Four life Changing New Year Resolutions

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Are you are looking for a NEW YEAR RESOLUTION that can actually change your life? Try these four 2017 money kick-start resolutions.

If you want accumulate more money, then pay off your credit card and start saving.  That’s what resolutions 1 & 2 are about.  However, don’t forget about protecting yourself.  Keeping what you’ve got is just as important as building more.  So resolutions 3 and 4 will help avoid a mess when things go wrong.  Number 3 (insurance) is always subject to affordability but if you can do 1 & 2 (above) well, you will be able to afford it.  So are my top 4 resolutions for 2017 in a bit more detail:

  1. PAY OFF YOUR CREDIT CARD – this should be a no-brainer.   All that money wasted making repayments to a bank could be saved and used to increase your own wealth.  I know that many will say, “Easier said than done!”, but you just need to work on a different mindset where a credit card is not your default means of payment.   It’s about breaking old ‘buying and paying’ habits and starting new ones.  The best way to start is to be a scrooge for a while.  It won’t take long to adjust and, before you know it, you won’t feel as much struggle to repay growing debt; and as it reduces, you will begin to notice that have more money available.
  2. SAVE FOR A GOAL – if you can’t think of a goal, then save for a rainy day fund that you can use in case of emergency.  It only takes a few weeks of being out of work, or a couple of critical break downs, like the car and fridge, to put a few thousand dollars on your credit card at a time when you can least afford it.  Wouldn’t it be good to have some savings to call on instead?  Even if you have a period of clear sailing with no emergencies, it’s great to have that feeling of ‘money in the bank’.  Then you can use the money to achieve some future goal without having to use a credit card.
  3. INSURE YOURSELF AND YOUR INCOME – Only about one third of Australian adults have adequate personal insurance and the automatic provision of insurance benefits in superannuation accounts for a lot of that.  It’s sad that two thirds of us rank ourselves behind our our house and car in terms of importance.  But bad things still happen regardless, and it’s only a matter of when.  Those who do adequately insure themselves realise that they are the ‘geese who lay the golden eggs’.  They are the rainmakers and the providers of the house and car.  Clearly, it is people not things that should be protected first.  And when you tell me there is no value in personal insurance, let me tell you from experience that some of the most heartening moments in my life have been the smiling faces and looks of utter financial relief as the insurance money arrives; always at a time of crisis and always when the money is needed the most.
  4. MAKE A WILL – these are your instructions on who receives money and property owned by you personally.  Don’t assume that, in the absence of a will, everything you own automatically goes to your spouse.  There is a standard formula of distribution is Queensland (and similar in other States) and if you don’t have a will, it will be applied.  So see a solicitor and make a will, and your beneficiaries will generally receive their inheritance with minimum fuss and cost.  If you don’t make a will, the Queensland Public Trustee office will administer your estate and this service is not free.  It will be a much slower and more costly process, and your beneficiaries may not be as you’d expect.

For more on how to make money work for you, follow my blog at http://garyweigh.com/

If you would like to ask questions about any of this, feel free to call me.  There is no charge or obligation.

Happy New Year

Gary

 

 

 

Seven Ways to Boost Your Super

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In my experience, people don’t need a million dollars to retire comfortably. Whilst a million dollars would be nice, the fact is that few people will ever retire with this amount of money. Most people retire with less than half a million dollars (in many cases, much less) and get by quite nicely.  It’s all about taking an interest in your super and doing your best with it well before retirement time comes around.

The proponents of the million dollar theory don’t take into account three (3) important factors:

  • The Age Pension in retirement;
  • The potential absence of taxation in retirement; and
  • The absence of non-income producing debt

The combined effects of the Age Pension and taxation concessions means that a lower capital amount in retirement will stretch further. And we empty-nesters all know how sharply household expenses drop after the kids finally move out.

Based on what I see among my retiree clients, most people don’t need a lot in retirement.  Generally speaking, if they can travel when they want to and pursue their interests, most appear to be happy. Whilst money is always important, good health, a sharp mind, embracing relationships and a strong sense of purpose are much more important to older people. Money can’t buy most of that.

