November 2024 Newsletter
In this edition, learn how small financial steps lead to fulfilling long-term financial goals, why saying “yes” to more things is a great New Year’s resolution, and some tips and tricks to prepare your kids for financial success.
If you are interested in discussing the topics raised in this month’s newsletter, please don’t hesitate to contact us.
In the meantime, we hope you enjoy the read.
All the best,
The Wealthy Me Team
Achieving your long-term financial goals doesn’t need to be overwhelming. If you can put in place some basic financial steps, you are on the road to a successful outcome.
It means keeping on top of your options and devising strategies for investment, debt reduction and risk protection. The start of the year is a perfect time to take a few proactive steps, that your future self will thank you for.
Adding to your superannuation is one of the most powerful and tax-effective ways to build your wealth over the long term. If you’re an employee, consider salary sacrifice to add to the mandatory contributions made by your employer. Even a small amount, paid regularly, will make a big difference over time. Don’t forget that there are some limits on how much you can invest before tax is affected, so it’s a good idea to keep track of any before-tax, or concessional, contributions.i
Small business owners, sometimes struggling with cash flow issues, may be tempted to neglect their own super contributions but you risk missing out on the benefits later in life.
Finding ways to cut living expenses and reducing or eliminating debt, including paying off the mortgage as quickly as possible, are also obvious ways to attain financial security, although not always easy to implement with cost-of-living pressures. But, again, any small and regular steps towards your goal are a positive contribution.
Apart from finding ways to build your wealth and reducing debt, being prepared for unexpected losses is another way to secure your future.
For example, losing your home, business premises or vehicle in a catastrophic event when you’re not adequately insured creates a significant financial burden.
As natural catastrophes increase in frequency and intensity so does the ‘protection gap’, the economic losses caused by underinsurance or no insurance. One study estimated these losses in Australia at more than $18 billion in the nine years to 2023.ii
The Insurance Council of Australia (ICA) says there are some common reasons for underinsurance.iii
Protecting yourself financially against unexpected personal events is also worth weighing up.
A survey of more than 5000 working Australians shows that, on average, almost 80 per cent have car insurance while just one-third have life insurance.iv
Life insurance is a valuable protection for your family if something happens to you. There is also income protection insurance and various other personal insurances that can ensure you continue to receive an income when you’re unable to work.
While cost-of-living pressures might make insurance or self-insurance seem like a luxury you can’t afford, making an informed choice is the best you can do. That means the financial risks associated with events that affect yourself or your property and carefully weighing your options.
We’d be happy to help you review your wealth building and risk strategies and solutions for a financially safer 2025 and beyond.
i Concessional contributions cap | Australian Tax Office
ii Insurance Catastrophe Resilience Report | Insurance Council of Australia
iii The risk of underinsurance | Insurance Council of Australia
iv Financial security takes back seat exposing advice crisis | CALI
As we step into a new year, it’s a good opportunity to think about what we want to embrace and experience in the year to come. Amidst all the resolutions that might be broken before we know it, one powerful and positive way to approach the new year, is to make this the year of saying yes.
Let’s dive into the warmth of possibility, fight the fear and explore the benefits of saying yes, while also recognising that it’s perfectly okay to say no when it counts!
There’s something magical about the word “yes”. It carries a sense of adventure, curiosity, and openness. When we commit to saying yes, we invite a world of possibilities into our lives. Whether it’s trying a new hobby, attending a friend’s event, or accepting an unexpected invitation, each “yes” can lead to enriching experiences that might just become the highlights of our year.
Every new opportunity is a chance to grow and learn something new. When we step outside our usual routines, we often discover hidden talents or passions we didn’t know existed. Maybe you’ve always wanted to paint but never picked up a brush. A friend invites you to an art class, and suddenly, you find joy in expressing yourself creatively. Each experience expands our horizons and introduces us to an aspect of ourselves that we may not have known existed.
Saying yes also opens the door to new relationships. Each time we engage with new people, whether in a casual setting or a more structured environment, we have the opportunity to form connections. These relationships can lead to friendships, collaborations, or even just delightful conversations that brighten our days. When you attend that gathering or volunteer for a community event, you never know who you might meet or how they might inspire you.
