Change is inevitable. We change jobs, move house and start families. We can be struck down with sickness, go through a divorce, or even lose a family member. Some of these things may happen, but some of these things will happen, it’s all just a matter of time.

There is not much that stays exactly constant in our lives, and finances can be a moving beast even if you have a perfectly set out budget and financial strategy.

When a major life changing event occurs however, it will usually take more adjustment than just increasing or decreasing one expense.

A big change can have a big flow on effect and will usually mean you need to reestablish your whole financial strategy before you can move forward confidently.

So, what do you need to do to move forward, and how do you restore your finances after a big change?

Figure out where you are now

This is where you throw it all on the table. Where are you at financially right now, right after the massive change has occurred? Write it all down. Do you have debt? Excess cash? Higher or lower expenses? Plans for the future that need to be accounted for?

Whatever your change, this may mean a complete deviation from any previous plans or budgets that you have created, so be prepared to pull apart what you currently have. If you have a financial adviser, then you have the advantage of going through all of this with them. They will know how to tackle your new situation the best way.

Review all of your expenses

If you situation has changes, then maybe some of your expenses have too. Now is the time to call your insurance providers, banks and lenders, internet and phone providers to see if there is a better or more appropriate deal based on your new situation. Most of these companies will be willing to negotiate cheaper rates if they think you are at risk of leaving them. Don’t be afraid to shop around either. A few hundred dollars here and there will make a difference to the bottom line.

A big change can have a big flow on effect and will usually mean you need to reestablish your whole financial strategy before you can move forward confidently

Set in place the new structure

Once you have pulled everything apart, you need to start from the basics again and build up. Firstly, you need to figure out what your absolute mandatory expenses are (food, accommodation, bills) and set aside money in your budget each pay period for all of these ongoing and yearly expenses. Once the mandatory requirements have been taken care of, then you are able to figure out where to direct any excess cash that you have. It might be towards debt, or a new goal that you have. Write down all of your goals financially speaking, and then rate the importance of them with 1 being the most important and work your way down. This will help to create a clear vision as to what your money should be directed towards.

Get an outside perspective

As mentioned above, seeking out a professional for this kind of thing is a real asset. A good financial adviser would have seen so many different situations and will be able to give you an outside, non-emotional perspective on your new situation and be able to create a plan going forward for you. Big life changes like buying or selling a house, change in family structures and changes in jobs are the typical reasons that people will seek financial advice. A good financial adviser should be able to help you through any and all stages of your life.

Do you need to update your other stuff too?

Getting your finances sorted is one step in the process but you may also need to consider any of the other peripheral parts of your life that could be effected by this change. Does your Will and/or Power of Attorney need to be updated? Are your bank accounts, credit cards and loans all in the correct names and structures. Do you need to update your payroll department with any changes in accounts, super funds or salary sacrifice arrangements?

If you are in the midst of a major change, then work through the above 5 tips, to reset yourself and start moving forward again.

 

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Most fights in marriages stem from money. Whether you have a lot or a little, if both parties don’t agree with how the finances are being spent, then there are going to be bumps in the road.

More often than not, one person will be wholly and solely responsible for the financial management of the household. That isn’t necessarily a bad thing if you’re both aware of what’s going on, and are on the same page. If, however, disagreements about money are a common occurrence in your home, then I daresay there are a few extra things you could be doing to ensure your finances are on track, and your marriage is free from financial squabbles. Here are 5 ways to be equal partners in your marital finances.

1. Have a meeting

I know it sounds a touch overboard, but I can tell you from experience, that communication is the key to success. It is important in any partnership where your finances are combined to have an open and honest discussion about money. This includes how much you have, what you need to live on, and what you are ultimately trying to achieve.

You need to think big picture here. Are you trying to retire by 40, did you want to invest, pay cash for the school fees? There is no right or wrong, but you need to agree together. Two people working towards a goal will get you where you need to go faster and keep you accountable to someone else.

