Yearly Archives: 2019

Staycations: should you stay or should you go now?

It’s the getaway you take when a getaway’s out of the question – the staycation. Whether it’s venturing out locally and returning each evening, or taking a few nights to explore places within driving distance of home, the staycation is becoming increasingly popular.

It might come down to time, or money, or just that you simply can’t be bothered with all the rigmarole of going overseas or interstate. Whatever the reason, it looks like the staycation is here to, well, stay.

Why are more people choosing to stay put?

Faced with the multi-headed hydra of stagnant wage growth, the rising price of many of life’s necessities, the lower value of the Australian dollar and an economy growing at its slowest rate since the global financial crisis, consumer confidence is low.

With the family budget top of mind, 62% of Australians plan to keep their annual trip to under $5,000 – which means splashing out on an overseas holiday is shoved on the back burner.

NSW Tourism Minister Stuart Ayres also believes staycations are an attractive proposition, “because of the convenience and comfort in vacationing so close to home. The ease of travel, coupled with exploring the hidden treasures of your own state, makes for a winning combination.”

He adds: “It’s an easy way for people to escape the day-to-day grind, but still have some flexibility within their itinerary. For example, friends or family may choose to join, it’s easy to add on a day or two, and the journey to your destination is often the best part.”

Other benefits, he says, include affordability and convenience: “Holidaying locally is an affordable option for people to get away without having to budget for expenses such as overseas flights, transfers and visas. The convenience of travelling somewhere familiar can also be appealing as the planning time required is far less.”

The pros and cons of a staycation

Pros

  • No queuing. An overseas trip involves queuing to check in, queuing at security, queuing at passport control, queuing to get on the plane. And then doing it all again at the other end to come home.
  • No need of passports or expensive, bothersome visas. And no chance of locking the passport in the hotel safe and only remembering it when you hit the airport.
  • Smaller, lighter bags are less hassle and you don’t have to check them in. They’re not needed at all if you’re a day tripper. There are no luggage size restrictions either, so if you’re taking a quick local trip with the kids, you can pack whatever you want.
  • There aren’t any so there are no delays and no cancellations.
  • You don’t need to take out extra, expensive policies.
  • Luggage again. Unless you’re a real klutz there’s no chance of losing your own bags.
  • Proximity to home. If there’s an emergency, you’re close enough to deal with it.
  • Getting to know your own area. Staycations are great ways to appreciate where you live.
  • No air miles and no flights mean it’s better for the planet.
  • Location, location, location. Spending money locally means you’re supporting local businesses.
  • It’s cheaper.
  • Pet-friendly. It’s not hard to find a local destination where your four-legged friends are welcome. No need for pet-sitters!

Cons

  • Being closer to home means being closer to work and the temptation to take that call or answer just that one email.
  • You can’t see the Eiffel Tower from your bedroom.

Source: Colonial First State

 


5 saving graces of giftmas

If it is indeed better to give than to receive, then Australians are a happy lot. According to the Financial Planning Association of Australia, 85% of us find more joy in giving gifts to others than in getting them ourselves.

We’re also a generous bunch, spending an average of $93 on a significant Christmas gift. Those with young families splash out even more, averaging $117. The top three categories are cash or gift cards (31%), food and alcohol (14%) and tech and gadgets (12%).

Snow laughing matter

Though we love the sound of ripping wrapping paper, much of this generosity is unplanned. Almost three quarters of us don’t budget for gifts, which can lead to increased pressure on household budgets well into the new year.

Here are five ways to keep enjoying – and a firm lid on – spending for the next special occasion.

  1. Have a plan

With 73% of Australians without a budget for gifts, there’s plenty of scope to improve. Although there’s much to be said for the spur-of-the-moment splurge, more of our generosity can be planned.

Weddings, for instance are the biggest outlay, with an average $137 spent on celebrating another’s big day. Most save-the-days go out well in advance. That gives plenty of time to shop around for that state of the art toaster at a tasty price.

Alternatively, if, you’re one of the 44% who give cash or a gift card to newlyweds, you have time to cost it into your budget.

As many events such as Christmas, anniversaries and birthdays fall on the same day each year, it should be easy enough to plan well in advance.

  1. Go early and in bulk

Bulk buying multiple gifts that aren’t intended for a specific occasion is a growing trend, with one in three of us doing it, saving time and money.

