Would you struggle to save if your earned $190,000 a year?

Hi Candice again, I was recently trolling through articles in the financial section on news.com.au and an article caught my attention.   ‘Saving is not something I’m good at’: Meet the guy who spends $1500 a week at restaurants.  

Steve Molloy is a successful business owner, is married with a young child and spends money “like it’s going out of fashion” because he prefers to live his life rather than save for the future.

I get this.  I go between struggling to pay our bills to "life is too short, buy the shoes!".  

Many of us would LOVE to have an income of $190,000 a year, we would have the freedom  to save, enjoy the finer things in life AND not have to struggle each and every week.

While reading the article, I began to wonder, if my financial circumstances changed, would my behaviour?  Or am I that used to eating at home and running around turning the lights off after my kids, that I would continue to do it?  

I kept reading...

Mr Molloy said in the article “I’ve got a Netflix account which started out at $8 and is now $17 a month, also a YouTube Red account, Foxtel, Stan, Spotify and all that. What’s worse is they bump up the price, you get an email you don’t read, and suddenly you’re paying a little more than you first signed up for."

We have Netflix, and we had Stan.  I read the email that prices were going up.  We took a vote (actually, my husband and I took a vote, the kids didn't get a say) and Stan was cancelled.  It may have only gone up a little bit, but when you budget down to $2, that little bit is A LOT at the end of the month.    

His brother on the other hand  is a chartered accountant who counts every cent. “He has an Excel spreadsheet with all of his finances and every single month he’ll try to reduce it down,” he said.

“Even if it’s chewing gum, he’ll write down the cost and add it up. He had been at a company 14 years and had annual leave saved up. When he took the annual leave he stayed home and didn’t spend any money, just to maximise [the value]. He’s sort of on one extreme.”

I think I am somewhere between Steve and his brother, I do not spend my annual leave at home, bring on our yearly trip to Noosa, I don't have an excel spreadsheet (I used to) I have DCA Lifestyle Package. 

I don't have to write down when I buy a pack of chewing gum or even work out how much our house is worth, the Package does it for me.  The Financial Planner that comes with the Package helps work out how I can have the finer things in life, while still putting money in the bank for a rainy day.

If I did have an income like Steve, I would still use my Lifestyle Package, I would still chase my kids around the house turning lights off after them and I would still enjoy home cooked meals.  The money would reduce the stress of how to pay the next bill and allow us to have Stan AND Netflix (I can hear my kids rejoicing) but I would still need the advice on how to best manage it.  

If you would like a life somewhere between Steve and his brother, contact us.

Useful links

Lifestyle Package - Services included

Tax Planning - Lifestyle Package

This article is provided as general information only and does not consider your client’s specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of a client's specific circumstances.

Franking credits and your SMSF

You may have noticed significant media coverage recently regarding the Australian Labor Party’s proposed policy to stop SMSFs from receiving tax refunds for the franking credits they receive in conjunction with the dividends paid from Australian companies they own. 

First of all, what are franking credits and how do they benefit SMSFs? 

Under the Australian tax system companies pay 30 per cent tax on their profits. When these profits are then passed on to their shareholders in the form of dividends, the company also hands the shareholders a credit for the tax the company has already paid (the “franking credit”). The individual shareholder then pays tax on the profit they received from the company less the credit for the tax the company has already paid. The franking credit ensures that the company profits are taxed at a shareholder’s marginal tax rate. 

For SMSFs in retirement phase which generally have a zero tax rate, this means they can receive a full refund of the tax already paid by the company on their behalf. 

SMSFs who have members in accumulation phase benefit from franking credits reducing the tax they pay on their SMSF’s earnings and may receive partial refunds of their franking credits depending on the fund’s overall tax liability. 

Labor, if elected, will change the law so that SMSFs and other low tax paying entities will no longer be able receive a tax refund for the franking credits they receive. This will affect all SMSFs that own Australian shares, especially funds that have received tax refunds in recent years. 