2. Figure out the mandatory costs before you think about savings

Contrary to popular belief, it is more beneficial to figure out the mandatory living expenses before you decide how much you are going to save. If you don’t have a good idea of all of life’s costs like electricity, clothes, rent, food and petrol, how can you realistically decide how much you are going to be able to save.

Write down every expense that you would normally have throughout the year. Be honest, and be thorough. Once you have that figure (either yearly, monthly or weekly, it’s up to you), you can then figure out what you are left with to save. This is a more realistic idea as to what you can comfortably save whilst still ensuring all of your expenses are taken care of, and you never have to dip into the savings to keep yourself afloat.

… Communication is the key to success. It is important in any partnership where your finances are combined to have an open and honest discussion about money

3. Be understanding of your partner’s expenses

For partnerships to work well on the money front, you will need to accept that sometimes your partner will spend more on certain things than you, and visa versa. Remember, it’s their money too, so if it’s important for your partner to have money to play golf, for example, then don’t discount it straight away. If it’s available within the budget and you can still achieve your other goals, it’s important to be flexible. Remember it works both ways, so having a level of understanding of what is important to each other is all part of the communication process.

4. Get a third party point of view

Typically, having these types of conversations can be foreign to many people. Speaking to a professional financial planner can be a good way to nut out the important goals and get some direction. It will also help because a professional will be able to help you with the correct structuring and figuring out what is actually achievable.

5. Plan for emergencies

Regardless of how thorough you are with planning your expenses, there will always be some unexpected nasties along the way. Having a small cash buffer set aside to fund these gremlins will mean that you can sleep easy. If something comes up, then there will be no fights or stress about where the money is going to come from.

At the crux of all of this, it’s really about communication and being on the same page financially. Spend some time to work through it together, set in motion a plan that you both agree on then commit. These simple steps should alleviate some of the stress that comes along with managing the marital finances but will also help you manage your money in a more realistic way.

 

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Everyone has a different story to tell when it comes to the way they manage money. There is no right or wrong way, and that’s OK. Different strokes and all that. Budgeting is one thing, but the way you approach managing, spending and investing your money will actually play a major part in your financial success in the long term. Below are my 4 tips to money management, something every smart woman – and man – should follow!

1. Quality over quantity

When it comes to most purchases, this is the number one rule. Yes, you might pay more from the outset but if the quality is there, it will likely last the test of time. This goes for so many of life’s expenses, including clothes, appliances and furniture. It’s easy to go cheap and nasty, but eventually whatever you have bought will break down or will need to be replaced. A common trait of smart money managers is to buy less, but buy quality. Think about it, you don’t need 12 black blazers in your cupboard, you just need 1 really well cut, high quality blazer, and it will be in your wardrobe for years to come.

2. Stay away from the amateurs

“So you think it’s expensive to hire a professional? Wait until you hire an amateur”. This perfectly sums it up. As much as we like to think we can, we just can’t do everything. We need to outsource parts of our life to other people, whether that be plumbing work on our house, hairdressers or financial planners. If you are always on the hunt for the cheapest of the cheap, then you might engage a total amateur who ends up costing you more to fix anyway. The smart woman will hire a referred, qualified and trusted professional for the job (whatever it is) so that they know it is done right the first time round.

It’s easy to go cheap and nasty, but eventually whatever you have bought will break down or will need to be replaced

3. Don’t put all your eggs in one basket

When it comes to investing, putting all your money on black, so to speak, is akin to gambling. Diversification is a major player when it comes to investing and should be part of any person’s investment plan. No smart women (or man) will ever just buy shares in one company alone. They will strive for a diversified and balanced portfolio taking into account different business types, sectors, countries and asset classes.

4. Cover what needs to be covered

It’s smart to insure the important and expensive things in life. I’m not talking about getting extended warranties on your toaster, I am talking home insurance, life insurance, car insurance and health insurance. Yes, insurance costs money but you can bet it will alleviate the financial pressure on these big ticket items if something ever happens.

The above tips aren’t just about basic budgeting, it’s about shifting your overall mindset about your money strategy. If you can start to view your spending and investing habits differently you will reap the rewards in the long term.

