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Kick-start your financial fitness

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					Kick-start your financial fitness

                    Work out your money and
                 get your finances into shape
CONTENTS


4                  Top tips for financial fitness

6                  Make the most of your money muscle – realistic budgeting

8                  Regular financial exercise for long-term gain – creating a savings plan

9                  Debt-busting exercises – reducing and controlling debt

10                 The healthy credit card workout – sensible credit management

12                 Increase your financial strength – building financial assets
                   through investing

16                 Financially fit at any age – retirement planning

18                 Health insurance for your finances – protecting your assets

19                 Mastering the tax-time treadmill – preparing for tax time

20                 The financial fitness information directory

22                 Financial fitness talk explained – glossary of terms

Back cover         Your budget planner and spending record sheet




Important notice
Australia and New Zealand Banking Group Limited ABN 11 005 357 522. This booklet provides general
information and is intended as a guide only. The information does not take into account your personal needs
and financial circumstances and you should consider whether it is appropriate for you. It is not intended to
be a substitute for professional advice and should not be relied upon as such.
Financial fitness –
an essential part of your
personal well-being
                            Keeping financially fit is just
                            as important for your well-being
                            as physical fitness.

                            Just about everyone, at one
                            time or another, has wished
                            they had their finances a little
                            more under control.

                            Like getting physically fit, the
                            hardest part about getting your
                            finances into shape can often
                            be simply making up your mind
                            to do something about it.

                            This booklet contains practical
                            hints and information to help
                            you understand and manage
                            your finances. And the good
                            news is, just by picking up this
                            brochure you’ve already made
                            a start!

                            Terms appearing in bold text throughout this guide are
                            explained in more detail on page 22.
Top tips for financial fitness

Your financial future is in your hands. The            8. Be aware of what your financial products
following tips will help you to kick-start your           are costing you – ask questions if you
financial fitness…                                        don’t understand the fine print and shop
                                                          around to find the products that best suit
1. You are responsible for your money –                   your needs. Don’t sign up for anything
   know what you earn, know what you                      you don’t fully understand.
   spend, know where you stand and know
   where you’re heading.                               9. Seek professional and qualified financial
                                                          advice when it counts (e.g. buying a
2. Keep a budget, review it regularly and                 house, planning for retirement,
   include a plan for regular savings.                    insurance, investing and tax issues) and
                                                          get a second opinion if you feel unsure.
3. Keep records of all your financial
   transactions together in one place                  10. Be cautious of investments offering a
   – from bank statements to super fund                    high return from little or no risk. If it
   statements. Check your statements                       sounds too good to be true, it probably is!
   carefully and talk to your financial
   institution if there are any inconsistencies,       11. Take the time to teach yourself more
   or if there is anything you don’t                       about finance (see page 21 for more
   understand.                                             details) and don’t be embarrassed
                                                           to talk about money with people
4. Don’t spend more than you earn and                      you can trust.
   only borrow what you can realistically
   afford to repay.

5. Map your financial future, including
   how you plan to fund your retirement.

6. Protect your assets with adequate
   insurance.

7. Understand the basics of investments,
   including superannuation. Remember
   that high returns generally equal high risk
   and only take on a level of risk that you
   feel comfortable with. Do an annual
   ‘health check’ on your investments.




                                                   4
Make the most of your money muscle

Realistic budgeting                                    4. Now create your budget. Start with what
Do you ever find yourself down to your last               you get paid. How much do you need to
few dollars two days before your next pay?                account for your essential living and
                                                          household expenses? Decide how much
You can get back in control of your money                 you want to set aside as savings. How
and kick-start your financial fitness program             much do you want to reserve to pay your
by creating a budget to suit your needs.                  debts? Do you want to invest some money?
                                                          Can you allow yourself a small amount of
Here are some ideas to get you started:                   ‘play money’? Write it all down.
1. Take a look at what you earn and what you           5. Set aside a modest ‘emergency’ fund to
   spend – write it all down during the course            pay for any unforeseen expenses such as
   of one pay period. Where does your money               a surprise car repair bill or your dog’s
   really go?                                             unexpected trip to the vet.
2. Can you cut your spending and increase              6. Once you’ve worked out your budget,
   the amount you set aside for savings or to             give it a reality check. A realistic budget
   repay debts? There are ways to cut your                is one you can follow without it being a
   spending without having to live frugally.              constant struggle.
   For example, only go shopping when you
   have the money to do so, shop around for
   the best price for major items such as
   whitegoods and consider buying second-
   hand rather than new goods.

