As a financial adviser here are three things that I talk to people about that they don’t like to hear

1. Save more than you think you need to save.

Most people I talk to understand the importance of savings. However not everyone does it. The ones that do generally save for emergencies. For example, appliances that need to be replaced or for a new car. Its rare that they save for retirement.

When I talk to people about the amount of money, they need to save most are shocked. I suggest saving 25% of your after-tax salary. Yes, it is possible to live on 75% of your salary. This will ensure that you have money for emergencies and more importantly help you take advantage of opportunities when they arrive.   

2. Stop trying to time the markets.

One of the most common responses I hear from people when it comes to investing is “I am waiting for the right time.”

“So, when is the right time?” The right time is now!

Most people try and time the market. It doesn’t matter if its shares or property. They want to wait for the perfect time to invest. They feel markets are overvalued and so they wait and wait and wait.

No one can time the market. Professionals struggle to time the market. If professionals get it wrong, what makes us think we can do it better?

My advice to people is if they are ready to invest then the time is right now. Doesn’t matter if markets are high or low. Have a plan and still to it!

3.  What's your backup plan?

If you become sick or injured and can't work, how are you going to survive, what is your plan B? I ask this question to everyone and the most common response is “I don’t know”.

A sound plan B will ensure that if you are not able to work due to injury or sickness your income will continue and your lifestyle will not be affected.

Have a plan B

Do you find that when you do the groceries you always shocked at how much the bill comes to? You look at the trolley and think how does all that cost so much!  

Well here are 3 simple ways to help you reduce your grocery bill next time you go shopping

Always shop on a full stomach

How many times have you gone grocery shopping on an empty stomach and bought things you do not need? I know I have! Shopping on an empty stomach will prevent you from buying unnecessary things.

Set a budget and stick to it

This is my favourite as I know it works if you do it. Every time I set budget for groceries; I walk out not spending more than that. By setting a budget you force yourself not to buy things that you don’t need. Take a calculator with you if you need to. Theses your phone will do the job anyway.

Buy homemade brands

If you're not loyal to a particular brand, try the homemade brands. I know for some things I will only buy the brands that I like. However, for other things I am happy to buy the homemade brand. For example, I am very particular when it comes to honey and therefore, I will only buy my favourite brand. However, when it comes to butter, the homemade brand suits me just right. Buying the homemade brands will help cut the bill.

Next time you go shopping try the above things and let me know if your grocery bill has reduced as a result.

Do you find it hard to live below your means?

If you are like most people then the answer is yes! A lot of us struggle to live below our means. Credit card debt and personal loans are perfect examples of this. I meet a lot of people who have an outstanding credit card debt that they are struggling to repay.

If you want to create wealth long term you have to live below your means. Otherwise, you will fall into a debt cycle that you will struggle to come out from.

Here are 3 simple ways to live below your means

Know the difference between a need and a want.

When I do a budget session with clients this is something we put a lot of time and focus on. We go through their everyday expenses and discuss their needs vs wants. A lot of people confuse wants with needs and as a result are not able to budget. The goal here is to focus on the needs not the wants. Remember a need is something that is essential for your wellbeing. A need is food, accommodation, bills, medicine etc. Wants are desires such as eating out, new clothing, car stereo etc. I am not saying not to buy wants. I am saying don’t confuse a want with a need.

Stop comparing yourself with the Jones.

This is something a lot of people struggle with – comparing oneself with others. When we see our friends or family buy the latest “thing” we have to go out and buy it as well. If a friend buys a new car, we think that our car needs an upgrade and we go out and buy a new car. This attitude will never help us to live below our means. One of the best ways to stop comparing yourself with others is to be grateful with what you have. If you focus on having an attitude of gratitude you will stop comparing yourself with others period!

Learn to cook

How much do you spend eating out? If you look back at your last 3 months bank transactions you will be amazed at how much you spend eating out. I have never met anyone who underspends on this category! If you want to live below your means then learn to cook. Imagine how much money you potentially can save if you learn to cook? Don’t know where to start? These days there are so many ways to develop this skill. Just go online. Don’t make the excuse you don’t have time. Everyone has the same amount of time in a day. It’s what you prioritise within the time you have that matters.  

