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Category: Provision Newsletter Articles

9 tips when you don’t size up in the financial department

Date: Apr 11th, 2019

If your partner has expressed that you’re a bit of a letdown when it comes to managing money, here are some pointers for when financial opposites attract.

Depending on what stage of life you’re at, you and your other half may be in talks about moving in together, adopting a pet, buying a property, or the day the two of you may be able to retire.

If your partner is on point when it comes to managing their finances, whereas you don’t have the faintest (do you even know how much cash is in your account right now, or how much money you owe?), it’s a chat that mightn’t end well.

If the thought had crossed your mind (after all, financial stress has a negative influence on many relationships), but you don’t know where to start, here are some ways you can demonstrate to that special someone, you don’t need financial babysitting no more.

How to flex your financial muscle

1. Create a budget

How much money you have in your back pocket will often come down to what you earn, but sometimes it’ll also come down to smarts – and creating a budget can play a big part.

It doesn’t have to be too hard of a task either. Start by writing down what money you’ve got coming in (from your job and/or elsewhere), what cash you need for the mandatory stuff (don’t forget any repayments owing), and what you’d like to have left over for the fun stuff.

Once you’ve got a good visual of these three aspects of your finances, you’ll more easily be able to identify where you may be able to cut back and where money might be saved.

2. Keep in mind you can still have fun on a budget

If you’re ready to chuck the towel in after giving point one a go, keep in mind there are a number of inexpensive ways to still have a social life with a little less money. Here are just a few:

  • Eat at home but make it an event. Invite friends over and take turns hosting dinner parties

  • Pack an esky for a date at the park. You’ll save on food and drinks, and may get an A for effort

  • Go where the specials are at and look for two-for-one deals via sites like TheHappiestHour

  • Swap a flight with a road trip and research cost-effective accommodation on Stayz or Airbnb

  • Do a movie night at home and deck out the kitchen bench with your own selection of popcorn, drinks and candy bar options.

3. Pay your debts to avoid problems borrowing down the track

Did you know late payments can impact your credit report, which means the next time you go to borrow money, you might not actually be able to? If the money you owe is mounting, check out our info page on 9 ways to manage your debts.

Meanwhile, if you’re struggling to make repayments, you may be able to seek assistance from your providers and you can also talk to a financial counsellor (free of charge) at the National Debt Helpline on 1800 007 007.

4. Call around to see if you can get a better deal

Research shows Aussie households could save up to $1,086 on their electricity bill every year just by switching from the highest priced plan to the most competitive on the market1.

Now apply that thinking to your phone, wi-fi, credit card and other providers, and you might be pleasantly surprised by the savings you could make over a 12-month period.

If you want some help, comparison sites, such as CanstarCompare the MarketFinder and Mozo, may be able to do some of the legwork for you.

5. Kick your vices or try to cut down

Aussies spent $10.7 billion on smokes, $6.7 billion on gambling and lotteries, and $5.8 billion on drinks at the bar in one year alone2, so cutting back where you can might be worth a thought and reduce people in your life nagging you about it.

Easier said than done? Sure, but if you consider the other things you could put your money toward (an overseas trip might be nice) and that findings reveal those who persist in these areas could save more than $20,000 a year3, healthier choices might not sound like too bad an alternative.

6. Put an end to borrowing cash from your other half

When you’re in a bind, it might be tempting to ask for a hand-out, but it can put strain on relationships, particularly if it’s a regular occurrence and you don’t pay things back on time, or at all.

The person you’ve borrowed from might need the money back before you can repay it, start to judge your spending habits, or even end the relationship, because they’re over you asking for cash (point one should be able to help here).

7. Cut out the sneaky spending habits

Nearly one third of Aussies in relationships spend money they don’t tell their other half about4. And, with financial problems and dishonesty having the potential to push couples apart, putting an end to secret purchases, which you may be hiding in your car right now, might be a game changer.

8. Have an emergency stash for the unexpected stuff

An emergency fund can give you (and your partner) peace of mind, as you’ve got a bit of savings up your sleeve to pay for unexpected bills in the event of a financial dilemma – car troubles, medical or dental treatment, parking fine – you get the gist.