3. Set yourself at least one financial goal.
   Do you want to save up for a holiday, buy a
   house or try to pay off your credit card debt
   once and for all? Having clear goals will
   help you decide what’s important and give
   you an incentive to keep your finances
   under control.




                                                   6
Checklist for a realistic budget


         Set your budget period to match your              Avoid impulse buying. For example,
         pay period, whether it’s weekly,                  take only enough money for food on
         fortnightly or monthly. This will make            your lunch break and leave the credit
         it easier to manage your pay.                     card or your ATM card back at the office.
                                                           Better still, take your lunch to work
         Pay yourself first – your savings and             with you!
         retirement plans should be one of your
         main budgeting priorities. They are               Review your budget every few months
         the keys to achieving many of your                (or more), to make sure you’re sticking
         short-term goals and long-term                    to the plan. Maybe you can put a little
         financial security.                               more into your savings, or perhaps you
                                                           need to allow a few extra dollars for
         Organise your pay so that savings and             household bills.
         debt repayments are automatically
         deducted.

         Keep your savings out of reach
         by transferring them into a separate
         savings account. Consider an
         account that doesn’t have ATM or
         electronic access.



                                                      Take action:

                                                      Create your own budget using the budget
                                                      planner and spending record sheet at the
                                                      back of this booklet.




                                                  7
Regular financial exercise for long-term gain

Creating a savings plan                                   If this sounds like you, it’s time to start
Many people find that after they pay the                  saving and make your financial fitness
bills, cover the basics and make the odd                  program pay off! A healthy savings plan
day-to-day purchase, there isn’t much left                can be the key to achieving your financial
for anything else. For some, saving up for                goals and making your life easier and
major purchases such as a holiday, a car or               more enjoyable.
a house, seems near impossible.

Successful saving checklist


        Start today, no matter how small your                    Be disciplined and make savings a part
        regular savings contribution might be.                   of your regular budget.
        Thanks to compound interest, a smaller
        amount of money saved sooner can                         Keep your savings in a separate account
        earn more over the long term than a                      so you won’t be tempted to dip in. But
        larger amount of money saved later.                      remember – there are lots of different
        For example, if you saved $2 every                       accounts to choose from. Shop around,
        day from the age of 18 until you                         ask questions and aim to select an
        turned 60, you will have accumulated                     account that meets your needs and
        almost $105,000 (assuming annual                         provides low or no fees.
        earnings of 5%).
                                                                 Watch your savings grow. Seeing the
        Pace yourself. Make sure your savings                    results of your efforts will make it easier
        goals are realistic. If you set the bar too              to stay on track.
        high it’s easy to become disheartened
        and stray from your savings plan.




    Take action:

    Open a savings account if you don’t already have one.
    Organisations such as the Australian Consumers’
    Association and InfoChoice have websites to help you
    compare finance products, including savings accounts.
    See the directory on page 20 for more information.




                                                      8
Debt-busting exercises

Reducing and controlling debt                             If your debts never seem to go away, it’s time
Debt can be a necessary and beneficial part               to take a realistic look at your situation and
of life. Most of us take on debt for a set                the only way to tackle debt is head-on.
period of time in order to purchase life’s
‘big ticket’ items such as a car or home.                   Take action:
But unmanageable debt can put a serious
dent in your emotional well-being and, in                   Ensure you make at least the minimum
some cases, cause severe financial and                      payment due on your loans and put any
personal distress.                                          extra payments towards those loans
                                                            charging the highest rate of interest.
The debt-busting checklist


