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Budgeting, News

The benefits of practising money mindfulness

Mindfulness isn’t often a word associated with money, but being mindful is a skill and practice that holds many benefits when it comes to managing your finances in a more clear, intentional and purposeful way.

A mindful money practice requires you to pay full attention to your money on a moment-by-moment basis. In other words, it’s about being present and aware of what you are thinking, feeling and doing with your money.

The mindfulness process begins with observing your inner experience with money: your thoughts and feelings about it.

 

What you’re thinking

Creating a vision for your money and setting goals for the future is an important part of money management.

Mindfulness encourages you to stay present and focused on your actions towards these bigger visions, keep on track towards your goals, and make necessary adjustments along the way.

It also requires you to become clear on what your money beliefs are, the expectations you have of yourself and others with money, how you define success and ultimately what wealth means to you personally. It helps you to:

  • Clarify what you are aiming for, and what it’s going to take for you to get there.
  • Define how much is enough and what are you grateful for.

Being aware of all of these things helps you to better understand the role of money in your life and how you can begin to use it in ways that best support you.

 

What you’re feeling

Your emotions are influential when it comes to money. Fear, greed, shame, anxiety, jealousy, loneliness, excitement are all emotions that can influence your money decisions and drive good and bad habits when it comes to your finances.

To practise mindfulness with your money requires you to take notice of these emotions, sensations and urges as they are occurring. It’s as simple as stopping to reflect each time you receive, spend or use money and checking to see how you are feeling.

It’s in this pause that you can often discover just how much these feelings and emotions are impacting your decisions and behaviour, and ultimately your wealth!

 

What you’re doing

Your habits, actions and behaviours with money will predict your experience and reality with it. If you spend without thinking, leave bills unopened, ignore your bank or credit card statements, delay saving, or procrastinate managing your finances then your money is more likely to control you and cause stress.

Adopting a mindfulness practice is about bringing awareness to these habits and behaviours and choosing to continue those actions that support (rather than detract) from your future wealth.

 

Aligning thoughts, feelings and actions

One of the simplest ways to introduce mindfulness and awareness to your money practice is to focus on your breath. This simple act of taking a moment to pause can have a dramatic impact on your money!

How? It creates a moment of pause and awareness – and, a chance for your emotional brain to catch up with your thinking brain or logic. It’s in this pause that you have the power to respond (rather than react) with more control and awareness.

Over time, as you practise mindfulness, it becomes second nature. Bringing your attention to the way you earn money, spend money and use money in your day to day life is one of the simplest ways to start creating a more conscious and healthy relationship with it.

April 11, 2019/0 Comments/by Jonathan
https://www.noallco.com.au/wp-content/uploads/2019/04/news2027.jpg 267 400 Jonathan https://www.noallco.com.au/wp-content/uploads/2019/04/static1.squarespace.com_-300x75.jpg Jonathan2019-04-11 12:33:492019-04-11 12:33:49The benefits of practising money mindfulness
Legal, News, Tax

Update: Recent legislative changes

It has been relatively quiet in Federal Parliament concerning many of the proposed superannuation, investment and taxation measures that were released in the 2018 Federal Budget.

Despite this, over the last few months, several proposals regarding small and medium businesses, primary producers and farmers, consumers, aged care and education have moved through the Federal Parliamentary Process and become enshrined in law.

 

Small and medium businesses

Running a small to medium business can be a tough, but rewarding, experience. Allowing you to pursue your passions and give back to the community in your own way, whilst also providing financially for yourself and your family. In light of this, here are a few legislative changes that may help you to maintain, preserve and grow your business now and into the future:

  • Corporate tax rate. The corporate tax rate for base rate entities (i.e. derive no more than 80% of income in passive forms and have an aggregated turnover of less than $50 million) will be:
    • 27.5% for the 2018-19 and 2019-20 financial years (unchanged timeframe);
    • 26% for the 2020-21 financial year (timeframe brought forward); and,
    • 25% for the 2021-22 financial year and later financial years (timeframe brought forward).
  • Small business income tax offset. The small business income tax offset for unincorporated small businesses (i.e. have an aggregated turnover of less than $5 million) will be:
    • 8% for the 2018-19 and 2019-20 financial years (timeframe unchanged);
    • 13% for the 2020-21 financial year (timeframe brought forward); and
    • 16% for the 2021-22 financial year and later income years (timeframe brought forward).

Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Act 2018. Royal assent on the 25th of October 2018.

  • Accelerated depreciated for small business. The period during which small business entities (i.e. have an aggregated turnover of less than $10 million) can access expanded accelerated depreciation rules (i.e. the $20,000 instant asset write-off) has been extended by 12 months to 30 June 2019.

Small business entity Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Act 2018. Royal assent on the 21st of September 2018.

 

Primary producers and farmers

In a similar vein to the above, and considering the recent and ongoing drought conditions, here are a few legislative changes relevant to primary producers and farmers:

  • Deductibility for primary producers. Primary producers can deduct capital expenditure on fodder storage assets (e.g. silos, liquid feed supplement storage tanks, hay sheds, grain storage sheds, etc.) used to store grain and other animal feed (e.g. hay, silage, etc.) in the financial year in which the expenditure is incurred (rather than depreciate over three financial years). This applies to fodder storage assets first used or installed ready for use on or after 19 August 2018.

Treasury Laws Amendment (Supporting Australian Farmers) Act 2018. Royal assent on the 3rd of October 2018.

  • Farm household allowance.
    • Farm Household Allowance is usually paid at the same rate as Newstart Allowance, however a more generous, two stage assets limit applies. The farm assets limit will temporarily increase from $2.6375 million to $5 million for the period 1 September 2018 to 30 June 2019. And, a new payment supplement of $7,200 for single farmers and $12,000 for farming couples, will be paid in September 2018 and again in March 2018, to qualifying Farm Household Allowance recipients.
    • The extension of the Farm Household Allowance program from three cumulative years to four cumulative years for each recipient.

Farm Household Support Amendment (Temporary Measures) Act 2018 and Farm Household Support Amendment Act 2018. Royal assent on the 24th of August 2018 and 29th of June 2018, respectively.

 

Consumers

With the festive season having come to a close, you have probably now taken stock of the presents that you received over this period. Importantly, a gift card may number among them. Recent estimates put gift card expiry losses at $70 million per annum. In light of this, here is a legislative change to help avoid the disappointment and financial loss that you may have experienced in the past when a gift card expired:

  • Gift cards. Gift cards must have a minimum three-year expiry period, information about the expiry must be displayed prominently on the card, and certain post-supply fees are banned. This applies to gift cards supplied on or after 1 November 2019.

Treasury Laws Amendment (Gift Cards) Act 2018. Royal assent on the 25th of October 2018.

 

Aged care

It’s often taken as a given that the aged care services received from a relevant aged care service provider will be both applicable to an individual’s needs and delivered in a professional manner. In light of this, if you do have a concern or complaint regarding the aged care services that either you, a family member or friend are receiving, here is a legislative change to be mindful of:

  • Aged Care Complaints Commission. The existing Australian Aged Care Quality Agency and Aged Care Complaints Commission will be replaced by the Aged Care Quality and Safety Commission from 1 January 2019.

Aged Care Quality and Safety Commission Act 2018 and Aged Care Quality and Safety Commission (Consequential Amendments and Transitional Provisions) Act 2018. Royal assent on the 10th of December 2018.

In addition to this, being a carer for someone can often be a demanding role, especially from a financial perspective. The Government recognises this and subsequently offers several types of financial assistance (e.g. Carer Payment, Carer Allowance, and Carer Supplement) to eligible carers. In light of this, here is a legislative change to be mindful of:

  • Carer allowance. A fixed and non-indexed family income test of $250,000 per annum (for single and partnered households) has been introduced for the Carer Allowance. Carers whose income exceeds this amount will no longer be eligible for the Carer Allowance. This applies to current Carer Allowance recipients and new claimants from 20 September 2018.

Social Services Legislation Amendment (Payments for Carers) Act 2018. Royal assent on the 29th of June 2018.

