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Common financial mistakes made at different stages of life

Regardless of your financial situation, you’ve probably made one of these mistakes at some stage in your life. This article discusses the common financial mistakes made by students, new workers, singles, couples, DINK’s (Dual Income No Kids), families and divorcees and also how to avoid making these mistakes. These are the major risk points in our lives so it is very important to avoid these mistakes because of the setbacks they can cause.

Students

The biggest mistake students can make is deferring a large portion of their debt. This is tempting to do because of how difficult it is to study full time and work. However students should avoid as much debt as they can.

If students find it tough to save and feel like they have to defer their debt, they should work full time for a year and either defer their study or study part time. This will help create a savings gap and reduce your debt at the end of your studies.

New workers

People when they get their first job tend to spend now and save later, but this is a pattern that is risky and tough to get out of. This is risky because you can work hard for years and have very little to show for it.

To avoid this mistake, the moment you start working you should automatically transfer a percentage of your pay to a savings account that you can’t access. This allows you to save whilst leaving you money to also enjoy life.

Singles

Waiting to meet a future partner before building a financial plan is a common mistake made by singles. All singles should have a financial plan and build their own assets.

You should consider taking in a boarder until you can manage a mortgage on your own. Another option is buying an investment property in your own name and renting it out.

Couples

A mistake made by couple is not thinking about protecting themselves financially. This is generally because you are feeling emotionally secure, however the number one reason couples fight is money.

Couples need to talk about money openly. They should also insist on transparency and understand the ramifications of any financial product they buy and what it could mean financially for them. Financial product can vary from a phone, right through to a house.

Dual Income No Kids (DINK’s)

Because DINK’s tend to have a higher disposable income, they run the risk of spending too much as opposed to saving.

Yes it is important to enjoy life, however you should also understand your goals, priorities and values so that you are more motivated to save and not as tempted to spend when you don’t have to.

Families

The biggest risk parents’ face is trying to keep up with others. It can be tough to keep up with friends who spend more on their child than what you can afford on things such as private school education or the newest toys and gadgets.

You shouldn’t feel the pressure to keep up with others and understand that getting yourself into trouble financially now could result in added pressures later.

Divorcees

During a divorce or separation both parties can be emotional and risk things getting messy. In this situation the biggest winners or normally the lawyers involved.

If you are in this situation you should seek good advice early and try to agree early on a fair and equitable split. This allows you to start again with more dollars in your pocket as opposed to a lawyers pocket if things get messy.

Source: Debra Killalea, news.com.au

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

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This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.

Tips to verify claims for online purchases

Online shopping and other peer to peer marketplaces such as Gumtree are a great way for businesses to purchase assets such as furniture at a reduced cost compared to retailers and save valuable time that you would have to spend travelling to the shops. However it is extremely important that enough evidence is provided to prove claims to the ATO. These tips below will assist you in verifying claims for online purchases and avoid trouble with the ATO.

Ensure there is documentation to confirm the purchase

To validate the online purchase, it is most important that you provide documentation to prove the purchase was made. The document should include:

  • Name of the seller
  • Date the document was created
  • Date of the transaction
  • Nature of goods or services purchased (you may write if the supplier does not specify)
  • The expense amount, in the currency it was incurred

A bank statement showing confirming the purchase amount and the date you incurred the expense can be used as substantial evidence.

Prepare your own documentation

This is more likely to be necessary if you purchase off an individual as opposed to a business.

Individuals may just be selling something to get rid of it and therefore don’t provide the documentation you require. If this is the case, prepare a document containing the necessary information about the online purchase as stated in the previous tip and then get the seller to sign the document to confirm the purchase.

Keep photos and screenshots involved in the buying process

Do not delete any messages between yourself and the seller and take screenshots to use as backup in case any messages that can be used as evidence get lost. A screenshot of the item being advertised and a photo of any exchange are a good source of evidence.

Keep related receipts

These may not be directly related to the transaction, but may help show that a transaction took place at a particular time or place such as a bank withdrawal or another purchase at the place the transaction took place.

