While Christmas is one of happiest times of the year, it can also be one of the most stressful when it comes to money. 

With so many additional expenses to account for such as the cost of presents, Christmas food shopping and holiday outings, careful budgeting is essential.

There’s no need to be a scrooge, but there are many simple tips to follow to ensure you enjoy the festive season without risking a financial hangover in the New Year.

Tips for controlling silly season spending:       

1. Get everyone to bring a plate – hosting Christmas lunch is expensive but you can spread the cost by asking everyone to bring a dish. Your family and friends won’t mind being asked to bring a salad or dessert.

2. Be a savvy shopper – set a budget for presents and stick to it. Instead of buying for everyone why not organise a ‘Secret Santa’. Also use catalogues and shop online to find the best deals. Vouchers are a great gift idea because you can use them in the post-Christmas sales and get more bang for your buck. Don’t forget many toy shops offer no deposit lay-bys right up until Christmas.  

3. Go easy on the credit – while credit cards are convenient, they can be addictive over the Christmas period and undo a well-planned budget. Avoid buying gifts with credit, unless you are going to be able to pay off your card before interest is charged. You don’t want to be still paying off Christmas well into the New Year.

4. Start paying off your holiday now – if you’re going away over the Christmas break, try to pay off your accommodation costs in instalments before you leave. Make sure you holiday within your budget and avoid paying for expensive overseas travel on your credit card if you won’t be able to pay it off quickly.

5. Bake it or make it – if you have a talent for craft or baking you can create inexpensive presents such as home-made fruit cakes, rocky road, jams and relishes. If you can sew, knit or have some other skill, a personalised gift will be even more special.

6. Budget for New Year expenses – when doing your Christmas budget, don’t forget to factor in some of the big expenses you’ll be facing in the New Year. If you’ve got children, be mindful that all those back to school costs are just around the corner. You’ll also have a new round of bills starting to roll in, such as rates, electricity and phone bills.

 So with a little thought and planning now, it is possible to have a jolly festive  season without blowing a hole in the budget.

 Once the fun of Christmas is over and the summer holidays a distant memory,  you can then look forward to getting off to a flying financial start in 2013.

 Oak Financial Partners is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051    208 327, AFS Licence No. 232706. 

 Any advice given is general only and has not taken into account your objectives, financial situation or    needs. Because of this, before acting on any advice, you should consult a financial planner to

 consider how appropriate the  advice is to your objectives, financial situation and needs.

Sensible things to do with your extra money

If you find yourself with additional money at the end of the month such as a tax refund, a bonus, or an inheritance, you might be tempted to indulge on things you don’t need. 

Here are some ways to spend this money that can give you long-term benefits[i].

• Pay off debt
• Generate an emergency savings fund through a high interest savings account
• Contribute extra to your super (which will save you tax)
• Consider investing

For large amounts of money, such as from an inheritance or a redundancy payment, you should obtain financial advice. Our advisers have extensive experience and knowledge to help you work out a strategy to make the most of your money.

Taking care of your accounting needs

For your accounting needs, it’s important to ensure you allow yourself enough time to make any adjustments. With this in mind, please contact Chris Arandt (Tax Accountant) on (03) 9859 8791, or alternatively, via your adviser to organise a time to discuss your tax situation.

Are you an Australian making the transition to retirement or high income earner?

 If you answered yes to either question, you may need to take note of some of the changes introduced via the 2012/13 Federal Budget to the way superannuation contributions are taxed. These new rules might well affect your retirement plans.

 1.       Higher contributions tax for high income earners 

The federal government is doubling the super contributions tax rate to 30% for Australians earning over $300,000.

 2.       Lower concessional contributions cap for over 50s

 Over the past few years, Australians over age 50 have enjoyed a significant tax break on their super contributions to encourage them to save for their retirement. They have been able               to contribute $50,000 a year towards their super at the 15 per cent concessional rate of tax – that’s double the standard $25,000 annual concessional contributions cap.

 This tax break ended on 30 June 2012, but the government was planning to continue the incentive for Australians aged over 50 with a super balance under $500,000.

 However, the government is now deferring the start of this new system to 1 July 2014.

 The two-year deferral means that everyone, regardless of age, will now be subject to the same $25,000 concessional cap for the 2012/13 and 2013/14 financial years.

Stay under the limit

You may need to review your arrangements to make sure you’re not making concessional contributions over the reduced concessional contributions cap. 