This could have a significant impact on the retirement income of many SMSF members in retirement. For example, an SMSF with $500,000 in retirement phase with 40 per cent of assets held in Australian shares could lose around $4,285 per year in tax refunds from their franking credits. This impact could be a significant hit to your annual retirement income. 

How can we help? 

SMSF Specialist advisors can help you understand how a change in the tax treatment of franking credits may impact your SMSF portfolio and retirement income. Please feel free to give me a call to arrange a time to meet so that we can discuss your particular requirements in more detail. 

Also, if you are concerned by the franking credit policy and want to ensure your voice as an SMSF trustee is heard in Canberra on this and other important superannuation issues, then I recommend that you consider joining the SMSF Association as an SMSF trustee member to support their advocacy for SMSFs. (http://trustees.smsfassociation.com/). The SMSF Association strongly opposes the proposed change to the tax treatment of franking credits and is looking to resist the introduction of this policy for the benefit of all SMSFs.

If you would like more information about this article please contact us.

Useful Links

• SMSF Myths Busted - Fact Sheet
• Personal Superannuation Contributions - Fact Sheet 

This information is of a general nature only and has been provided without considering your objectives, financial situation or needs. Because of this you should consider whether the information is appropriate considering your objectives, financial situation and needs.

Women flock to work, but super still needs work

Originally written by Nicki Bourlioufas for Morningstar

Australia's female labour force participation rate reached an historic high of 60.5 per cent in January 2018 and continued growth could help to grow women's superannuation balances, which still significantly lag those of men.

Average superannuation balances in 2015-16 for people aged 15 and over were $111,853 for men and $68,499 for women, according to data from the Australian Bureau of Statistics.

Moreover, women are still retiring with substantially lower savings. Average superannuation balances at the time of retirement (at ages 60 to 64) in 2015-16 were $270,710 for men and $157,050 for women. This falls well short of the $545,000 needed for a comfortable retirement, according to the ASFA Retirement Standard for a single person.

Even more worrying is that one in three women reported retiring with no superannuation savings in 2015-16. That compares to 27 per cent of males who reported nil superannuation. 

According to the Association of Superannuation Funds of Australia (ASFA), there are several reasons women have less superannuation. Women spend more time out of the paid labour force for family reasons, including caring for children as well as parents. Women are also more likely to be employed in part-time and lower-paid jobs. 

ASFA CEO Dr Martin Fahy says lifting the Superannuation Guarantee (SG) to 12 per cent needed to happen sooner rather than later to adequately address the lack of sufficient superannuation held by women. 

"Security for women in retirement is an important issue. Despite increasing workforce participation by women, there still remains a significant disparity between the retirement incomes of men and women. There are a number of factors that contribute to this, including broken working patterns," Fahy says. 

"While this is not confined to women, given that caring for children, parents, and other family members is more often than not performed by women, this results in both breaks in employment, and frequently, significant periods of part-time employment. 

"The gender pay gap and the increasing casualisation of the workforce also contribute to the gap. While this is not unique to women, this does have a tendency to affect roles which predominantly employ women, such as the caring professions, hospitality, and retail." 

Dr Fahy recommends women make the best use of the federal government's tax concessions for superannuation contributions. 

"There is a $25,000 annual concessional contribution cap and the ability to make catch-up contributions from 1 July 2018, using previously unused cap amounts on a rolling five-year basis for anyone with less than $500,000 in super," he says. 

"You may also be eligible for a super co-contribution from the government of up to $500 if you make personal super contributions and earn less than $51,813. The Low Income Super Tax Offset (LISTO) provides a refund of contributions tax for anyone earning up to $37,000, up to a maximum of $500. 

"If you have received a large windfall (such as from an inheritance) or sold an investment property, think about putting the proceeds into super. You can make a $100,000 after-tax annual contribution if your super balance is less than $1.6 million as at 30 June of the previous financial year." 