Source: McKinley Plowman

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent

Croydon, Victoria 3136

Email: integrityone@iplan.com.au

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This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.

6 pros and cons of property investment

A common long term investment in Australia is buying a property and renting it out. However there are significant pros and cons of this investment option that can be important factors when deciding whether or not to invest in property.

Pros

Low risk

Because the property market is more stable than other options such as the stock market and because of the fixed rental come the risk of the investment is low.

Fixed long term Income

You receive fixed regular rental payments from tenants. If this income is high enough, it can be used to cover the mortgage repayment and other costs associated with managing the property. The more certain income also reduces risk and increases your ability to plan for the future.

Capital gain

If your investment property increases in value, you can benefit from the capital gain when you decide to sell the property, along any rental income you received.

Tax benefits

There are a number of costs associated with buying, managing and selling an investment property. Most of these property expenses can be claimed on tax and if you are losing money on your investment property, these expenses can be offset against your income.

Physical Asset

Property is a physical asset that you can see and touch unlike other investment options such as shares.

Special knowledge not required

Although it is important to have some knowledge on the property market, it is not essential to have specialised knowledge unlike other investments.

Cons

High buying and selling cost

The initial cost of the property is generally very high and may require a loan to purchase, whereas shares can be purchased for a much lower investment. There are also other costs associated with buying and selling such as stamp duty, legal fees and real estate agent fees.

Costs of managing and maintaining the property

Along with the buying and selling costs, there are a number of expenses associated with managing the investment property such as insurance, repairs and maintenance fees, water and council rates and mortgage repayments. These expenses may be greater than the rental income you receive

Vacancy and bad tenants

There may be a period of time where you don’t have a tenant. As a result you would be receiving no rental income and be forced to cover the cost of managing the property yourself. Bad tenants who don’t pay rent or cause damage can increase financial stress as well.

Loss of value

There is a chance that the value of the property may decrease over time. This could result in you owing more than what the property is worth and/or having to sell the property for less than what you bought it for.

Inflexible

You are normally locked into a contract with tenants for a fixed time and fixed rental payments. Therefore you wouldn’t be able to receive more rental income until the contract is finished, even if the value of the property increases during the contract.

Risk of the property being your only investment

Because of the high entry cost, it is common for a property to be an investor’s only investment. Therefore if the market changes and the investment doesn’t perform well you can be opened up to devastation. You should diversify your investments or grow your skills and specialise in the property market.

Sources: ASIC, On Property, Loan Market

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

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This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.

Sunday penalty rates cut – How are you impacted?

In December 2015, the productivity commission called for Sunday penalty rates to be reduced to the rates of Saturday payments. This approved reduction will gradually come into effect over the next few years. Workers in the retail, fast food, and pharmacy and hospitality industry are impacted by the penalty rate reduction.

Why there should be a reduction

Along with the productivity commission, small business wanted these changes because it improves their ability to operate and make profits on Sundays as well as their ability to hire more staff. They believe this will allow them to reduce prices on Sundays and create a better customer experience.

Why there shouldn’t be a reduction

However unions and the workers impacted by the penalty rate reduction argue that the reduction takes money directly from, money that they depend on for living expenses. This reduced income would also reduce spending in the economy. They believe that original Sunday rates were fair compensation for missing various social events including spending time with children at home. They also argue that there is no guarantee that these business will take advantage of the reduced rates to hire more staff and reduce their prices to create a better customer experience.

How retail workers are impacted

  • In the retail industry the Sunday penalty rate for full and part-time employees will be reduced from 200% to 150%
  • For casuals the rate will be reduced from 200% to 175%.

How fast food workers are impacted

  • Full-time and part-time level 1 employees rates will be reduced from 150% to 125%
  • Level 1 casual employee rates will be reduced from 175% to 150%
  • No change for level 2 and 3 employees

How pharmacy workers are impacted

  • Full-time and part-time employees working between 7:00am and 9:00pm will have their rates reduced from 200% to 150%
  • Casual Sunday rates reduced from 200% to 175%

How hospitality workers are impacted

  • Full and part-time penalty rates will be reduced from 175% to 150%
  • Casual Sunday rates will stay at 175%

Source: ABC news

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.

