Many aspects of financial success are about putting good habits in place early and avoiding traps that can damage your dollar value. Here are our top five traps to avoid.

1. Make minimum repayments

Whether we’re talking about high-interest debt such as credit cards or longer-term investment debt such as mortgages, making the minimum repayment is good, but not always great. On credit card debt you can end up paying interest of 20% or more, potentially adding thousands of dollars annually to your repayments. Even small increases in your regular mortgage repayments can cut years off the loan and save tens of thousands of dollars in interest along the way.

2. Leak money to businesses

Many businesses are now moving to a subscription or regular repayment model, whether it is for software, TV services or holiday packages, because it seems cheaper and causes less financial pain in the short term. Those businesses become wealthy over time and you do not. Being aware of these regular outgoings, living a leaner lifestyle and plugging these financial leaks can be the equivalent of adding several percentage points to your investment interest.

3. Spend your redraw/equity

Paying extra into your mortgage is an exceptionally good habit. Constantly redrawing the available funds, or borrowing on the equity for non-investment purposes, is not. Keeping all of your savings within your mortgage, or in an offset account, will likely save a considerable amount of interest over time. But be sure to set yourself a budget or savings goal to reap the full benefit of your discipline.

4. Lack familiarity with your finances

We are all guilty at some stage of being less familiar than we should be with the investment mix of our super fund, or the interest rate on our mortgage. But checking in with your finances on a regular basis – monthly, bi-annually or yearly – is a simple way to check things are moving in the right direction and to take action if they are not. This process should always involve all stakeholders, particularly both members of a couple.

5. Prioritise spending rather than investing

All great plans begin with a goal. Wealth planning usually begins with a retirement lifestyle goal. A strategy is then set to achieve that goal – perhaps the diversified investment of $100 every week for the next 20 years – and that becomes the absolute priority. Households often prioritise and plan for holidays, new cars, furniture updates and wide-screen TVs. The fact that a plan is in place means they will likely have those things. But such purchases should only be allowed after the real priority has been taken care of.

General information only: The information in this message is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. It should not be construed as financial, taxation or legal advice. Before acting on the basis of this information, you should consider its appropriateness to your own objectives, financial situation and needs. Individual advice can be provided by contacting our office at admin@completefinsol.com or by phone (08) 9330 8886.

IMPORTANT INFORMATION

This document has been prepared by Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138, (Financial Wisdom) a wholly-owned, non‑guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Mark Giles of Complete Financial Solutions (WA) – Financial Planning (ABN26 050 157 938) is an authorised representative of Financial Wisdom Limited (ABN) 70 006 646 108 AFSL 231138).

Information in this document is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Financial Wisdom, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. Taxation considerations are general and based on present taxation laws and their interpretation and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information

Success in generating long-term wealth has a lot to do with awareness of the tricks money can play on your mind. How many of these do you recognise?

Money and emotion are strongly connected. Purchases often mean something to us personally. They broadcast our identity. They make us feel special. They reward us for hard work. But in the background, behind our most basic reasons for spending or saving, our mind plays further tricks. If you become aware of these tricks then the added clarity will benefit your wealth generation.

1. Bigger is better

Consider the purchase of a new car. You have just spent $35,000, so when the salesperson offers you a special deal – a $700 upgrade pack including a towbar, carpet mats and alloy wheels – it seems like a bargain. But would you happily go out today and spend $700 elsewhere? How many grocery trips does that represent? And many of us will grab the opportunity to buy a $100 item that has had its price slashed to $50. But if a $5000 item is discounted to $4950, then the $50 saving is not nearly as attractive. Remember that a dollar is always worth a dollar, no matter how much or how little the related purchase happens to be.

2. Discounted = good value

It is increasingly rare to see a price ticket that is not marked down. But is the $130 jacket, marked down from $210, actually better value or better quality than the $100 jacket in the shop next door? Ignore the higher price (known as an ‘anchor’, intended to make the discounted price seem cheap) and consider the actual value. This works in several other situations. For instance, many restaurant menus offer a high-priced entrée and main to make the other options seem cheap. And in your local electronics store, the fancy $500 toaster is only really there to make the $140 toaster seem like a bargain.

