The funny thing is money, on the one hand, can get us excited or give us a real sense of achievement (think reaching a savings goal). On the other hand, it’s something we tend to keep to ourselves. Whether our finances are in great shape or need a bit of TLC, talking about it openly with a partner or loved one could help you share your experiences and align your financial goals.

Why we don’t talk about money

There are all sorts of reasons we don’t discuss money, and the psychology behind it is different for each of us.

Some of us had it drummed into us at an early age. Remember Gran telling you it was rude to talk about money? Well, her advice should have come with a few caveats.

Another reason is that, for many of us, our sense of self and success is wrapped up in how financially successful we are. So we play our cards very close to our chest. It’s also why we see people falling into the trap of using money they don’t have to project a false, more successful ‘version’ of themselves.

When we should be talking about money

Some things are best kept to yourself (like your PIN!), but there are circumstances where you could really benefit from an honest discussion about your finances. Here are a few examples:

• In a relationship? Talking openly about your finances with your partner could help you align your goals and pool your knowledge.
• Worried about your finances? Opening up to a close family member could help you regain psychological control of your situation.
• Planning for the long term? Talking to a licensed financial advisor about what you want to achieve could help you set achievable goals for the future.

Getting the conversation going

Once you’ve decided to have the chat and choose a trusted person to talk to, here are three steps that’ll help you make the most of your time:

• Decide what you want from the conversation. Do you want advice, help or just someone to talk things through with?
• Share your feelings. If you’re feeling overwhelmed or worried, say so.
• Focus on outcomes. Try and walk away from the conversation with a positive change you can move forward with.

So there we are. Opening up about your finances could be a great help, but remember – your financial information is private, so treat it with care. You can still discuss goals, share hints and tips, and get advice without revealing sensitive information.

Do you need a go-between, someone who can help you start the money conversation? Chat with the JBS Financial team, and let us see how we can help you.

Source: ING

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

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 – Time – One of the first things our clients 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 prolonged period of time. A great plan is ensuring each of you have your own hobbies, goals and friends. As my mother often said to my father “I married you for better or worse, but not for lunch”.

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 a lot more than you’ve budgeted for. 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. By speaking with the team at JBS early on we can help prepare you and set realistic goals for your retirement, putting in allowances for those additional goals that you want to tick off your bucket list. 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 – Depending on what year you were born, the Australian Pension Age is at least 65 but is gradually increasing to age 67. 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). We will help ensure you’re kept up to date regarding any social security payments you’re entitled to and consider how we can structure your wealth to maximise these for you.

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. Remember good planning takes time.

Introduced as part of the 2017-2018 Federal Budget, the First Home Super Saver (FHSS) scheme aims to make housing more affordable for first home buyers. Essentially the FHSS scheme allows you to save money in your super fund that will go towards your first home.

If you are making either concessional or non-concessional contributions into your super fund, you will be able to apply to have your voluntary contributions, as well as associated earnings, released to help you purchase your first home. Since your concessional contributions are taxed at 15% as opposed to your marginal tax rate, the FHSS scheme can be an effective tool in helping you save for your first home.

When making a withdrawal from super to help purchase a home, you are able to withdraw total voluntary contributions of up to a maximum of $30,000 across all years, with a maximum of $15,000 from any one financial year. The contributions are ordered by a first-in first-out approach. For example, Joe has made $10,000 of eligible non-concessional contributions each of the past 3 financial years. He finds a house he would like to buy. He can withdraw a total of $30,000 to purchase the house as each year he has stayed within the maximum of $15,000 per year. If Joe had made eligible non-concessional contributions of $20,000 and $10,000 in the past 2 financial years, he would be limited to only withdrawing $25,000 (maximum of $15,000 from the first year and $10,000 from the second year).

Once your first FHSS amount has been released to you, within 12 months you must do one of the following:

– Sign a contract to purchase or construct your home – you must notify the ATO within 28 days of signing the contract
– Re-contribute the assessable FHSS amount (less tax withheld) into your super fund and notify the ATO within 12 months of the first FHSS amount being released to you.

There is a strict set of criteria you must satisfy in order to be eligible for the FHSS:

– You must be at least 18 years old when you request a release from your super account
– You must never have owned property in Australia (this includes investment property, vacant land, commercial property, a lease of land in Australia or a company title interest in land in Australia).
– You must not have previously requested the Commissioner of Taxation in Australia to issue a FHSS release authority in relation to the scheme.

