watching our spending more closely too. Things we used to think we needed have been recategorised as nice-to-haves. And it’s not just the overhanging threat of job losses that have made us feel this way. Stay at home orders and have allowed us space to take stock and start appreciating the simple things in life once again. We’re valuing time with our family, a slower pace, and being debt free over buying things for the sake of it, or that we might not be able to afford.

Whatever your situation, now could be an ideal time to revisit your financial goals and decide if they’re still right for you.

Source: AMP


The future of work – a new way of working

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2020 will be the year that changed the way many people work. COVID-19 introduced both societal and organisational shifts, with businesses and their employees forced to adapt quickly to new ways of working that included work being carried out remotely and with increased flexibility.

Although it took us by surprise, it has perhaps brought forward many businesses’ plans to create workplaces of the future. It’s presented an opportunity to act now and redefine the future of work, building on what’s been learned throughout the pandemic.

For employees, removing a stressful commute and the need for smart business clothes and adding the ability to get the washing on while the kettle boils has proved a success.

In turn, businesses have experienced increases in productivity and now see further potential to reduce overheads. If working remotely becomes the new way of working, office spaces will be smaller, reducing the cost of rent, cleaning and heating/cooling, even if there is a need to invest in IT systems and cyber security.

So, what might our workplace of the future look like, and what might it mean for our environment, social skills and work productivity?

It all starts with strong leadership. Business leaders must map out a path for the return to work, whilst learning from the lessons of COVID-19 to create their workplaces of the future. It’s a significant opportunity to drive positive change – change that might otherwise have taken years to design and implement, jumping through corporate hoops.

As well as the physical environment, leaders need to recognise managing virtual teams is quite different from face-to-face. The norms that emerge during face-to-face contact take longer to establish via a screen and require far more nurturing and intuition. Employees need to understand what’s expected of them, how decisions are made, what are the appropriate communication channels and how their performance will be measured.

A happy medium

As we return to work, some workplaces will advance quickly, transforming themselves into workplaces of the future, where people and technology co-exist effortlessly. Others may take longer to establish new ways of working. But either way, the future of work is certain to be different from what we’ve known before.

All changes must be sustainable to enable a meaningful, long-term recovery. And while health and safety dominate initial return to work plans, productivity must also be a key consideration. We’ll likely transition to a world where employees will be able to choose how they manage their time between working within the office and remotely.

Source: BT


What to do next if you’re facing redundancy

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Uncertainty around COVID-19 might be increasing your stress levels about losing your job, but here are five ways to soften the financial blow.

In April, Australia hit its highest unemployment rate in five years, and with the Federal Treasurer expecting an unemployment rate of around 10% by the end of the year, many Aussies may be feeling a little uneasy about their future job prospects.

Which sectors have been hardest hit?

COVID-19 has affected all areas of the workforce, but analysis by AMP reveals recruitment, retail and hospitality make up almost half of all early super release withdrawals, suggesting people in these sectors may have been more greatly affected by job losses.

Uncertainty around the reopening of interstate and international borders makes any tourism rebound also hard to predict.

How to get on the front foot with your situation?

It’s important to know that a genuine redundancy payment is made when you’ve been retrenched because there’s no longer a need for the job that you’re doing.

Here are some ways to help make sure you get what’s yours if you’re faced with a redundancy so you can be well prepared for the future.

1 – Know what you’re entitled to

What your employer is required to pay you will depend on your conditions of employment, so ask your boss or HR department (which might be easier if you’re still working), or be sure to check your redundancy payment summary carefully to ensure you get what it is you’re owed.

Fair Work’s redundancy calculator ( can help you find what redundancy pay and entitlements to expect. It’s also a good place to find details of pay and conditions if you’re covered by a registered agreement.

Meanwhile, keep in mind that apart from your actual redundancy payment, you may be eligible for things like payout of accrued annual leave and long service leave.

When the redundancy happens, if you’re under your Centrelink Age Pension age (which will be between 65 and 67 depending on when you were born), special tax treatment is also given to genuine redundancy payouts, which means some payments you receive will be tax free up to a certain limit based on your years of service.

2 – Sort out your money situation, including benefits and super

The size of your payout may determine the time you can afford to be out of work, what you’ll be able to live on from week to week, along with how you’ll tackle financial responsibilities until you find another job. With that in mind you may want to:

Create a workable budget

You can do this by writing down your daily living expenses, and what you estimate any upcoming bills and loan repayments will total. This way you’ll be across all your outgoings, as well as where you may be able to make minimum repayments and cut back on other forms of spending.

