Raising Financially Educated Kids

Lee Nickelson is an Authorised Representative, GWM Adviser Services Limited, Australian Financial Services Licensee

Why do many of us have such a bad relationship with money? The recent UBS white paper¹ revealed some disturbing statistics – 56% of married women leave financial decisions to their spouse and 85% of those women do so as they feel the man ‘knows more’. The scariest statistic when taking this into account is that 8 out of 10 women will at some point in their lives be left managing their money themselves. Having had a family friend recently pass away; his widow knows all too well the difficulty taking a back step with money management has caused.

Our relationship with money starts early in our lives. Now, in the digital age of money, how do we best equip our kids to grasp the value of money?

The Financial Planning Association have released their report Share the Dream – Research into raising the Invisible Money Generation² which shows up to 68% of people are reluctant to talk to their children about money, often as they are stressed about their own situation or are concerned the discussion will make their children worry about money. Is this then perpetuating the education gap?

Interestingly, parents with a Financial Planner are much more likely to discuss money with their children. It also starts with simple conversations. Parents who report talking to their children start with pragmatic topics such as how to spend and how to save, how do we earn money, the household budget and how much people earn when they work. More complicated topics such as in app purchases, crypto currency or Afterpay type credit purchases are less likely to be discussed, though this doesn’t make them less important.

Now in the Invisible-Money generation, how do we start teaching children about money when the majority of transactions are tap and go / online based? Pocket money is a great first step for children to practice with money. I know with my 4-year-old daughter, it is about learning simple addition and subtraction, what the numbers, colours and size of the notes and coins represent and the difference of how many ice-creams she will need to forgo to buy a teddy bear. There is a tipping point between the ages of 14-18 where buying shifts from tangible products to online purchases such as apps, games and experiences, so prior education is paramount here.

The research is clear, in order for us to prepare our kids and give them the best chance to have a great relationship with money, we need to talk to them about it early and frequently. If you would like more how to hints and tips, please speak with one of our Financial Advisers.

 

¹ https://www.ubs.com/global/en/ubs-news/r-news-display-ndp/en-20180514-ubs-reveals-top-reason.html
² https://resources.moneyandlife.com.au/hubfs/FPA%20Share%20the%20Dream%20Report%20-%20August%202018.pdf 
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.

Income Protection Insurance

Gareth Daniels from Income Solutions

Authorised Representative, GWM Adviser Services Limited, Australian Financial Services Licensee 

Are you looking at purchasing your first home or planning on starting a family soon? If so this is the perfect time to look at getting an income protection insurance policy in place or re-evaluating your current policy.

Buying a new home or starting a family, or both, is such an exciting time and you’re probably getting lots of different opinions from family and friends on what you should be doing, so let’s break down the facts.

What is Income Protection Insurance?

Essentially, it pays up to 75% of your income if you are unable to work due to injury or illness. If you have debt, dependants, or both. We all know that whether your income is coming in or not, the bills still need to be paid. It is advisable to have income protection insurance to help pay those bills and support your loved ones in unforeseen circumstances.

When paying your income protection insurance, you have main 2 options, paying through your superannuation fund or paying directly from your income.

Paying through your super fund

If you choose to pay your income protection through your super fund, it will cover the premium giving you more money in your pocket to pay for other things. This strategy is useful if you are trying to pay down your mortgage or have school fees to pay as the premium is coming from your superannuation, not your wage, so there is more money in your pocket to pay down your mortgage or pay for childcare or school fees.

However, there can be some restrictions on claims, dependant on your policy, we advise that you speak to your financial advisor to clarify these specifics.

Paying income protection from your wage

Alternatively, you can pay your premium straight from your wage, and in many cases, this can prove a greater tax deduction compared to the tax rebate that will be paid into your super fund.

For example, take the average Australian wage of $60,000. This person will pay around 32.5% tax each financial year (not including the Medicare levy). If they pay their income protection insurance from their wage they will get back about 32.5% of that premium at tax time.

How do I know if I have the right cover?

These days everyone has a super fund, and you may have a level of income protection insurance by default, however this policy may not be right for your personal situation. So, feel free to grab your super fund statement and come in for a coffee and a chat and we can look at the right coverage for your current situation.

 

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. 

Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.

Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product.

 

 

 

WOMEN – Professional Self-Taught Jugglers

Spotlight on Women - WEbsite SizeWhether you are single or in a relationship, one thing we all have in common is that we are juggling many roles all at once. I learnt quickly that once you begin to add little munchkins to your clan, the number of balls that you are juggling dramatically increases. When I thought I had achieved some rhythm to my new found skill of juggling, it was time to return to work. I had no idea what I was in for in regards to the level of organisation it would require trying to fit in my own personal time, setting goals for now and later, while continuing to run a house!