Financial adviser Jay Adamson with countplus one says women need to take a greater interest in their superannuation. 

"It is 9.5 per cent of your salary and it is important. Make sure you are invested in the right asset allocation to achieve your objectives. Check on fees and charges and find a fund that meets your current needs (and this may change over time)," she says. 

Salary sacrificing is also important. "Ask your employer to contribute part of your pre-tax salary directly to your superannuation fund. For example, if your taxable income is $80,000 a year, a superannuation contribution of $100/week will reduce your net take home pay by only $59/week," she says. 

"If you are self-employed, don't neglect to make superannuation contributions--they are a tax deduction for your business." 

She also recommends working with your spouse. "If you earn less than $40,000, then your partner can get a tax offset of up to $540 on contributions made to your complying superannuation fund. There may also be advantages for you in 'superannuation splitting' where part of your spouses' superannuation can be transferred to top up your own superannuation account," says Adamson. 

ASFA recommends other policy changes that would further improve superannuation outcomes. These include payment of superannuation contributions linked to paid parental leave. 

In addition, removal of the $450 a month threshold for payment of Superannuation Guarantee contributions would also benefit women, say Ross Clare, director of research, ASFA, in a recent research paper.

If you would like more information about this article please contact us 

This information is of a general nature only and has been provided without considering your objectives, financial situation or needs. Because of this you should consider whether the information is appropriate considering your objectives, financial situation and needs.

10 ways to identify a failing business

1. Too much debt

If a company’s operations are mostly funded by creditors instead of the business owners, and it may have some difficulty servicing that debt, then it is under stress and may not be a valuable business partner.

2. Overexpansion

Overexpansion can quickly lead to cash flow troubles, even for experienced operators. This then leaves them running the risk of taking on large amounts of debt in a bid to keep the business going.

3. Lack of clarity

Clarity around what the business is trying to achieve is critical to its ongoing success.  If it’s not clear what the business does or how it generates cash, there is likely to be a significant amount of risk.

4. Qualified accounts / going concern commentary

Qualified accounts are audited accounts where the auditor has doubts or disagreements with the firm’s management.

Going concern commentary is not as serious as qualified accounts but it can be a sign that the auditor is protecting themselves from litigation but is still signing off on the accounts.

This is a huge red flag; don’t do business with a company showing these warning signs.

5. Profit warnings

Profit warnings are most commonly the domain of listed companies. 

6. Profit versus cash flow

It is important to differentiate profits from cash flow, as current profitability is not an accurate measure for determining the ongoing viability of a business.

Strong profits but little cash flow could indicate problems lurking behind the scenes, and can even be “a sign of dodgy accounting practices”.

7. Irregular payments

Another common indication a business is in strife is its payments become irregular – even if they make sizeable lump-sum payments at ad hoc intervals.

It’s a sign the company’s cash flow is compromised. Deciding to continue doing business with a company in this situation can depend on past payment history, current relationships, and the reasonable likelihood of the business getting its cash flow back on track.

8. Unstable leadership

Aside from finances, instability among a business’ management team and senior employees can indicate problems. Beware of a significant turnover among senior member of staff and management.

9. Trappings of success

When directors have high-end, brand-new cars, computer systems, and furnishings, it can be a sign that directors are rewarding themselves at the expense of the company.  

10. Late filing of accounts

It pays to dig into a company’s history of lodging documentation.

If the company files its accounts late, it could be a sign of general disorganisation or it could indicate that the business had trouble getting an auditor to sign off.

If your company identifies with any of these items on the list, do not fret, contact us and we can help you develop ways to improve.  

$4,200 - what does it mean?

Both high-income earners and the unemployed are accumulating high levels of credit card debt, but we're getting better at paying it off, new data suggests.  How do you operate your credit card?  Comment below.  Do you pay it off each month, do you pay the minimum or do you struggle to reduce the balance? 

