We've recently spent some time discussing the importance of defining your relationship with money and then getting clear on how to make a start with an investment plan. One of the most important areas of any financial plan though is our spending habits. That's right, it's the love-hate relationship that most of have with money on a regular basis, but our spending habits can either make or break our financial futures.


As a very general rule, most people will spend what they have available. This is the reason that superannuation was mandated by governments all around the world just a few decades ago – in the space of a generation or two, we seemed to have lost our ability to set money aside for a rainy day. So instead of governments relying on people to do their own saving, they made it compulsory for a specific amount of our wages to be kept out of circulation until we needed it – usually when we stopped earning income from employment.

This is an important point: particularly in Australia, we're not very good at saving money. We like to live for today and not save for tomorrow, as it turns out. But if you really want to get ahead with your finances, it's the bit of money you're able to save and set aside that will really give you financial freedom in the future.

So how do you start saving and then get better at it over time? The key is to get clear on where your money is coming from and also going to, namely by doing a budget. Many banks will now offer a breakdown of our spending habits through their data analysis of our bank accounts, but a good old fashioned budget spreadsheet will also work just fine. You can download one from us here, to get you started. Start by listing everything and if you're unsure about certain expenses, round them up. It's always better to overestimate what's going out the door rather than to underestimate it.

Once you've listed your income and expenses, see if there's anything left over. If there is, you then need to decide what it's best to do with this surplus, and we would suggest either debt reduction or investing are your best two financial alternatives. But if you don't have a surplus in the first place, you need to find a way to carve one out. This can usually be achieved by adding in a savings component as an "expense" to your current budget, which doesn't have to be a big amount but just something to get you started.

As a minimum, we'd suggest setting up an online savings account with an institution that's different to the one you normally use for your everyday banking, and automatically transferring a regular amount into this new account. You'll be surprised at just how quickly the regular income amounts will build up. Importantly, you'll also notice that your regular spending adjusts down to accommodate having less money readily in circulation.

How you treat your saving and spending habits will really depend on what you're trying to achieve with your money. But it's necessary to understand how most of us are naturally wired – we spend what we have, so savings need to be forced on most of us. Take the time to analyze what you may be able to pull out of circulation because most of the time, you won't even miss it, and you'll be pleased that you did.

Tips to Minimise Your Tax Ahead of EOFY

Now that the end of financial year is just around the corner, it's time to put some real focus into your tax minimisation strategies. For many of us, living with the benefits we have in Australia does mean that we have to pay a portion of our earnings in tax, but no one wants to pay more than their fair share. Listed below are some ideas for you to implement, but just make sure you've got them covered before June 30.


1. Pay and delay if you can
Now is a perfect opportunity to pre-pay some expenses that you'll likely carry through with you into the next financial year. For example, see if you can pay for subscriptions, the cost of your income protection policy, conferences and membership fees all before June 30. Also, ask your lender if you're able to pre-pay any of your interest for the next financial year. Then if the opportunity arises, see if you can put off receiving income before the June 30 deadline. This might be achieved by holding off on issuing invoices or even reviewing your term deposit maturity dates.

2. Reduce capital gains
If you're sitting on capital losses on some of your smaller share investments and you don't have a long-term plan to continue holding these, it may be a good time to sell these shares and use the losses to offset against any gains you've made earlier in the year.

3. Top up your super and salary sacrifice
Topping up your super can be one of the best deductions around, as you're still the holder of the money, minus the 15% contribution tax. This is different to claiming a deduction on paying bank interest as once that expense is paid, the bank has the money rather than you. Concessional contributions are allowed for up to $25,000 per person under 75, so make use of these limits. For a couple, that's up to $50,000 between them that can be set aside to accumulate in a lower tax environment. Don't forget that if your employer is making contributions for you, you're only able to salary sacrifice by the difference to take you up to the $25,000 limit.

4. Small business immediate asset write off up to $20,000
If you're a small business, this is definitely something you want to make use of although this allowance has now been extended to 30 June 2019. If you buy an asset and it costs less than $20,000, you can immediately deduct the business portion in your tax return. You are eligible to use simplified depreciation rules and claim the immediate deduction for the business portion of each asset (new or second hand) costing less than $20,000 if you have a turnover less than $10 million (increased from $2 million on 1 July 2016), and the asset was first used or installed ready for use in the income year you are claiming it in.