3. Gifted money is not worth investing

You receive money as a gift so instead of adding it to savings, investment or retirement funds, you put it straight into the spending budget. Your mind is de-valuing the money, because it was a gift. In other words, you didn’t have to work for it, so it is somehow of less value or not worthy of investment. But if you regularly invest a specific percentage of your income, then consider investing the same percentage (or more) of gifted money.

4. Small change is of little value

How much small change do we leave lying around, or in a container, or in the glove box, then happily spend it on little things without a second thought? But consider that a small money box for children can easily hold $400 in gold coins, and suddenly that small change becomes a very real driver of financial change. The same goes for small pay rises, which may not seem to make any difference right now but can make a very real difference over the long term.

5. Money buys happiness now

Buying something today produces a very measurable result. Saving for the future and putting money into superannuation or investments is difficult to quantify in terms of lifestyle. So make it quantifiable. Figure out your average monthly expenditure and buy future months of happiness with your savings and investments.

6. Reduced mortgage repayments represent a saving

In an environment of low interest rates, many home owners have been offered a drop in mortgage repayments. That is great for our household budgets, right? But consider that if you drop your repayments, you will spend more on the mortgage in the long run and will lose more money in interest, as you take longer paying off the mortgage compared to keeping your repayments at the same level.

Changing your money mindset

If you want to know more about how to separate money from emotion, your financial adviser should be the first person you speak to. They will help you change your money mindset so you can recognise traps and win the money mind games.

General information only: The information in this message is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. It should not be construed as financial, taxation or legal advice. Before acting on the basis of this information, you should consider its appropriateness to your own objectives, financial situation and needs. Individual advice can be provided by contacting our office at admin@completefinsol.com or by phone (08) 9330 8886

When you’re exploring aged care options for a loved one, the process can seem overwhelming. Here’s how to make it a bit easier.

Choosing when to place an elderly relative into a retirement home may be one of the toughest decisions you have to make. And while you want your loved one to be as comfortable as possible in their final years, it’s also important to be financially prepared.

With so many choices available and so many decisions to make, it helps to break down the process into a series of steps. And remember, when the time comes to begin your own aged care journey, you’ll want to be ready – so the sooner you start planning, the better.

Step 1. Finding the right place

The first step is to have your loved one’s needs assessed to determine the right level of care – from semi-independent living to round-the-clock nursing. Free assessments are conducted by community- or hospital-based Aged Care Assessment Teams. You should also consider any additional services your relative might need in the future, so they won’t have to move again if their health declines.

If you can, visit different retirement facilities together to find an environment your loved one feels comfortable in. Be sure to investigate the social activities and meal options on offer, to ensure they’ll enjoy a happy and enriched life there.

Step 2. Calculating the costs

Although the federal government subsidises aged care costs, there are still various expenses that need be covered. For residential aged care, these include:

• Accommodation fees. Prices are set by the facility but may also depend on your relative’s income and assets. Fees can be paid either as a lump sum or in regular instalments.
• Basic daily care fee. This covers daily living costs and is fixed at 85% of the maximum single Age Pension – currently $50.66 per day.
• Means-tested fee. This may be charged on top of your relative’s daily care fees, and is based on their assets and income. It’s currently capped at $27,232.33 a year.
• Extra service fees. Additional fees may be charged for a more comfortable standard of accommodation, or special services like hairdressing or pay TV.

A financial adviser can help you calculate all these costs so you know exactly what to expect.

Step 3. Managing the paperwork

Because the fee amounts vary, you’ll need to lodge a Request for a combined assets and income assessment form with the Department of Human Services. This helps determine how much of a government subsidy your relative will receive towards the aged care costs.

Next, you can start applying directly to aged care facilities to find a suitable placement for your relative. A facility will contact you as soon as a slot becomes available, and they may also require you to enter into a Resident Agreement and Accommodation Agreement.

Step 4. What to do with the family home

Moving into aged care accommodation isn’t cheap, and many people who go into care need to sell their family home to cover the costs. This process can take many months, so you might also have to sort out a loan to manage the initial expenses while the property is on the market.

An alternative may be to rent out the property and use the rental income to help cover your aged care fees.

Your relative’s choice of whether to sell, or keep and rent out their former family home can have significant consequences for the aged care fees they pay, as well as any social security entitlements they receive, so speak to a financial adviser about the best option before taking any action.

Step 5. Making the move

Packing up an entire house or flat and moving into a single room of a retirement home requires a lot of work. As space will be limited, you’ll need to prioritise the most important or valuable items (including those with sentimental value) for your relative to take with them, and then sell or give away the rest.