One in five Australians (20 per cent) earning between $101,000 and $150,000 per annum now own three or more credit cards and hold an average of $5,978 in credit card debt, according to a finder.com.au survey of 2,085 Australians.

The survey revealed that the average credit card debt is $4,268, with the level of debt accrued generally rising with income.

Do you have a credit card?  If you do what do you use it for?  My husband and I have a credit card, our rule was never to put every day, household items onto it.  Milk, bread, petrol - to keep it for emergencies.  Like, when the kids fall off the swing and break a bone (not that they have done that.... yet!).  With the price of everything rising, we have found we have come to rely on our credit card more and more.

Who else find they are in the same boat?  

If you are struggling with everyday life and are struggling to achieve your financial goals, contact us  our Advisors maybe able to help you achieve your financial goals and break free of credit cards.

This information is of a general nature only and has been provided without considering your objectives, financial situation or needs. Because of this you should consider whether the information is appropriate considering your objectives, financial situation and needs.

5 questions to ask yourself if you are trying to save money

Article first published 9 March 2018 - Nestegg.com.au

There are myriad reasons to cut back on spending, and according to a financial educator, these are the five key questions that will help savers stay on track.


No More Practice Education chief executive Vanessa Stoykov said sometimes all it takes to improve a situation is to ask yourself the right questions.

“And if you don’t know what to ask, you can’t get a result,” she said. These are the five key questions savers should be asking themselves.

1. Is this the best deal I can get?

“It sounds basic, but we often don’t ask the question. The first suspects are your health insurance, utilities and super fund. It’s important to find out what fees you are paying, and ask the question,” Ms Stoykov said.

For instance, Ms Stoykov related, she discovered she was paying for unneeded maternity cover “long after the horse had bolted!”

“Nobody ever stopped to ask me did I still need it, and I never asked the question,” she said. “When I did, I saved myself over $100 per month – that’s $1,200 a year saved for asking the question of could I get a better deal.”

The same goes for utility bills, she continued, suggesting savers query whether there are promotions or plans to help them save.

“This can put major dollars back in your bank account, rather than theirs,” Ms Stoykov said.

2. How much can I invest in myself?

The educator explained that she works with a mindset of paying herself first. However, this can be hard, she acknowledged.

“Usually we pay whatever we need to, and whatever we have left is what we live on. This is ineffective because we are putting ourselves last – and to get ahead, you need to put yourself first,” Ms Stoykov said.

Noting that some people make sure they put away 10 per cent of their earnings prior to paying any other bills, she said it’s crucial that savers ask themselves how much they are worth and how they can invest in themselves more.

“Then open an account … that’s hard to touch and get it deducted the day your pay goes in! In a few months you won’t even notice it’s gone, and you have a tidy nest egg building up, and that feels good,” Ms Stoykov said.

3. Do I need this right now?

Usually the immediate answer is yes, but Ms Stoykov urged shoppers to keep this question in mind while out shopping, especially if they’re planning on putting the purchase on a credit card.

“If you don’t have the cash to pay for it, and it’s not a burning, critical, must have item, really question whether you need it. Because putting things on credit is just increasing the burden on you to keep working just to pay it back,” she said.

“Start thinking of how to make what you have last longer, or go further, and cut back on what you are spending on day to day.”

4. Can I get this cheaper buying online or in bulk?

The educator said convenience can be expensive, as buyers make purchases as is needed. However, by carrying out a bit of planning and research, they could save thousands.

“Google is the first port of call, and with online selling sites, and cheap bulk discount places like Aldi or Costco, thinking ahead and shopping around can save you a lot. Even buying in bulk and storing it can really work to get down your day to day shopping bills,” Ms Stoykov said.

5. What do I really want for my life?

Ms Stoykov said that while it seems like a daunting question, it’s an important one.

She explained, “By spending some time thinking about what you really want your life to be like, not just next week or month, but next year, five years and 10 years, you can start making some strategic decisions about life.”