Returning to work is a big decision. For some it is financial and for others it is to assist with self-fulfilment. Whatever the reason, finding the right work life balance is crucial. There is no right or wrong level of work life balance. The solution that works for your family is individual.

Following returning to work, I began to experience guilt. Guilt for not being able to spend more time with my little ones, that I wasn’t completing as much at work as I had (in comparison to my old, full time employed, child free self), that the house wasn’t as tidy as it used to be and the list goes on! I had to find a way to put a positive spin on what I was doing and the reasons as to why I had returned to work. I realised it was to achieve my goals! Our goals often take second place to day to day activities, however even without realising it, it is another one of those balls we are juggling. Understanding and knowing why I was back at work and the benefits my employment brings to myself and my family was very important, empowering and motivating. Without goals, it is easy to question why. It helps you stay on track towards reaching those goals which are important to you. Also, it is hard to know if you are on the right track, if you don’t know where you are heading.

Goal setting doesn’t just end with the things you want to do in the next 12 months. Goal setting should include what you and your family want to do in 5 years – family holidays, education for your children, a new car, when it is that you and your partner would like to stop work or wind back into retirement. As far away as these milestones may seem, without having an active plan in place, time will continue to fly by. Without a solid plan our goals rarely materialise.

Planning your exciting goals and aspirations doesn’t have to be a weighted time consuming ball that you have to learn to juggle along with everything else. It is easier than you think if you work with someone who can help you plan and keep you motivated. It is very rewarding when you realise you are actually living and experiencing the achievement of the goals you wrote down.

We use systems all the time without realising. Just like we put systems (well try to!) in at home to make our home life easier, it is vitally important to establish systems that ensure your money is working for you, and your family.   Something as simple as structuring your banking correctly can have a big impact on how hard your money works for you.

Now that you are back at work and earning additional money to put towards your household, it is important to ensure that all the sacrifices that have been made to earn this money have not gone to waste. You need to ensure that your hard earned money is working for you.

I have written about my own personal experience, as a Mum working part time. In my professional life I am a Financial Planner with Income Solutions.   I regularly hear stories just like mine, which provided me with the motivation to create a tailored presentation for women which provides some examples of the impact receiving financial advice can make to your day to day lifestyle as well as your long term goals. For more information, book a one-on-one meeting or a workplace Income Solutions for Women session.

Invest in yourself – it could be the best investment you’ll ever make!  

Jess Hall, Financial Planner

 

Please note: The advice in this article is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

Mini money management

Aug blogOne Saturday morning whilst having a coffee, my mind wandered back to my childhood. I remember my sister and I often asked our parents for money, to which the usual response was, “Do you think money grows on trees?” If we persisted though, we usually had our way.

Looking back now, I realise this was probably not the most effective method of teaching us money management. My parents must have done something right though, as I grew up with a great sense that money is in limited supply and I must to be careful managing it.

Teaching children to manage their own money is very important. The Government’s Money Smart program provides some great school-based resources to assist children with managing their money. There are also some terrific ideas for around the home.

Here are my top 3 tips for children:

1. Start Early
Always remember it is never too early to start teaching your children about money. Show them how much they can buy with a small amount of money by taking them to the shop to buy the newspaper. Talk to them about the difference between ‘a need’ and ‘a want’.

2. Encourage Them To Save
Sit down with your children and write a list of what they what to buy. Discuss with them how much pocket money they need to set aside each week, and how long it will take for them to have enough money for the item on their list.

There are two ways this can be done:
• Encourage them to put their savings into a clear jar, so they can see their savings grow.
• Open a savings account for them and take them in to the bank to deposit their money.

3. Budgeting
Budgeting is an important skill for everybody to learn. It doesn’t mean you need to draw up a formal budget. Some tips given by Money Smart include:

• When giving children pocket money, give a combination of coins and notes. This will assist them in learning how to handle different sums of money, and will also allow them to put some coins toward their savings straight away.

• Give them a small amount of money at the shop counter and let them check if the change is correct.
• When they are a bit older, tell them what you need, send them to the shop with a set amount of money and let them keep the change. This will make them consider different brands, prices and, in some cases, bulk buying.

Money Smart also has many great tools and calculators to assist in teaching your children about saving and budgeting. It doesn’t matter which method you choose to teach your children about money management, the important thing is to start early. Like many things, looking after money becomes a habit, and once learnt it is not forgotten.

By Ash Irwin, Associate Financial Planner

Please note: The advice in this article is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

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