So if you want to maximise your superannuation savings (well) ahead of your retirement, here are seven (7) strategies to consider:

Consolidate your superannuation into one account. If you have several super accounts, as is usual when you change jobs a few times, take some time to select the right one.  Also make sure that you are looking at all your superannuation accounts, including any ‘lost super’.  Check ATO Super Seeker on the Australian Taxation Office site.  Next, drag out your statements and consider the fees you are paying on each. Check out which ones contain insurance before you cancel any of them. Inadvertently cancelling insurance could be a costly error.  In the end, it may be the case that none of your existing super accounts suit your current needs. In that case I can help you choose one that does.

Check the fees you pay to your current super provider. If you may be paying fees for services you don’t use, like paying commissions to an adviser you never see. Also on older accounts, fees can be a lot higher than they are today as the retail superannuation market has become very competitive in recent years.

Understand your own innate appetite for risk and choose investment options that suit your level of risk taking. You don’t have to accept the default investment option in your employer’s fund. You can change to suit your needs.

Review your insurance. Or in many cases, become aware of what insurance you have in your super. It is quite common to acquire insurance benefits that you didn’t ask for, simply by joining your employer’s fund. So check what you have and ask yourself is it enough?  My experience tells me that when all things are considered, the answer is often NO!

Nominate a beneficiary to receive your super (and insurance benefits) in the event of your death. This is such a neglected area because is sounds a bit daunting.  It is one or two bits of paper and about 5 minutes work.  Generally, from superannuation you can only nominate your spouse, children or someone who is financially dependent on you. Making this nomination is important because your super is not covered by your will because it does not form part of your estate.

To give your super a boost, consider salary sacrifice.  This means that you put a bit more than the mandatory 9.5% of your gross ordinary time earnings into super.  There is a tax concession to be had for doing so, depending on your income level, because any money diverted by your employer into your super fund is taxed at the flat rate of 15% and no longer forms part of your taxable salary on which you pay tax at marginal rates.  How much to of your salary to sacrifice and the associated tax concessions will depend on your circumstances, so it is best to seek advice.

The Transition To Retirement (TTR) strategy is one of the most underused ‘super-boosting’ pre-retirement strategies. It shouldn’t be! It is a real benefit to those who use it properly. Getting the most out of it requires getting the balance right between money in and money out of your fund, given your age and the associated taxation consequences. You should seek advice on this because the cost of good TTR advice is far outweighed by the benefits.

If you have questions, please call on 0408 756 531 or email me at gary@garyweigh.com and I will be happy to answer them.

 

 

 

middle aged woman

Money at Call to Regain Your Life

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Judging by what I see every day as a financial adviser, the silent enemy in family money management is FINANCIAL STRESS.

Financial stress causes arguments, breaks up marriages, and has the capacity to make a serious illness a whole lot worse. The irony is that it is not caused by lack of money but by the poor planning and management of money.

If you want to give yourself a chance to recover from a serious illness such as cancer or serious heart condition, then it helps to stay calm and relaxed and let your body do what it does best.

Financial stress will never help and actively works against your recovery.

If I suggest that you consider Trauma Insurance to relieve financial stress at a time of serious health crisis, you will probably stop reading. So I won’t.

middle aged womanInstead, I will give you a recent example of what can happen when you don’t.

A single middle aged lady was referred to me mid last year. She asked for help with household budgeting as her credit card debt, on top of her mortgage payment, was getting out of control.

As you can imagine, she was stressed over her financial situation. I could see it in her eyes.

Together we worked out a solution that was realistic and achievable and, at the same time I recommended that she insure herself because, as I explained, it was a really bad time to be financially caught out by a serious illness or even a car accident injury.

So I recommended Trauma Insurance as a priority; enough to cover her debts and allow her a stress free recovery period in the event of a serious illness diagnosis; and also income protection in the event that ill health prevented her from working. In addition, I proposed life insurance, enough to eliminate her debts if she should die.

Even at lower amounts, she said she couldn’t afford any of it, not even the Trauma Insurance; even though the premium could and should have become an essential budget item. She chose to defer it until she was in a better financial position.

She returned to see me recently, only a few months later. She was going well with her budgeting and heading in the right direction with her personal debt problem.

