“Move out of home” they say, “you’ll have all the independence you want”.  These are the words I often hear from relatives and friends.  I sometimes feel as though society demands that we must all move out of Mum and Dad’s house at a certain age.   However has anyone stopped to consider that some of our parents do not mind having us at home?  I can’t speak for everyone, but I contribute my fair share around the house.  I clean, cut the grass, pay bills when required and assist my folks with large expenses such as Kitchen renovations and purchase of a new car.  Furthermore as English is a second language for mum and dad, I take care of all incoming mail and admin work around the house.  Don’t think for a second though that it’s all my parents who benefit from me living at home.  I benefit as well as I don’t pay rent and mum’s cooking is the one of the best in the world, only rivalled by my lovely wife of course.

In my case it was because I continued to live at home, that I was able to save for a house. I realise that not everyone is in the same position as me so, given the opportunity I say stay at home for as long as possible and save as much as possible. Like most Aussies, I too found it very difficult to save enough for a house; however working in the financial planning space has assisted me in appreciating the value of budgeting and saving for my own place. I’ve since moved out of home and now live with my lovely wife and very active little son. So now that I’ve moved out of home, do I have all the “independence and privacy” I want? The answer is I don’t feel any different, as a matter of fact I found it strange living in a house with only 2 and half people. I feel as if the house is constantly empty. Over time however, I’m sure we’ll grow into it. Furthermore there are these little things called bills and mortgage repayments, which seems to constantly re-appear even though I pay them every week. I admit I never paid any attention to bills whilst living with mum and dad and would just pay them as they appear. Since moving out I would now analyse every bill I have to pay with a fine comb to ensure I’m not getting “scammed”.

I find there are merits to moving out of home and there are pitfalls associated with been “independent”, but not exactly what I had originally imagined. Whilst there were some things such as more house work which I expected, there were also some unexpected factors such the wife spending a fortune on flowers, which I never saw coming. Overall having my own place gives me a sense of achievement knowing I was able to save enough for my own house. Now it’s time to save for that house warming party everyone keeps asking about.

Life insurance is an effective way to protect your family against financial hardship if the unthinkable event happened and you pass away prematurely. Unlike other forms of insurance, such as income protection or critical illness insurance, life insurance can be put in place relatively easily depending on your health status and age.

Having appropriate life insurance policy in place, will mean your beneficiaries receive a lump sum payment to fund for everyday expenses, such as mortgage / rent, bills, childcare costs and kids’ education. The thought of losing our partner is unbearable, which makes the topic of implementing life insurance one we prefer to avoid however is necessary. Most Aussie families would find it difficult and almost impossible to meet daily living expenses should the main income earner pass away. This often leads to families having to move back in with relatives, increasing debt levels and even losing the family home.

Latest studies on the underinsurance issue of Australian families suggest the average household should have at least $680,000 of life insurance in place. This is because it takes into account not only debt and possibly medical costs but also lost income, even for the surviving spouse as the likelihood that you would need to take additional time on top of the obligatory 2 days bereavement leave is very high. In reality however the average household has less than half the required cover or even no insurance at all. Most Aussies believe that they have automatic insurance inside their Super Fund and this is sufficient enough. Furthermore hurdles such as having a perception of life insurance being expensive or time consuming to implement, further deters us from implementing life insurance covers.

Depending on your health and age, Life insurance is one of the most simple and cost effective types of personal insurance to put in place. It’s understandable that most of us would prefer to avoid the topic, however you do so at the risk of leaving your families without financial protection in the future. There are lots of options out there for setting up insurance; inside superannuation, through your bank, online or over the phone cover or insurance through an adviser. Any options outside seeing an adviser means that you have to determine the levels of cover and structure yourself, which is usually the part with the greatest benefit. Knowing how to calculate the level of cover required, including additional amounts if held through super and is ongoing to be paid to a non-tax beneficiary to cover tax, or making sure it’s structured right to pay the least amount of tax or even gain a tax deduction, is very important and shouldn’t be overlooked. This is more important than the product that you choose to take up.

So, before you go out and purchase life insurance, we strongly recommend you speak to an expert. Everyone has different needs for personal insurance and therefore it’s important to visit a financial adviser, like your friendly JBS team member, to discuss your own personal situation.