There will also be other practicalities to deal with, such as changing their postal address and advising Centrelink about the move. Finally, make sure you include your loved one in as much of the decision-making as possible, to help make the transition as painless for them as you can.

General information only: The information in this message is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. It should not be construed as financial, taxation or legal advice. Before acting on the basis of this information, you should consider its appropriateness to your own objectives, financial situation and needs. Individual advice can be provided by contacting our office at admin@completefinsol.com or by phone (08) 9330 8886.

Your child’s education is an important investment in their future. But getting it right takes careful planning, which means you need a true understanding of the costs involved.

As every parent knows, a quality education is one of the most important foundations you can provide for your child. But the costs of schooling can really add up over the years – and it’s not just fees; there are plenty of other extras you’ll need to cover as well. And of course, if you have more than one child, then all the expenses will be multiplied.

So how much can you expect to shell out for each child’s education – and are there ways to plan ahead so you can reduce the strain on your household finances?

What to expect

The cost of a child’s schooling in Australia varies widely between metropolitan and regional areas, and depends on whether you opt for a private or public education. But even if you send your child to a government school, there are still plenty of expenses that you’ll need to be ready for – like uniforms, books, supplies and after-school activities.

In a major capital like Melbourne or Sydney, the cost to educate a child born in 2018 from preschool to Year 12 could cost anywhere from around $72,000 to almost $550,000.^[1] That means a family with two children attending private school could end up spending well above $1 million for their kids’ primary and secondary education.

And while cites like Adelaide and Perth are substantially cheaper, the projected costs still range from around $55,000 up to more than $400,000.¹

How to prepare

As with any investment, you should plan carefully for your child’s education. Everyone’s circumstances and choices are different, so take the time to research and calculate how much you’re likely to be pay over the course of your child’s school years. That way you can start budgeting as soon as possible.

If you’re lucky, you might have parents who are willing to chip in for their grandchildren’s education – but if not, don’t worry. Here are three things you can do now to cover your family’s education costs without sacrificing your lifestyle.

1. Create a savings plan

By putting aside a little bit of money on a regular basis, you can grow your savings so you’ll have money to put towards your child’s schooling. A simple way to do this is to set up an automatic transfer from your everyday account into a high-interest savings account. Once you get started, you’ll notice the interest compounding over time. As you get into the habit of saving, you’ll find it becomes easier to manage your short term expenses like school fees and uniforms.

2. Invest your savings

While a savings plan is great, it’s important to know that education costs may rise faster than inflation. This means your cash savings might not grow enough over time to meet your child’s future education costs, and you might want to consider non-cash investments as well. By investing part of your savings in an investment bond or managed fund, you may find it easier to cover education costs over the longer term, based on the anticipated growth and earnings from these investments. So it’s worth speaking to your financial adviser about the best investment vehicle for your situation.

3. Pay down your mortgage

It can be tough keeping up with school fees and other costs when you still have a major financial burden hanging over you. That’s why it’s a good idea to prioritise paying off as much as your home loan as possible before you child starts school, so you’re in a better financial position to manage their ongoing education costs when the time comes. Even if your child is already in school, it’s never too late for your financial adviser to help you get your finances on track and plan for the remainder of their education.

General information only: The information in this message is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. It should not be construed as financial, taxation or legal advice. Before acting on the basis of this information, you should consider its appropriateness to your own objectives, financial situation and needs. Individual advice can be provided by contacting our office at admin@completefinsol.com or by phone (08) 9330 8886.

[1] Australian Scholarships Group, ASG Planning for Education Index, 2018.

Who doesn’t love the end of the financial year? Okay, so maybe sorting through a shoe box full of receipts isn’t your idea of fun, but don’t worry. With our handy checklist, you can take some of the headache out of tax time. You might even find ways to give your finances a boost.

The end of financial year has a way of creeping up and catching us unprepared. But this time you can be ready, with a to-do list of tasks that you can tick off as you go.

For instance, now may be the perfect time to put a bit extra into your super before 1 July to make the most of the annual contribution caps. And if you’re a business owner, we’ve also got some useful tips to help you manage your financial obligations and plan for the year ahead.

So as the countdown to 30 June begins, here’s our checklist to start you on your way.