You may be eligible for the FHSS even if you do not satisfy the above conditions. More details of this can be found here.

There is also criteria on what you cannot purchase through the FHSS and these include:

– Any premises not capable of being occupied as a residence
– A houseboat
– A motorhome
– Vacant Land

One thing to note is that just because it can be done, doesn’t mean that every super fund offers it so if you believe you are eligible and would like to explore it further, it would be worthwhile contacting JBS.

The holidays are great time for families and friends to get together to enjoy the warmer weather and sunshine together. However, this time of year is also when spending can go a little overboard and people end up with an overwhelming credit card debt.

Below are a few ways to get yourself back on track this New Year:

Sell, Sell, Sell
Selling items you no longer use is an easy start. You can make a dent in the amount you overspent during the holidays and you can also make a jump on decluttering your house. Try to sell in local areas to reduce the cost of shipping items. By grouping items together such as 10 x books or bag of kids clothing size XX for a set price reduces the time you spend advertising items and increases the chance of a quick sale.

Eliminate non-essential items
Small inexpensive items add up over the month. If you don’t purchase that morning coffee or afternoon soft drink you could potentially save yourself between $150-200 a month. Consider cheaper alternatives like taking your coffee with you in the morning and making your lunch the night before.

Stop Shopping
This time of year can be tempting to purchase in the post-holiday sales, but if you are already in debt you cannot afford the items no matter how good the deals are. Unsubscribing from e-newsletters offering sale items is a great place to start, if you don’t see the deals you can’t buy them. Ensure you don’t do your grocery shop when you are hungry and take a shopping list so you don’t impulse buy.

Make this year’s financial hangover the last, contact JBS today and we can help you give your finances that bright New Year feeling.

Offset vs Redraw

When it comes to choosing a home loan, we often simply choose the one with the lowest interest rate. However one thing we should take into account is whether the loan has an option to add an offset account or not.

What is an offset account?

An offset account is a bank account attached to a loan that ‘offsets’ the loan balance. It does not earn any interest but instead reduces the interest payable on the loan.

For example, if you have a $300,000 loan with an interest rate of 4%. The interest payable on the loan is $12,000. If however you had an offset account with a balance of $50,000. The interest payable is calculated on a balance of $250,000 ($300,000 less $50,000) so $10,000.

Note that if instead you paid this $50,000 into the loan then the total loan would also be $250,000 and the interest payable would also be $10,000. The advantage of having an offset however is that the $50,000 is in a bank account and therefore can be withdrawn very easily.

Why not just pay money into the loan and then use a redraw facility?
Having a redraw facility on your loan gives you the option to redraw the extra money you’ve paid into the loan giving you the same flexibility as having an offset account. There is however 1 key difference. When utilising the redraw facility, you are paying down the loan and redrawing whereas with an offset account, you aren’t actually paying down this loan.

So why does this matter? Tax law dictates that the tax deductibility of a loan is determined by its purpose. So if the purpose of the loan was to purchase an income producing asset, then the interest becomes tax deductible. If the purpose of the loan is to go on holiday, the interest is not tax deductible. This is where an offset account shines.

For example, let’s take a $500,000 loan which was initially purchased to buy a home. 10 years down the track, you’ve paid off $100,000 so the loan is now $400,000. You redraw that $100,000 to purchase a new home and borrow an additional $500,000, with the plan to turn your existing home into an investment property.

In this scenario while the initial borrowing amount was $500,000 once you’ve paid it down, only $400,000 is being used to fund the now investment property and is hence tax deductible.

In a separate scenario, you utilise an offset account. You have a current loan of $500,000 with an offset account of $100,000. You then withdraw the $100,000 from the offset account and borrow an additional $500,000 to purchase a new home. In this example the loan for the new home is $500,000 instead of $600,000 however the loan on the investment property is $500,000 instead of $400,000.

By utilising an offset account, even though your total loans are the same, your tax deductible loan is $100,000 more which will provide you with more tax deductions (and hence less tax payable) than if you used the redraw facility.

What are the pitfalls?

An offset account is a bank account and can be easily accessed. This is the offset accounts greatest weakness. If you are the kind of person that struggles to save money or can be tempted by large bank account balances you may find yourself using the offset money to purchase a new car, go on holidays etc. as you will have large cash amounts easily available to you. In contrast, a redraw facility adds that extra step which may stop you from accessing those extra mortgage payments. So while you are thinking you are paying down the loan quickly using an offset account, yes you are reducing the interest payable, however the loan is not getting paid as fast as you may think as you continue to redraw the funds for personal spending.

