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Moving interstate? The cost of living in a new Australian city could surprise you

Posted On:May 20th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

If you’re relocating to a new city, it’s a good idea to do your homework about living costs…particularly if it’s Sydney.

When you’re moving interstate it’s natural to focus on the costs and logistics of the actual move—removalists, storage, rental bonds.

But what about the costs of living in a new city?

It’s important to crunch the numbers beforehand to avoid any nasty

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If you’re relocating to a new city, it’s a good idea to do your homework about living costs…particularly if it’s Sydney.

When you’re moving interstate it’s natural to focus on the costs and logistics of the actual move—removalists, storage, rental bonds.

But what about the costs of living in a new city?

It’s important to crunch the numbers beforehand to avoid any nasty surprises, particularly if you’re heading to Sydney.

One of our former prime ministers famously said that if you don’t live in Sydney you’re just camping out.

And whether you believe Paul Keating or not, it’s fair to say that the harbour city’s popularity comes at a price.

A tale of two cities

Natalija and Melissa recently moved in opposite directions along the Hume. Here are their first impressions of their new homes.

Natalija moved from Sydney to Melbourne

  • What’s cheaper than you expected? I was surprised by how much more affordable Melbourne was than Sydney. I wasn’t expecting to pay less rent in an area that was relatively the same distance to the CBD. In Sydney I paid $200 more per week to live in an inner city suburb (Darlinghurst). And it took me longer to get to work as I walked because I couldn’t spend any money on transport! Where I live in Melbourne (Prahran), I pay less rent and I live in a great spot, close to restaurants, bars and parks. I can walk everywhere and still afford to catch public transport to work. And I can still save money for my mortgage and holidays! I just love the Melbourne vibe.

  • And what’s more expensive? Perhaps car insurance and registration are slightly higher than Sydney but everything in Melbourne is nominally more affordable.

  • What tips you would give anyone moving to a new city? Do your research, particularly on sought-after areas in proximity to work and schools. This will ultimately affect how much you spend on buying/renting a house, contents, insurances and bills. Also consider your lifestyle choices (restaurants, bars, gym etc). It’s all dependent on your own situation.

…and Melissa moved from Melbourne to Sydney…

  • Is anything cheaper than you expected? $2.50 all day travel on Sunday with the Opal card.

  • And what’s more expensive? Rent! You a pay a lot a more in Sydney and you typically get a lot less. I am paying an extra $130 per week in rent compared to Melbourne, and for a space that is smaller than what I had. Melbourne is better value when it comes to rent, but that’s Sydney for you.

6 living costs that vary around Australia

Here are some things that could be more expensive (or cheaper) in your new city, whether you’re thinking of joining Melissa and five million other Sydneysiders or Natalija and the 20 million other Australians just camping out.

1. Buying groceries and clothes

As a general rule if you’re leaving Sydney you’ll save money—for example, consumer prices are 13.24% lower in Brisbane than in Sydney1.

But economies of scale mean that if you’re moving to a more remote or smaller city you could find yourself paying more for the basics. So anyone moving from Sydney to Darwin or Hobart would be pleasantly surprised by housing and transport costs but not as excited by the fact they could be paying a little more for the weekly grocery shop2.

And if you’re moving to a bigger city it could all depend on where you’re based. If you’re in an inner-suburban apartment you might have limited choice with grocery shopping. If you’re in an outer suburb you may have bigger—and cheaper—supermarkets nearby.

Clothes are another matter. If you’ve been living in subtropical Queensland and you’re moving south, you might need to adjust to a very different weather, as well as a whole new wardrobe.

In Melbourne you’ll need an outfit for every season—often in the same day. In Townsville on the other hand you could save money…just stock up on thongs and singlets and you should be right.

2. Eating out and socialising

Eating out in your new city could set you back more than you bargain for.

The average cost of a daily cappuccino is $4.01 in Sydney, $4.48 in Perth and a whopping $4.78 in Darwin3.

