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personal finance

Most fights in marriages stem from money. Whether you have a lot or a little, if both parties don’t agree with how the finances are being spent, then there are going to be bumps in the road.

More often than not, one person will be wholly and solely responsible for the financial management of the household. That isn’t necessarily a bad thing if you’re both aware of what’s going on, and are on the same page. If, however, disagreements about money are a common occurrence in your home, then I daresay there are a few extra things you could be doing to ensure your finances are on track, and your marriage is free from financial squabbles. Here are 5 ways to be equal partners in your marital finances.

1. Have a meeting

I know it sounds a touch overboard, but I can tell you from experience, that communication is the key to success. It is important in any partnership where your finances are combined to have an open and honest discussion about money. This includes how much you have, what you need to live on, and what you are ultimately trying to achieve.

You need to think big picture here. Are you trying to retire by 40, did you want to invest, pay cash for the school fees? There is no right or wrong, but you need to agree together. Two people working towards a goal will get you where you need to go faster and keep you accountable to someone else.

2. Figure out the mandatory costs before you think about savings

Contrary to popular belief, it is more beneficial to figure out the mandatory living expenses before you decide how much you are going to save. If you don’t have a good idea of all of life’s costs like electricity, clothes, rent, food and petrol, how can you realistically decide how much you are going to be able to save.

Write down every expense that you would normally have throughout the year. Be honest, and be thorough. Once you have that figure (either yearly, monthly or weekly, it’s up to you), you can then figure out what you are left with to save. This is a more realistic idea as to what you can comfortably save whilst still ensuring all of your expenses are taken care of, and you never have to dip into the savings to keep yourself afloat.

… Communication is the key to success. It is important in any partnership where your finances are combined to have an open and honest discussion about money

3. Be understanding of your partner’s expenses

For partnerships to work well on the money front, you will need to accept that sometimes your partner will spend more on certain things than you, and visa versa. Remember, it’s their money too, so if it’s important for your partner to have money to play golf, for example, then don’t discount it straight away. If it’s available within the budget and you can still achieve your other goals, it’s important to be flexible. Remember it works both ways, so having a level of understanding of what is important to each other is all part of the communication process.

4. Get a third party point of view

Typically, having these types of conversations can be foreign to many people. Speaking to a professional financial planner can be a good way to nut out the important goals and get some direction. It will also help because a professional will be able to help you with the correct structuring and figuring out what is actually achievable.

5. Plan for emergencies

Regardless of how thorough you are with planning your expenses, there will always be some unexpected nasties along the way. Having a small cash buffer set aside to fund these gremlins will mean that you can sleep easy. If something comes up, then there will be no fights or stress about where the money is going to come from.

At the crux of all of this, it’s really about communication and being on the same page financially. Spend some time to work through it together, set in motion a plan that you both agree on then commit. These simple steps should alleviate some of the stress that comes along with managing the marital finances but will also help you manage your money in a more realistic way.

Featured image via Pixabay under Creative Commons CC0

This article is brought to you by Nuffnang and Suncorp Super.

You may have heard the term ‘salary sacrifice’ around the office. Perhaps you didn’t bother looking into it, because let’s be honest, who wants to sacrifice even more of their salary? But did you know that it can actually reduce the amount of tax you pay? Yes, you heard right. Less tax to the government, and more money to you—or your super fund, anyway.

Let’s start by defining basic terms. Gross earnings is your pay before the tax is taken out. A marginal tax rate is the percentage of tax you pay depending on your gross earnings. In Australia, this starts at 19% for every dollar over $18,200, and goes up to about 30% on your first $180,000 and 45% for every dollar after that—and don’t forget the levies, which add an additional 4%! Ouch.

Now here’s where salary sacrifice comes in. This is when you take money from your gross earnings and put it into your super fund. Why? Because unlike your salary, all contributions to your super fund are only taxed at 15%. That’s a huge difference if your marginal tax rate is closer to the 45% end of the scale!

For those who are planning ahead for retirement, research has found that a couple in Australia wanting a comfortable retirement will need approximately $58,444 a year. Even assuming both retire at age 65 and get the age pension, that’s still roughly $510,000 you need in your super fund.

By starting early and getting more money into your super fund now, it will mean a larger difference. By sacrificing as little as $20—one meal out!—a week, you could have an extra $184,205 in your super fund if you start at age 25. Or for those of us a little older, $93,484 extra if you start at age 35. The ideal contribution amount for each person varies wildly depending on circumstances—it’s best that you talk to a financial adviser or financial planner so that you can get advice for your particular situation.