5. Charitable gifts
If you're thinking of making a charitable donation it's best to do so before June 30 as you'll most likely be able to claim the full donation amount. 

Remember not to leave these items to the last minute and also know that we're only an email or phone call away if you would like to seek advice on any of the above.

Tax Tips to Save You More

Are you wondering whether you'll be paying too much tax this financial year? Minimising your tax where legally possible is a big part of your current and future wealth creation, not to mention that it's a smart thing to do.


If you're unsure about how you're traveling this year, don't leave your tax planning to the last minute. Consider getting a set of interim reports prepared by our office, which will show you exactly how your profit and income levels are tracking. If it's looking like you'll have a handsome tax bill after June 30, then now is the perfect time to arm yourself with information and do something about it. A set of interim accounts can be prepared to the end of March 2018, which then gives you a further three months before June 30 to get organised to make any changes necessary. We sometimes hear that the cost of the interims puts people off having them prepared, but in many cases, the cost is a minor expense if we can save you thousands in money you would otherwise be giving to the ATO.

The main tips to consider in the lead up to tax time are:
1. Consider superannuation contributions as a great tax deduction. For those under 75 and still working, a concessional contribution of $25,000 is available, and you'll only pay 15% tax on that amount of money, compared to your potentially higher personal tax rate.
2. Is your depreciation schedule up to date? If you've got business assets you can be claiming depreciation on, make sure these are listed and all up to date in order for your accountant to maximise any claims.
3. Prepay interest. If you've got borrowings, you may be able to pre-pay an amount of the interest, thus claiming that expense in the current financial year.
4. Consider making a charitable donation. Not only will you be able to claim the expense against your income, you'll also be making a difference for others.
5. The $20,000 instant write off is still with us, but not for long. If you buy an asset and it costs less than $20,000, you can immediately deduct the business portion in your tax return. The $20,000 threshold applied from 12 May 2015 and will reduce to $1,000 from 1 July 2018, so get in quick if you're thinking of buying something.
6. Look to write off bad debts if you won't be getting them back in the current financial year.
7. Pay your staff super on time if you'd like to claim the deduction for this. If you happen to leave the last quarter's payment until the next financial year, you won't be able to claim it.

So put some planning in place this year and get in early. We're here to help with all of your tax planning needs, and we'd love to help you where we can. To minimise your tax bill this year, give us a call today.

Are You Drowning in Credit Card Debt?

It has been reported that while the nation's overall credit card debt that attracts interest charges has dropped 11% in the past four years, our overall credit card debt has reached a record high of $52.2 billion in 2016 and is climbing! While interest rates across home loans remain relatively stable at reduced rates and remain for the most part well below 5% and lower, the standard credit cards charge interest rates near 20% per annum. Personal loans currently charge around 10%, and as noted in recent weeks mortgages are at 5% or less.


Working on these interest rates the cost comparison of $10,000 owing on a credit card (at 20% interest rate) equates to $2000 in interest a year compared with the same $10,000 on your home loan (at 5%) costing only $500. The exact same amount owed on a credit card is four times as much as if it was owed on a home loan. Many credit card holders are beginning to be savvy with their outstanding balances and getting smarter about managing their credit card debt by making the most of the balance transfer cards offering 0% interest, typically for 12 months.

However, it might make more sense to absorb your credit card debt into your home loan while shopping around for a better mortgage option. With falling interest rates, right now is the best time to reduce your overall debt and simplify your finances into one easy and lower repayment. Rolling all your debt into one structure such as a home loan may allow you to focus on paying more off that one loan and reducing it faster if you choose. You will also reap the benefits from the variety of flexible structures now available improving cash flow that puts more money in your wallet!

How can your reduce all your debt right now?

It is our job to work for you to find you the best financing option for your situation and to support you in creating a better overall position. Right now we have access to a variety of lenders and lending options that can better serve you. We can give you the best advice and access to the best opportunities every day. If you are ready to access a better loan and rate for you contact us today on: 5482 2855. Or call our friendly residential team, Dannii and Jo on 07 5480 4859 or David direct on 0400224615 to book an appointment today and find out how we can save you more. 

Heavy profit-taking in the major banks and miners hit the Australian sharemarket as market pundits warned the lenders were overbought and house prices faced downside risks. Wall Street edged higher last night, but after slipping 0.3 per cent in early trade, selling accelerated mid-session and the S&P/ASX 200 index crashed through technical support at 5900 points. 