For example, those that want to be travellers should consider how they can put more money away regularly and speed up the time in between trips.

Or, Ms Stoykov questioned, for those with their eyes on property, are there ways to live cheaply in the present or move to a more affordable area?

“Thinking long term can save you thousands of dollars making bad short-term decisions that don’t serve you and the life you really want,” she said. “This will be more fun than you think!”

At DC Advisory Group, we have Advisors and products that can help you with your budget needs.  Contact us today 

Five steps to spend less and save more

Five steps to spend less and save more 

One of the most common new year’s financial resolutions is “spend less and save more.”  It's time to check in on how you are tracking with your new years resolution.  Have you made progress?  Or have you given up already?

Kick-starting your savings resolution can be as simple as following the maxim: “spend less, save more.” However, we know that setting up this discipline can be a challenge, and research shows it can take 66 days to form a habit.

However, harnessing your goals can be achieved by following five steps: 

1. Set a savings goal;
2. Keep track of your spending: write down how much you have spent at the end of each day. At the end of each week add up how much you’ve spent in total;
3. Identify where you can make savings (for example, cutting down on bought lunches and takeaway coffees), and use these funds to start a regular savings plan;
4. Invest the funds. Your investment should be in line with your risk profile. Set up periodic payments or direct debits from your bank to make sure you stick to the plan;
5. Monitor the results of your investments on a regular basis: monthly, quarterly and six-monthly. Over time you may be amazed at how much you have saved.

To help you keep track of your funds easily, we have a wonderful product called the "Lifestyle Package".  

The Lifestyle Package includes 

• Monthly Lifestyle package subscription (Initial setup and training)
• includes personalised balance sheet and data input
• Goal setting and strategy session to look at current positions
• Financial planning session
• Retirement discussion
• Annual meeting to review position
• Cash flow budgets/set goals prepared and review annually
• Estate planning - review and recommendations
• Email and phone support

If you would like help to achieve your financial goals and are interested in the lifestyle package, contact us today!

Ignorance is not bliss: poor financial awareness costing sleep

Do you know the balance of your credit card, or your overall financial position?  Lack of financial knowledge is costing Australians sleep!

Further, only 22 per cent of credit card holders accurately know their credit card debt. That’s according to UBank’s Know Your Numbers Index.

While there’ll always be some costs we can’t plan for, it’s important budgets are created and stuck to, to minimise potential stress in the future.

Poor financial awareness can trickle into poor physical health as sleep and stress levels take a hit. Fifty-nine per cent of respondents conceded that their financial situation has caused them to lose sleep, or contributed to stress.

How to improve your financial awareness

Financial management tools and budgeting apps are a great way for people to get on top of their money and feel in control of their finances.

The cost of living grew 2 per cent last year, and is currently at its strongest pace of growth in 3.5 years, it’s now more important than ever that Australians are in touch with their finances.

DC Advisory Group offer the Lifestyle Package, it is a great way to keep track of your finances.  

Services included in the package include

• Initial set up an training
• personalised balance sheet and data input
• Goal setting and strategy session
• Financial planning session
• Retirement discussion (never too early to plan for retirement)
• Annual meeting to review position
• Cashflow budgets/goals prepared and reviewed annually
• Estate planning
• Email and phone support

We aren't going to lie, when you first see your overall financial position it can be scary.  Our Marketing Coordinator, Candice, looked at her finances, got such a fright that she logged straight back out!  After a few weeks, she has come to see the benefits and has set goals.  Now she is in love with the package and logs in every day.  Sprouting its benefits to anyone who listens.  Who wouldn't love regular access to financial planners, retirement planning and so much more.

Eliminate financial stress by reviewing your finances and finding the best deals on offer. A little bit of homework can go a long way to reduce the strain and help Australians live a bigger, happier life.

Contact us today to find out more about this wonderful package and how we can help you sleep better at night.