Going over the cap attracts a severe penalty. Any contributions exceeding the $25,000 concessional cap will attract an extra 31.5% tax in addition to the standard 15%, potentially matching the highest marginal tax rate.

With significant penalties for exceeding the cap, it’s vital to review your strategy. You don’t want to be faced with an excess contributions tax bill for 2012/13.

Plan well

 Many people leave it right to the end of the tax year to look at their super. But it’s worth putting a plan in place at the start of the year to avoid the last minute rush. Early planning means you stay in control all year and can avoid inadvertently breaching the $25,000 concessional cap.

Super simple solutions

 Is your super scattered all over? If so, what about any insurance you hold inside it? Get super savvy today by bringing it all together into one account, so you can be better off tomorrow.

Lower fees, less paperwork and a better strategy – consolidate your super and you may stand to achieve all three benefits.

All in one

 Most of us have more than one super account, often because of job changes. Or we have ‘lost’ track of super accounts we have accumulated over the years. And, that’s how Australians have, on average, three super accounts per person[i].

Among the many reasons to consolidate, the issue of fees is important. Super fees can add up, especially if you are paying multiple member fees across multiple accounts. Over the long term that could mean a lot of money. Instead of paying double or triple the costs you need to, you could be better-off keeping your money in one account where it can compound into more retirement dollars.

Keeping track of different accounts can also be time consuming and the energy required to wade through all that paperwork could be better spent on deciding on a super-related strategy that can maximise your retirement benefits.

 As our existing client, you may already have your superannuation consolidated by us. When changing jobs make sure you have nominated your existing superannuation fund. As our valuable client, we are more than happy to review your current super to match and personalised them with your needs.

 Your financial planner can help you decide which super fund is right for you, by:

• Comparing the benefits of each of your current super funds in view of your own objectives.
• Considering whether you will be charged fees to leave a fund.
• Finding any lost super if you have lost contact with a fund.
• Helping you understand insurance.

Whichever way you look at it, one thing is certain – the more you end up with, the better-off you’ll be.

Father’s Day often gets dads thinking about whether they’ve been the best father they can be to their kids. Have they passed on those important worldly lessons, so their children will lead a happy and successful life?  

While many dads teach their kids practical things such as how to ride a bike or change a tyre, they often forget to share their hard-earned lessons about money.

Just think how much more financially secure we’d all be if we could turn back the clock and start over again, knowing what we do now.

By teaching their children some simple tips about money, dads can help set their kids on track for a prosperous future.

Five money secrets dads should share with their children:  

 ·         The magic of money – Talk to your kids about your own financial milestones such as the first big thing you saved up for. Let them know how rewarding it felt to empty your money box on the counter and buy your first skateboard or album. Also, discuss things you wish you had done. Don’t be afraid to talk about your mistakes and what you learned from them.

·         Dodge the debt ­– Mobile phones are a core part of teenagers’ social lives, but they can also be one of the biggest debt traps. Credit card debt and car loans are also common pitfalls for young people, so it’s important to flag the potential dangers with older children. Make sure they understand they need to take responsibility for their own finances.  

·         Every penny counts – It’s a good idea to encourage kids to develop good financial habits early in life. Whether they’re still receiving pocket money or have a part-time job, encourage them to set aside money for spending, saving and investing. Also, teach your children how to be savvy spenders by showing them how to shop around for the best price.

·         The bank of mum and dad – Let your kids know everyone has to contribute to the household, even if it’s by helping with the chores. While parents often want to give their children a better life than they had, it’s easy to overdo it. You can teach kids the value of money by encouraging them to save for some things themselves. After they’ve finished studying, you can also ask them to pay board if they continue living at home as young adults.

·         Save for the future – When older children first begin their working life, it’s tempting for them to blow their new found cash on a flash    set of wheels, designer clothes or going out. Of course this is part of being young, but also encourage them to set some long-term financial goals and discuss how they might achieve them. Saving for a car or deposit for a first home can take years, so the earlier they start the better.

Oak Financial Partners is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706.

Any advice given is general only and has not taken into account your objectives, financial situation or needs.  Because of this, before acting on any advice, you should consult an accountant, tax professional or financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.

Happy New (Financial) Year!

 Welcome Siobhan 

We are delighted to introduce a new adviser joining our practice this week, Siobhan Foley. Siobhan brings extensive technical experience to the firm and further deepens our portfolio construction and strategic advice capabilities. Join us in making her welcome.