The Australian dollar lost US0.4¢ to US74.90¢ and government 10-year yields were marginally lower despite a 4 point drop in US 10-years to 2.28 per cent.


What this means for you:
Our attention over the next week will be turning towards the Federal Budget which will be released on Tuesday. In the lead up to the budget Australian Treasurer Scott Morrison has been making reference to "good vs bad debt". You may ask what is "good" debt and what is "bad" debt. Basically good debt is an investment in your future like a mortgage for an investment property. Bad debt is debt incurred to purchase things that quickly lose their value and/or do not generate long-term income and generally carries a high interest rate, like credit card debt or the mortgage for your home.
If your bad debt is getting out of control it may be time to go back to basics and do a budget. Take a good look at what you are spending money on and follow this general rule to avoid bad debt - If you can't afford it and you don't need it, don't buy it.

What You Need to Consider Before Tying The Knot

Getting married is a milestone in anyone's life. It is a time filled with excitement as you research and plan your perfect day to celebrate your love and say I do and then dive into details of a romance-filled honeymoon! For many couples, the planning of the actual wedding and honeymoon take precedence over the boring and not as exciting planning of the future... However, just as important as the dress, the cake and the destination of that one big day, is the day-to-day realities of how you will plan, save and invest for your future.

Money can be one of the primary sources of disagreement in a relationship, and that is why before you say I do it is important that you and your partner take the time to discuss and agree on a "money plan." This includes understanding how tying the knot can impact your financial obligations and potentially affect how you structure your finances. Keep in mind, however, that finances and taxes can vary greatly depending on an individual's or a couple's specific situation. We recommend consulting a qualified professional to discuss your personal situation and get the best plan in place for you. 

Here are three things to consider when it comes to how marriage and money can work together:

1. Decide on a personal spending amount and keep it separate. One of our main cashflow strategies is to separate your weekly personal spending from your other money that's used for bills, investments and savings. Transfer your weekly spending amount to your spending account and use this money to cover gifts, dining out, transport and groceries – all the day to day spending. This works for couples because you each have your own allocation of personal spending deposited into your individual bank accounts, and you each have discretion over how you spend your weekly allocation. Just try and stick to the determined amount! Then with your remaining cashflow, you can set up automatic payment of bills and investing for your goals.

2. Set your goals together. If you're wanting financial success, you both need to know what you're saving and investing for in order to stay motivated, and also to ensure you don't dip into those savings. It's so important to set those investment goals together so that you're aligned and both planning for the bigger picture. Put a plan in place together and then you'll have a much better chance of reaching your goals.

3. Update your Wills. Getting married actually cancels any previous Will that you already had in place, so make sure you visit your solicitor soon after to get another one done. If you, unfortunately, pass away before having done this, you'll be deemed to have died "intestate" (without a Will), which makes estate planning a lot more complicated and time-consuming for the remaining spouse. Also, revisit your nominated beneficiaries on your super funds. Remember that a spouse can receive a super benefit tax-free.

If you would like support to put a plan in place or review your current strategy the Schuh Group Financial Planning team offer free consultations and are happy to support you in reaching your together goals. Contact Dominique Schuh direct at dominique@schuhgroup.com.au. or the Schuh Group office on 54804877.

Should You Consider Salary Sacrificing?

The Australian share market reversed early losses to finish in the black following soothing words from Chinese Premier Li Keqiang. He said China would fasten its "seat belt" and rein in risks as it pursued a mid- to high-speed growth, while he also played down risks of a trade war with the US and said the country would continue to support global growth. The S&P/ASX 200 index bounced to close up 14.9 points, or 0.26 per cent, at 5774 as markets shrugged off US rate rise caution.

What this means for you:
We talk a lot about the benefits of salary sacrificing, but do you know when to consider it? The decision basically comes down to two things: 1.) whether your personal taxable income is greater than around $37,000, and 2.) whether you can do without the money as "take-home pay". If your taxable income is over $37,000, there will be a tax saving for you to do some salary sacrificing, particularly by contributing to super where the tax rate is lower at 15%. However, you need to find a balance between keeping enough money aside to be able to live on.

Do you have savings goals? Consider setting up separate fee-free online accounts to automatically save into from your income. This is a similar concept to the "jam jar" saving strategies of old, but it really works. If you've got a home loan, contact your bank to see if they'll allow you to set up separate offset accounts against your home loan. That way you can still do your saving for specific items such as holidays, and reduce your home loan at the same time.