 

Education

In a nutshell, you send your children to school to be educated because you believe a certain level of education will provide rewards and returns over their lifetime. In a similar vein, investing in yourself through an educational course or professional development program can often open the door to a promotion, pay rise, improvement in job security and stability, and/or other employment opportunities. In light of this, here is a legislative change to be mindful of:

  • HECS/HELP Loan Repayment. The repayment rates and thresholds for HECS/HELP loans have been amended. New repayment rates and thresholds have been legislated to commence for the 2019-20 financial year. Please see the below table for further details.

 

HECS/HELP Loan Repayment Rates and Thresholds

(2019-20 financial year)

Repayment Rate (%) Repayment Income Below ($)
0.0% $45,880
1.0% $52,974
2.0% $56,152
2.5% $59,522
3.0% $63,093
3.5% $66,878
4.0% $70,891
4.5% $75,145
5.0% $79,653
5.5% $84,433
6.0% $89,499
6.5% $94,869
7.0% $100,561
7.5% $106,594
8.0% $112,990
8.5% $119,770
9.0% $126,956
9.5% $134,573
10.0% Maximum Rate


Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018
. Royal assent on the 14th of August.

 

Moving forward

If you would like to discuss any of these legislative changes and their relevance to your financial situation, goals and objectives, please do not hesitate to contact us.

April 11, 2019/0 Comments/by Jonathan
https://www.noallco.com.au/wp-content/uploads/2019/04/news2026.jpg 267 400 Jonathan https://www.noallco.com.au/wp-content/uploads/2019/04/static1.squarespace.com_-300x75.jpg Jonathan2019-04-11 12:31:512019-04-11 12:31:51Update: Recent legislative changes
Interest Rates, Mortgage, News

Monetary policy, cash rates and interest rates

According to a recent survey(#), over one-third of Australians, those either with or without a mortgage, don’t check the cash rate. The most common reasons for this were as follows: had no interest in checking the cash rate (30%); don’t see the relevance (28%); or, don’t know what it is (24%).

In addition to this, 68% of Australians with a mortgage, haven’t ‘stress-tested’ their home loan. With this in mind, recent estimates have highlighted the fact that: 1 in 3 households would experience mortgage stress if there were a 0.5% (i.e. 50 basis points) increase in the current interest rates; and, 1 in 2 households would experience mortgage stress if there were a 2% (i.e. 200 basis points) increase in the current interest rates.

In this animation, we illustrate the important relationship between monetary policy, cash rates and interest rates. This is not only relevant for mortgages – it’s also relevant regarding other debts, as well as assets.

#Compare the Market & Deloitte Access Economics. (2018). Dollars and sense: Financial Consciousness Index.

April 11, 2019/0 Comments/by Jonathan
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Health Check, News

Your 2019 financial health check

When it comes to assessing the most appropriate path moving forward for your personal finances, it can often help to take stock of your personal circumstances (financial situation, goals and objectives).

By laying out the details before you, it can give you the opportunity to see things from a big picture point of view, as well as zero in on specific areas (and, assess whether something needs to be addressed). If you are not sure where to start, then you may find the financial checklist below helpful.

We already know a lot of this information about our clients; however, it’s a good time to have a refresher. Importantly, after reviewing your personal circumstances, if you think a specific area needs addressing (or simply have a question that you would like answered), then please remember that we are here to help.

Personal

  1. What is your current marital status? For example, single, married (de facto or registered), widowed, separated or divorced.
  2. Do you have financial dependants? And, if so, when do you expect their dependency to end?

Employment

  1. When do you expect/plan to retire?
  2. What is your current accrued sick leave, annual leave and long service leave?
  3. Do you currently salary sacrifice into superannuation?
  4. Do you expect to change occupations?
  5. Do you expect to receive a redundancy or early retirement payout?

Social security

  1. When is your eligibility age for the Age Pension?
  2. Are you eligible for, or receiving, Centrelink benefits? For example, the Age Pension, Child Care Subsidy, Carer Payment/Allowance/Supplement, or Family Tax Benefit.
  3. Have you ‘gifted’ assets to someone in the last five years?

