NEW PENSION ASSET THRESHOLDS
How will they affect you?
The assets test, effective 1 January 2017 will see some Australians receive the full age pension. However, a significant amount of retirees receiving a part pension will have their retirements reduced and some will lose all entitlements.
There are certain things you will need to consider to ensure your money is working in the best way for you. It might be worth trimming down your assets before the changes come in. Examples include bringing holidays or home renovations forward or maybe moving savings into a spouse’s super.
This government link, https://www.humanservices.gov.au/customer/services/centrelink/age-pension has all the information regarding the asset thresholds and contact numbers for Centrelink to find out how your Age Pension entitlements might be affected.
Whether you are already receiving the age pension or not, it is important to keep abreast of changes to the pension guidelines. It might be worth contacting your financial adviser to explore possible strategies to make the changes work for you.
CREDIT CARD CAUTION
There are many reasons to be cautious of credit cards. If you are aware of some of reasons you can use them to your advantage. Here are a few things to be wary of:
HIGH INTEREST RATES
The biggest one is the fact that the interest rate on most credit cards is around 20% even though the cash rate is at an all time low and keeps going down. Credit cards are tempting to use and are designed that way to maybe spend money we wouldn’t normally have. If you don’t pay the total outstanding balance each month, you will interest on the entire balance from day one.
Many retailers, airlines etc., charge a fee for using a credit card. This is due to the hidden fees they are charged from the banks. The government has recently stepped in to minimise these charges however, you still need to be aware and maybe choose another method of payment if charges do apply.
DECREASE IN REWARD POINTS
With the government introducing new regulations for the banks, the banks are likely to make you pay some other way. Keep an eye on the rewards you were receiving and any notification of that changing/decreasing. Some cards are putting a cap on the amount of points you can accumulate. Be savvy and maybe apply for joint cards for your partner and yourself, rather than having them combined.
Have a look at the CANSTAR website (http://www.canstar.com.au/credit-cards/) and click on the ‘Which card may suit me?’ link to find out which card may be the best for you.
If you can live without one, that also may be a good option.
The single girl's guide to getting ahead financially
Yes of course, many single women are too busy thinking of the now and not about the future. Being single gives us that luxury – clothes, travel, long lunches etc.
It’s quite ok to have all of those things, we just need to maintain some balance. Here are a few tips to ensure you keep things under control for the future while you are having fun:
Pay off your debt
First step to building a successful savings account is to get out of debt. Pay as much as you can each month off the highest interest debt you have until they are all paid off.
Make smarter choices
All those coffees and take away lunches do add up. It seems like just $5 here and $10 there but it soon becomes hundreds. Maybe take your lunch to work every day except Fridays.
Ask for a better deal
Every year we spend thousands of dollars on insurance, phone and electricity. Every year it automatically increases as well. Invest a little time to ring around for a better deal when that yearly bill comes in. Companies will often offer discounts for long term customers. You won’t know unless you ask.
Get help paying your rent or mortgage
It’s not easy living alone and paying the bills most people share as a couple. Maybe you could have a friend, boarder or international student live with you to help pay the rent and split the utility costs.
Additionally, it is important to have an emergency fund in case you lose your job, so you can still meet your financial commitments.
SPRING – THE SEASON TO SPRING CLEAN YOUR FINANCES
We spring clean the house, the garden, the office – but what about our finances? This includes reviewing what you are paying on bills, insurance, super and more. Give these areas a spring clean – and see what a difference it could make!
Interest rates are at an all time low. What interest rate do you currently have on your home loan? You could change to a lower rate but keep paying the same repayment and cut years off your mortgage. Keep in mind, it isn’t all about the interest rate though. Ensure you keep the features that work for you eg. Redraw facility etc.
Are your savings just sitting in an everyday account? It is worth shopping around and seeing if there is a term deposit or higher interest rate savings account that could help your savings grow faster.
HOME & CONTENTS INSURANCE
When is the last time you got a quote for home & contents insurance? Are you guilty of just paying the premium each year it comes in or just continually paying by the month? Insurance is definitely a must to shop around. It is all so competitive, there is bound to be a better deal out there for you. Check your policy too, and ensure the amount you are insured for is adequate, or if it is too much, lower it.
Do you even have income protection and life insurance? Have you considered how your family will keep up with the lifestyle they currently have should something happen to you? If you do already have this cover, have you checked that it is still the right cover for you?
When was the last time you saw a super statement? Are you just receiving one, or is there a few super accounts out there?
First step is to combine them.
Secondly, you may want to change the investment options. If you are unsure about this step, it is best to seek advice from your financial planner.
Are you in a position to start contributing to your super? Check if you are eligible for a government co-contribution. If not, ask your accountant about your tax savings options.
After you have completed the above, the budget will need a freshen up. Income and expenses change quite often. It is important to have this up to date to allow you to track your spending. After a spring clean, you generally feel a little more motivated to get your savings on track!
We have said it before but just recently there was an article on the front page of the newspaper claiming there is $340 million in ‘forgotten’ Super accounts sitting waiting to be claimed in South East Queensland. The reason being that account holders don’t realise how easy it is to retrieve the funds.
When it comes to retirement every cent counts. Secondly, there is no other environment that provides the tax advantages that Super does. These sort of figures could make a 20 – 30% difference to someone’s Super balance if they consolidated. Superannuation accounts generally have insurance attached to them too. So you could potentially be doubling on the cost without it providing a benefit.
It is as simple as visiting the Australian Taxation Office website and use the lost Super tool link. As long as you have your name, date of birth and tax file number the ATO will determine whether you have a lost account. The link is www.ato.gov.au/calculators-and-tools/check-your-Super/
A financial planner can also help assist with this process.