  • Now that a new year has arrived, it's a great time to take stock of your finances and revisit your household and / or business budget. Budgeting is perhaps one of the most basic and the most effective tools for managing your money, yet most people neglect to do one. The task of sitting down and doing a budget may seem overwhelming at first, but the benefits make it worth the effort, including:

1. It enables you to see exactly which direction your money is going. If nothing else, this makes you more aware of what is coming in and how fast it's going out.
2. It helps you organise your spending and saving. We always recommend that people save first and then spend what is left over.
3. It enables you to save for expected and unexpected costs that come up.
4. It keeps you focused on your money goals.
5. It helps you determine whether you can take debt on and if so, how much.
6. It gives you control over your finances. 

So what makes a good budget? The key is to keep it simple, and a good way to get started is to:

1. Gather all your financial information, such as bank and investment account statements, recent utility bills and any information about the money you have coming in and what you spend it on.
2. Record all sources of income, such as your salary and outside income (e.g., interest on investments), etc. Write down your total income as a monthly amount.
3. List all of your expenses, such as rent or mortgage repayments, car repayments, mobile phones, insurance, groceries, petrol, utilities, entertainment and education expenses. Make sure you don't leave anything out.
4. Split expenses into fixed and variable. Fixed expenses broadly stay the same each month, while variable expenses change from month to month. So, you'll have to average these.
5. Once you have totalled everything you can see the bigger picture. If your income exceeds your expenses, you're off to a good start. If it's the other way round, you are living beyond your means and it's time to make some changes.

Make adjustments, so you can balance your income and expense columns. This means all income is budgeted to a specific expense, including some savings, whether that's in an investment fund, superannuation, or just a savings account. If your expenses exceed your income, look to see what can be cut – or consider how you might be able to increase your income, by taking a second job or working to get a promotion.

If you would like help with your budgeting, please contact Dominique Schuh in our office on 54804877 and she will assist you with some of our budgeting tools.

It Pays To Do A Budget

Budgeting is perhaps one of the most basic and the most effective tools for managing your money, whether it's your personal finances or your business cashflow. Yet despite how powerful a simple budget can be, most people will avoid doing one and simply drift along with a very vague idea of where their money is actually going.

The benefits of budgeting are many and varied, and a handful of these include:

1. It enables you to see exactly which direction your money is going. If nothing else, this makes you more aware of what is coming in and how fast it's going out. 

2. It helps you organise your spending and saving. We always recommend that people save first and then spend what is left over. With a budget, you can really see whether this is happening or not. 

3. It enables you to save for expected and unexpected costs that come up.

4. It keeps you focused on your money goals and how you're tracking towards them.

5. It helps you determine whether you can take debt on and if so, how much.

6. It gives you control over your finances.

So what makes a good budget? The key is to keep it simple and to outline your income and expenditure in a way you can easily understand. A good way to get started is to:

1. Gather all your financial information, such as bank and investment account statements, recent utility bills and any information about the money you have coming in and what you spend it on
(online banking is a great way to access this information). The more information you have, the better.

2. Record all sources of income, such as your salary (net income, or take home pay, is fine) and outside income (e.g., interest on investments), etc. Write down your total income as a monthly amount.

3. List all of your expenses, such as rent or mortgage repayment, car repayment, mobile phone and data, insurance, groceries, petrol, travel, utilities, entertainment and education expenses. Make sure
you don't leave anything out - a common error is to exclude 'one-off' or infrequent payments.

4. Split expenses into fixed and variable. Fixed expenses broadly stay the same each month (mortgage/rent, insurance, car loan, etc). Variable expenses change from month to month (groceries, petrol, entertainment, etc) – so you'll have to average these.

5. Once you have totalled your income and expenses you can see the bigger picture. If your income exceeds your expenses, you're off to a good start. If it's the other way round, like many Australians,
you are living beyond your means and it's time to make some changes.

Make adjustments, so you can balance your income and expense columns. This means all income is accounted for and budgeted to a specific expense, including contributions to a savings vehicle, whether that's an investment fund, superannuation, or just a savings account. If your expenses exceed your income, look at your variable expenses to see what can be cut – or consider how you might be able to increase your income, by taking a second job or working to get a promotion.