It also reduces the need to rely on your partner, family or high-interest options, such as credit cards or payday loans, which could see you pay back more than what you borrowed.

9. Show you care about the future

If you’ve put thinking about super on the backburner, you might want to think again, particularly depending on how you and your partner hope to spend your years after you finish working.

With over $17 billion worth of super waiting to be claimed by Aussies right across the country5 (you may have changed jobs and opened new super funds along the way that you’ve lost track of), you might discover super you didn’t know you had. If you’re with AMP, we can even help locate it for you.

Meanwhile, you might also be interested to know that according to the last analysis by the Australian Taxation Office (ATO), $2.75 billion dollars in super wasn’t paid to employees by their employers6, so it’s worth taking a moment to also check you’re getting what you’re owed.

 

 

Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling |PHONE|, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person.

How our subconscious affects our attitude towards money

Date: Mar 29th, 2019

Why you might be finding it difficult to save and what to do about it

Whether it’s uploading mindfulness apps, calling out unconscious bias at work or watching Todd Sampson redesigning his brain on the ABC, we’ve never been more interested in how we tick.

And that’s especially the case when it comes to money—how we spend and how we save.

But you don’t have to go to quite such extremes as Todd—there’s no need to escape from underwater shackles or skywalk between two high-rise buildings to investigate how the brain works.

Knowledge is power. The more you’re aware of how your mind works the more you can adjust your attitude towards money.

Six cognitive biases that influence how we save, spend and invest money

We like to think we’re rational beings. But the reality is that a lot of our daily behaviour is influenced by our subconscious.

Behavioural scientists have looked at the way human beings are wired and discovered some ‘cognitive biases’ that influence our everyday behaviour1.

So if you find yourself clicking on that Amazon special or buying lunch at the same expensive cafe near work every day, they could explain why it’s so difficult to stick to your spending limits or saving plan.

Here are a few of their insights into how our minds work.

  1. We tend to discount the future.

    We value immediate rewards over rewards in the distant future. This tendency to want instant gratification is hard wired from birth. Studies have shown that children find it hard to stop themselves eating a treat even when a bigger and better treat is offered for those who wait for a few minutes. And ‘discounting the future’ doesn’t stop when you reach adulthood. It could explain why it’s hard to get too excited about saving for your retirement in your 20s. But the earlier you start planning, the more you’ll be able to put away.

  2. We tend to feel the pain of a loss more than the pleasure of a gain.

    You can see an extreme example of this sort of behaviour at the casino when gamblers chase their losses. This ‘loss aversion’ can also manifest itself in continuing to commit to a poor investment because you’ve already put a lot of money into it. It can help to think long term and avoid focusing on short-term fluctuations in the value of your investments.

  3. We tend to follow the herd.

    Much as we like to think of ourselves as independent human beings, we tend to look to others for affirmation. Think about the rush to secure seats for the concert when you know that everyone else is using the online booking system. It’s all about FOMO. This sort of ‘herd mentality’ can work in a positive way. Just a generation or two ago it was socially acceptable to smoke in restaurants or to drive without a seatbelt. Now it’s unthinkable. When it comes to money, this ‘herd mentality’ can manifest itself after stock market downturns, when investors start panicking and selling up, even though rationally this will crystallise their losses. It can help to shut out daily market noise and focus on long-term goals.

  4. We tend to think things are more likely to happen than they are.

    You can see this in the popularity of lotteries around the world. While the chances of winning are infinitesimal, the winners get a lot of publicity, which makes us think it’s more likely to happen. But at least the lottery is relatively harmless. Thanks to the global mass media, this ‘availability bias’ often focuses on bad events like kidnapping, plane crashes or stock market downturns. Investors who experience a market crash like the GFC over-estimate the chances of the same thing happening again, even though statistically it’s unlikely. It can lead to people saving for retirement changing their investment preferences to lower risk investments, even though this may not be in their best interests as their long-term returns struggle to keep pace with inflation.