Selecting a loan

Interest rates aren’t the only thing we need to consider when selecting a loan. We often need to consider the features of the loan. However, features aren’t everything, and they may be features that we do not need and a cheaper loan may be better suited. It is always advantageous to speak to an expert, where they can determine your needs and recommend a product that best suits. An offset account is only one feature. There may be other features that better suit your circumstances or a simple loan with the lowest interest rate may be the best.

If you would like to speak to a loan expert to make sure your loan is the best one suited to you, please call us on 03 8677 0688 and we will happily refer you to an expert.

My partner and I have always taken it upon ourselves to build towards our family’s financial future. Having a roof over our heads and bills paid was one thing but we also wanted savings put aside each week for a rainy day, some savings in the kid’s bank accounts and back up plans for unexpected life events. From time to time I get asked how we’re able to have a mortgage, with 2 kids and think about saving all with me being the only one working. I simply explain that it all comes down to planning well before committing ourselves to any major long term commitments. Then it’s just a matter of defining the steps required and sticking to our guns.

Before we bought our home we decided that it was important to set out the financial ground work regarding what we needed to do in order to fund our loans, living expenses and at the same time able to save each week. So we sat down to determine what our repayments and bills would be once we moved into our home. From there we were able to work out the exact amount we were realistically able to save each week and made a commitment to put those funds aside without fail. Furthermore we made a commitment to put aside funds each week into our son’s bank account. Again this was a realistic figure and we stuck to it each week.

The main point we focused on was to be realistic in what we set out to achieve and how much we could achieve. Often I would think to myself that I’m able to save a certain amount each month; however my bank account does not reflect my theory. Once our second child was born, we again went through the same process to ensure we were continuously building towards our family’s financial future.

We also knew that having a saving’s plan and strategy in place wasn’t enough. Being the sole income earner of the family, I also took it upon myself to ensure my family was protected if I was suddenly unable to earn an income. Several months before we bought our house, we discussed the amount of personal insurance I would require in unforeseen circumstances, which takes into account future long-term loans and living expenses. I then made sure my personal insurance cover was all in place months before we started to look for a house. As you never know what might happen.

Having a financial goal for our family’s future is great but to achieve it, planning and commitment is key. Time and time again we have experienced that thorough planning has many benefits. It firstly provides us with a realistic expectation of what we’re in for and more importantly provides motivation to achieve the financial goals we set. Once our plan is in place it was then up to us to commit, keep each other accountable and more importantly encourage each other to achieve what we set out to achieve.

– Andy –

It’s been more than 6 months since the Superannuation reforms came into force on the 1st of July 2017, and now with the Christmas break over and done with and most likely back to your day to day routine, now is as good a time as any to re-focus on your Superannuation.

One of the more prominent changes to Super that came into effect was the removal of the concessional tax treatment of Transition to Retirement Pensions (TTR Pension). Pre 1 July 2017 any money held within a TTR pension received a 0% tax rate on any income or realised capital gains, however post 1 July 2017 money held within the TTR pension is taxed at 15% (same as accumulation).

However, any funds that are held within an Account-Based Pension still receive the 0% tax rate (for balances up to $1.6 million). Unless you’ve met a condition of release, such as attaining age 65, you’re unable to commence an Account-Based Pension. The most common conditions of release are:

– Reaching preservation age (currently age 57 – depending on your date of birth) and retiring
– Reaching age 65

For superannuation purposes, a member’s retirement depends on their age and future employment intentions. A person cannot access Superannuation benefits under the retirement condition of release until they reach preservation age. At this stage, the definition of retirement depends on whether the person has reached age 60.

If you’re under age 60, then meeting a condition of release is a bit harder, effectively you generally have to completely cease employment and have the intention never to again work more than 10 hours per week. However, if you’re over age 60 (but under age 65), simply having a change of employment post age 60 means you may be able to satisfy a condition of release, opening up an opportunity to move your Super wealth into the tax-free pension environment.

For example, let’s say John (age 62) works full-time in a Supermarket, but for 6 weeks he was contracted to work on the Weekends as a Labourer. After 6 weeks John has stopped work as a Labourer, because of this John has now met a condition of release and can move his Superannuation savings into the tax-free environment. However, any later contributions made (employer and personal) and earnings will be preserved (i.e. can’t be accessed until a new condition of release is met).

Based on the above, if you’ve been operating a TTR Pension and potentially could meet a condition of release, you may be able to continue to receive the tax-free pension on your Superannuation benefits. Here at JBS we can help assess your options in relation to meeting a condition of release.