One of the major concerns for people when they retire is, ‘how long will my savings last in order to support my lifestyle of choice’? This is what we often refer to as ‘Longevity Risk’, or the risk of outliving our money.

We are advised of the importance of putting money away into savings or superannuation to ensure that we are able to enjoy our retirement. However there is another perspective to consider – your health.

We need to take one step back and remember our health in retirement is just as important as our wealth. In the same way that we are diligent about saving for retirement while we are working, we need to also focus on our health during our working life.

A person’s health experiences later in life can be affected by their behaviours during their younger years.

So, you may ask ‘what is the health experience that could reduce longevity risk’? It could have something to do with our growing waist-lines:

More than five million Australians are obese;

– If weight gain continues at current levels, by 2025, close to 80% of all Australian adults and a third of all children will be overweight or obese;

– Obesity has overtaken smoking as the leading cause of premature death and illness in Australia;

– Obesity has become the single biggest threat to public health in Australia;

– On the basis of present trends, by the time our kids reach the age of 20 they will have a shorter life expectancy than earlier generations simply because of obesity.

Dr. Joanna McMillan a leading nutrition and healthy lifestyle expert was recently speaking about the obesity epidemic and emphasised the need and importance of a balanced diet and the dangers of a sedentary life.

Inactivity is the second silent killer which can contribute to a person’s shortened life expectancy. Evidence is emerging that sedentary behaviour, such as sitting or lying down for long periods of time is not good for your health. Technology has made our lives easier, but also made us lazy. There are fewer of us doing manual work, many of us have jobs which involve very little physical effort. As a general guide, we should be looking to achieve 150 minutes of moderate intense physical activity in a week.

Tips for a healthy and happy retirement:

– Maintain a balanced diet, including vegetables and legumes, fruit, bread, cereals, rice, pasta and noodles, lean meat, fish, poultry, eggs, nuts and tofu, milk, yoghurt and cheese;

– Try to limit fizzy drinks, alcohol, chocolate, chips and fatty fast foods;

– Stay active – try to get 30 minutes of physical activity every day;

– Get involved with a social group or sports club, this can have many benefits – meeting new people, learning a new skill and overall keeping your mind and body active.

Whilst a planner can assist you with building a sufficient amount of assets to fund your retirement, your health is about you.   You are the one who has most control over a healthy lifestyle.  So get out there, get active, and enjoy life to the fullest, for the longest amount of time possible.  That’s what retirement is all about!

A Power of Attorney is a document that a person prepares to enable another person to make decisions on their behalf. On 1 September 2015 changes to Victorian power of attorney laws came into effect with the commencement of the Powers of Attorney Act 2015 (the Act).

Due to abuse of enduring powers of attorney, it was a necessary move to improve protection and to introduce a new supportive attorney appointment.

The new law sets out:

•    The General Power of Attorney will be called general ‘Non-Enduring Power of Attorney.’
A Non-Enduring Power of Attorney will undergo only minor changes and remain largely governed by the previous statutory and common law provisions.

•    The consolidation of the enduring power of attorney (financial) and power of guardianship into one enduring power of attorney.

This means that one form can now be used to manage a client’s financial and/or personal matters.

•    A new definition of ‘decision-making capacity’ and provides guidance in relation to the factors that should be taken into account when assessing decision making capacity.

Though ‘capacity’ is a key concept when dealing with powers of attorney, there was no clear definition of what that actually meant in any of the existing laws. Following new mental health laws enacted in 2014, this law defines decision-making capacity and therefore shows that a person is presumed to have decision-making capacity unless there is evidence to the contrary.

•    There will be a ‘Supportive Attorney’ role created. This allows a person to choose someone to support them to make and give effect to their own decisions such as banking and financial decisions.

The Act recognises that a person may have decision making capacity if they have practicable and appropriate support. The final decisions remain the decisions of the person and not the supportive attorney appointment. A person may have more than one support attorney appointment.

•    The Act adds safeguards to increase the protection of people making an enduring power of attorney or supportive attorney appointment.

