Save yourself this Christmas
If the festive season usually leaves you out of pocket and feeling like you spent more time and money battling the crowds than relaxing with friends and loved ones, why not simplify things this year?
Here are some quick and easy tips to help you enjoy the holiday season without breaking the bank.
1. Have a pre-Christmas cleanup
There's still time to bag some extra cash to boost your festive finances. Spend a few hours clearing out anything you no longer need around the house, like clothes, books, jewellery, furniture, music, or sporting equipment. You could sell these items online, hold a garage sale, or find a local buy-swap-sell.
They say that one person's trash is another's treasure so, as well as pocketing a few extra dollars, you might just end up making someone else's Christmas extra special.
2. Make a list and check it twice
Make lists of the things you need to buy and the food you need to prepare for the festive season. Having lists will help you plan your spending and keep you on track.
3. Track your spending
Keeping track of your festive spending is the best way to avoid going over your budget this Christmas.
Use an app, write it down, or keep track through your online banking.
4. Be cluey about Christmas credit
If you don't have the cash to pay for your Christmas goodies up-front, you might be tempted to use your credit card, or use a buy now pay later service. Although these are convenient ways to get the things you need now, that convenience can cost you dearly if you find yourself still saddled with Christmas debt well into 2020.
Before you sign up to a buy now pay later service, make sure you understand what the terms and conditions are, how much your repayments will be, and when they are due.
5. Personalise your cards and wrapping
Most people throw away their Christmas cards once the festivities are over, which is just like throwing money in the bin.
This year, instead of spending your hard-earned cash on shop-bought cards that will only end up in the recycling bin, why not send your family and friends Christmas greetings they will want to keep? You could:
Rethink your wrapping by buying brown paper and string, or just use plain coloured paper to wrap your presents. Then you'll avoid pricey Christmas wrapping and can use the excess during the year to wrap other gifts.
6. Be a scrooge online
If you're Christmas shopping online, look for ways to save every cent you can. Before you start, do a web search for discount or coupon codes that you can use at the checkout. Look in the sales sections of retailers' websites to see what's on offer.
If you know what items you are looking for, search for them online instead of just going to one retailer's website. You might find it much cheaper somewhere else.
Search online auction websites where you can 'bid' for items, including supplies you need for Christmas Day. Make sure you include any shipping costs when you are comparing prices. The cost of some items can blow out once you add shipping, meaning it might be better to simply go to a store to get the item. Or look for items or shopping days that have free shipping.
Things are often much cheaper online than in a store, but you do need to take extra precautions when shopping online.
7. Get social with Christmas shopping
If you follow your favourite brands and retailers on social media, you may be able to get exclusive discounts through these social channels. Their newsletters may also alert you to sales and deals.
There are also discount or deal apps that you can use to find bargains that you can use as Christmas gifts.
Before you buy any deal or discount, always check the terms and conditions to make sure you know what you are getting and make sure the website is legitimate. See the ACCC's SCAMwatch website for tips on how to pick an online shopping scam.
8. Master the art of Christmas gift hacking
There's a lot of pressure to spend up big on gifts at this time of year, but pricey presents aren't necessarily the way to go. Here are some ways you can show you care, while keeping a lid on your spending:
9. Shop like you're Santa
Santa is always well-prepared and does his shopping on time, so why don't you? If you are going to shop in-store, consider these rules-of-thumb to reduce Christmas shopping stress and limit the temptation to over spend:
10. Give to those less fortunate
Spread the Christmas cheer by giving to those who are doing it tough. Consider donating to a charity on someone else's behalf and give this to them as a gift. As well as money, many charities also accept household items, clothes and groceries at Christmas, or you could volunteer your time to help them out.
11. Lighten your load on Christmas Day
The costs of entertaining can skyrocket at this time of year. But, with some simple planning, both you and your wallet can enjoy the fruits of your labour. Here are some ways to lighten the Christmas load:
Read our article on simple ways to save money for more tips on cutting costs at the supermarket.