Whether you're a first home buyer, first time investor or need help with your budgeting and financial planning - we can help.

Do you struggle when it comes to savings?

If you are like most of my clients then the answer is yes. Here are three practical tips to help you save more.

1. 48-hour rule

I heard about this rule a few years ago. When you are thinking of buying something whether its new clothes, shoes or even a car, don’t buy it straight away. Wait for 48 hours before you purchase the item. By waiting 48 hours you have allowed yourself to rethink the purchase and determine if you really need the item or just want the item.

2. Automate your savings.

When you get paid set up an automatic transfer of a specific amount from your bank account to another account that you cannot touch. This will prevent you from spending all your pay check. It is a great way to force yourself to save. Make sure that the account you are transferring the money into is an account that you cannot easily get access too. A great amount to start is 10% of your income and then slowly build from there.

3. Track your expenses.

When was the last time you tracked your expenses? By tracking all your expenses, you will know where you are overspending and you can immediately cut back on those expenses and start saving. If you don’t know where to start, I suggest looking at your last 3 months bank transactions and go through all your expenses. Its tedious I know however once you do it you will not need to do it again as you will have the list of most of your expenses. Alternatively, there are apps that you are able to download that will summaries your expenses or your online bank app may have this feature. I suggest tracking your expenses daily if not then at least monthly.

If you need help with budgeting, please get in touch with us as we would love the opportunity to assist.

Insurance inside Super – BEWARE!

If you have insurance inside Super you need to be aware of the following 3 things.

The first thing that you need to be aware of is that your premiums will eat into your account balance, yes, I know it is obvious but trust me, a lot of people forget that. Especially if they have reduced their working hours, if they have stopped working or if they have changed jobs and their income is less than what they were making before.

Insurance premiums inside Super are eating into your account balance and that will affect your retirement balance down the track because your premiums can be worth thousands and thousands of dollars. So, what I suggest is contributing more into Super to cover the premium amount because then at least you know that your employer contributions will help your account balance to grow.

The second thing that you need to be aware of is the insurance benefit amount that you have inside Super may be insufficient to meet your financial needs. You see, a lot of the times when I sit with clients, they have a default insurance cover. What that means is that they have opened up an account with their Superfund, they have automatically been given some insurance cover. 99.99% of the time, it does not meet my client’s needs. The reason is that they have a mortgage, they have major debts, they have kids that are financially dependent on them.

When you add up all these debts the amount that they need to continue with their lifestyle is going to be greater than the default insurance amount that they have in place. I strongly suggest you sit with someone and review that, especially if you have major debts.

The third thing that you need to be aware of is the tax implications if it’s paid to a non-financial dependent. For example, if your beneficiary is an adult child and you are relying on the insurance to be paid to them, the amount that you think that they will receive may not be the amount that they actually receive. There are tax implications that you need to be aware of. Again strongly recommend you speak to a financial adviser to discuss this.

The three things that I would like you to remember when it comes to insurance inside Super. The first thing is it eats into your account balance. The second thing is that the amount may be insufficient to meet your financial needs. Thirdly, consider the tax implications, especially if it’s paid to a non-financial dependent.

If you would like more information, or if you would like me to sit down with you and go through your insurances please contact Better Financial Tomorrow, St Marys on (02) 9623 4351 or email clyde@betterfinancialtomorrow.com.au

Super Fund fees have been in the news lately and I don’t know if you know, but Super Funds charge us $30 billion in fees every year. This has to stop! “Why not take some of that $30 billion and give it back to ourselves, to help us in our retirement? Why do we give the Super Funds all these fees and charges?”

Below are three tips to help you reduce your Super Funds fees.

The first tip is, consolidate your Super Funds. I know it seems obvious, but you know what, I sit with a lot of clients who have multiple Super Funds and they haven’t consolidated their super as yet. If you have multiple Super Funds, the first thing that I highly recommend you to do, to reduce the fees, is to consolidate them all into one. Having multiple Super Funds, and if you’re not contributing to them, your account balance is being eaten up with all these fees. You know what? You worked hard for your money and super is your money, so why, why do you want to give all of those fees and charges to your Super Funds? So make sure you consolidate your Super Funds into one fund.