Getting ready for the tax man

• Confirm if you need to lodge a tax return

If you received an income through employment or investments during the financial year, chances are you may need to lodge a tax return after 30 June. If you’re not sure whether you need to do one, you can find out by using the Australian Tax Office’s online tool – ‘Do I need to lodge a tax return?’, or speak to your accountant or tax agent.

• Organise your documents

Your tax return needs to show everything you earned between 1 July 2017 and 30 June 2018. As the first step, gather your payment summaries from your employer, invoices for any self-employed work you’ve done, and bank statements that verify your income.

• Identify your investment earnings

Your tax return must also indicate any income you’ve earned from non-work activities during the financial year. This includes (but not limited to) dividends from shares and rental income from investment properties, as well as capital gains from the sale of investment assets. Make sure you have a clear record of all your investment earnings for the year, with documentary evidence to back it up.

• Collect receipts for donations or gifts

You may be able to claim a tax deduction for donations or gifts you’ve made during the financial year to charitable organisations or other eligible ‘deductible gift recipients’. You’ll need to find all your receipts for these – monetary gifts must be over $2 to be tax-deductible, and different rules apply for gifts of money or contributions, so ask your accountant which ones you can claim.

• Work out your deductions

Depending on your employment situation, you may be able to claim a tax deduction for money you’ve spent on things like your car or other transport, work uniform, tools, home office equipment or education and training expenses. You may also be able to claim deductions on costs you incur in earning investment income (such as interest payments) and super contributions. Your accountant can advise you on what you may be eligible for.

• Calculate child support payments

If you’re making child support payments or providing any related benefits, calculate the total you have paid during this financial year. Depending on your circumstances, these costs may be used to reduce your adjusted taxable income. Your adjusted taxable income is used to calculate your entitlement to a range of Government concessions. Speak to your accountant or tax agent or contact Centrelink for more information.

Sorting out your super

• Make an after-tax contribution

The annual cap for after-tax or ‘non-concessional’ super contributions is $100,000 (or $300,000 in any three-year period, if you are eligible for and apply the ‘bring-forward’ rule). But if your total super balance is $1.6 million or more, your annual cap reduces to nil, while your bring-forward cap is reduced once your total superannuation balance is $1.4 million or more. So if you’re thinking of giving your super a boost, ask your financial adviser how you can make the most of the caps.

• Start salary sacrificing or making personal tax-deductible contributions

The annual cap for pre-tax or ‘concessional’ contributions is $25,000. One way to take advantage of the cap is by salary sacrificing part of your income into super. But even if you don’t reach your cap before 30 June, salary sacrificing might be a strategy worth considering for next financial year, so talk to your financial adviser, tax agent or accountant.

Another way to make use of the concessional cap is to speak with your employer about making personal tax-deductible contributions. Since 1 July 2017, most employees have become eligible to make these contributions whereas previously employees were generally ineligible.

• Don’t exceed your caps

If there’s a possibility you’ve already gone above your concessional or non-concessional contribution cap, work out how much you’ve put into super so far this financial year. If you’ve contributed too much, speak to your financial adviser.

• Find other ways to contribute

If you’re a low income earner, you might be eligible for other types of contributions or government payments – for instance, a split contribution from your spouse, a government co-contribution or the Low Income Super Tax Offset (LISTO). Your spouse may also qualify for a tax offset when making a contribution on your behalf. If you’re not sure what you’re entitled to, ask your financial adviser now so you don’t miss out before 30 June.

Taking care of business

• Organise your paperwork

If you’re a business owner, the type of tax return you need to lodge will depend on the structure of your business. Your accountant will probably want to see your profit and loss statement for the financial year, plus your balance sheet, general ledger report and bank reconciliation report, so it’s best to get these ready in advance.

• Reconcile your payroll

If you employ staff, you’ll need to give them each a payment summary by 14 July so they can lodge their own tax returns. You can also use this opportunity to check that your employees’ salaries are in line with award rates and you’ve paid them the required amount of super.

• Update your financial records

As with each monthly or quarterly Business Activity Statement (BAS) you lodge, make sure you have all the financial documents ready that you’ll need. The Australian Taxation Office website has a full list – yours may include bank statements, a PAYG payment summary, receipts and invoices, plus records of fuel tax and GST.