Income and expenditure

  1. What was your taxable income last financial year?
  2. What is your take-home pay each pay cycle?
  3. Do you currently have a HECS/HELP loan? And, if so, what is the current outstanding balance?
  4. Do you keep track of your work-related expenses?
  5. What are the sources of your income and expenses? And, do you expect any changes to occur?
  6. Do you have a budget and track your spending?
  7. Do you earn more than you spend?
  8. Do you have a savings account that you regularly deposit into?
  9. Do you have enough savings to fund your living costs for at least three months?
  10. Do you pay your household bills on time?
  11. Do you plan ahead for large expenses?

Assets and liabilities

  1. What are your current assets and liabilities?
  2. Where is your superannuation invested and how much do you have? And, which superannuation fund is your employer currently contributing into on your behalf?
  3. Do you make concessional and/or non-concessional contributions to your superannuation?
  4. When is your preservation age for withdrawing superannuation?
  5. Do you need to review your trust deeds for your self-managed superannuation fund in light of the recent superannuation reforms?
  6. Do you receive an income stream? For example, retirement or transition phase pension, or annuity.
  7. Do you have a negatively geared investment?
  8. Do you know the current interest rate on your home loan? And, if interest rates were to rise by 0.5-2% per annum, would you still be able to afford your mortgage repayments?
  9. Do you have an interest-only loan that will soon convert to principal and interest?
  10. Do you pay more than the minimum required payment on your mortgage?
  11. Do you pay your credit card off in full within the interest-free period?

Insurance planning

  1. Do you have life, total and permanent disability, trauma and income protection insurance in place? And, has a recent life event occurred that may require a review of your personal insurances?
  2. Do you have cross-insurance in place?
  3. Are your personal insurances held inside or outside of superannuation, or a combination of both?
  4. Do you need to make a claim on your personal insurances?
  5. Have you gone 12 months without smoking or recently had a favourable health assessment?
  6. Do you have a buy-sell arrangement in place?
  7. Do you have key person and business expenses insurance in place?
  8. Do you have private health insurance in place?
  9. Do you have comprehensive motor vehicle insurance in place?
  10. Do you have home and contents insurance in place? And, is the level of cover adequate?

Estate planning

  1. Do you have a current will? And, if so, does your executor know where to find a copy of it?
  2. Do you have a testamentary trust in place?
  3. Do you have ‘joint tenancy’ or ‘tenancy in common’ ownership with regards to your home and/or investment property?
  4. Do have a power of attorney, guardianship and advanced care directive in place?
  5. Have you made death benefit nominations in relation to your superannuation?
  6. Are you considering receiving aged care services? For example, the Commonwealth Home Support Programme, Home Care Package or Residential Aged Care.

Goals and objectives

  1. What is important to you in terms of the following areas:
    1. Your family? For example, making sure there are appropriate personal insurances in place in the event of your death, or sickness or injury.
    2. Your local community? For example, charity and volunteer work.
    3. Your career? For example, a promotion, pay rise, improvement in job security and stability, and/or other employment opportunities.
    4. Your money? For example, debt and cashflow management, and saving and investing.
    5. Your health? For example, maintaining a healthy physical and mental lifestyle.
    6. Your house? For example, renovating, upsizing or downsizing.
    7. Your business? For example, maintaining, preserving and growing the business, and succession planning.
    8. Your retirement? For example, accumulating wealth to support your retirement lifestyle.
  2. Do you have any future planned expenditures? For example, upgrading the car, renovating the house, or taking an overseas holiday.
  3. What are your investment preferences? For example, diversification, asset allocation, risk versus return, liquidity, and environment, social and governance considerations.

If you have any queries about this article, or have had a change in circumstances that you would like to discuss, then please contact us.

April 11, 2019/0 Comments/by Jonathan
https://www.noallco.com.au/wp-content/uploads/2019/04/news2025.jpg 267 400 Jonathan https://www.noallco.com.au/wp-content/uploads/2019/04/static1.squarespace.com_-300x75.jpg Jonathan2019-04-11 12:27:432019-04-11 12:27:43Your 2019 financial health check

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