End of Financial Year Tax Planning

 With the tax season rapidly approaching, it is an appropriate time to discuss what initiatives and strategies will help minimize your tax  obligations.

 Recent changes to tax legislation have created some additional opportunities and pitfalls to consider, including: 

• Private health insurance rebate
• Baby bonus and family benefits
• Superannuation contributions
• Distributing income using trusts and company structures
• Home office deductions
• Travel expenses
• Interest payments relating to investment property and shares
• Depreciation and capital gains tax (CGT) issues 

It’s important to ensure you allow yourself enough time to make any adjustments well before June 30^th. With this in mind, please contact Chris Arandt (Tax Accountant) on (03) 9859 8791, or alternatively, via your adviser to organise a time to discuss your tax situation over the next few weeks.

First Home Owners and Regional Bonus

 As of the 30 June 2012, the Victorian Government will no longer distribute the $13,000 First Home Owners Bonus or the $6,500 Regional Bonus[1]. Although there has yet been no formal announcement, the $7,000 First Home Owners’ Grant is also tabled to be reviewed or eliminated in full shortly[2]. The First Home Owners’ Grant is given to all those meeting eligibility and buying an established house in Victoria[3]. The First Home Owners Bonus  was awarded in addition to the First Home Owners’ Grant to all those building new homes, with the Regional Bonus being awarded on top of both the FHOG and the FHOB to newly constructed homes in Regional Victoria only (subject to eligibility)[4]. 

With the bonuses close to an end, it is important to think about all the options available when buying a new home. Seeking advice from a mortgage broker can assist in finding a suitable loan by comparing loans and lenders. Allow us to assist you with those choices by speaking to our in-house mortgage broker.

A $1.5 billion Federal Budget surplus was unveiled on 9 May 2012, but what’s in it for you and how may it affect your super? We took a closer look.

In delivering the 2012-2013 Federal Budget, Treasurer Wayne Swan declared Australia to be one of the world’s strongest economies, and said that the deficit years of the global recession are behind us.

While this is welcome news, it’s also important to look at how this budget may affect your super savings and retirement goals. Knowing what’s been proposed gives you the chance to plan ahead of time and to maximise what’s available till the end of the current financial year.  

Delayed date for concessional cap

The start date of the higher concessional contributions cap for over 50s will be postponed from 1 July 2012 to 1 July 2014. The previous proposal was to allow individuals aged 50 and over with a superannuation balance below $500,000, to make up to $25,000 more in concessional contributions than the standard $25,000 concessional contributions cap.

Concessional contributions are sometimes referred to as ‘pre-tax contributions’ such as contributions made on behalf of an employee by their employer and contributions made through salary sacrifice. Details of other contributions regarded as concessional contributions, for self-employed persons for example, can be accessed on the ATO website[1].

The deferred date now means all individuals, regardless of age and account balance will be subject to the standard $25,000 concessional cap for the next two financial years.

It’s expected that from 1 July 2014, the standard $25,000 concessional cap will likely have increased to $30,000 through indexation. Accordingly, the higher concessional contributions cap will then likely begin at $55,000.

Higher tax for higher incomes

A higher tax on concessional superannuation contributions has been proposed for very high income earners. These individuals with incomes higher than $300,000 will have a superannuation contributions tax of 30 per cent applied to their concessional contributions from 1 July 2012.

Income for this purpose will include all concessional contributions made for or by the individual. If someone is earning less than $300,000 excluding their concessional contributions, but the inclusion of their concessional contribution pushes their income over $300,000, then the higher tax will only apply to that part of the concessional contribution, which pushes their income above the $300,000 income threshold.  

More super for you

There are several proposals aimed at helping you to increase your super balance, which is always good news.

From 1 July 2013, the Superannuation Guarantee Contribution (SGC) made by your employer will gradually increase from nine to 12 per cent by 2019. Plus the maximum age limit for receiving SGC, which is currently at 70, will be abolished. You can use these proposals to work out what impact more super can have on your retirement goals.

What’s more, a government low income superannuation contribution payment of up to $500pa will be available for low income earners, earning less than $37,000pa who make or who have an employer make concessional contributions on their behalf, on or after 1 July 2012.

What next?

Of course, these proposals will only come into effect once legislated in parliament.