Each small step outside our comfort zones is an opportunity to build our confidence. When we say yes to new experiences, we’re essentially telling ourselves, “I can do this!” Even if we stumble along the way, those moments contribute to our sense of self-efficacy. Think about that time you gave a toast at a wedding or tried rock climbing for the first time. The thrill of stepping up to the challenge can leave you feeling accomplished and more willing to embrace future opportunities.
New experiences can also ignite creativity and inspiration. Have you ever noticed how a change of scenery or a fresh activity can spark new ideas? It’s like a reset for our brains. When we engage in activities that are different from our daily routines, we open ourselves up to innovative thinking. So, whether it’s a cooking class, a new fitness routine, or exploring a different neighbourhood, each experience has the potential to inspire new ideas and perspectives.
While saying yes has its many benefits, it’s equally important to recognise that saying no is perfectly acceptable. Life is a balancing act, and sometimes we need to protect our time and energy. It’s okay to say no to things that don’t align with our values or drain us emotionally. For instance, if you’re feeling overwhelmed with work and social commitments, it’s perfectly fine to decline an invitation.
The key is finding a balance that works for you and to say “no” to the things that aren’t right for you and “yes” to the things that are. When considering an invitation or opportunity, take a moment to ask yourself: Does this excite me? Will it bring me joy or growth? If the answer is yes, then lean in and say yes, but if it feels like a burden or something you’re not genuinely interested in, don’t hesitate to politely decline.
Remember, it’s about making conscious choices that support your journey and well-being. Saying no when appropriate, frees you to say yes to the things that truly matter and make space for the right opportunities to come along—ones that truly resonate with us and enrich our lives.
So, let’s step into this new year with open hearts and curious minds. Embrace those invitations, try that new activity, and savour the joy of each experience. Remember, it’s not just about what you say yes to; it’s about the richness of life that unfolds when you open yourself up to what could be. Here’s to a year of embracing new possibilities!
Here’s some easy money management skills for children of different ages.
Teaching good financial habits, such as saving and budgeting, is one of the best ways to prepare children to have a secure financial future.
It’s never too early or late to start talking about money with your children — start as soon as you are comfortable to and make learning as relevant to their age and life stage as possible.
Below are some strategies that parents can use with their children when they’re at different ages.
A great way to begin to teach younger children about money is to explain its value and its function in the world. Kids often focus on rewards-based systems, where they earn a reward for good behaviour or academic achievement. Use this time to teach them how to earn money as a reward and divide it into three categories: spend, save, and give. For example, spending may be related to buying a fun treat or toy, saving could be taught as a way to buy something they really want in the future, and giving is how you help those in need.
Tip: Sometimes when sharing the concept of saving with your child, it can be helpful to explain you’re “paying yourself for something fun in the future” and relating it back to an age-appropriate concept they can understand. You can make tweaks to this activity along the way. For example, if your child puts extra money into their Saving jar, you could provide a few additional dollars to help them understand compounding interest—how saving money can help them earn more over time. If they receive money as a gift for a holiday or celebration, bring out the money jars for a refresher. Repetition and reinforcement become important in learning any discipline, especially money management skills.
Parents often associate the tweens and teens as the years their kids desire more independence and more options. In this case, tying money management and financial literacy to something relevant in their lives can help keep them engaged. For example, many young people are interested in gaming, so try to relate investing to playing a game. Before they start the investing game, provide them with an overview of the concepts of shares, bonds, and cash, and how they operate differently, like different players in a game. The different players in the game all act together to form an investment strategy. Depending on a child’s age, engagement, and appetite for these discussions, consider introducing the concept of building model portfolios. Review model portfolios that show different asset allocations, and then have each family member choose a portfolio. Once a family member chooses a portfolio, discuss what stood out to them about the portfolio. This will help reinforce the importance of asset allocation and diversification.
At this stage, they may be ready to digest more advanced topics. Discuss the importance of goals-based investing by asking them to think about the next big purchase they want to make—are they saving for a car, a down payment for a home, or even setting aside money for future retirement? Ask: What is their time frame for that investment? When do they want to reach that goal? This helps teach the importance of time horizon as it relates to investing; the longer a person has to save and invest, the greater the likelihood for success in reaching their goals. Depending on their current situation, they may also have student loans to pay back. Budgeting may become a critical topic at this time, and sitting down with them to create that budget can be helpful. This is another important component of financial literacy and money management, and attaching it to an important life stage can make it all the more relevant.
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™
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