12. Plan for next Christmas
Once this Christmas is done and dusted, start planning ahead for next year! Here are some ideas to make sure you are set up for next Christmas:
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Good record-keeping is essential for any business. It helps you manage your cash flow, keeps you organised, helps you meet your tax responsibilities and most of all, it lets you know how your business is going.
The four requirements from the ATO are that record-keeping must:
If you're unsure about the records you need to keep, the ATO has a Record keeping evaluation tool that can help you.
The ATO's website has extensive information on what you can and can not claim, and when you can claim it. Talk to your accountant about what deductions you can claim from your business, as they will be best placed to provide you with specific advice for your situation.
A few tax tips to remember is that you:
Case study: Alex
Alex is a 22-year-old fully qualified hairdresser and beautician who has been running a salon from the front room of her home for the past eight months. She's been struggling to make ends meet as she's had to spend quite a lot of money on equipment and supplies to set up her salon, as well as advertising to get the word out there.
There hasn't been much time for Alex to organise any of her paperwork in between answering the phone, fulfilling appointments, cleaning the salon and replenishing supplies. She only takes cash for the work she does and has been paying cash for her equipment and supplies, she has no electronic record of her transactions.
Alex struggles with paperwork but she does have an ABN. She hasn't registered for GST as she doesn't expect her income to be very high. When the ATO contacts her about lodging her first Instalment Activity Statement, she doesn't know where to start. A friend puts her onto a local accountant for help.
Alex finds out that she should have been keeping a record of all her business income and keeping receipts for all her purchases so she can deduct them against her income. Otherwise, she has no way to show what her taxable income is so the ATO can work out how much tax she needs to pay.
Alex's accountant shows her how to fill in a simple Excel spreadsheet at the end of every day, detailing her income and any business expenses. Alex also now knows she needs to get a receipt for all business purchases and keep them as proof that they are business expenses. She can use the spreadsheet to help her to complete her Instalment Activity Statement each quarter, and it tells her how profitable her business is.
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Most super funds offer life insurance for their members. If you're reviewing your life insurance, check what cover you have through your super fund so you can compare it with other options.
Here we explain what types of life insurance you can get through your super and the pros and cons of this type of insurance.
What types of life insurance are offered by super funds?
Super funds typically have three types of insurance for members:
Your employer's default super fund will generally provide you with death and TPD cover. This basic cover may be available without health checks. You can usually increase, decrease, or cancel your default insurance cover.
Your super fund's website will have a product disclosure statement (PDS) which explains the insurer they use and details of the cover available.
Like other insurance policies, you will pay insurance premiums. If your insurance is through your super fund, the premiums are deducted from your super account balance.
Cancellation of insurance on inactive and low balance accounts
Super funds will cancel insurance on:
Your fund will contact you if your insurance is about to end.
If you want to keep the insurance, you must tell your super fund or make a contribution to that account. You may want to keep your insurance if you don't have any through another fund or insurer and you have a particular need for it (e.g. you have children or other dependants or work in a dangerous job).
Insurance for people under 25
From 1 April 2020, insurance will not be provided if you're a new super fund member aged under 25 unless you:
Why get life insurance through your super?
There are benefits in getting your life insurance through super:
However, you also need to be aware that:
You may opt for some cover through your super fund, and some cover directly from a life insurer, depending on the cost and the type of cover you need.
Check your life insurance cover before changing super funds
Before switching or consolidating super funds, make sure you can get the death, TPD or income protection cover you want, in your chosen fund. Be particularly careful if you have a pre-existing medical condition or are aged 60 or over, as you may not be able to get insurance again without health checks. Seek financial advice if you are unsure.
How to check the insurance you have through super
To find out what life insurance you have with your super, either call your super fund, check your annual super statement or access your super account online to check:
You should also find out how your super fund is calculating your insurance premiums. For example, if your super fund has classified you as a smoker or blue collar worker, and these risk characteristics aren't relevant to you, you could be paying more for your insurance than you need to.