5 reasons why it’s worth paying an accountant to do your tax return

Paying an accountant vs doing your own tax is a much debated issue. Although there are arguments for doing your own tax, there are significant benefits of hiring a professional.

They can save you time

Yes it costs more to pay for an accountant, however the value of your time should be taken into consideration when deciding if you want to pay an accountant or do your own tax. By paying for a professional you can maximise your time to focus on your own interests. Depending on how complicated your tax situation is, the cost of a professional may be very small when compared to the time saved by not doing it yourself.

Reduced risk of errors

This is important if you own or have sold shares, if you don’t understand capital gains tax, if you are unclear on what deductions you’re eligible for and if you have a complex tax situation. Hiring a professional reduces the risk of mistakes and fines from the ATO.

Higher tax return

Accountants may be able to find deductions that you didn’t realise you’re eligible for, therefore reducing your tax liability. The deductions that they find for you may outweigh the fee for the accounting service.

It is tax deductable

On top of finding deductions you may not have been aware of, the accounting fees are also tax deductable

They can help plan for the future

As well as maximising your tax return for a previous period, accountants can also help organise and maximise your finances in a safe and legal manner. What sets Integrity One apart is that we focus on planning for the journey ahead.

 

Source: Savings guide

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.

End of financial year tax tips for small business

Buy a business asset that costs less than $20,000

If you purchase a business asset and it is ready for use before June 30 2017 you could qualify for an instant deduction

For more on the small business tax write off visit https://www.integrityclients.com.au/news/20000-small-business-tax-break-explained/

Prepay expenses this financial year

Eligible small business can claim deductions this year if they pay taxable expenses in advance such as next year’s professional subscription, insurance policy or accounting fees.

Write off bad debts

If you have customers that are unlikely to pay their accounts in the new financial year, these accounts should be written off as a bad debt before June 30 so a deduction can be claimed. Have a record of the debt and the actions taken to recover the debt to ensure you meet tax office requirements.

Review your inventory

Check to see whether you can write off or write down the value of any of your stock to claim a deduction.

Small business restructure roll-over

Small businesses under $2m in aggregated turnover have the option to restructure their affairs without incurring any capital gains tax liability.

This may allow an entity the opportunity to genuinely restructure to a corporate entity to take advantage of a lower tax rate. Alternatively, the restructure can be reversed from a company back to a sole trader/partnership without any capital gains tax liabilities.

Delay sales to next financial year

Subject to cash flow considerations and anti-avoidance rules, income could be deferred to the following year, particularly if:

– Income in the following year is likely to be lower, or
– Tax rates for the following year are expected to be lower

High income earners will also have to factor in the effect of the 2% “budget deficit levy” applying in 2016/17. This is the final year in which the temporary budget repair levy will apply.

For cash businesses – deferral of income can be risky, especially when the deferral puts them outside the ATO small business benchmarks

When possible defer:
– Sales
– Contract dates for the sale of CGT assets
– Insurance recovery claims

Superannuation

Ensure that contributions for the June quarter are paid to a complying fund by June 30 2017 (otherwise the deduction is delayed until 2017/18).

Do not leave payment processing until late June as funds have different processing cut off dates. Check with your funds

April to June 2017 quarter contributions must be paid no later than 28th July 2017

Cap limits of concessional contribution a member can make before June 30 2017:
– $35,000 for members aged 49 or over
– $30,000 for members aged 48 or under

In the 2017/18 financial year the cap will be cut to $25,000 for all ages

For more on the changes to superannuation as of July 1 2017 visit https://www.integrityclients.com.au/news/superannuation-changes-july-1-2017/

 

Sources: Commonwealth Bank, Finder, ATO

For any advice on these issues please contact the Integrity One office

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.

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Integrity One Planning Services Pty Ltd (ABN 59 125 846 933) is a Corporate Representative (315000) of Integrity Financial Planners Pty Ltd (AFSL No. 225051).