This way you can shop the end-of season sales, craft markets or even check out a Christmas shop in January to capitalise on discounts.

Taking advantage of a bargain pack of birthday cards direct from the artist at a market stall can save you from a more expensive last-minute purchase at the newsagents, and you also get the feel-good factor of rewarding the creator direct.

Checking out resellers such as Gumtree or eBay with a discount offer can also help you make substantial savings along the way.

Women (31%) are more likely than men (24%) to be wise to the blessings of the bulk buy, though it’s also popular with young families.

  1. Give the gift of time

There’s more to giving than things you can wrap – experiences matter too. Instead of another power drill, peach-scented candle or ironically-embroidered pillow, your significant other might prefer your company at a favourite restaurant, or a day out at that music festival.

  1. Everybody gather round

Group giving is the go. Whether it’s colleagues, friends or family, nearly three quarters (73%) of us get together to give gifts. As well as reducing individual costs, it harnesses the purchasing power of the collective for something more expensive.

There’s more to this than money.

Playing to the strength of individuals gets everyone involved and means we can avoid stressing about every last detail. Younger generations prefer to share ideas and more naturally involve themselves in non-material ways such as buying the gift, wrapping it, or writing the card. Older generations have a stronger inclination to simply give cash and leave the rest to someone else.

  1. Australians all let us regift

Some might think it’s a no-no, but 41% of Australians have re-gifted to someone else or for another occasion. If you don’t share your aunt’s taste in holographic horses or Christmas jumpers, think about passing the love on to someone who might find it more their bag.

Whether we don’t like what we’ve been given, or ethically choose to reduce waste and lengthen an item’s lifespan, it’s an increasingly acceptable approach.

Gen Y is the regift generation, although young families are Australia’s most serial re-gifters. Three in five families with young children aged 0-12 (60%) have re-gifted.

One in five of us still believes they’ve never received a regift. So, remember the golden rule and re-gift responsibly.

Source: AMP, 2019


Three reasons why fun should be in your budget

It’s fair to say that most of us aren’t crazy about budgeting. Even with the latest budgeting apps that aim to make this common sense habit into something easy and fun, the thought of keeping tabs on what we’re spending from month-to-month fills many people with boredom or anxiety.

In their Know your Numbers survey results from February 2018, UBank revealed that 86% of Australians don’t know their monthly expenses and only 28% actively use financial management/budgeting tools. The survey also found that being in the dark about your spending can be a big source of stress, with 59% of Australians saying their current financial situation causes them stress or loss of sleep.

Taking it back to basics

When finances are this much of a worry, what does it take to face up to things and take control? One way is to put the fun back into budgeting by taking a step back in time.

Remember when you were young and had pocket money? Maybe you spent the lot every week on lollies or saved it up for a favourite toy. With Mum and Dad picking up the bill for clothes, food and other essentials, pocket money was there to spend on whatever you wanted, guilt-free

It feels great to know you can treat yourself to something without any concern about the impact on your finances. Thanks to credit cards and Buy Now Pay Later, it’s still easy to buy something just because you feel like it. But when you’re borrowing to buy, it’s not such a carefree experience. In fact, it’s a purchase you might regret if the cost of servicing debts makes it harder to just keep up with essential expenses.

Why fun should be in your budget

So instead of spending in an ad hoc way when the urge to splurge strikes, it’s well worth trying. By making fun money an essential ingredient in your budget and cash flow formula, you’ll be giving yourself a much more positive reason to keep an eye on money going in and coming out. And this is important for three key reasons:

  1. It makes your budget real and achievable

The problem with most budgets is that they start with what you need to pay for.  Rent, electricity, travel passes are all important for day-to-day living, but generally aren’t things to get excited about. So instead of basing your budget on needs, make a list of your wants and what they cost first. If the holiday of a lifetime is at the centre of your budget, doesn’t that give you a much greater incentive to be in control of your money?

With money in your budget dedicated to these future plans, you’ll have a good reason to bring more discipline to daily spending. But we’re only human, and it can be hard to wait for weeks on end to reap the rewards of self-control. By including a provision in your budget for some ‘pocket-money’ you can use to spoil yourself every month or so, you won’t have to feel like fun is always just out of reach. This kind of fun money in your budget is like the icing on the cake. It gives you that sweetener to keep you on track with your whole budgeting effort.