You may need to call your super fund to check how you've been classified as your annual statement may not provide this detail.
What if you have no insurance through super?
If you discover that you have no insurance through your super fund, and you think you should have cover, call your super fund to find out why and discuss your options.
Claiming on insurance through super
There are some important things you need to know if you're making an insurance claim through super.
Making a claim
To make a claim for insurance through your super fund you will typically need to submit a claim form. If you die, your estate or dependants should contact the super fund to find out how to claim death benefits.
Most super funds provide claim forms on their websites or you can call them and ask them to send you one.
When you make your claim, you may be asked to provide documentation that proves your condition, including medical reports. There may be waiting periods in some cases.
Some funds will allocate you a claims officer to be your point of contact if you have any questions during the claims process.
Unhappy with your super fund's claims process?
If you're unhappy with the claims process or unhappy because your claim is not accepted, complain to the super fund using its formal complaints process. Your super fund's website should have details about how to complain. If not call and ask about the process, or look in the product disclosure statement.
If you're not satisfied with the outcome, take your complaint to the Australian Financial Complaints Authority (AFCA). AFCA will generally not consider the matter unless you have used the superannuation fund's internal complaint process first.
AFCA replaced the Superannuation Complaints Tribunal (SCT) on 1 November 2018. Complaints lodged with the SCT before this date will still be dealt with by the SCT.
You do not need a lawyer to complain to your fund or to AFCA. Of course, you may find it helpful to use a lawyer or other professional adviser if you think the benefits outweigh the fees.
Industry Code of Practice
An Insurance in Superannuation Voluntary Code of Practice started on 1 July 2018 to improve the consumer experience of insurance in superannuation. If your fund's trustee agrees to comply with the Code, you should get better disclosure and claim and complaints handling. Your fund trustee should notify you if it is complying with the Code. You can check this on your fund's website.
To decide if insurance through super is right for you, work out how much cover you need, whether your super fund will offer you this cover, and compare the costs and conditions with other insurance providers.
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Money and Life
(Financial Planning Association of Australia)
A new ASIC report offers key insights into consumer perceptions of financial advice. Find out how to get off to the right start with your financial planning experience.
In an independent research study commissioned by ASIC, more than 2,000 Australians were asked about their beliefs and perceptions about financial advice as well as their experiences of receiving advice. The Financial advice: What consumers really think report, published in August 2019, shares findings from an online survey of 2,545 participants as well as group and one-on-one discussions. It presents a picture of a profession that Australians feel they need, but has some way to go in developing a sense of trust and value among consumers.
Many Australians want financial advice
According to the report, demand for financial advice among those surveyed is high. 41% said they planned to seek financial advice in the future. And nearly twice as many 79% acknowledged that 'Financial Advisers have expertise in financial matters I do not have'. These figures clearly demonstrate a recognised need for informed and professional advice among those surveyed.
In the 2017 Live the Dream survey and research report, the Financial Planning Association found that more than half of Australians (54%) saw financial freedom and independence as vital in their ability to 'live the dream.' So it's no wonder financial advice is on the to-do list of so many Australians.
Trust and perceived cost are barriers
But when it comes to actually seeking financial advice, a fair number never follow through on their intentions. The ASIC report found that 20% of respondents had thought about getting financial advice in the last 12 months, but hadn't gone ahead.
So just what is standing in the way of Australians taking steps to get professional advice on their finances? Figures from the report suggest that affordability, trust, and value are three significant barriers stopping Australians from meeting with a financial planner. 35% consider financial advice to be too expensive, 18% do not see the value in seeing a financial planner and 19% don't trust financial planners. For others it may simply be a case of not knowing where to start with the whole process of getting advice. In group discussions and interviews, people said they found it difficult to know how to find a financial planner and that they're getting quality advice.
Finding the right financial planner
Based on the experiences of people interviewed and surveyed for the ASIC report, asking around for a referral is often a good method of approach for finding a trusted financial planner.