What does salary sacrificing mean for your take-home pay? How much is your pay actually reduced by? For someone earning $60,000 a year, without contributions they would take home about $920 each week. But here’s the thing—sacrificing $20 a week does not mean your take-home pay goes down by $20. Because your gross pay is now decreased by $1,040 a year, you are taxed on the decreased amount. This means that each week, your pay only goes down by $13 for that $20 sacrifice. (Do note, after the 15% super tax, only $17 goes into your super fund—but you still end up ahead!)

For those interested, you can see the full details of the calculations and assumptions below, kindly provided by Suncorp Super.

suncorp-stats

Before you get carried away by the benefits, however, keep in mind that you can only sacrifice up to $30,000 a year—or $35,000 if you’re over 49 years old. That includes the mandatory 9.5% that your employer contributes.

As salary sacrifice can be a somewhat complex topic, Suncorp has created a fun online game called Super Slinger that you can play to get a better understanding of how salary sacrificing works—and how it can work for you. (Added bonus: It doesn’t keep asking you to buy additional in-game items!) Leaders in Heels had a chance to play with it, and not only was it rather addictive, it was also helpful in learning about salary sacrificing. Sounds like an odd combo, right?

The game itself is simple to play, where you have a number of projectiles that you need to fling at a structure to topple the prize nested above or within. The theme itself is cute, related to the idea of salary sacrificing. Your projectiles are coins—your money—and you’re flinging them into the future to secure items like hoverboards and time machines. At the end of each successful level, you’re not only rewarded with your prize, but with an interesting fact about salary sacrificing.

Of course, it never hurts to hear from experts in the field, either. Below, Suncorp Super answers some common questions:

1. How can someone get a rough estimate of the amount they need to retire, as different people have different views of ‘comfortable’?

Take a look at our Retirement Simulator. All you need to know if you current super balance and how much you earn!

2. How does my super fund earn money?

Earnings will depend on your investment choices. Even with the cyclical nature of markets, in general, topping up your super on a regular basis means you should have more in retirement. Your investment returns will compound as you contribute more.

3. What are your top tips in regards to salary sacrificing for anyone, regardless of age?

Start early
No amount is too small
Don’t exceed your contribution limit. There’s a limit to the amount you can contribute to your super each year, before and after tax, depending on your age without incurring additional tax.
Check if it’s the best strategy for you. For those earning under $50,454, an after tax contribution may be more effective as you may be eligible to receive a government co-contribution.

Rewards cards are increasingly common these days. Most people have one of some sort, whether it be a credit card, an airline loyalty card or a strict rewards card such as Fly Buys. But most people also don’t use their rewards card to their full potential, missing out on extra points that could be what they need to get that flight or that new TV. Below, we share five ways that you can get the most from your rewards card.

1. Pick a card that provides rewards in your area of interest

Different cards have different perks. Some have rewards such as free travel insurance for frequent travellers, others free wines when dining at certain restaurants, and yet others bonus points for daily activities such as grocery shopping. Work out what you spend the most on, or what perks integrate best with your life.

2. Work out what provides the best return for value

When it comes to points, a lot of the time it’s easy to simply opt for cash back, or to pick up that kitchen appliance you’ve had your eye on for a while but couldn’t bring yourself to pay for. But is that really the most efficient spend of your points? Physical items tend to be allocated a point value based on their RRP. If you can wait, it’s generally better value to pick up a gift card and wait for the sales to come around.

It’s also worth noting that a lot of the time, the best return for value on points is generally on airline points. The number of points required for a business-class fare tends to be excellent return for value compared to how much you would pay in cash for that fare (not to mention, the number of points required doesn’t go up around peak period!).

Look for something like Qantas Cash, a prepaid MasterCard built into the Qantas Frequent Flyer card. You can use it like any other credit or debit card (including PayPass functionality), and you’ll also earn Qantas Points in the process. The best part? No annual fee, unlike many credit cards that provide reward points!

3. Look out for promotions when transferring credit card points to airline points

It can be tempting to simply transfer your credit card points to an airline rewards program as and when you need them. But it can be worth planning ahead—occasionally, companies will offer bonus points when transferring to airline programs, for a limited amount of time only. There are times they will go up to as high as 20% or 30% in bonus points, so be patient, stockpile your points… and be ready to jump in when those offers come up!