  5. We tend to favour recent reference points when making decisions.

    This ‘anchoring bias’ can make it easy to overspend in shopping malls. When you first see a pair of shoes for $200 and then a similar pair for $150 it’s easy to anchor on the first amount and perceive $150 as a great bargain. And these days it doesn’t stop when you leave the mall—online shopping means plenty more opportunities for that anchor to embed itself and end up in an unwanted purchase. To counter this, try setting your own ‘base price’ before you set out shopping and stick to it. You can also see anchoring in practice when investors rush in to buy stocks that have just plunged in value without looking at the underlying performance of the company. They have made the mistake of anchoring the recent high point in their mind.

  6. We tend to be a bit lazy.

    We tend to stick with current plans rather than change if it’s too much hassle. This is probably why so many of us stay with our utility providers rather than shopping around for a better deal. If you find yourself suffering from ‘status quo bias’, try making a start with one area of the household finances—say, your electricity bill—to make it more manageable, rather than trying to tackle everything at once.

1 If you’d like to know more about how our unconscious mind affects our decision making when it comes to saving and spending money, here’s some bedtime reading: Thinking, Fast and Slow by Daniel Kahneman; Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard Thaler and Cass Sunstein; Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely.

Source : AMP March 2019

Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling |PHONE|, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person.

 

 

5 steps to manage your business while travelling long term

Date: Mar 21st, 2019

By Flying Solo contributor Karen Valadares

All praise to the internet for making it easier to work on the go! It still amazes me that carrying around a laptop and a phone allows us to manage our businesses while travelling long term.

But adopting this dreamy lifestyle needs a bit of planning to make it work.

I know this because I worked as a freelance digital nomad from May 2015 to September 2016, while I travelled to 25 countries with my husband.

From January 2018 to September 2018, we hit the road again. This time, I ran my new business while witnessing Carnival in Brazil, the World Cup in Russia, and the Romantic Road in Germany.

From these experiences I’ve collected five steps to help you keep your sense of adventure as you discover the world, with your business in tow.

“Traditional travel industry information may not apply to you.”

1. Travel slooooow

Getting to new places always comes with a period of adjustment. You have to learn your way around a new town and keep control of your desire to go about as if you were only there on holiday.

If you have only five days in one city, it is really hard to control that desire, but if you are spending one month there, you do have time to focus on work as well as visit new places. And you can do both really well.

When you travel slow you allow yourself time to work AND time to get to know the surroundings and experience the culture.

My recommendation: plan one-month minimum stay in each place.

2. Choose suitable places to work from

I’ve worked from coffee shops, restaurants, and hotel rooms. As cool as it might seem at first, working from places like these becomes hard over time. Sometimes the internet might be slow or, shockingly, not available. The surroundings may be distracting, or too lonely. These interferences will negatively affect your productivity.

Over the last months, I worked from co-working offices and even tried a co-living space. The stable internet connection, nice chairs and air conditioning were the highlights for me in these spaces. The added benefit was meeting people who have the same challenges and dreams as I do, as they work and run their business remotely.

My recommendation: look into co-working and co-living spaces.

3. Get online tools to do the heavy lifting for you

Saving a few hours every week is certainly a goal when you run your business. Add the extra challenges of being on the road and you will soon realise some online tools become lifesavers.

Here are my recommended tools to get you started. Be careful not to get a bunch of online tools all at once. There is always a bit of a learning curve at first, even with the easiest ones. And over time juggling too many tools becomes a challenge.

My recommendations:

  • Worldclock to make sure you are on the same page of your clients and team when you set meetings and agree on deliverables.

  • Skype and Google Hangouts for online meetings (these are my favourite ones, but there is also Zoom and Whatsapp).

  • Google Drive to store and share files (there is also WeTransfer).

  • Trello to manage project phases, create to do lists and checklists, and assign tasks in a collaborative environment.

  • Avaza to create invoices and request payments.

  • Skype Number to have a local phone number your clients can call (alternatively, you can register for a local business phone number at a co-working office in your hometown; some offices even offer receptionists to screen your calls. Also, you can secure an official business address with these offices)

4. Go to meet-ups around the world

Sometimes managing your business while travelling long-term makes you disconnected from people. The combination of working hours and new places with zero acquaintances might isolate you.

Avoid this by attending meet-ups in the places you visit. Co-working and co-living spaces are a great starting point for meeting people. These spaces usually schedule networking and training events as well. And if you can’t attend these types of events, check the available meet-ups along your way.