  1. It makes the fun money count

This monthly splurge budget doesn’t have to be much. $100 may be all you to need to spoil yourself a little and perhaps that’s all you can afford right now with your other day-to-day commitments and bigger fun goals to save for. But it’s an amount you should stick to. If you don’t put it towards something worth enjoying, you can be sure it will get spent anyway. And this can teach you an important lesson about why a budget works wonders for lifestyle goals, large and small. If you don’t take control of where your money goes, you’re very likely to spend it anyway and have little to show for it

  1. It gives you permission to spend – but not too much

Knowing that your fun money is finite can help you think more carefully about each spending choice. Keeping your monthly limit in mind when shopping or out with friends can remind you to put the brakes on spending when you’re at risk of getting carried away. Giving yourself permission for a couple of small splurges or one bigger one can feel more like a real treat when you know it’s money you can genuinely afford.

If you need some help with managing your spending and saving then perhaps a financial coach is the answer. Chat to the JBS Financial team about what steps you need to take to live the life you want to live.

Source: FPA Money and Life


Balancing your travel dreams and your money in retirement

So you’ve retired, and received that last pay check from full time employment.  What’s next?

“This is all the money I will ever have”, one of our clients said to us when they had reached their financial freedom number and were able to stop working full time.  But with some good savings and spending habits, together with a sound investment strategy; your money can last for your lifetime and be passed onto the next generation.

When you retire, it’s best to remember that you are investing for the rest of your life and as a result ensure that you have a balance of both growth assets (shares and property) and defensive assets (cash and fixed interest).  Whilst the later, cash in the bank isn’t returning much right now, it will provide you with the security of knowing that you will have enough to pay for your spending over the next 2-3 years.

Like most people, when you start retirement it’s a wonderful time to look forward to planning that first big trip.  And so the questions begin:

  • Where will it be to?
  • How long are you travelling?
  • Who are you travelling with?
  • How much do you need to do what you want to be doing?
  • And more….

There is no point in working hard all your life, just to stay at home when your goals have been to travel the world.  So how can you be prepared?

Consider all the costs to do the things you want to do, whether it’s a bunch of day trips and places you want to visit, or dinner in the local tavern or in a high end restaurant. You need to consider ALL the costs so there are no surprises. Yes, you need a ‘Budget’; I know it’s that dreaded budget word but it’s always best to ensure that you know what you are spending on each trip. There is nothing worse than getting caught short because you’ve overspent or missing out on some of your other plans because you’ve spread yourself too thin.

Many of our retired clients choose and want to do most of their travel, when health and fitness allows, in their early years of retirement.  They will have a living expenses plus travel budget, but their travel spending say 15 or 20 years down the track is just not used to the same extent.

International travel becomes more costly once you reach 85 with insurance and so local holidays within Australia become more appealing.

After years of helping people ‘Retire Right’ we collated some key considerations before setting out to discover the rest of the world:

  1. Do you really love to travel, or just take vacations?
  2. Consider where you want to travel and how long each trip will be. It’s good to also take into consideration your obligations to family at home and your state of health.
  3. When reviewing how long you will be away from home, things like packing, flying, finding accommodation all take time and after a while can become tedious. Often shorter trips can be more enjoyable than 3 months away.
  4. Review on-line the costs, airfares, accommodation, local travel costs, day tours and living expenses. So that you can have a ‘daily allowance’ worked out.
  5. Keep watch for special offers airlines such as double status credit promotions or 2 for 1 deals at certain times of the year; these can often make your dollars travel further.
  6. Don’t blow your travel budget all in the first couple of years, otherwise you might find yourself spending more time at home and less time traveling because you’ve run out of money.
  7. Do you love to cruise and don’t have a lot of excess cash, then you might consider a re-positioning cruise. Cruise lines offer discount trips when they need to move a ship from one port to another, usually during the off-season.  Unlike typical cruises, the ship will not return to the port of origin but will stop at several ports on the way to the end destination.
  8. Swapping houses is another great way of seeing another part of the world for minimal accommodation expenses. The typical house swap involves you and another homeowner moving into each other’s house for a stated period of time.  It’s a great way to vacation abroad if you want to stay a week or more in one location.  Remember the movie “The Holiday”.
  9. House sitting is another option, and helps cover the cost of your accommodation by house sitting for a family that is doing some traveling of their own. In return for staying in the home for free, you might be expected to take care of pets, water plants, or perform simple maintenance.