4. Think creatively when it comes to earning bonus points

For example, if you have a card that provides triple points for shopping at a supermarket chain, it’s worth taking into consideration the fact that the major chains usually sell a wide range of gift cards as well. Wanting to purchase music online, or get a TV at an electronics store? Check if the supermarket chain sells gift cards for those stores, and use the gift cards to make your purchase.

You could even arrange group shopping trips with friends where you pay first with your card, if you trust them enough. Or if it’s strictly a points-earning card, you can ask your friends whether you can swipe your card when they pay. Friends are normally more than happy to help out—if they’re not gunning for points of their own, that is!

5. Work out if the fee you’re paying for a rewards card is worth the number of points you earn

Most credit cards that earn you points have an annual fee. While it’s nice to feel like you’re being rewarded for spending what you would spend anyway, don’t let yourself get too carried away! You can make a general estimate of whether a card is earning its keep by going online and checking for the number of points required to redeem gift cards. If you don’t earn enough points in a year to get a gift card that’s equal to or more than the annual fee, then perhaps it’s time to start thinking about whether you really need that card or not.

You can do the same with cards that earn you airline points—do you earn enough in a year to redeem an equivalent amount of flights that would cost you your annual fee?

This post was sponsored by Qantas Cash. Visit Qantas Cash to find out how you can reward yourself with a great prepaid rewards card!

How do you get the most out of your rewards cards? Share with us in the comments!

The first question many people have is: why automate? The truth of the matter is, we can waste a lot of time using technology, whether it’s checking our social media, viewing YouTube or Vimeo files, or just general internet surfing. Setting up an automated system can save you a lot of time and effort, not to mention you won’t have to do all those boring, repetitive tasks!

But there are also good reasons not to automate. Setting up a system is like setting up a new habit. If the system doesn’t match your personality or way of doing things, you won’t stick to it, no matter how much someone else tells you that you will!

There are some things you should look out for if you choose to automate your personal life:

1. Devices will fail you. Your smartphone might run out of battery, you might lose your tablet, or your laptop could break down. If you rely on them to manage your life, you will find yourself at a loss while you scramble to find a replacement.

2. Data won’t always sync perfectly. There is nothing worse than trying to go to an appointment, only to find that not all the details are in your calendar – or in the worst case scenario, none of the details are in your calendar.

3. You rely on automation too much. I’ve found that sometimes, if an even isn’t in my digital calendar, then it doesn’t exist. This causes issues when you are expected to be somewhere (and forgot to reply to the invitation or didn’t the data!).

There is no shame in finding alternate ways to manage your data. Many people have gone back to using physical diaries, and making notes on paper instead of on their phone, because technology has failed them before.

But if you decide to automate your personal life anyway – because, let’s be honest, it does save a lot of time – here are two simple suggestions to get you started.

Personal finance

In this past year, our family has been trialing the use of personal finance apps. One of these apps is Pocketbook. This is an Australian app which helps you to manage your personal finances and check where your spending is occurring.

Simply download the app from the App Store (iOS only) and then create a new account via your desktop. It’s much easier to set up Pocketbook on your computer, and create the set categories to manage your finances. For me, the most valuable personal benefit is seeing where spending is going each month. I can also check how much money is in our personal bank account (and yes, I know there are the separate bank apps, but this ties everything together).

The other benefit is that Pocketbook detects bills, especially if they are on a recurring basis. It will even inform you whether you have enough money to cover them!

Calendar events

Another main area of automation is for calendar events. I use an app called IFTTT (IF This, Then That) to automate these tasks. IFTTT is a web and app service that lets you create what they call recipes, based on a trigger (something that happens) and a resulting action. I’ve mentioned it in previous automation articles as well.

Here are three of my favourite recipes for Google Calendar:

For those individuals who need to log their work hours, use this recipe in conjunction with Google Calendar.
This is a ‘DO’ recipe. It allows you to quickly create an event in Google Calendar simply by entering the information in a natural sentence such as “Meeting with Sam at 7pm”.
If you use Reminders on your iOS device, then this recipe automatically syncs them with Google Calendar so you get reminders on all your devices!

Thanks for reading the series on automation. We’ve also previously covered home automation and work automation. What do you use to help streamline your personal, home and work life? Let us know in the comments!