For anyone moving north from Sydney or Melbourne, a three-course meal for two at a mid-range restaurant is cheaper in the Gold Coast ($70) and even cheaper in Darwin ($65).

But a McMeal is a bit more in the Top End—$12 at Maccas compared with $10 in most of the rest of Australia4.

3. Commuting to work

Your monthly pass on public transport is another cost of living that varies widely across Australia—$99 in Adelaide, $130.43 in Perth, $140 in Brisbane, $147 in Melbourne and…wait for it…$217.39 in Sydney. So perhaps follow Melissa’s advice and stick with Sunday travel if you’re in Sydney!

And of course, public transport can vary widely depending on where you live in a particular city, both in terms of cost and comfort. A short ferry ride from the north shore to Circular Quay in Sydney is a very different commuting experience to the train from Parramatta. Equally, if you’re moving to a regional or more remote capital city you may find you need to rely on the car more as public transport can be patchy at best and non-existent at worst.

4. Renting an apartment

In terms of our state capitals, no prizes for guessing that Sydney is the more expensive state capital with a median weekly rent of $583. The most affordable? Adelaide just beats Perth, with the average apartment in the city of churches costing you $375 a week5.

5. Buying a house

It won’t surprise anyone to know that Sydney tops the charts when it comes to buying a house, with a median house price of $1,027,962 for the March 2019 quarter. For anyone prepared to camp out, head to Tassie where a house in Hobart will set you back $478,2476.

6. Sending the kids to school

For anyone with school-age kids, education options are going to be at the top of your list when you decide to move. So it’s important to do your research on how things work in your new city. New Melbournians might be surprised to find that the Victorian capital has a very distinct split between public and private schools, with very few selective schools compared to Sydney.

If you’re set on educating the kids privately through high school then costs can vary widely, from $373,421 in Darwin to $543,334 (yes, Sydney again). Parents of kids at Catholic schools get the best deal in Canberra and the most expensive in Brisbane. And even government school costs vary considerably, from nearly $70,000 in Sydney and Melbourne to less than $50,000 in Adelaide and Hobart7.

New city, new you?

Moving cities isn’t just about money. It’s about setting up a whole new life in a whole new place. Ask yourself some questions about how you’ll go in a new environment.

  • Think connections. If there’s someone you went to school with or used to work with in the area, why not look them up and reconnect? They could be an invaluable source of local knowledge and introduce you to their local network of friends.

  • Think demographics. If you’re retired and moving to a city dominated by twentysomethings, or if you’re a young parent and moving to a suburb full of retirees, you might find it difficult to meet like-minded people.

  • Think jobs. If you work in the creative industries and you’re moving to an area dominated by finance, you might find it hard to secure a job in your preferred field and might need to think a bit laterally about job opportunities.

  • Think sport. If the kids barrack for their local league side in Sydney and you’re planning to move across the Nullarbor, you might need to broaden their sporting horizons to include AFL or soccer.

  • Think atmosphere. If you’re used to the excitement and buzz of living in a big city on the east coast and you’re planning to move to somewhere quieter like Hobart, you might need to adjust to a different pace of life.

If you’re planning a move, check out this great cost of living comparison tool.

Source : AMP May 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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This Small Country Is Leading the Way in Going Plastic Free

Posted On:May 15th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

As we find ourselves in the midst of the war on plastic, we are seeing some (slow) progress in our own home towns, but there are inspiring countries across the globe that are going the extra mile to rid our planet of the mountains of unnecessary waste.

Just how much waste are we talking? Well, there’s around 8 million metric tons

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As we find ourselves in the midst of the war on plastic, we are seeing some (slow) progress in our own home towns, but there are inspiring countries across the globe that are going the extra mile to rid our planet of the mountains of unnecessary waste.

Just how much waste are we talking? Well, there’s around 8 million metric tons of plastic that end up in our oceans each year, the equivalent of dumping a garbage truck full of plastic in the water every minute, plus there’s all the waste in the landfill to consider!

It is truly a significant problem that we are all responsible for fixing.