Whilst we all love the idea of being spontaneous and heading off to our dream destination, the truth is if you want to Retire Right and do those dream holidays then you need to plan ahead. If your travel “taste buds” have been tempted, the above are just some of the ways that you might be able to review your travel and what’s next on your retirement bucket list.

Maybe it’s time for you to chat to the JBS Financial team on how they can help you.

Jenny Brown


Tips for boosting retirement savings and investments in a lower-for-longer world

Retirees now face a bold truth: investing in traditional safe haven assets do not provide the returns they once did. So, where to from here?

The first thing is to accept that today’s returns are lower on retiree favourites, like cash and bonds.

Second, there are tools available to provide forecasts for what the market will return over a 10-year period. These forecasts have been relatively reliable through history and are useful for investors who, understandably, are looking at short-term volatility and thinking there is no hope in predicting long-term patterns.

What the future could look like

In our view, investors should expect lower returns on bonds over the next 10 years than the past 10 years, simply because the starting point of today’s yields is extremely low.

Low bond yields have the potential to cause other riskier assets such as equities to trade at higher valuations and therefore also offer lower expected returns. Because of market conditions, annuities may also pay less.

The combined effect in our view is that the expected return on a simple 50/50 stocks and bonds portfolio is likely to be less than 5% p.a. over the next 10 years. The only compensation accompanying these lower returns is that this environment is likely to produce lower levels of inflation.

This is the lowest forecast return for this type of portfolio in history, matched only by those made in the run-up to the global financial crisis. In that instance, high equity valuations were driving down expected returns. This time, it’s low bond yields.

This is a very importance difference; if you were aware in 2007 that equities were the source of deterioration in your expected return, you could de-risk your portfolio into cash and bonds and still expect a reasonable result. However, in 2019, there is nowhere to hide.

To avoid the risk of holding a poorly performing asset, like cash and bonds, one option is to look beyond these conservative asset classes and take on higher levels of risk with more volatile assets. At a time when investors can least afford shocks to the downside, this is a conundrum with no simple answer.

Retirement savings, then and now

For retirees whose focus is to preserve and prolong their stockpile, all this begs the question: how large a reduction in retirement income should one expect?

The bottom line is: retirement savings won’t last nearly as long as they have in the past. Based on the average market return from 1969 to today, a retiree could have expected to receive a comfortable retirement income for 18.5 years. For retirees in 2019, that drops down to just 13.5 years.

There is no doubt that the investment environment moving forward is going to be significantly more challenging than it has in the recent past, with today’s retiree facing the prospect of some of the lowest returns in living memory.

What retirees can do?

Still, far from waving the white flag, in our view there are some things investors can do to improve their prospects.

With traditional strategies returning less in today’s environment, retirees will now more than ever reap the benefit of a good adviser. Three investment strategies which could help manage the situation are:

  1. Retirees can seek higher returns from active management. By finding managers who can outperform the market, retirees can give their returns a boost that may go some way to offsetting the impact of lower market returns.
  2. Retirees can also employ a dynamic asset allocation approach in their diversified portfolio. Dynamic asset allocation seeks to navigate the market cycle and gain exposure to asset classes that are delivering the most attractive returns. By dynamically managing their exposure to different asset classes through the cycle, retirees may be able to secure more attractive returns and better manage risk compared to a traditional ‘buy and hold’ strategy.
  3. Retirees could consider increasing their exposure to alternative sources of return that aren’t linked to bond and equity markets and aren’t likely to suffer as badly from the low-return environment.

Additionally, retirees will benefit from an effectively constructed portfolio that minimises waste, such as transaction costs, and maximises structural advantages, such as access to franking credits.

Unfortunately, there is no magic tonic for the situation and retirees should be wary of anyone claiming to have one. If you are concerned about what’s next for you in retirement then take the time to book an appointment with the JBS Financial team.

Source: AMP Capital

 


Do falling markets signal a good time to open an SMSF?

Historically, self-managed super funds (SMSFs) have been seen as a direct way to take control of your retirement savings. By taking charge of your investment selection and asset allocation, there may be the perception that you could outperform your retail or other super fund by taking control over your choice of investments.