– Peter Folk –

Spring is a great time to give your finances a once over to see how those goals you set back in January are tracking. Reviewing your financial situation, starting afresh this spring and making sure you aren’t spending more money than you need to.

Below are a few tips to help organise and freshen up your finances:

Start with a Budget: if you haven’t tracked your spending for a while, it is likely that your income and expenses have changed. There is potential for you to save money by simply making a few small adjustments.

Automatic payments: everyone has been guilty of not paying a bill on time and this often incurs additional fees. Automatic payments could be extremely beneficial and scheduling a direct debit is one way to avoid these extra fees especially for regular payments like utilities.

Check your bank statements: running your eyes over your monthly bank statements for mystery charges. By doing this you may come across charges that are not yours or old subscriptions that you may have forgotten about.

Eliminate non-essential items: small inexpensive items add up over a month. If you didn’t purchase that morning coffee or afternoon snack every day you could save yourself over $1,000 a year. Look for cheaper alternatives – if you can’t leave the house in the morning without your coffee, purchase an eco-coffee cup and start making your coffee at home to take to work.

Protect what you can’t afford to lose: If something is important and you can’t afford to lose it – it needs to be protected. Your income is imperative to your financial freedom, you need to ensure it’s adequately protected.

You work hard for your money, so make it work for you. Creating a budget and monitoring your expenses doesn’t mean you miss out on all the fun stuff. It’s about knowing where your money is going so you stay in control.

If you struggle to stick to your budget or your financial situation is becoming a bit overwhelming, JBS has a program that can help give your finances that spring clean feeling. Contact us today to discuss how Cash Coach can help you.

No matter where you are on your financial journey, you need to know that it’s possible for anyone to turn their financial life around. As with most things, sometimes that very first step is the hardest part. We have created a list of tips to start saving money today.

None of these tactics will be life-changing on their own, but they can make a difference over time if you are able to implement more than one. Some of these suggestions take just a few minutes, while others require a bit of regular effort. Still, they’re all incredibly simple – anyone can do them.

So here we go with our money saving ideas:

 
– Have a save buddy. Saving while hanging out with spenders can mean your money goes on impulsive or unnecessary items

 
– Review your bank accounts. Are you paying fees? Are there cheaper offerings? Are you restricted on what you can do with your money?

 
– Master the 30-day rule, waiting 30 days to decide on a purchase can give you better perspective on whether it’s truly worth the money, often the urge to buy the item has passed

 
– Write a shopping list before you go shopping to avoid impulse buying

 
– Lock up your credit card for a month and only pay for things with cash

 
– Set a limit for birthday and Christmas presents and don’t go over

 
– Buy in bulk

 
– Have a portion of your salary paid directly into your separate savings account

 
– Set a savings goal

 
– Pay your bills on time to avoid late fees

 
– Shop around for necessities such as car insurance, house and contents insurance, gas, electricity, phone, etc.

 
– Unsubscribe from sale email alerts. This is just constant temptation

 
– Stop buying bottled water! Buy a water filter instead if you can’t drink tap water

 
– Only purchase classic clothing that you can wear again. If you know you’ll only wear it once or twice, consider borrowing from someone rather than buying that sequent and lace floor length ball gown

 
– Empty your pockets and wallets of coins at the end of each day into a jar. But make sure to deposit into your savings account and not dive into because you want a coffee

 
– Double down. If you do have to buy luxury items, like makeup, wine or clothes, try saving the same amount. $15 on that gorgeous red lippy you had to have might not seem so great when it comes with another $15 savings requirement. If you can’t afford both, then you have to step away.

If you struggle to manage your money and wonder where your savings disappear to each month, fear not! Our comprehensive program will put you back into the driving seat, using high impact track and reporting technology teamed with expert advice. We’ll help you get your finances on track, so you can achieve your goals, plan for the future and say hello to a happier, healthier life where YOU are in control.

Cash Coach is a program run by JBS Financial Strategists. We believe that the biggest influence on achieving your goals is how you use your cash flow, so we start from there and help you develop great money management skills. Our aim is for you to consistently have money left over at the end of the month, so you can direct it towards the stuff that really counts!

If you’re not sure where to start – contact the team at JBS and we can run through a financial health check with you. This is a great way to understand your financial position and the team can identify any trouble areas, offer possible solutions and could also find growth areas you may not have considered.

Happy Saving 🙂