Leading the way in the reduction of plastic consumption are the people of Vanuatu who are taking massive strides in reducing single-use plastic items. The original announcement of their progressive plan, to ban all plastic bags and bottles that cannot be reused, was made on the Vanuatu Independence Day, 30th July 2017. As of July 2018, they have already put much of this into effect, banning single-use plastic bags, drinking straws, and styrofoam food containers, all of which had been known to make their way into Vanuatu’s pristine ocean. Thankfully, that has already begun to clear.  So what will they tackle next?

Vanuatu has been working towards their target of a complete ban, forbidding single-use plastic bottles from being imported into and used in the country. This will be yet another step in their plan to ban. The Prime Minister has recently released a statement, including the many other single-use plastic items they plan to ban within the year. It’s inspiring to see such powerful and swift action made by this small Pacific island nation in order to save our planet.

The other countries and cities following suit with notable initiatives and alternatives for plastic are:

1. Kenya

Though extremely harsh, Kenya’s penalty for using, producing or selling a plastic bag is proving effective, with most people choosing a creative bag solution rather than face four years in jail or a $38,000 fine since the law was put in place in August 2017.

2. United Kingdom

From January 2018 the UK has been working towards setting the ‘global gold standard’ on eliminating plastic waste, working through their 25-year plan that started with eliminating plastic microbeads from rinse-off cosmetic products. They’ve continued their plan with taxing single-use plastic bags, banning plastic straws, stirrers, and cotton buds, and the Queen herself even put a complete ban on these products in the Royal Estate since February 2018.

3. Taiwan

Taiwan has begun implementing their wide-reaching ban on all single-use plastics, building on existing recycling programmes and charges for plastic bags, building up to their blanket ban by 2030 restricting single-use plastic bags, straws, utensils, and cups.

4. Zimbabwe

Since July 2017 anyone caught violating the ban on expanded polystyrene in Zimbabwe could face a fine of between $30 and $500.

5. Canada

Montreal and Victoria have banned single-use plastic bags with large fines in place for individuals and corporations caught violating the ban. Across the country, microbeads are completely banned following research that revealed there were 1.1 million microbeads per square kilometre infamous Lake Ontario. 

6, Malibu

It was voted that from June 1, 2018, Malibu would implement a ban on the sale, distribution, and use of single-use plastic straws, stirrers, and cutlery to keep this pollution from reaching the beaches and ocean.  

7. Seattle

September 2017 saw the ‘Strawless in Seattle’ campaign enacted, involving more than 100 restaurants, sports, airports, and aquariums banning straws. Now it’s a city-wide common practice to go without plastic straws.

8. Australia

The 2nd largest waste producer in the world, Australia has now phased out single-use plastic bags across most of the country with the support of major supermarket chains now only providing reusable bags for sale.

9. Hamburg

Non-recyclable plastic coffee pods have been banned in the German city of Hamburg since February 2016 as they found billions of the plastic coffee shells were dumped in landfill each year.

10. France

There’s been a total ban on plastic bags in France since 2015, and following an announcement in 2016, there will be a ban on plastic cups, plates, and cutlery coming into effect in 2020.

Source : FoodMatters May 2019

Reproduced with the permission of the Food Matters team. This article by Laurentine ten Bosch was originally published at https://www.foodmatters.com/article/vanuatu-become-first-country-world-ban-plastic-bottles

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. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes 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. 

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3 simple ways to skyrocket your personal brand

Posted On:May 08th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

By Flying Solo contributor Nick Brogden

Have you ever wondered why some people are able to skyrocket their personal brand more than others?

Quite often it can come down to leveraging your network, branding yourself as an expert, and thinking outside of the box by doing things that others don’t do. Here’s a fresh look at some creative things you can do

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By Flying Solo contributor Nick Brogden

Have you ever wondered why some people are able to skyrocket their personal brand more than others?

Quite often it can come down to leveraging your network, branding yourself as an expert, and thinking outside of the box by doing things that others don’t do. Here’s a fresh look at some creative things you can do to skyrocket your personal brand.