Put your money somewhere useful

It might be tempting to go on a holiday, undertake renovations or pay off all existing debts with your redundancy packet, but if you don’t find work within a certain timeframe, you may leave yourself short.

Think about where you could put your money, still have access to it and potentially reap added benefits. Options may include high-interest savings accounts or a mortgage offset account that allows you to redraw funds while reducing what you pay in interest on your home loan.

Apply for financial hardship with your lenders

If your redundancy payout starts to run out and you’re struggling to make repayments, you may be able to seek assistance from your lenders by claiming financial hardship.

All providers must consider reasonable requests to change their terms in instances where you may be suffering genuine financial difficulties and feel help would enable you to meet your repayments, possibly over a longer period.

Find out if you’re eligible for government assistance

There’s a range of Federal and State government assistance available related to COVID-19. Make sure you’re across these and don’t miss out on support you might be able to access straight away.

These may change as the economy emerges from hibernation, so bookmark the pages relevant to you, in case you’re out of work for longer than you anticipate.

Depending on your age, different benefits may be appropriate at different ages – for instance most workers may look to JobSeeker payments where they’re out of work, while the Age Pension may be more appropriate for older Aussies.

Waiting periods may apply to some benefits, so keep that in mind when it comes to any payout you receive, as you may need it to cover your living expenses for a while.

Loss of a job and income in the family could also mean that you may qualify for Family Tax Benefits, or for a higher rate of payment.

Look into your super situation

See how much money you have in super and think about the effect a break from work may have on your balance.

If you have insurance inside super and are paying premiums with your super money, consider how this may affect your retirement savings if the premiums aren’t being offset by contributions.

You might also be considering early access to super during COVID-19, where the Federal Government is allowing eligible people affected by the outbreak to access up to $10,000 of their super as a tax-free payout between 1 July and 31 December 2020.

There may be short-term advantages to this, but there may also be some disadvantages that you’ll want to make sure you’re across.

3 – Create a plan for your return to work

You might have a bit of leeway to take some time off, but when you do look to join the workforce again, a good place to start will be your resume. Make sure your previous roles and responsibilities are up to date and that you’ve listed all your skills and achievements.

In the meantime, set up relevant online job searches, tidy up your LinkedIn profile, touch base with recruiters in your field and don’t be afraid to target companies directly.

4 – Contemplate the benefits of training

Depending on whether you want to remain in your industry or make a career change, further training could help you gain new qualifications, keeping in mind this can still cost time and money.

A new education assistance package has recently been made available to help displaced workers upskill and retrain during COVID-19. A number of free online courses are also available from TAFE, while Open University offers a range of short and longer education courses for all levels.

5 – Seek further support

There’s a range of support and resources available.

Talk to your financial adviser as they may pick up on things that could otherwise be missed

Check out AMP’s free webinar – Managing through a redundancy

Find a range of articles on AMP’s COVID-19 support hub

Seek free financial counselling from the National Debt Helpline on 1800 007 007

Take a look at the government’s Moneysmart website for further financial education.

If you’re finding it difficult to cope and need to speak to someone, there’s a range of mental health and family support services available through:

Beyond Blue – 1300 22 4636

1800 RESPECT – 1800 737 732

Lifeline – 13 11 14


Source: AMP Insights


Some ways to use your tax refund for a stronger financial future

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Whether you breeze through tax time or dread the extra admin, receiving a tax refund makes the effort worthwhile.

For many of us, getting a financial boost will be even more welcome this year, and you might be looking around for the best ways to use it.

These simple actions can help you figure out how to make a plan for your tax return. And if you’re looking for inspiration for how to spend it, we suggest some ideas to consider, too.

Plan to succeed

Never underestimate the power of a well-crafted plan – it’s easy to watch funds dwindle when you haven’t given them a clear direction. Recent research has revealed that 81% of us admit to splurging an average of $1,430 annually as a result of comfort spending and that one in six Australians struggle with credit card debt.

Like any goal, your ambitions for this year’s tax return can be more easily realised if you have a concrete plan in place. In fact, studies have found that taking the time to write down your goals and plans can actually improve your chances of making them happen.

Once you’ve lodged your tax return, you should have a decent idea about the amount of your refund. Use the time before you receive the money to give yourself a financial check-up and decide exactly where you plan to put your tax refund to avoid excitement spending once it lands in your account. This includes any money you’re hoping to use for a holiday or other splurge – work it into your financial plan to avoid spending beyond your means.