My second tip is to look at your current super and see what your super is charging you. Super Funds charge what we call direct fees and indirect fees. So the direct fees would be, your accounts keeping fees and admin fees, items that you’ll be able to see on your statements. Indirect fees are fees that you don’t usually see on your statements such as investment costs fees. So it’s extremely important to find out what your current Super Fund is charging you. You’ll be able to do this by looking at your statements or looking at the product disclosure statement or just calling up your super and asking them. They’ll be able to go through your current Super Fund and let you know exactly what your fees and charges are.

The third tip, once you know what your fees and charges are on your superfund, compare your super with what’s in the market. By comparing your super, you’ll be able to see whether your fund is more expensive or not. If it is more expensive, it may mean that it has a lot of bells and whistles that you may not need. If you are after a simple Super Fund, that doesn’t have all the bells and whistles, then try and look for a fund that is simple and easy. Saving 1% pa in fees or a few hundred dollars per year, over a 20 or a 30-year timeframe, equates to $10,000s+ more money back into your account to help fund your retirement. Just remember to compare apples with apples. That’s very, very important when you are comparing your current Super Fund to what’s on the market.

So the three tips, that I have for you today in terms of looking at consolidating or reducing your fees, are:

  1. Consolidating all your super funds – very, very important.
  2. Finding out what your current Super Fund is charging you.
  3. Compare your current Super Fund to what’s in the market by going online or speaking to a professional.

Here at Better Financial Tomorrow, we have a system in place, that will help you to determine what your super fund fees are, but more importantly, is to find the right Super Fund for you because every Super Fund is different and the right one will depend on what your circumstances are. You may need a Super Fund that has a little bit more features and benefits or you may need a Super Fund that’s very, very basic and simple. I highly recommend you speak to someone with regards to choosing the right Super Fund.

So, lets put some of the $30 billion, in fees and charges, back into our own pockets to help us fund our retirement.

How do I choose the right financial adviser?

Okay so, you’ve decided that you need financial advice and you’re not too sure if the person in front of you is the right one for you. Below are some tips that will help you determine if the professional in front of you is the right adviser for you.

My first tip is to make sure that they are licensed or authorised to give you financial advice. There is a registry that you can check and I highly recommend you to check this registry. It is available online by ASIC and it’s the financial adviser registry. The registry will show the advisor’s qualifications, it will show the advisor’s experience, it will show the advisor’s employment history. Most importantly, it will show if there are any disciplinary actions against that adviser. It’s a great resource to have when choosing the right advisor and making sure that the person in front of you is right for you.

My second tip is to ask the adviser a few questions and make sure that they have advised clients who are in a similar situation as yourself. Ask them about how long they have been advising for and the types of clients that they advise. Also, ask them about their areas of specialty. Some advisors specialize in Aged Care, other advisors specialise in Self-Managed Super Funds.

The other thing that I also recommend you to do is; check for client testimonials or reviews. Go online and look at the Google reviews. Go to the website and see if there are any client testimonials. Some advisors I know, have videos of clients testimonies which is even better. You want to be able to listen or read as many reviews because at the end of the day, this person is going to advise you on your financial affairs and you want to be able to trust them and believe that they’ll do the right thing by you.

Finally what I recommend you confirm with the advisor is; how they charge their fees. Generally speaking, advisers either charge a commission, only a fee model, some advisers charge a percentage based fee model and then other advisers charge a fixed fee model. Personally, I prefer a fixed fee model because I know the amount of work that’s involved. Whenever I sit with a client, I know how many hours I’ll be working and can charge accordingly. So, being able to justify why I charge my fees, it’s a lot easier if the advisor has a fixed fee model.

The other thing as well is; advisers that charge commission only or a percentage, if the advice or if the fees increase but the amount of work doesn’t, the adviser needs to justify what extra advice or value, that they have provided.

So again just in summary;

The first one is; to check the websites, the financial adviser registry. Make sure that they are licensed and authorised to give you advice.

The second tip is; look at Google reviews, ask them if they advised clients in a similar situation as yourself.

And finally; again check their fee model. Again, I personally prefer a fixed fee model, purely because I know it’s a lot easier to justify my fees because I know the amount in hours that’s involved.

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