But in the meantime, if you have any questions or are keen to understand how these proposals may affect your personal circumstances and how you may make the most of them, we’re here to help. So, please call us on 03 9859 7789. 

Your Goals for 2012

With the blink of an eye we are a quarter of the way into the year already!

 Now is a good time to think about your goals for the rest of the year, and what you have achieved so far.

 What are your goals for 2012 and beyond?

 Paying off debt? Need a budget planner?

• Assess your superannuation fund? Rebalancing your portfolio?
• Entering into new investments and reviewing the options available?
• Travelling overseas?
• Saving for your children’s education?
• Keeping a healthy lifestyle and taking care of your family?

 We are here to help you every step of the way. Schedule a time to meet up with us this year and take the first step towards achieving your goals.

Super VS. Mortgage

Have you ever wondered whether to put money into your super or your mortgage?

 Logically, most people will prioritize paying off their home mortgage as it is the largest financial burden you will carry in your lifetime. However, depending on your age and financial circumstance, the most logical answer is not always the most appropriate. There is a lot to consider in whether to put your hard-earned money towards your mortgage or your retirement. There may be tax consequences and/or savings, Government co-contributions to super, liquidity issues, and the risks associated with the economy. These risks include, but are not limited to: interest rates, market volatility, legislative, and property value fluctuations.

 For these reasons and for peace of mind, seeking financial advice to address these decisions is crucial. We can assist in budgeting and strategy, ensuring that your money will work harder for you and planning a secure retirement when you do decide to leave the workforce.  

Europe Recession

 Europe’s current recession has become a global concern, inevitably also affecting the Australian economy as their debt crisis continues to deepen. Low confidence in the market has resulted in extremely cautious investors and a slow-down in the purchase of government bonds. Thus, this is placing a large strain on Euro markets and their financial system, as they attempt feebly to raise capital. Due to the recent regulatory changes, the Euro banks have been trying to reconstruct their financial position by de-leveraging and reforming their balance sheets. However, these changes may lead to a domino effect that can put pressure on Australian banks to tighten their capital and pass this burden onto customers by increasing interest rates.

 In the Australian economy alone, we have seen a reduction in consumer retail spending because of the uncertainty about the market, leading to low confidence and a greater urgency to save. Businesses have also been impacted, as large-scale corporations such as Toyota and Qantas are being forced to retrench thousands of staff as a result of involuntary restructuring changes and a decrease in profit margins. In addition, Australia’s huge commodity export market that has previously kept our head above water may not withstand the pressures this time. The RBA has stated that the increasing Euro debt crisis could result in a sharp slowdown in Asian economies – directly impacting our exports, essentially causing a further slowdown of our economy. 

 Now, is an important time as ever to ensure your finances are secure, and that your short and long-term goals are suited to the unpredictability of the global economy.

Home Loan Health Check

Oak Financial can compare your current home loan against a panel of lenders and provide you a competitive cost benefit analysis of using different home loans thereby allowing you to make the best financial decision.   

 Refinancing through Oak Financial can reduce overall payments, debt and most importantly utilise equity in your home for personal or investment purposes.

 If you are successful refinancing through us, we will also give you a $50 Coles/Myer gift voucher as an added thank you.

 To find out more, please call our accredited mortgage broker Lester on 03 9859 1325. 

And finally….

Like us on Facebook and keep up to date with the latest financial news! https://www.facebook.com/oakfinancial

You can also visit our website www.oakfinancial.com.au for the latest news, and how we can help you.

Kind Regards,

The Oak Team

http://youtu.be/w6HRDZPgqDI

We’ll be taking a hard-earned break from December 24th but will be back on January 9th feeling fully refreshed and ready to assist you with the challenges of the new year.

Troubles at Uni Super
You may have heard the news about Australian universities’ super scheme, UniSuper, being underfunded. To find out more about what this means and how members may be affected, watch this report from the ABC (7-8 minutes)

Do you have friends or family whose retirement funds may have been put at risk? Have them contact us for assistance exploring alternatives.

Your goals for 2012

The approaching new year brings a time to think about what you would like to achieve in the short, medium and long term. What are your goals for 2012 and beyond?

• Buying a house or investment property?
•  Getting out of debt? Paying off your mortgage?
•  Saving for a trip? Planning for your retirement?
• Living well and taking care of your family?

We are here to help you, every step of the way. Make a time to catch up with us in the new year and take the first step towards achieving your goals.