The Act has also clarified VCAT’s powers in relation to enduring powers of attorney and has created new indictable offences punishable by up to 5 years imprisonment or 600 penalty units. One penalty unit is currently worth $151.67.

Enduring powers of attorney (medical treatment) are not impacted by the changes and will continue to be regulated separately under the Medical Treatment Act. The new law does not invalidate existing powers of attorney.

The new Power of Attorney must be in writing and must be in the prescribed form. The form set out the minimum requirements for what to include in a form to make, revoke (cancel), resign or provide notification (where required) in relation to enduring powers of attorney and supportive attorney appointments under the new Act.

When considering making a Power of Attorney as a principal or if you are or are intending to act as an attorney, you should carefully consider the implications of the new laws.

Visit the Victorian Government Department of Justice and Regulation website for more information about the changes to power of attorney laws.

If you would like to discuss your estate planning requirements please give JBS a call.

This article is not intended to be legal advice and is not a substitute for legal advice.

As you may know from reading my previous blogs, I love the surf. However, living in Melbourne I don’t exactly get the fix every week that I used to when I lived on the Gold Coast. Living in Melbourne does give me the opportunity to visit the snow each year and go snowboarding – another sport that I love.

A couple of weeks ago I managed to get myself to Mt Buller for a few days with a group of friends. I have only ever been to Falls Creek in Victoria so I was really looking forward to going to Buller which has many more lifts and runs to conquer.

Going to the snow is an expensive exercise (especially when compared to surfing) so I usually only go once a season. Without the repetition of being on the snowboard every week like surfing the thought always crosses my mind as my trip inches closer – will I remember how to board, will I remember how to turn or even will I fall.

As soon as my boots go in the bindings and I’m at the top of the mountain it’s like riding a bike. What I love about the snow is the sense of freedom you get when you start down the run and then mid-way you can choose to take a different course and try the unknown. You get the opportunity to explore, get lost and sometimes on a good day it can take you the whole day to find you way back to where you started.

If you don’t explore and try new things, your course won’t change. Step outside your comfort zone, push the boundaries a little, lose your way and even fall – imagine where you could end up and what fun you could have along the way.

Buying your first home has never felt harder and it’s clear that people could use a helping hand.  Australian’s typically approach their finances with a ‘do-it-yourself’ attitude, and have quite a reactive, last minute approach when facing up to life-changing events such as home ownership.  

We understand Australians have a high emotional drive for property ownership and we see the importance to satisfy this driver to create life satisfaction.

Here are some tips to help make it happen:

Tip 1 – Determine / Cut Down your Expenses:  Saving the house deposit is going to involve some sacrifice.  Try cutting down on a little luxury each week.  It all adds up.  As a first step, determine what your living expenses are so you are happy, whilst also ensuring there is money left over to save.

Tip 2 – Start Now:  It doesn’t matter if you don’t know exactly where you will buy.  It’s going to take some time to save for a house deposit, so start a regular savings plan now and sort the finer details later.

Tip 3 – Stash your Cash somewhere Sensible:  Investing short term in the share market is not usually a good option.  Whilst an online savings account doesn’t pay much in interest, it is most likely the right place to save for your house deposit.

Tip 4 – Avoid Paying Rent:  One of the hardest parts about saving for a deposit is saving cash whilst also renting.  Living with your parents is not always an option, however if this is possible it will supercharge your savings.

Tip 5 – Save like you’re paying a mortgage:  Many people say they find it hard to save because they’re renting and still have all the other expenses as well.  If you have to rent, then as a minimum you should be saving the difference between your rent and expected mortgage repayments.

Tip 6 – Don’t forget Lenders Mortgage Insurance (LMI):  If you can save 15% – 20% of the purchase price you will generally avoid paying LMI.  The aim should be to avoid LMI because the insurance isn’t actually for you, it’s to protect the lender.

Tip 7 – Allow for Other Extra Costs:  Costs such as Stamp Duty and conveyancing add up and need to be factored in.  The Stamp Duty amount will depend on the purchase price and the State in which you purchase, whilst conveyancing costs will range somewhere between $800 – $2,500.

How JBS can Assist

We believe the biggest influence on you achieving your financial and lifestyle goals is how you best utilise your cash flow.