She had also just received a diagnosis of stage 3 breast cancer.

With a need for immediate surgery, she has no money to fall back on and no family support.  The bills won’t let up so she doesn’t have any financial breathing space.  Without that, she doesn’t have the stress-free time she now needs to recover. To make matters worse, she is now uncertain about how long her employer will keep her on.

Her stress has just multiplied.

 

This is general advice only. The purpose of this article is to provide you with practical examples as a means of education in the poorly understood area of personal risk insurance. As a licenced financial advisor, I strongly urge you to seek personal advice about protection which would be tailored to your individual needs and circumstances.

the big c curse

Stories of the ‘BIG C’ Curse

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the big c curseLast year, a friend of mine who is also a client, had elective breast surgery. During the procedure, the surgeon found a small tumor and removed it. She had been completely unaware of it and even a recent mammogram hadn’t detected it.

Several weeks later, she let me know what had happened and I suggested she may have a valid trauma insurance claim. I had arranged the trauma policy for her less than two years earlier. Although she was doubtful about the claim, I contacted the insurer and explained the situation. They requested the relevant medical reports and a claim application. Two weeks later she received $120,000 being the agreed sum insured.

In this day and age of insurance, if you tell the insurer the truth and disclose everything, you will be paid provided that you meet the claim criteria. In the case of breast cancer, a claim is usually triggered when invasive surgery is involved. In this case, it made no difference that the lady involved was completely unaware that she had breast cancer.

Call Gary for your free consultation

Nine Questions You Should Ask About Your Super

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gary weighSuperannuation is so much more than a low administration fee. We so often see TV ads for union-related superannuation funds, commonly known as industry funds, promoting low fees as if it is the only thing that matters.

It is not surprising, because what you are hearing is a provider of superannuation talk about the product features of their particular brand. Nothing more!

A superannuation provider is not licensed to give advice beyond their own product.

Find out how your super can be made to work well for you using the personal approach of a good financial adviser who specialises in superannuation and, importantly, using one that doesn’t have any bias towards any particular product provider.

Whether you are suited as member of an industry super fund, a retail super fund, a superannuation wrap, or a self-managed super fund depends entirely on your personal circumstance, your financial situation and your retirement aspirations.

Advice comes first! Which type of superannuation you need and which product you might ultimately purchase comes a distant second.

If you think your super is not working for you the way it should, and you are interested in improving it, then you might be interested in some general advice from an adviser who understands superannuation very well.

Whilst fees are important, here is a list of NINE other important aspects of your super to consider if you want your super to be the effective retirement vehicle it is supposed to be:

1. Is your super all in the same fund?

2. Does the fund you are in actually suit your needs from a control, investment management, tax effectiveness, and estate planning point of view?

3. Are you able to replace lost insurance benefits if you change super fund?

4. Do you have enough insurance in your super and is it tailored to your needs?

5. Do you know what to do with a government ‘defined benefit’?

6. Are your investments consistent with your tolerance for risk?

7. Do you understand the tax consequences of your withdrawal options

8. Are you aware that lump sum tax could apply to your benefit if you die

9. Are you aware that by being in the wrong fund that your spouse or young children could miss out on a lump sum tax refund in addition to your benefit if you die?

You have probably never heard of most of the issues I have raised above and, to be fair, they need to be explained to you. But as you can appreciate, superannuation is a complex area and there is so much more that matters besides a low administration fee. The points above are the areas that a good adviser will address to make an enormous positive difference for you.

With a good investment strategy and frequent reviews, your benefit can grow over time and then be repositioned to provide income for you when needed. But there’s much more!

With correct structuring; appropriate contribution and withdrawal strategies, personalized protection and inheritance planning, and an eye for tax consequences, you can potentially save a lot more money over the course of your working life, into retirement, and eventually, beyond death where your descendants safely receive your remaining wealth.

So as well as hearing about super from a superannuation product provider’s point of view, ask about super from a ‘how to make super work for you’ point of view from a knowledgeable adviser’s point of view.