If you would like help with your budgeting, please contact our Dominique Schuh in our office on 54804877 and she will assist you with some of our budgeting tools.

Is Australia's Saving Rate Illusory?

An interesting question was raised last week about Australia's return to form as a nation of savers.

From a peak of over 20% in the early 1970's Australia's household savings ratio had rolled down a very steep hill to negative territory in the early 2000's. From there it barely kept its head in positive territory until the big shock of the GFC. The savings rate swiftly jumped above 10% and remains there today, but there's now a question - are those savings something that households can draw upon?

Credit Suisse released research suggesting our high household saving rate was illusory because it includes superannuation and didn't properly account for principle payments on mortgages. Adjusting for superannuation, Credit Suisse found that the current 10% saving level fell to 2%. The scary thing here is that this adjustment means Australia had a negative household savings rate from 1997 to 2008.

Superannuation is a form of saving, but our capacity to draw from it is limited until retirement. Then there are principle mortgage payments, when these are removed the savings rate drops from 2% to -3.6% meaning we've been negative savers since 1997!

Some people argue paying off the mortgage is saving, but the reality is you'll always need somewhere to live, so your house is more a consumption item than investment. And if you take money out of your house, it can only exit as debt.

So what do you do if you're one of those in negative territory or just want to save? Firstly, stop using credit cards, and then start the 'pay yourself first' method. Set up an online savings account and have the money you want to save directly debited from your transaction account.

Without that money you'll be forced to lower your spending and most online accounts are card-less so impulse won't be a problem. U Bank's (NAB) Usaver account is card-less offering 4.31% if you deposit $200 a month; while RAM St (Westpac) RAMS Saver is card-less offering 4.31% if you deposit $200 per month and make no withdrawals.

As always, if you would like some assistance in putting together a saving plan, don't hesitate to contact Dominique Schuh on 07 5480 4877 or dominique.schuh@schuhgroup.com

Saving For Your Child's Education

Finding the money to pay the soaring costs of education is a battle for many Australian families. With no relief in sight, it's time for some serious planning.
Raising a child in the new century looks is more costly than ever. A recent report indicates the basic cost of raising two children to the age of 21 now exceeds $500,000. Add private education fees and the figure soars. Make no mistake, alongside the mortgage, education is becoming a substantial and sobering cost for families.

Choice magazine regards the cost of education as one of the fastest growing life costs in the Australian community, growing at around 6 per cent a year. To put this into perspective, consider that $1,000 in today's dollars, will be close to $1,800 in 10 years time.
And it's not just for the growing number of children attending private schools.

Contrary to common belief, public education is not free. Increasingly, costs at government schools are being passed on to parents who can expect to pay around $800 to $1,200 per child each year on school levies, uniforms, books and excursions. And while the cost of non-government education varies enormously depending on which state and which
school, on today's figures, parents can expect to pay between $5,000 and $17,000 per child each year at secondary level.

Planning for future expense

Education is one cost that can be planned for a long time before children even step foot in the playground. Given the long lead times associated with bearing and raising children, the opportunity is there to plan ahead.

A regular investment plan is a good way to prepare for future education costs. It has the benefit of longterm investing and the simple but effective powers of compound interest. A family with a baby due later in the year, for example, might start a regular investment plan using any gifts of money intended for the baby, and then continue to contribute a
monthly amount. Over this sort of timeframe, using a cash management trust or managed fund can be better than putting the money into a traditional savings bank account - or the piggybank.

If you've already got children, it's not too late either. The power of compound interest simply warrants getting started as soon as possible.

Start small, now

There's a misconception that people have to start with a large amount when they're investing money. This is not the case. Even with a small amount, the key is to start now and not put it off, to benefit from long-term investing. A survey conducted by Newspoll discovered that about half of all parents use their general savings to pay for school fees. Of the other half, around a third use savings from a special education saving account, 28 per cent tap income from specific investments, while 21 per cent take a part-time job to pay the fees and 14 per cent use a personal loan or draw down on their flexible mortgage to meet the cost.

Only 40 per cent of parents are saving for education in advance but almost all admit that their savings fall short, with half of the savers putting aside less than $100 a month.
So like any long term goal, when saving to pay for your children's education it can be as simple as ensuring you start as early as possible.

As always, Dominique Schuh can assist you to devise an appropriate strategy to start saving for your children's education.
1AMP.NATSEM Income and Wealth Report, 2007
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