This has driven us to develop the JBS Cash Coach program which aims to assist the Generation X & Y demographic, and anyone else requiring advice / coaching / mentoring / tracking / accountability regarding their cash flow and financial goals, such as purchasing a first home / debt reduction / retirement planning etc.

We assist clients to develop great money management skills.  This puts you back into the driving seat, using high impact track and reporting technology teamed with expert advice.  We help clients get their finances back on track, so they can achieve their goal.

We have helped around 10 clients this year purchase their first home, and this was achieved through the JBS Cash Coach program.

If this is something of interest and you are looking for accountability and ongoing advice around achieving your savings goals / house purchase please give JBS a call.

Please refer to this brochure for further details.

I am on a quest to create the perfect Father’s Day card. I want it to be personal, to show that my sister and I really appreciate him. So this card cannot be generic or store bought. The problem with this is that in the card making world, there aren’t many products that I can use to represent my Father and his interests.

I got really excited when I stumbled across a stamp set that has a car in it. This was not just any old car; there are plenty of stamp sets that have those. No, this car represents his passion, 1934 Ford Coupes.

I had to get this stamp set, the car was perfect! But I could not find it anywhere. Not in the American Craft Stores and definitely not in the Australian ones. I looked and looked and admittedly, I had to give up. Maybe it wasn’t meant to be. But it definitely was meant to be, because I stumbled across it by accident in an Australian store.

After 18 months of wanting this stamp set I finally had it! Now I just needed to figure out what to do with it. Do I make it an exact replica of his car? Do I make it an artistic representation of his interest?

This is the latest version of my Father’s Day card. It will change before Father’s Day. My cards always do. Afterall, I am on a quest to make the perfect Father’s Day card!

Wills aren’t just for the sick or wealthy, if you’ve got a family, a home or investments you definitely should have one – especially if the asset is only owned by you. Your will is your voice after you die and can be drawn up to provide guidance around who gets what and the person in charge of the distribution process.

Dying without a will (intestate) leaves the decision to a judge. Your assets will be distributed by the law of the state where your property is located, regardless of what your wishes were. It could mean that your minor children could be awarded to someone not of your choosing.

If you have minor children, your will should name a guardian for them.  If your children are a little older and perhaps living with partners but not married; the court may deem their relationship to be “de facto” and their partner would have claim to your estate, even if they separate.  Testamentary trusts can assist with greater levels of protection for de facto and other relationships.

If you have a more complicated estate, you may want to consider a trust which can provide much greater levels of protection, control and tax effectiveness.  You should provide your lawyer with clear instructions on how to change the ownerships on your accounts or changing the deed of your assets to reflect your newly created trust.  For example, with a testamentary trust you could give your spouse the annual income from an investment property you owned but at the same time ensure the asset ownership passes to your children.

Trusts can also be useful to stagger an individual’s inheritance over time.  We all know of or have kids who are not the most responsible when it comes to having large amounts of money in their possession.  You could setup your trust to pay various amounts of the inheritance at ages 21, 25 and then 30, or you can tie the release of your assets to particular events, such as marriage, purchasing a house, education or overseas travel.

Having a lawyer draw up a will should generally cost about $500 to $1000. Your “will” should clearly state who gets what’s left to your estate.  Accounts with beneficiary designations (Property, Superannuation, Insurance and Investments) are typically distributed (or assigned) prior to “the reading of the will” – so it’s possible that very little could be left to your estate.  Nevertheless, dying with a will insures that any leftover assets will be awarded to the person or entity of your choice.

JBS can refer you to an appropriate solicitor who specialises in estate planning matters.

We all know that stereotype. The uni student who gets up at midday, spends all night finishing an assignment and seems to spend more time partying than in class. While I, and the majority of university students, can’t claim to enjoy such a laid-back lifestyle, the idea made me think about finding a balance in what we do.

I have been lucky enough to combine my university studies in commerce with a somewhat more practical education helping out the team here at JBS. Yet, contrary to many opinions regarding lazy uni students, this has resulted in a busy (by uni standards at least), finance-centred schedule.