General advice warning

The article above is general advice only designed to educate and heighten awareness of superannuation issues. It should not be regarded as personal advice because it does not take into account your personal circumstances, financial situation or specific goals. For personal advice that is tailored to your needs, please consult a licensed financial adviser.

a man in suit holding a credit card

Tips to Reduce your Credit Card Debt

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gary weigh

I find that people with significant credit card debt generally don’t like budgeting.  Most I meet as a financial adviser tell me that they are hopeless budgeters.   What they really mean is – it wouldn’t tell them anything they didn’t already know deep down, and because they don’t know how to change, there seems no point as they would not be able to live within its means anyway. 

Regardless, I still insist on a budget because it shows the depth of the problem and it helps prioritise spending.  After all, my job is to help, not judge!

The reality is people get into trouble with credit cards because they spend more than they earn and the credit card is being used to bridge the gap.  It occurs a lot with lower income earners but I have seen many couples on a combined gross income of $200,000 – 300,000 a year complain to me that they can’t make ends meet.  It is all relative!

When families can’t make ends meet, credit card debt increases and as each month passes, it becomes rising core debt.  Core debt means that the debt is not paid down to zero each month.  It therefore carries over to the next month where it is increased by new debt associated with current purchases.

Typically, this bad habit will continue for a couple of years until finally, at a crippling interest rate of between 15%-20% per annum, the debt eventually grows beyond the capability of the cardholder to manage it.

Growing credit card debt means only one thing – you are spending more than you earn.  Your two choices are simple – either to earn more or spend less (or both).

To reduce existing credit card debt:

  1. Obviously, stop adding more debt to your credit card
  2. Pay as much as you can afford each month as an extra payment in addition to the required minimum repayment, otherwise the number of years required to repay your debt, plus the total amount you will ultimately repay, will quickly blow out beyond your control
  3. To get some breathing space, renegotiate the interest rate on your existing debt either with your own bank, or take advantage of a better offer to transfer the balance to a new bank
  4. If you are a homeowner, consider consolidating your personal debts into your home loan and then increase your home loan repayments.  This would usually lower your total monthly repayments for all debt.  This may or may not be feasible depending on your circumstances, so it is important that you seek professional advice before you take action!
  5. If you are not a home owner, consider approaching your bank and ask them to convert your credit card debt to a personal loan.  Then work hard at paying off the personal loan.  Personal loan interest rates are generally lower than credit card rates.  This will generally lower the interest rate and therefore your decrease your monthly repayments.  This may or may not be feasible depending on your circumstances, so it is important that you seek professional advice before you take action!

Let me be clear:

“Using a credit card is the worst personal finance strategy you can think of!” 

If you have a credit card that is maxed out, or you have more than one credit card, you are either in financial trouble or trouble is looming and you should seek professional advice immediately.

Nobody needs a credit card.  For payment convenience in this cashless society, switch to a debit card where you are spending your own money, and not borrowing and increasing your debt every time you make a purchase.  At least then, when the account linked to your debit card runs out, it is an unmistakeable signal to stop spending.

Gary

christmas bokeh background

My Christmas Gift List

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Gary Weigh Financial AdviserI have finished my Christmas shopping without spending $1,000 or running up a credit card debt. This year, more than ever, I am looking forward to Christmas day because I have the following five gifts:

  • I gave up on expensive gifts with no lasting value
  • I have given over to my imagination and creativity
  • I am giving my time and genuine interest to my family
  • I want to give solo friends the opportunity share Christmas with me
  • I feel great about giving charitably to help those less fortunate

As the years pass and the composition of family and friends around the dinner table ever slowly change, I think the best part about Christmas is the light of excitement in children’s eyes, the pure enjoyment of being part of a family, and wonderful memories of Christmas past.

Have a Merry Christmas

Gary

Please make a small donation to Jacaranda Clubhouse Ipswich to help those recovering from mental illness http://www.jacarandaclubhouse.com.au

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old man wearing a beret holding a glass of wine

The Golden Years Retirement Myth

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Business coaching BrisbaneIn the words of Tennessee Williams, “You can be young without money, but you can’t be old without it”.   Retirement is often referred to as the golden years, but for many a golden years retirement is a myth, and not just because of a lack of money.