But what if you don't know anyone who's had experience with financial advice? Many people may not encounter someone in their circle of friends or family who has been advised by a financial planner. If you do find yourself narrowing down your options based on your own research, there are tips from the ASIC report to guide you. In ranking the attributes they considered most important in choosing a financial planner, the following four scored highest with survey participants:
These findings tally with FPA research from 2017, which found the most common criteria for selecting a planner were trust, comfort, rapport, impartiality, tailored recommendations and reputation.
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Preparing for your family's future
No-one wants to think about death, but it's important to decide what will happen to your assets when you die. Find out how you can give instructions to your family about your legal and medical preferences should you fall ill or lose the capacity to make those decisions yourself.
An estate plan includes your will as well as any other directions on how you want your assets distributed after your death. It includes documents that govern how you will be cared for, medically and financially, if you become unable to make your own decisions in the future.
You must be over 18 and mentally competent when you draw up the legal agreements that form your estate plan. Key documents might include:
If you have made a binding nomination in your super or insurance policies, the beneficiaries named in those policies will override anyone mentioned in your will. If you have a family trust, the trust continues and its assets will also be distributed according to the trust deed, no matter what is written in your will.
Ask a legal professional to check your estate plan. A good estate plan should minimise the tax paid by your heirs, and help avoid any family squabbles.
A will takes effect when you die. It can cover things like how your assets will be shared, who will look after your children if they are still young, what trusts you want established, how much money you'd like donated to charities and even instructions about your funeral.
Your will can be written and updated by private trustees and solicitors, who usually charge a fee. Some Public Trustees will not charge to prepare or update your will if you nominate them to be the executor of your will. Other Public Trustees may only exempt you from charges if you are a pensioner or aged over 60. Check with the Public Trustee in your state or territory.
It's estimated that nearly half of all Australians die without a will, or 'intestate'. Don't let this happen to you. Make a will today.
You can buy will kits online but it's a good idea to ask a solicitor to review your will to make sure everything is in order. If a will isn't signed and witnessed properly, it will be invalid.
Keep your will valid and up to date as your legal rights change specifically, if you marry, divorce or separate; have children or grandchildren; if your spouse or beneficiaries die; or if you have a significant change in financial circumstances.
If you die intestate or your will is invalid, an administrator appointed by the court pays your bills and taxes from your assets, then distributes the remainder, based on a pre-determined formula, which may not be how you intended your assets to be distributed.
If you die intestate and don't have any living relatives, your estate is paid to the state government.
A testamentary trust is a trust set out in your will that only takes effect when you die. Testamentary trusts are usually set up to protect assets.
Here are some reasons why you would create a testamentary trust:
A trust will be administered by a trustee who is usually appointed in the will.
A trustee must look after the assets for the benefit of the beneficiaries until the trust expires.
The expiry date of a trust will be a specific date such as when a minor child reaches a certain age or a beneficiary achieves a certain goal or milestone (e.g. getting married or earning a specific qualification).
Powers of attorney
Appointing someone as your power of attorney gives them the legal authority to look after your affairs on your behalf.
Powers of attorney depend on which state or territory you are in: they can refer to just financial powers, or they might include broader guardianship powers. You will need to check with your local Public Trustee.
The different types of power of attorney are:
You can prepare a few other documents to help your legal appointees and family as you grow older, including an:
The documents you choose to draw up will depend on your situation, and the responsibilities you're happy to entrust to others. Get legal advice if you are not sure.
Choosing your powers of attorney
Nominate people that you know are trustworthy, financially responsible, and likely to be around when you need them.
Your legal and financial housekeeping
Once your paperwork is in order, it will help your executor and family if you list the legal documents you have and where they are kept.
Here is a list of key documents to keep:
The NSW Government's Planning Ahead tools website gives more detailed information on advance care directives, wills, power of attorney and enduring guardianship.
A good will and estate plan can help make sure your wishes are carried out after you die, or if you are no longer able to make your own decisions.
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