That’s where soccer comes in. For the last three years I have been filling my winter weeknights and Saturday afternoons with training and games. While it would be something of a stretch to see this progress from just a hobby, every member of the club shares the hope of progressing up the leagues and enjoying the success of a table topping team. We have had an exciting season so far, and with just a handful of matches left, the senior team has a chance to achieve the club’s first ever promotion.

I enjoy my sports, especially soccer, and have woken up at all hours in the morning in the past to follow my team Arsenal, so the continued decision to keep playing is a relatively easy one.

Yet the real reason I choose to freeze on a cold, raining, winter Wednesday night out on an exposed oval is the change it gives to my schedule, the ability to step away from everyday activities and engage in a completely different discipline. It has enabled me to find something of a balance in an otherwise full schedule; the fact that it keeps me at a reasonable level of fitness is a bonus. There is a structure to it that ensures that nothing dominates my thoughts to the detriment of my wellbeing.

I hope to keep playing soccer for at least a little while longer, but I have no doubt that the understanding that I have gained regarding the balance it has brought will be something I try to continue, particularly with my graduation coming up soon and from it a more permanent move into the workforce.

For the majority of us leaving our office desks forever is something we can only imagine about as it’s so far away.  For the luckier ones that are much closer to retirement this can be a time of excitement and relaxation.  Spending our days at the golf course or with our community groups, families and friends all day every day sounds like heaven on earth.  The transition from full time work to full time play however may become unbearable.  Here are 5 facts about retirement that you should be looking at before retiring.

1 – One of the first things retirees discover about retirement is that they have too much time on their hands with nothing to do.  Playing a round of golf with mates, or enjoying a drink at the bar will only fill up a certain amount of time in the day and you can’t go doing the same routine day after day.  Couples and singles alike will quickly become very unhappy once they run out of ideas on what to do with their time.  Having ideas in your head on what to do in retirement is one thing; however actually doing them is another.  Some experts are suggesting retirees have a day to day plan on what they want to do and even seek a therapist leading up to retirement.  You will never be as busy as you were pre-retirement so it’s important to map out ongoing hobbies, part time work and social events before embarking on retirement.

2 – Retired husband syndrome – Many couples get very excited about retiring together, travelling the world together and spending intensive time together.  If this is you then consider the fact that you and your other half may have been together for the past 30 years working full time.  Aside from weekends and holidays, you never have to see each other for more than a couple of hours in the morning and night.  Now all of a sudden you see each other 24 / 7 and may even start to discover that you can’t stand being together for a prolong period of time.  Each of you having your own hobbies, goals and friends will ensure you don’t spend intensive time together.

3 – Not having enough money to fund retirement – Once retired you might have the goal to travel, see the world and complete your bucket list, unfortunately you might not have the funds to do so.  Travelling can become very costly.  A single international trip can set you back several thousand dollars if not more.  By the time your second trip comes around you may find that you don’t have enough funds anymore, so eating out may be out of the question and this year you won’t be able to travel overseas to see your grandchildren.  Having a good financial planner early on can prepare you and set realistic goals for your retirement.  This way at least you have a more clear expectation of what you can afford in retirement and prevent any nasty surprises once you’ve retired.

4 – Entitlement to social security – At present, the Australian pension age is age 65, which is subject to rules, regulations and changes in the future.  During retirement some retirees aren’t aware of what social security benefits they’re entitled to.  Even if you are receiving funds from your Superannuation benefits, you may still be entitled to government age pension (subject to income and asset tests).  Having a good financial adviser will ensure you’re kept up to date regarding any social security payments you’re entitled to.

5 – Losing your identity from not being at work – For those of us who are passionate about our profession, this becomes our identity.  Anytime your friends or family think of Engineer, Accountant or Doctor, they think of you.  So it’s no surprise that once you retire you may feel like you’ve lost your identity, which may lead to discontent and even depression.  Without the daily interaction of your work colleagues, your mental and even physical health may start to deteriorate.  Retirees who are not very active tend to decline rather quickly mentally and physically.  Joining up to the local gym, taking up classes and just continuing to meet new people will have a longer lasting affect for you.  After all, we all need something exciting to look forward to in the future.

If you are one of the lucky ones thinking about retirement, make sure you talk to the team at JBS so there are no nasty surprises.