Leverage your personal network

Over the years, I’ve built up a considerable network from working as a principal consultant in one of Australia’s leading marketing companies. But my plan was always to go back to working for myself. As much as I loved the fast-paced agency life it was hard to justify dedicating so much time to an agency I had no ownership in.

But, as you can imagine, the switch from full-time employee back to business owner was quite challenging, and I can account a lot of my success to the skills that I have built up over the years and also the connections that I’ve made.

Reid Hoffman, the founder of LinkedIn says, “One of the challenges in networking is everybody thinks it’s making cold calls to strangers. Actually, it’s the people who already have strong trust relationships with you, who know you’re dedicated, smart, a team player, who can help you.”

I couldn’t agree more with Hoffman’s statement, and the interesting thing here is that as soon as I quit my full-time job to be a solo “business owner,” I’ve had a considerable amount of local SEO job offers come in, with the bulk of these coming via my personal network.

Brand yourself as an expert

Personal branding is all about how you present yourself online and offline. It’s about displaying your expertise in a professional manner that isn’t “screaming self-promotion” but rather identifies you as a knowledgeable person that is backed up by social proof and your connections.

I now use my personal brand as one of my major marketing tools. Take my website for instance, it shows a picture of me speaking at an event. This shot is actually of me speaking at the Powerhouse Museum for a guest lecture I delivered on the fundamentals of SEO and content marketing for a large group of marketing students at the University of Technology Sydney (UTS).

The benefits of guest lecturing are priceless, that’s because they can add new dimensions to your personal brand that simultaneously solidifies your expert status and credibility. Guest lecturing can also lead to other things like being invited to be a panel judge or even being interviewed by journalists on TV.

“Nothing positions you as an authority anymore clearly than being a lecturer at somewhere of the calibre,” says IT Expert Stewart Marshall, a guest lecturer at Sydney University and best-selling author of “Doing IT for Money.”

Think outside of the box

A friend of mine who is a writer for Forbes recently ran a strategic PR experiment on “his own content.” He recently published an article that, he felt didn’t get the attention that it really deserved. So, what did he do? He thought, “how can I turn this into an opportunity.”

So, he emailed approximately 300 journalists from major publications telling them about the article that he had just written, and asked just 2 things:

  1. If you were to republish this, it would not only make my day but my entire year.

  2. And, if you are looking for contributors, I’d love to be considered 

The results: The article went from approximately 500 views and grew to almost 5,000. It was re-published 7 times, and he was offered around 10 opportunities to write for other publications. And, this helped him to grow his personal brand by getting creative and thinking outside of the box.

 

Source : FlyingSolo April 2019 

This article by Nick Brogden 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.

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Keeping your super intact: It’s fundamental

Posted On:May 08th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Ideally, investors should begin investing as early as possible in their lives, invest more whenever possible and remain in investment markets for as long as possible.

These fundamentals of sound investment practice should increase your chances of investing success.

Yet super fund members who attempt to illegally gain access to super savings before being eligible are doing the opposite.

And they are reducing

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Ideally, investors should begin investing as early as possible in their lives, invest more whenever possible and remain in investment markets for as long as possible.

These fundamentals of sound investment practice should increase your chances of investing success.

Yet super fund members who attempt to illegally gain access to super savings before being eligible are doing the opposite.

And they are reducing their opportunities to save for a satisfactory standard of living in retirement. It is difficult to later rebuild super savings spent on paying pre-retirement expenses.

The tax office, the regulator of self-managed super funds (SMSFs), recently reinforced its warning about participating in illegal early-access schemes. These relentless schemes typically use new SMSFs as a means to obtain super savings initially held in large super funds.

Preservation rules

With limited exceptions, super fund members cannot legally gain access their super savings before turning 65 or reaching their preservation age (55-60) and retiring (or taking a transition-to-retirement pension).

Members can seek to legally gain early access to their super on various compassionate grounds or in such circumstances as severe financial hardship, terminal illness or incapacity.