        Assess your current debt situation and                   a low overall interest rate and minimal
        work out a plan of attack. Get help from                 fees. As with any financial product,
        your bank, a financial planner or a                      make sure you read the fine print.
        financial counsellor if you are not sure                 Beware of products that look like they
        where to start.                                          will be a ‘quick fix’ in the short term
                                                                 but actually lock you in to excessively
        Set some realistic goals for paying off                  high interest rates and ongoing fees
        your debts, even if it’s just one at a time              longer term.
        over an extended period – at least you’ll
        have something to work towards.                          If you can’t consolidate, start by paying
                                                                 off smaller debts and those with high
        Make debts a priority in your budget,                    interest rates. You’ll feel a lot better when
        after your essential living expenses.                    you cross off that first debt and you can
                                                                 then continue to set aside that
        Think about consolidating your debts
                                                                 repayment amount to go towards your
        to make them more manageable. For
                                                                 larger debts.
        example, if you have more than one
        loan from the same bank, you may be                      Never ignore a debt that you can no
        able to roll some or all of these loans                  longer repay. Talk to your financial
        into a single loan and potentially                       institution sooner rather than later – they
        reduce the interest and administration                   may be able to vary your repayment plan
        fees that you pay.                                       to help make the situation more
                                                                 manageable. Alternatively, talk to a
        If you do choose to consolidate your
                                                                 financial counsellor about other
        debts, shop around for an option that
                                                                 strategies that might help.
        will best meet your needs and aim for



                                                      9
The healthy credit card workout

Sensible credit management
There’s no doubt that credit can be
                                                          Take action:
convenient, but never forget that what
goes on your credit card is another debt
that you will eventually have to pay, often               For more information on how to use and
with interest on purchases and cash                       manage credit, visit A Guide to Credit at
transactions added.                                       www.howcreditworks.com.au.

The key to making credit work for you is to
use it wisely and know your financial limits.

Checklist to successfully managing credit

         If you don’t think you can manage                     If you make a transaction that takes
         repayments on a credit card, don’t                    you over your credit limit, you must
         get one.                                              pay the excess amount immediately.
         Choose a credit card that is right for                If you don’t, your bank may charge an
         you. Shop around, ask questions and                   overlimit fee or close your card.
         read the fine print. Interest rates,                  Avoid cash advances and cash
         annual fees, interest-free periods and                equivalent transactions (e.g. using your
         features such as reward points vary                   credit card to get cash from a branch or
         from card to card.                                    ATM, or to pay another credit card
         Only charge items to your card that you               account). They are a costly way of
         know you can afford to pay off within a               getting access to cash, incurring
         realistic time frame and be aware that                interest from the date you make the
         most credit cards charge additional fees              transaction until the date the
         for late payments.                                    transaction is paid off in full.
         Limit the number of credit cards you                  Try and pay off your credit card every
         have to one or two. Fewer cards mean                  month. If it’s not realistic to pay off your
         fewer annual fees and fewer interest                  credit card each month, pay more than
         rates to keep track of.                               the minimum repayment. The more you
                                                               pay, the faster you can reduce your
         Consider carefully any offers to increase
                                                               credit card debt.
         your credit card limit. Do you need more
         credit? Will you be able to manage it?                Talk to your bank or financial institution
         Think about decreasing the limit, if                  if you get into trouble paying off your
         you have more credit than you need                    credit card and see whether you can
         or can afford.                                        organise a payment schedule that
                                                               works for you.


                                                     10
Increase your financial strength

Building financial assets through investing            What types of investments are there?
Think you have to be rich to invest? Not               There are four main types of investments
necessarily; some of the most successful               (called ‘asset classes’):
investors start small and watch their money
grow over time.                                        • shares – ‘direct’ investments in companies
                                                         listed on the Australian Stock Exchange or
Investing can be a great way to strengthen               on international share markets, or ‘indirect’
your finances in the mid to long term,                   investments in unit trusts which hold
so you can enjoy a financially fit and                   shares in a selection of companies
comfortable future. It’s easy to get started,
but it’s also important to understand the              • property – a ‘direct’ investment in property
basics of investing first. This will help you            assets (such as houses, offices or
to make wise choices and avoid getting into              factories), or an ‘indirect’ investment in
financial difficulty.                                    a property trust, which holds assets in a
                                                         selection of properties. Property trusts
Know how much risk you can take on                       are usually listed on a stock exchange