Hence, when investment markets begin to fall, greater interest is taken around where your super is invested and the fees you may be paying to the super fund and investment experts managing your retirement savings.

Keep in mind, this doesn’t mean you can invest in anything, anywhere you like. You are still restricted to investing in assets allowed under the trust deed for your SMSF, the investment strategy of the SMSF, and what superannuation law allows (or prohibits) your SMSF to invest in.

At its core, an SMSF is essentially a concessional tax retirement savings trust designed for the sole purpose of funding the retirement needs of the SMSF’s members. SMSFs operate under comparable rules to other super funds in the open market. However, they provide their members with an additional level of choice, control, and flexibility.

Financial and other considerations for opening an SMSF

If you are considering starting an SMSF for the first time, the best time to open your SMSF will be after you have considered all of the relevant factors, such as the costs and responsibility involved in running your own SMSF, your investment plan and only then after you have arrived at the conclusion that an SMSF is the right retirement savings vehicle for you.

Start by making sure you understand the rules and regulations in the current superannuation landscape.

Make a decision around the pros and cons of how you may want your SMSF structured. Will you have a corporate trustee or individual trustees and how many members will be a part of your SMSF?

Your SMSF trust deed contains the rules for operating your SMSF, the powers (and restrictions) the trustees may have, and the conditions for investing the member’s funds and paying members benefits. Is there anything you specifically need accommodated in your SMSF’s trust deed?

It’s important that your SMSF’s trust deed is correctly drafted and meets the needs and plans you have for your SMSF, so consider professional advice in this area.

Factors critical to your SMSF’s success

Plan the way forward for your SMSF by preparing your SMSF’s investment strategy, putting it in place, and reviewing all factors critical to your SMSF’s success on at least an annual basis.

For example, are the SMSF’s members in the accumulation phase or will they soon be drawing pensions? Does the risk tolerance of the SMSF’s investments need to change? Are the SMSF’s investments within the target range of the investment strategy? And will you apply for or continue to hold insurance cover for the SMSF members?

While running your own SMSF may provide an increased degree of choice, flexibility, and control that is generally not available in retail funds, it comes with additional responsibility (and potential complications) in areas you may not immediately realise.

What if over time your relationship with other members of the SMSF change? Unless your SMSF is a single member fund, most SMSFs will have more than one member and more than one trustee (or director of the corporate trustee company) running the SMSF.

Do you have a plan in place to cater for events such as a member falling ill, losing the capacity to undertake their duties, a relationship breakdown or someone no longer wanting to be a part of the SMSF?

Challenges may arise if the remaining trustees are unable to agree on the future direction of the SMSF, the investment management or how to deal with the members’ benefits.

SMSFs don’t always last the distance

With an average of over 14,000 SMSFs being wound up each year over the five financial years prior to 30 June 2018, you may choose to wind up your SMSF for any number of reasons, and if you do, it’s important you consider your role in this area carefully. Winding up your SMSF requires a number of tasks to be undertaken, which if not done correctly, may result in your SMSF staying open for an extended period of time resulting in additional operating costs.

Again, you will need to check your SMSF’s trust deed as it may require certain actions as part of the wind-up process. You will need written agreement and approval from all people involved in your SMSF, verification with the members on how they would like their benefits paid (or rolled to another super fund), and complete all of your tax and other compliance obligations.

Before you take a step to establish a Self Managed Super Fund (SMSF) or close your SMSF down, sit down with one of the JBS Financial team so they can help step you through what is right for you.

Source: BT


How to stay mentally and physically fit pre & post retirement

Whether you’ve already reached retirement or are readying yourself for it, there’s no denying it signals a big change in your life. Here the top 10 suggestions for staying alert and active in your golden years.

Find your joy

To fight feeling a loss of purpose, find something that gives you a sense of achievement and joy, such as travelling, looking after the grandchildren or volunteering.

Learn new things

You’re never too old to learn something new, so look into free courses on offer, learn a language, an instrument or go back to university.

Embrace youth

There’s nothing like having younger friends to keep you feeling young. It will keep you up-to-date with the latest trends and technologies, and in return you can share your wisdom and experience.

Get a dog

A new four-legged friend will keep you active, get you outdoors, make you laugh and, as an added bonus, help you to meet new people.