And other ways that fund members can legally gain early access to some of their super are through the First home super saver scheme and transition-to-retirement pensions. (Members taking a transition-to-retirement pension can receive up to 10 per cent a year of the balance in their super pension accounts as a pension upon reaching their preservation age yet before retiring.)

Promoters misuse of SMSFs

Typically, promoters of early-access schemes try to convince members of large super funds to transfer their super into a new SMSF before taking the savings out of super. In such cases, the members wanting to withdraw their super become trustees of the new SMSFs.

Scheme promoters try to convince fund members to use their super money to pay for new cars, holidays and financial help to their families, and to reduce credit-card debt. High fees or commissions paid to promoters further dilute super savings.

Promoters tend to target individuals who are in financial difficulties, perhaps with a poor understanding of super. In some cases, the targeted members may have been eligible to legally gain early access to their super on financial hardship or other limited grounds.

Implications for SMSF trustees

Possible consequences for SMSF trustees allowing early access to super include: disqualification as trustees, personal liability to pay penalties, and prosecution. As well, an SMSF may be declared non-complying, leading to the loss of valuable tax concessions.

Dipping into super

Some members gaining early access to their super do not participate in early-access schemes pushed by promoters. Instead, they illegally dip into their SMSFs from time to time with the hope of not to being detected.

In the past, the tax office has warned, for example, about the use of super to prop up small businesses with financial difficulties. Unfortunately, super saving can be a temptation for owners of a business with cash-flow problems.

Please contact us on |PHONE| if we can be of further assistance.

Source : Vanguard April 2019 

By Robin Bowerman, Head of Corporate Affairs at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.
© 2019 Vanguard Investments Australia Ltd. All rights reserved.

Important:
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.

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Rebalance your portfolio, rebalance your emotions

Posted On:May 08th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Is your portfolio suffering from what is sometimes called portfolio drift?

This occurs when a broadly-diversified portfolio drifts away from its strategic or target asset allocation with movements in investment markets and diverging returns from lower-risk and higher-risk assets.

Your diversified portfolio’s strategic asset allocation to different asset classes should be set with the aim of reaching your goals without exceeding your

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Is your portfolio suffering from what is sometimes called portfolio drift?

This occurs when a broadly-diversified portfolio drifts away from its strategic or target asset allocation with movements in investment markets and diverging returns from lower-risk and higher-risk assets.

Your diversified portfolio’s strategic asset allocation to different asset classes should be set with the aim of reaching your goals without exceeding your tolerance to risk. (See Goodbye to ad-hoc portfoliosSmart Investing, April 15.)

And then regular rebalancing of your portfolio back to that asset allocation will regain its intended risk-and-return characteristics. The primary benefit of rebalancing is to keep a portfolio’s risk profile, not to maximise returns.

In today’s low-interest, lower-return investment environment, investors may be more tempted to delay rebalancing their portfolios. This is a trap because a portfolio usually becomes progressively more volatile and riskier without rebalancing.

Repeated research* over more than 30 years, including by Vanguard, has concluded that a diversified portfolio’s strategic asset allocation is the main cause of variations in its long-term returns.

A recent Vanguard research paper, Getting back on track: A guide to smart rebalancing**, suggests three straightforward practices for portfolio rebalancing:

  • Rebalance to manage your risks and emotions: A disciplined, easy-to-follow rebalancing strategy helps remove emotions from your investment decisions. And as discussed, rebalancing reduces the likelihood of your portfolio becoming riskier with movements in investment markets.

  • Set rebalancing trigger: Most investors following a rebalancing strategy use either a “time trigger” or a “threshold trigger”. With a time trigger, you rebalance your portfolio at set intervals of, say, once a year or more frequently. And with a threshold trigger, you rebalance when your portfolio drifts from its asset allocation targets by a predetermined percentage.

  • Minimise rebalancing costs: Keep potential tax and transaction costs of rebalancing to a minimum. Some investors use cash where possible – perhaps from dividends and savings accounts – to replenish asset classes that have become underweight over time. Those with investments inside and outside superannuation should keep in mind when rebalancing that their super savings are either concessionally-taxed or exempt from tax.