My recommendation: check local meet ups to network and understand how people in your field are working worldwide.

5. Get involved in digital nomad communities

When you travel long term, and manage a business at the same time, you have specific needs. You are not a regular tourist or a worry-free backpacker, so the traditional travel industry information may not apply to you.

Digital nomad communities, on the other hand, can provide you with the specific info you need, as these travellers have hands-on experience of working on-the-go. They can make your life easier regarding the travel planning side of things.

My recommendation: join social media groups, such as Global Digital Nomads FB Group & Digital Nomads Girls FB Group. Check out the info and forum on https://nomadlist.com/.

Being a business owner is never easy, but you will have extra energy to succeed if, in your free time, you are hanging out with like-minded people. Like having a beer while overlooking the Seine river in Paris, or doing your daily exercise at the beachside in Rio de Janeiro. These fulfilling experiences boost your motivation to keep remote work as a long-term decision.

Source : FlyingSolo

This article by By Karen Valadares is reproduced with the permission of Flying Solo – Australia’s micro business community. Find out more and join over 100k others.

 

Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

What kind of money parent are you?

Date: Mar 20th, 2019

Many parents approach the topic of money differently, but could your way of doing things influence your kids’ success?

The majority of Aussie mums and dads recognise that they’re accountable when it comes to shaping their children’s perspective around money matters.

A recent report published by the Financial Planning Association of Australia (FPA), revealed parents listed themselves (95%), followed by grandparents (63%) and teachers or coaches (59%) as the top three biggest influencers when it came to instilling money values in their kids1.

What money conversations are parents having?

As part of the research, parents said they mainly concentrated on day-to-day issues when talking money with their children, admitting that more contemporary issues, such as making transactions digitally, were sometimes overlooked2.

What parents said they discussed3:

  • 52% – how to spend and save

  • 43% – how to earn money

  • 32% – how household budgeting works

  • 24% – how much people earn

  • 19% – making online purchases

  • 13% – in-game app purchases

  • 5% – buy now, pay later services, such as Afterpay.

What approach do you take with your kids?

The research undertaken indicated that there were four prominent personalities parents assumed when discussing money with their children, with some parents initiating conversations more frequently, while others were sometimes a little more hesitant4.

The four distinct personalities that came out of the research included5:

The engaging parent

Common traits:

  • You have the most conversations around money with your kids and feel comfortable doing so

  • You tend to have a higher household income

  • You’re more likely to use money to encourage good behaviour in your children

  • Due to high engagement, your kids are often more financially prepared than other kids

  • Your kids have a greater interest in learning about all types of money matters.

The side-stepping parent

Common traits:

  • You are less comfortable talking to your kids about money so have fewer conversations

  • You may have less money coming in as a household

  • You’re less transparent about what you earn and money matters in general

  • You tend to provide the least amount of pocket money and as a result your children may be less interested in learning about money and how to make transactions.

The relaxed parent

Common traits:

  • You’re comfortable talking to your kids about money but don’t do so too often

  • You take a relaxed approach to money matters and are transparent about money issues

  • There is little financial stress in your home

  • Your relaxed nature may lead to your children missing out on opportunities to learn about money, which means your kids may need to explore money matters on their own.

The do-it-anyway parent

Common traits:

  • You’re not always comfortable talking about money but still have frequent conversations

  • You’re mainly concerned your child will worry about money if you talk about it

  • Despite your discomfort, your perseverance generally pays off

  • Your teenage children are more likely to have a job than the average child.

What approach is best according to the research?

Engaging parents were more likely to report that their children were more curious, confident, and financially literate than they were at their age6.

According to parents who fell into this category, their children were the most equipped to understand and transact in today’s digital world and their teenagers were the most likely to have a job and make online purchases for themselves or their family7.

In addition, the research found children with a paid job outside of the family home were more financially prepared to engage with money8.

They were also used to transacting digitally and showed greater interest in learning about paying taxes and superannuation than those who didn’t have a job9.

1-9 Financial Planning Association of Australia: Share the Dream – Research into raising the invisible-money generation 2018 page 6, 14, 15, 13

Source : AMP February 2019 

Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling |PHONE|, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person.

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