Check out Get Your Life Back ebook by Kasia Gospos, founder of Leaders in Heels, on how you can streamline and automate your business and life so that you have more time for what you really love.

photo credit: iPod Touch add events

A three-month holiday. A new, top-of-the-line mountain bike. A fancy degustation dinner at Tetsuya’s.

There are things or experiences that we all want — but more often than not, they’re simply dreams without plans. If you want to make your dreams a reality, it’s important to develop good saving habits.

Recently MoneySmart, a division of the Australian Securities & Investments Commission (ASIC), conducted an online ‘Money Goals’ poll to determine how and what Australians are saving for.

One of the key findings of the poll were the techniques used by successful savers. If you want to know how you can finally cross that item off your wish list, then read on!

1. Know how much money you need

Budgeting for some things is simple. Whether it’s a car, a bike, or even a house — it’s not hard to know exactly how much they’ll cost you upfront.

Then there are things like holidays. Flight prices are always changing, as are exchange rates and hotel costs. And let’s not even start on spending money! That single unplanned activity you stumble across in your travels may end up blowing your budget completely, or maybe it’s that expensive souvenir you simply can’t pass up.

To stay on track with your savings goals it’s important to list out each item, then do your research. Calculate how much money you’ll need in the worst-case scenario and use that as the figure you’re aiming for. It’s easy to want something but there’s some serious savings work involved if you’re actually going to achieve your savings goals!

2. Have a specific saving timeframe

Set a firm deadline for each thing you want to save forHow long are you willing to wait before you reach your savings goal? After all, that new Kate Spade handbag won’t take long to become last season. The two-door convertible you fell in love with in your younger years might not be so practical if you end up having a family. And no one really wants to be in their sixties or seventies before they can finally afford their first house.

Set a firm deadline for each thing you want to save for. Much like work or assignment deadlines, this date will be your motivator!

3. Have a clear savings plan

To successfully save for the things you want, you’ll also need a clear savings plan. Once you know how much money you need for each goal, and set a timeframes for them, you can work backwards and calculate how much you need to put aside each month or each week.

Yes, this will be painful. It may mean going drinking with friends only once a month, selling something to drastically reduce the overall amount of your savings goal, or sending the kids to public schools instead! The key thing is to ensure your targets and deadlines are realistic. Saving for that multi-million-dollar mansion in five years is probably out of reach if you’re on an average office worker’s salary. But you might be able to make the down payment for a modest house or apartment!

4. Regularly review progress toward your goal

…identify periods where you’re not making any progress towards your goalIf your savings plan has long deadlines, it’s important to stay motivated. The best way to do this is by constantly reviewing your progress. It can be a real pick-me-up to see you’re that much closer to your dream holiday, or the sexy convertible you’ve had your eye on for a while.

It also helps you to identify periods where you’re not making any progress towards your goal. Was it because of unexpected emergencies, such as a car breakdown or medical expenses? Or was it because you went on that shopping spree after a particularly terrible week at work or home? By critically analysing your financial habits, you can develop strategies to ensure you’ll stay on track to meet your savings goals.

If you like to see visible signs of progress (who doesn’t?) there are apps such as ASIC’s TrackMyGOALS, available on Apple and Android, which let you set, share, track and review your savings goals. You can also upload pictures of your goals to remind you just what you’re saving for!

5. Tell your family and friends

It’s much too easy to slack off if you’re the only one who knows you’ve slacked off. Accountability is another key motivator, whether it’s your family continually asking how you’re going, or the potential embarrassment of informing your friends that you can’t actually afford the awesome holiday you boasted about all year.

The more people you tell, the more people you’ll have to make excuses to — or explain yourself to — if you don’t meet your goals. And for those of you who prefer the carrot over the stick, if you choose the right people to tell, you’ll have a personal cheer squad to get you to the finish line of your savings goals!

This post was sponsored by ASIC’s MoneySmart website. Visit the MoneySmart website to get free and impartial information and guidance about all aspects of personal finance to help Australians make informed financial decisions. The MoneySmart website also has useful free tools such as mortgage calculators and budget planners.

featured image: TruShu

While you must have Compulsory Third-Party Insurance in all states and territories of Australia, there are many more insurance options that can provide you with extra coverage. Did you know that there’s a separate insurance coverage entirely for damage to your tyres and rims? Or that Purchase Price Insurance is not the same as GAP Insurance?