 

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It’s a common sentiment that most people want to ‘get their finances sorted’ before they have kids. The questions is, how do you know when your finances are actually ready and what should you be doing to prepare?

1. Take stock

Look at where you are at right now. If you haven’t already got a budget, then this is the first step you need to take. What debt do you have? Do you have any savings or do you live pay to pay? If so, it doesn’t mean you can’t have a baby, but now is the time to get a bit of structure and have a better understanding as to where your money is going.

If you are currently spending everything you earn, how do you expect to pay for the extras that come with being a parent?

2. Create the post-baby budget

Once you know where you are now, you then need to start mapping what your post baby budget would look like. This needs to include any reduced income due to maternity leave, and the added expenses such as nappies, formula, and child care.

Setting a realistic budget will let you know if you have enough money for all of these things, and should highlight how long you can take off for maternity leave if that is what you are currently considering.

If you are currently spending everything you earn, how do you expect to pay for the extras that come with being a parent?

3. Do you have an emergency fund?

This is an important feature in any well managed personal budget, but this is even more important if you are expanding the family. Firstly, if you don’t have one of these then you need to consider it. My general rule is to aim for 3 months’ worth of household expenses to be set aside for an ‘in case of emergency’ situation. Think about medical expenses, white goods breaking, freak weather events that mean you have to pay for an insurance excess. It’s hard to plan for all of these, so having an emergency fund is super important.

4. Do you have stable income?

Everyone’s jobs are different, but you need to consider how stable your income is. It may be slightly different from month to month depending on overtime etc, but do you feel confident that your job isn’t going anywhere? Think about the industry you are in, are there a lot of redundancies going around at the moment? Are you getting regular, consistent hours or is it all over the place?

It is likely the case that you will need to rely on one income for a period of time. Ensuring that income is as reliable as possible is important. This could mean getting a full time, permanent job or trying to position yourself in a large company that has great employee benefits.

An interesting trend to consider is that most employers are putting 6 month probationary periods into new contracts now, so if you are after a new role that is something to be mindful of.

5. Do you have all of your life insurances sorted?

Life insurance (including disability and income protection) are so much more important when you have dependents. Having enough life insurance to look after your children for the long term if something were to happen to you, should be priority number one. Depending on your personal situation, you can fund this via your superannuation account or your everyday budget.

It’s not all about the money, but putting yourself in the best position in advance will mean that when you get there, you will know exactly what your money is doing and how much you have to spend on your new family.

We love to spend money on cute outfits and overpriced gifts but the best gift you can give your future children is a stable and loving home, one that is not overflowing with debt, money stress and late bill notices.

 

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The end of the financial year is not all balloons, champagne and celebrations for most people. Typically, unless you work in financial services, it is just another day like any other.

So then why is it significant? Well for one, this date is the line in the sand as to when the ATO decide how much you owe them for the all the hard work you have done throughout the year.

If you are after a swift and hefty tax return, here are the 5 things that you should be doing in the lead up to end of financial year:

1. Charity

Now is the time to make any last minute donations. Donations to a registered charity of $2 or more can be claimed as a tax deduction. Remember, you aren’t getting all of the donation back, the deduction just reduces the amount of income you must pay tax on.

2. Consider superannuation contributions

Consider making a concessional contribution to your super account. If you have some excess cash and you aren’t above the super contributions cap ($30,000 for 14/15 year for those under 50 and $35,000 if you are older), then investing in super could be the best bet. Any investment earnings within your super fund are only taxed at 15%, as opposed to investments personally owned being taxed at your marginal tax rate, up to 45%.

For those who are low income earners ($48,516 pa or less), you may be able to receive the government co-contribution of up to $500 if you make a non-concessional contribution before June 30. It’s free money, so if you have some spare cash to go towards your retirement, then consider this before the end of financial year.

Getting your ducks in a row now will help you when you prepare for your appointment with your accountant or tax agent

3. Get organised

Getting your ducks in a row now will help you when you prepare for your appointment with your accountant or tax agent. Collect all of your work related expenses, travel expenses and working from home expenses. Anything that you think could be deductible is worth taking with you.  A good tax specialist will be able to tell you what you can and can’t claim. Either way, if you don’t have the receipts you can’t claim them anyway, so keep them safe and take them with you.