Stress less

A worry-free mind will keep you mentally happy and healthy, so make sure your financial affairs are in order, and tackle all those little jobs you’ve been putting off.

Laugh often

Laugh as much as you can. Having a good sense of humour and a positive attitude is a must to enjoying your retirement years.

Use it

Do crosswords, puzzles, chess, Sudoku, knitting, reading, jigsaws, cards, and board games – anything that stretches your brain.

Move it

Whether it is Zumba, walking, yoga, lawn bowls, golf, swimming or whatever you can manage, exercise is key to a healthy mind and body.

Reflect and revitalise

Be satisfied with who you are and what you’ve achieved. Learn to live at a slower pace and enjoy the journey as well as the destination.

 

Source: AMP

 

 


What are the 3 biggest living expenses for households?

We check out the three largest contributors to household spending in Australia and where people would source additional cash if living expenses rose.

If you worked a full-time job in Australia in 1975, the average amount you would’ve earned a year was about $7,600, whereas today, that figure would be closer to $72,000, according to research by McCrindle.

That’s welcome news, but while we’re earning more than what we did in 1975, things are also costing us more. A loaf of bread is 10 times the price, a litre of milk is three times the price, a newspaper is 20 times the price, not to mention petrol has doubled, with house prices in some capital cities up thirtyfold.

We check out the largest contributors to household spending today and where people say they would source additional money if day-to-day expenses increased further.

Housing, food and transport

The three largest contributors to household spending in Australia have been the same for many years, according to the Australian Bureau of Statistics (ABS).

ABS figures reveal three-and-a-half decades ago the largest contributors to household spending were food (20%), transport (16%) and housing (13%), with housing now at the top of that list (20%), followed by food (17%) and transport (15%) respectively.

A separate report by Deloitte highlighted that around 37% of Aussies were concerned about their ability to cover expenses, with more than 50% indicating that they expected to pay even more on housing and energy costs going forward.

What people would do if costs rose further

When asked, if your day-to-day living expenses increased, where do you think you’d source additional money from, here was the top eight responses in a survey of Australians:

Reduce luxury spending – 20%

Buy fewer groceries – 12%

Spend less on transport – 12%

Borrow money via a loan or credit card – 10%

Draw on savings – 5%

Spend less on food delivery and eating out – 5%

Cancel subscription services – 4%

Cancel streaming services – 3%.

After more tips and insights?

Now that you’re aware that housing, food and transport are generally the biggest expenses for Aussie households, you may be looking at ways you could cut back and save in these areas.

 

Source: AMP News & Insights October 2018


Good things come to those who wait

If you’ve only recently started earning for yourself, taken out a mortgage or started a family, you’ll know it’s a far cry from the teenage impulse to order up that amazing jacket right now.

Of course, giving something up involves sacrifice, which doesn’t sound like fun. So instead of thinking of the pain, concentrate on what you gain. Instead of clicking on another piece of wearable tech, imagine a property with a backyard where your kids can run around.

Why we want it now

It’s only human to want things straight away. Evolution has given us a desire for immediate rewards. We’ll eat the food in front of us if we’re not sure where the next meal’s coming from. Most other animals simply act on these impulses, they don’t know any other way. But we can imagine the future.

People don’t always make rational decisions straight away, which is why some areas like house purchases usually have cooling-off periods. Waiting a while before you commit to a purchase can reduce buyer regret and free up money better spent on what you really want.

You can do it already

Even if you think you’re a hopeless case when it comes to resisting temptation, it’s likely you already practise some form of delayed gratification.

If you have kids, you’ll already know the challenges of unfiltered demands. Most parents teach the benefits of waiting and sacrificing something now for something more rewarding later.

Self-control is like a muscle. The more you use it, the stronger it will be. The stronger you get, the easier it’ll become. Over time you’ll become less susceptible to dropping back into old habits and finding yourself searching online for this week’s hot Apple gadget. Early adopters often pay more for tech that’s new to market. Waiting for the bugs to clear and price to fall might be cheaper and better.

Talk to your future self

There’s a trend for famous people to write notes to their teenage self, saying what they’ve learned along the way.

Will your future self thank you for trading up to the latest phone or vehicle? Or would they rather you’d saved for the holiday of a lifetime, or that beach shack with a view?

The answers help you plan your goals. Often, it’s experiences rather than things that are truly memorable. There may come a time when you come across that designer jacket in the back of your wardrobe and casually toss it into the op shop pile.