Even the safest drivers can experience car troubles, from fires and floods to fender benders, and a well-chosen insurance policy is vital to protect your vehicle from life’s unexpected events. Read on for everything you need to know about the most common types of Australian car insurance, so you can choose the best car insurance policy for you.

Compulsory Third-Party Insurance (CTP)

This type of insurance is required for every driver in Australia. In fact, you won’t be able to drive out of the car yard without this type of insurance. It exists to cover people for the injuries they may cause to other drivers, passengers and pedestrians. Some states include the CTP premiums in the car registration fees, while in other states you can choose your own provider.

“Even the safest drivers can experience car troubles, from fires and floods to fender benders, and a well-chosen insurance policy is vital to protect your vehicle from life’s unexpected events”

Comprehensive Insurance

There are a wide variety of Comprehensive policies available at different price points, but overall it’s the most – you guessed it – comprehensive option you can choose. If you get a car loan, most financiers will insist on Comprehensive Insurance to best protect your (and their) investment. Comprehensive plans generally include:

Crash repairs (whether you’re at fault or not)
Replacing or paying you the value of your car if it can’t be repaired
Replacing or paying you the value of your car if it’s lost in a fire, flood, or due to theft or vandalism
Replacing or paying you the value of any stolen damaged property inside of your car
Repairs to other drivers’ cars and other people’s property if you’re at fault

Depending on your plan, you may also be able to arrange additional coverage such as windscreen cover, hire car after an accident, multi-policy discounts, and low-kilometre discounts. There are many options available, and it’s a smart idea to shop around or even use a broker to help you compare options.

Third-Party Property and Third-Party Property, Fire and Theft

Third-Party Property only generally offers a basic level of coverage for you if you cause damage to someone else’s car or property. It is useful if you don’t feel your own vehicle is worth insuring (although be careful about making that decision) but you don’t want the bill if you should happen to hit a Mercedez-Benz.

“… It’s a smart idea to shop around or even use a broker to help you compare options.”

Third-Party Property, Fire and Theft includes the third-party property coverage as well as cover for damage caused to your car caused by fire or theft.

Purchase Price Insurance (PPI)

In extreme cases, your vehicle may be declared a total insurance loss, whether that’s due to theft or a major accident. In this case, there is a chance that there will be a shortfall between the price you paid forthe vehicle and the Comprehensive policy payout. If that happens, you could be left with considerably less money to purchase your replacement vehicle. PPI will pay the difference between the insurance payout and your original purchase price, up to the maximum benefit payable under the option you selected.

GAP Insurance (a.k.a. Motor Equity Insurance)

Many people confuse PPI and GAP Insurance because they both deal with a shortfall following a serious accident or theft, but there is a distinct difference between the two. Unlike PPI, GAP Insurance covers a potential shortfall between your Comprehensive Insurance payout and the payout figure to your financier for your car loan – which isn’t necessarily the same as the purchase price. This gap can occur for a number of reasons, for example when expenses like stamp duty, delivery fees, and registration are included in the loan amount but don’t contribute to the value of the car, or if the value of your car depreciates faster than the payout amount of your loan.

Extended Vehicle Warranty

Most Comprehensive Insurance policies are for “accidental” damage or loss and therefore don’t cover mechanical problems that your vehicle might have – think broken air conditioner, window mechanisms, and electrical systems. If you are thinking of buying a used car, an extended warranty offers great peace of mind and they often come with optional benefits such as emergency assistance, towing, and a hire car.

“Unlike PPI, GAP Insurance covers a potential shortfall between your Comprehensive Insurance payout and the payout figure to your financier for your car loan”

Tyre and Rim Insurance

If you damage your tyres – and the damage isn’t due to an accident – then your comprehensive policy most likely will not cover it. That means that if you run over a nail or suffer a blow-out on the highway, you’ll be out of pocket for the repairs unless you have separate Tyre and Rim Insurance.

Whatever type of insurance policy you choose, be sure to contact your insurer straight away anytime you’re involved in an accident. This will help you get the assistance that you need as soon as possible.
General Advice Warning: The above is provided for information purposes only and does not consider your own personal situation. You should always read the Product Disclosure Statement to determine if these products are right for you.

Image credit: Guest post provider, Rob Chaloner.

Rob Chaloner
Rob Chaloner is the Founder and Managing Director of stratton, and is passionate about smarter ways to buy and finance cars. With stratton, he’s working to help Australian buyers disrupt the traditional car buying, financing and insurance markets through smarter products and online services.