There are four (4) must-have requirements that must be met before retirement is likely to approach a golden era.  They are:

  1. Must have good health
  2. Must have enough money
  3. Must have satisfying relationships; and
  4. Must have a continuing sense of purpose

Regardless of the amount of money you have, poor health can devastate your retirement if it occurs in the early stages.  It can also make it much more expensive than it needs to be.  The irony is that in many cases, poor health can be the result of the decades spent under stress to earn the money to fund a life, including retirement.

The financial reality for most people is that they exist on a full or part government age pension.  Even if all the other requirements are met, a lack of money can mean a frugal lifestyle indeed plus a severe restriction on travel and other touted ‘golden year’ activities.

Loneliness can have a severe negative impact on the quality of a person’s retirement. Having one or more satisfying relationships is essential because all people have an innate need for social interaction and support.  The key relationship might not be a spouse; it could be one or more close friendships.

One essential requirement that is overlooked by eager retirees is an ongoing sense of purpose.  After a year or two of travelling overseas, or touring the country in a caravan, the reality of nothingness often sets in.  If you don’t like fishing, golf or bowls, life can become extremely boring.  For this reason, many people go back to work or give their time to charities.

Retirement is a period that can last for 30 years or more.  So if you do some golden years planning that great, but remember that money is only part of the plan.  If, like most people, you don’t plan, at least you know what’s coming.

Gary

a family of 6 gathering together for a meal

Give your children the gift of personal finance basics

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learn personal finance basics

Children learn financial management from their parents.  At a very early age, our kids become aware that money comes from a machine outside a bank (ATM) or a supermarket cash register (EFTPOS); and that flashing a thin sliver of plastic allows us to walk out of a shop with just about anything we want.   

So it comes as no surprise that older children can believe that a credit card is the one and only option when cash is needed instantly.  Of course, people skilled in financial management know that’s crazy because nothing capable of growing in value or earning an income return is ever purchased with a credit card and the amount that is ultimately repaid often far exceeds the original purchase price.

It is a natural urge of all parents to want the best for their kids.  Consequently, we all invest a lot of time and money into their education and career guidance.  However, the ability to earn good money is only half the story.  Keeping the money they earn and making it grow is far more important. 

This ‘make-or-break’ chapter of our children’s education is so often missing because parents don’t have the skills themselves.  As a result, young people do not see a good example in the way their parents manage money.  Worse, they see bad habits on a daily basis and copy them in the innocent belief that Mum and Dad are right.  They can also copy the negative behaviours that relentless money stress can cause!

One way or another, our children need to be shown good money skills.  With these skills, there would be less pressure on them to become high income earners just to get by.   Without self-imposed financial pressure caused by bad habits and a lack of know-how, our kids could be encouraged at a much earlier age to follow their dreams instead of the drudgery of a life lived merely for the sake of money.

To me, this is what personal financial management is all about – a life well lived!

Gary Weigh

the big c curse

Turning prosperity into retirement

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HOW-TO WORKSHOPS

Starting in Brisbane – February 2014

“Is a Self Managed Super Fund right for you?”

SelfBusiness consultancy Australia Managed Superannuation is a hot topic at the moment.  Many people are being talked into setting SMSF to own an investment house via slick property marketeering.    This can be a huge mistake unless you know what you are doing.

Merely setting up a Self Managed Super Fund (SMSF)  does not guarantee success.  It needs to be crafted to the owners needs.  A SMSF structure can be a tax-effective investment machine.  But it must be used the right way.   Like turning a house into a home, a new SMSF shell must be furnished to meet the particular needs of the family.

My 1-hour evening workshop will cover:

  1. How to know if a SMSF is right for you?
  2. How much money do you need?
  3. How much work is it to manage?
  4. How and when can you access your money?
  5. How to making a SMSF actually work?
  6. How to keeping the costs down?

Numbers will be limited to 8 people per session so that we can field questions and put everyone on the right path with their superannuation.  We will conduct as many small group workshops as we need to.

The workshops will be held at Toowong, Brisbane after hours and there is no cost to attend.  Yes, of course we would like you to consider us as your ongoing advisers but there is absolutely no obligation.

To register your interest just send me an email personally to gary@garyweigh.com