Talk to someone older about what they’d have done differently. Many retired people wish they’d put more aside, or started saving earlier in life.

See the difference a day makes

Waiting just 24 hours before you commit to buying that band t-shirt can be enough to persuade you that you’d never really wear something that yellow.

Taking time to reflect often changes the choices you make. You might just find you can do without that extra case of shiraz, when next day you come across one you haven’t opened.

Many consumer goods are marketed to persuade you that you need something right now. Think of those shopping channel ads where they’ll throw in an extra mophead if you buy that new cleaner within the next 10 minutes. Make sure you really care about that mophead before you commit.

Don’t be a tech slave

Own your phone, not the other way around.

As advertisers get more and more personal data they’re better at targeting what we want, and using techniques to get us to buy right now. Is 10% off the end-of-financial year sale really worth losing a week’s holiday? Think of your other goals so you use the value scale that’s right for you.

Instant advertising often pushes for instant responses that don’t look so flash down the line. Marketers often structure offers to take advantage of our FOMO. Resist this year’s model in favour of the future car. It might just be a jetpack by then.

Source: AMP, 2019


Changing money habits for good

Is sticking to a budget the money magic wand that can sort out your finances, once and for all? Discover what budgeting can and can’t do for you and how to turn new budget habits into positive lifestyle changes.

What’s a budget for?

Knowing how to budget is one thing. But what is the real point of a budget and how can it actually help you change your behaviour and get a fresh financial outlook on life? In the simplest possible terms, the purpose of a budget is to move money from one spending category to another. Instead of shelling out $50 for lunch at work every week, you put the money towards a weekly date night with your partner. Or you cut back on your grocery bill to give yourself more to save towards a deposit for your first home.

What a budget isn’t is an overnight transformation from money worries to wealth and peace of mind, particularly if you have debts to pay off. It’s more a ‘fake it until you make it’ way of redefining how you naturally behave with money.

Learn along the way

At first glance, a budget can seem too transactional to be a tool for behavioural change. You set yourself some targets for spending less here, saving more there and do your level best to stick to them. To many of us, this can feel like a test we’re never going to pass with flying colours. There’s always going to be some reason to blow up the best budget intentions. It could be a surprise bill for car or home repairs, or a moment of weakness when your favourite label has a sale. Before you know it, spending in the household or clothes category has gone way over and you feel like a failure.

But before you throw in the towel, it’s really important to realise that learning from your budget failures is the key to actually changing your lifestyle and finances in some very important ways. Missing a budget category target gives you the perfect opportunity to consider what got you off track. Was it buying something on sale for your wardrobe that you really could have done without? If this is the case, you can acknowledge that opportunistic spending is a problem for you and come up with ways to resist temptation or avoid it altogether. If it’s the unexpected bill that threw you off, this is a great reminder of the reason for having an emergency fund to dip into. With a decent savings buffer up your sleeve, you can deal with the occasional surprise in your budget without it having an impact on other spending.

Positive pay-offs

Without those budget targets in front of you, these moments come and go. Your debts grow or your savings shrink but nothing really changes in how you think or behave about money. When you have a budget to follow, on the other hand, spending more than you planned to can trigger thoughts and conversations about the positive priorities in your life. What are you working towards? What will help you sleep better at night and reduce your stress? Is it worth doing things differently next time so you can meet your targets and get a step closer to your goal – whether that’s to be debt-free, travel the world, buy a home or pay for your kids’ education.

From rigid to routine

This really highlights how your commitment to a budget is something you need to keep making, week after week, month after month. When you feel like you’ve failed, it’s definitely not a reason to give up on yourself and your journey towards better money management. Instead, see it as a prompt to change your financial behaviour, one routine at a time.

This is the goal of a good budget – to push you to change spending habits a little at a time.  When you overshoot your target, you make adjustments to your normal routine so you can hit the bulls eye next time. And although it won’t make you rich overnight, it will make you question and change behaviour that has you spending your entire income each month.  Before you know it, having money leftover each month will become your new normal. As well as giving you more choice in how you spend that extra money in the future, you’re also getting peace of mind and less stress about money, here and now.

If you need help getting your good habits in place then it could be time for a meeting with the JBS Financial team.

Source: FPA Money and Life, May 2019