Some common deductions you may be able to claim depending on your situation include work and uniform expenses, travel, education expenses, donations, expenses in relation to your investments such as interest payable on loans, and income protection insurance.

4. Repairs and maintenance

If you hold an investment property (or two), then consider whether there are any repairs or maintenance that needs to be completed on your investments and whether you can do them by the end of financial year. You will be able to receive the deduction straight away instead of holding it off until next financial year.

5. Get your insurance up to scratch

Some of your personal insurance, like income protection is tax deductible. If this has been on your to do list for a while, then get it sorted by June 30. The premiums you pay will be tax deductible so opt for an annual payment and receive the full deduction immediately.

If you are relying on your tax return for a cash injection, then these tips are even more important. According to Moneysmart.gov.au only 70% of people actually receive a tax deduction back, the remaining end up owing the tax department. Prepare now to get yourself into the best shape. Your accountant and your bank balance will thank you for it.

photo credit: Checklist Chalkboard
Cara-Brett-Leaders-in-Heels-profile-picCara Brett

Cara Brett is the Director and Senior Financial Adviser at Bounce Financial. Having worked in the financial services industry since 2003, she saw an opportunity to work with the young professionals and the movers and shakers in Brisbane, and so Bounce was born.


Last week, we talked about failure and financial setbacks, and the importance of learning from our financial mistakes so we can come out on top.

Getting out of the hole and back on top should be priority number one, and if your financial setback has got you low on funds and high in debt, then here are 6 more actions you can take ASAP to help your situation:

1. Review your expenses

Work towards eliminating all non-essential expenses for the time being, and minimising where you can. This may mean cutting off Foxtel, reducing your food spending, reducing your entertainment money and going without some extra luxury items that you may have become accustomed to. Fingers crossed it’s only in the short term, so don’t think of this as a life sentence.

2. Reducing your private health insurance cover

If you can help it, don’t cancel your private health insurance because you avoid the additional 1% tax by keeping it. You can, however, call your health insurance company and enquire about reducing down your cover to just the basic hospital policy only. This means that you get to keep the tax advantage, retain a basic level of cover and it also means that when things improve financially, you can update the policy again without having to go through the full application process.

Work towards eliminating all non-essential expenses for the time being … Fingers crossed it’s only in the short term, so don’t think of this as a life sentence

3. Contact Centrelink

Do this as soon as possible. You need to find out what, if any payments are available to you and the time frame that you must wait. The sooner you get onto it the better. Sometimes you will need to wait up to 13 weeks before you qualify for any benefits.

4. Consider accessing your superannuation account in hard times

This is not common but is potentially an option later down the track. In order to qualify for early release of some of your super funds you need to:

  • Be receiving some form of government benefits for at least 26 weeks (hence, step 3 is important), and
  • Demonstrate that you are unable to meet any immediate family living expenses

This isn’t always the best option, because the amount you withdraw is taxed heavily, and you are only able to access a maximum of $10,000 pre tax, in a 12 month period.

5. Call your life insurance providers

Some products have the option to put your premiums on hold for up to 3 months if you are having issues financially and allow you to retain the full insurance cover. Cancelling this cover should not be one of your first options, but it’s great if you have the option to alleviate the premium payments in the short term.

6. Call the companies you owe money to

If you have debt that you do not believe you will be able to service in the short term, then contact your creditors to talk to them about options. You may need to change the repayments to interest only, or the providers may be willing to put payments on hold during this time. If you get on the front foot they are more willing to come to the table with an action plan.

Whatever your situation, there will be ways that you can dig yourself out and get back to living life. The best thing that you can do is accept where you are and take steps to change your situation.

 

Cara-Brett-Leaders-in-Heels-profile-picCara Brett

Cara Brett is the Director and Senior Financial Adviser at Bounce Financial. Having worked in the financial services industry since 2003, she saw an opportunity to work with the young professionals and the movers and shakers in Brisbane, and so Bounce was born.