Anticipate your upcoming living expenses

When making your plan, you might want to consider your upcoming living expenses, particularly any large, irregular bills such as car insurance and registration costs, utility bills and general home maintenance.

Putting aside some of your tax return as a cushion for upcoming expenses or an emergency fund helps you avoid reaching for other financial support – such as personal loans and credit cards – when the bills start to build up.

Reduce outstanding debt

If you have some debt to pay down, you’re not alone: the average Australian household debt-to-income ratio is around 190%, meaning we owe almost twice as much as we earn each year. Putting your tax return towards any outstanding debts, including mortgage repayments, personal loans and any credit card debt may help reduce any interest charges.

Invest in growing your wealth

If you don’t need the money for immediate expenses, paying off debt (or the occasional luxury), you might be looking to make a long-term investment with the extra money. You might consider contributing some or all of your refund to boost your super, or add it to a term deposit or savings account.

Make tax-deductible purchases

If you’ve been holding off buying specific equipment for work, such as a new laptop or desk, now could be a good time to make the purchase. For purchases over $300, tax deductions are calculated on the depreciation of the ‘effective life’ of the item. If you purchase them at the beginning of a financial year, the item has almost a full year to depreciate before you do your next tax return.

Donate to a charity

Although this has been one of the most difficult years in living memory, Australians have shown extraordinary generosity by donating to bushfire appeals and other charities. If you plan to support a charity or not-for-profit organisation, don’t forget that any donations over $2 to eligible organisations in Australia are tax deductible. Just remember to keep a receipt for when you start preparing next year’s tax return.

Source: AMP Insights

HomeBuilder grant

Are you eligible for the HomeBuilder grant?

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Available for a limited time, the HomeBuilder grant offers eligible owner-occupiers, including first-home buyers, a potential tax-free $25,000 boost to help fund the cost of building a new home or substantially renovating an existing home.

Although not specifically targeted at first-home buyers, the Government expects the HomeBuilder grant will be popular with first-home buyers looking to buy a house and land package, as well as growing families upgrading to a bigger new home.

It could also spark interest for retirees who might see this as a trigger to downsize their home, using the grant to help purchase a new smaller apartment or unit, and potentially the money saved to invest into their retirement fund.

As with any Government grant program, there are rules around who is eligible and the type of renovations or properties you can use the money for.

Deciding if you’re eligible

The first and most simple criteria for the Homebuilder grant is that you must be an owner-occupier. If you tick that box, and you’re someone looking to build or renovate your home, you must also meet the following criteria.

  • Be an Australian citizen aged 18 or over.
  • Have an annual income less than $125,000 for individuals or less than $200,000 for couples (based on your 2018/19 (or later) tax return).
  • Planning an appropriate renovation or new build

The Government has defined strict price caps for renovations and new builds to ensure the HomeBuilder scheme sits in-line with other programs already operating in Australia.

  • Substantial renovations – the planned cost of a renovation must be between $150,000 and $750,000, and the value of the property being renovated should be less than $1.5 million when work begins.
  • New builds – the purchase value of new homes (house and land combined) must not exceed $750,000. This also applies to new homes bought off-the-plan.

In addition, all building contracts must be entered into at arm’s length. This means the builder you choose cannot be a relative for example, and you cannot be an owner-builder.

Types of property eligible for the HomeBuilder grant

Good news – this is the most flexible part of the HomeBuilder scheme. Whether you own a house or apartment, or you’re buying a new house and land package or a property off-the-plan, all are eligible types of dwelling.

However, you must live in (or plan to live in) the property, ie you’re an owner-occupier. The HomeBuilder grant is not available to investors looking to renovate or those wanting to build a new home to use as an investment property.

Defining ‘substantial renovations’

In simple terms, the renovations you undertake must improve the liveability, accessibility or safety of your home. And the changes or additions must be connected to the main property.
While there isn’t an exhaustive list of do’s and don’ts, here are a few things that aren’t considered improvements.

  • Tennis courts
  • Swimming pool
  • Spas and saunas
  • Sheds or garages not connected to the property

Given that the scale of required renovations far exceeds just painting walls and replacing carpets, the work must be carried out by a licensed or registered builder. Also, the terms of any contract should be commercially reasonable and the contract price should reflect fair market value and not be inflated to ensure it fits within the imposed price boundaries.

The HomeBuilder grant is only available for a limited time, so if you’re thinking of applying there’s no time to lose.

Source: BT