• Check your depreciating assets

Until 30 June 2018, businesses with a turnover below $10 million per year can now deduct the full cost of any depreciating assets under $20,000 (that were purchased and installed ready for use between 7.30pm AEST on 12 May 2015 and 30 June 2018) and a portion of the cost of assets worth over $20,000. If you’ve made a purchase for your business in the past year, ask your accountant if you can claim a deduction.

• Work out your deductions

Tax time is also when you should review your stock to see if you can claim deductions on anything your business makes, buys or sells. You may even be able to claim a deduction for things like interest on business loans and overdrafts.

• Plan your spending

As many of your business expenses may qualify for a tax deduction, it’s worth thinking strategically about when to pay them. There may be costs you want to pay now so you may claim a deduction for this financial year – and on the other hand, you may want to put off some payments so you can save the deduction for next financial year.

When it comes to taking care of your business commitments at tax time, it’s best to contact your accountant or tax agent. They can help you organise your paperwork, review your deductions and assets and help get other financial records in order for the end of financial year.

Start the next financial year off on the right foot.

Need help getting your finances in shape for the year ahead? Speak to your financial adviser. They can make sure you have the right arrangements in place for your personal circumstances and lifestyle goals.

General information only: The information in this message is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. It should not be construed as financial, taxation or legal advice. Before acting on the basis of this information, you should consider its appropriateness to your own objectives, financial situation and needs. Individual advice can be provided by contacting our office at admin@completefinsol.com or by phone (08) 9330 8886.

It’s a good idea to regularly revisit your personal insurance to make sure it’s giving you the level and type of cover you need at your specific stage of life. Here are some things worth considering to make sure you and your family are protected.

Recent research shows that Australians are largely underinsured, with the median level of life cover meeting only 61% of basic needs.[1] Part of the problem may be that we tend to ‘set and forget’ our insurance – even as our circumstances and responsibilities evolve throughout our lives.

That’s why it’s so important to regularly review your cover to make sure it’s working to protect your lifestyle, loved ones and financial goals. Here’s what to consider as you move through different life stages.

Young and single

While you may not be thinking about life insurance when you’re young and healthy, there are still the risks of injury and illness. What’s more, an extended period without an income can do serious damage to your finances. So, if you’re away from the office for longer than your sick leave allows, you’re going to need a safety net.

Which insurance is for you?

• income protection
• trauma insurance
• TPD (Total and Permanent Disablement) insurance

Young couple

Consider how your lifestyle would change if you were left without an income – for example, you might not be able to save for a house deposit or keep up with your mortgage. And if you were off work for some months, you’d still need to keep up with regular living expenses and loan repayments, ideally without eating into your savings.

Which insurance is for you?

• income protection
• trauma insurance
• TPD
• death or accidental death insurance

Family with kids

Once you have kids relying on you, your financial responsibilities increase. Your income is a vital asset: you need it to manage debt, stay on top of bills, pay your children’s school fees and keep up with other necessary expenses. That’s why it’s worth taking the time to get your insurance sorted – so you can make sure your family’s lifestyle is protected.

Which insurance is for you?

• death or accidental death insurance
• trauma insurance
• income protection
• TPD

Mature and independent

If you’re single and enjoying life, your income is key to the lifestyle you cherish – so it makes sense to protect it with a financial buffer. That way you’ll be covered against accidents or illnesses that could take you out of the workforce for a while. Or, if you’re raising children, you’ll also want a financial safety net that ensures they’ll be taken care of, even if something happens to you.

Which insurance is for you?

• death or accidental death insurance
• trauma insurance
• income protection
• TPD

Retired

With your children grown up and independent, your financial responsibilities have started to ease – but that doesn’t mean you should forget about insurance. Because you’ve spent so many years building up a nest egg for your retirement, it’s important to protect it. A serious medical event could still impact your finances, so get the right cover in place to ensure your ongoing financial wellbeing.

Which insurance is for you?

• death or accidental death insurance
• trauma insurance

Need more guidance?

Remember, your financial adviser can help you make sure you have the right level of insurance cover. They’ll work with you to understand your situation and recommend insurance solutions to better protect your financial future.

General information only: The information in this message is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. It should not be construed as financial, taxation or legal advice. Before acting on the basis of this information, you should consider its appropriateness to your own objectives, financial situation and needs. Individual advice can be provided by contacting our office at admin@completefinsol.com or by phone (08) 9330 8886.

[1] Rice Warner: Australia’s relentless underinsurance gap, September 2016.