The rebalancing of a portfolio can seem counter-intuitive. This is because rebalancing requires the selling of currently outperforming assets to buy currently underperforming assets.

Please contact us on |PHONE| if you seek further assistance .

*The global case for strategic asset allocation and an examination of home bias, Vanguard 2017.
**Getting back on track: A guide to smart rebalancing, Vanguard 2019.

Source : Vanguard April 2019

By Robin Bowerman, Head of Corporate Affairs at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd.

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.
© 2019 Vanguard Investments Australia Ltd. All rights reserved.

Important:
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.

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Forget willpower: Why habits are the key to achieving financial goals

Posted On:May 08th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

What’s the value of $20 per month?

It’s not a trick question. Obviously, the simple answer is $20. But if you’re talking about a 21-year-old earning $50,000 who salary sacrifices $20 per month to her super, the value is $10,077, the extra amount she would have in her super at retirement age, according to the Australian Securities & Investment Commission retirement planner.

But the real

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What’s the value of $20 per month?

It’s not a trick question. Obviously, the simple answer is $20. But if you’re talking about a 21-year-old earning $50,000 who salary sacrifices $20 per month to her super, the value is $10,077, the extra amount she would have in her super at retirement age, according to the Australian Securities & Investment Commission retirement planner.

But the real value of that $20 is that it establishes the habit of saving. It’s that first step that makes the next one easier to take. The study of habit — how to break bad ones, build good ones and leverage them to achieve goals — is flourishing.

Much of what habit researchers are discovering runs counter to conventional wisdom about getting things done.

Many people believe they must set big goals and work tirelessly to achieve them. That can work, but may instead lead to failure. Big goals are rarely achieved quickly, and it’s easy to lose interest and commitment along the way.

The new science of habit advises the opposite strategy. As the Stanford University behaviorist BJ Fogg explains, “Only three things will change behavior in the long term.

Option A. Have an epiphany
Option B. Change your environment (what surrounds you)
Option C. Take baby steps”

Using this way of thinking, economists have discovered that putting healthy choices such as carrots at eye level in school cafeterias will do more to get children to eat vegetables than a million lectures on the evils of junk food. By focusing on habits, instead of goals, you set up systems that dramatically increase your odds of achieving the goal.

How can you apply habit research to your financial life? Start by identifying money habits you want to change, then implement a system to get there by changing your environment and taking baby steps.

Here are few ideas to get started:

Let’s say you are spending too much on your credit cards. You can tackle this in a number of ways.

One principle of breaking habits is to make the activity harder. Someone trying to kick the sugar habit, for example, might start by keeping it out of the house, so that it’s an occasional treat that requires going somewhere to indulge in.

You could try leaving your credit cards at home, or spend only cash on purchases. Some researchers believe that because cash is such a tactile experience, the brain pays more attention to it, making people less likely to spend. But even a baby step, such as wrapping your credit cards in a piece of paper, may be enough to remind you to walk away from the purchase.

A more tech-oriented person might benefit from an app that regularly updates you on how much you are spending on sneaky expenses such as eating out. The key here is to figure out what works for you.

Scheduling activities also can work. If you want to save money on eating out, start with a goal so small that you will be able to achieve it no matter what. You could commit to taking your lunch once a week. Then, add the required items to your grocery list and schedule time in your calendar to pack it.

Automating a habit also pays big dividends. People have written books by deciding to write, say, 1,000 words every day at a certain time.

Many ways to automate the saving habit exist. One of the best is dollar-cost averaging, which involves investing the same amount of money into, say, shares or managed funds at regular intervals over a long period – whether market prices are up or down. This takes the emotion out of investing, minimising the risk that you will panic and sell when share prices fall. From a habit point of view, it keeps you on track even when motivation flags. That’s worth a lot.

Please contact us on |PHONE| if we can be of any assistance on this topic.

Source : Vanguard April 2019

By Robin Bowerman, Head of Corporate Affairs at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd.

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.
© 2019 Vanguard Investments Australia Ltd. All rights reserved.

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