All investments involve some level of risk,            • fixed interest (bonds) – investment in fixed
though some more than others. Generally                  interest securities such as bonds issued by
speaking, if the expected return from an                 companies or governments
investment is above-average, then the risk
associated with the investment is usually              • cash – investments in short-term, interest-
above-average. The lower the likely returns,             bearing products such as bank bills or
the lower the level of risk. This is called the          commercial bills, or in term deposits.
‘risk/return trade-off’.
                                                       These can be accessed by investing directly
There are ways of managing your investments            in the assets themselves (e.g. buying some
to reduce the amount of risk you are exposed           shares, or buying a property), or by investing
to, including:                                         ‘indirectly’ through products such as
                                                       managed funds. When investing in a
• diversification, that is, spreading your             managed fund, your money is pooled
  money around and investing in different              together with that of other investors and
  types of investments or with different               is then invested by a professional fund
  fund managers                                        manager on your behalf. Depending on the
                                                       type of managed fund, the pool of money
• taking a long-term view and investing your           can be invested in one or more of the four
  money for longer periods of time to reduce           main asset classes.
  the impact of short-term ups and downs
  (volatility) on your investments.

                                                  12
Different asset classes and
their characteristics


                         Cash                     Fixed interest          Property                Shares          International
                                                                                                                  investments
 Volatility              Low-med                  Medium                  Med-high                High            High

 Returns                 Low-med                  Medium                  Med-high                High            High

 Time frame              1+                       3-5+                    5+                      5-7+            5-7+
 (years)

 Possible tax            No                       No                      Yes                     Yes             Yes
 benefits

 Examples of             Bank accounts,           Govt bonds,             Houses,                 Shares, share   Share funds,
 investments             bank bills,              debentures,             offices,                funds, listed   fixed interest
 in these asset          cash funds               bond funds              factories,              investment      funds
 classes                                                                  property funds          funds

Courtesy of the Investment and Financial Services Association
Please note: the opinions and recommendations of your financial planner or financial institution may differ
from those shown in the chart above.



Which investments are right for me?                                       • what level of risk you are comfortable
So you want to invest, but what should you                                  with (and can afford to take).
invest in? Should you look at investments                                 These are some of the factors that help to
that are short term or long term? In order to                             determine which sorts of investments would
determine the types of investments that best                              be right for you. A financial planner can
suit your needs, you’ll need to identify a few                            assess your circumstances and help you
factors that are unique to you and your                                   choose an investment mix that best suits
financial situation, such as:                                             your financial needs.
• what you want to achieve from
  your investments

• your time frame, or how long you want
  to invest for



                                                                     13
Checklist to building financial assets
through investing


        If you’re new to investing, educate             Invest small amounts regularly to boost
        yourself. Organisations such as the             your investment over time and reach
        Australian Stock Exchange and the               your goals sooner.
        National Information Centre on
        Retirement Investments provide                  Make diversification part of your
        information and education to assist             investment plan and ensure
        people make better informed decisions           investments meet your time frames.
        about investing.
                                                        Review your investments regularly and
        Talk to a qualified financial planner           when your circumstances change. Talk
        about your financial goals and                  to a financial planner to make sure your
        which types of investment would be              investment plan still meets your needs.
        best for you.
                                                        Remember that all investments involve
        Make sure you understand the tax                some level of risk. Be wary of get-rich-
        effects of your investments and talk to         quick schemes. If an investment is
        a registered tax agent (or a financial          offering high returns from little or no
        planner) if you’re unsure.                      risk, it’s probably too good to be true.

        Understand how much risk you are                Don’t be pressured into making an
        comfortable with and how long you               investment that you are not comfortable
        want to invest and select your                  with and always read the relevant
        investments accordingly.                        information about any investment (such
                                                        as offer documents, product disclosure
        Start sooner rather than later and              statements and prospectuses) in full,
        take advantage of the power of                  before you make a decision.
        compound interest.




 Take action:
   Choosing a financial planner
   Before consulting a financial planner, make sure you take the time to
   check the planner’s credentials. Financial planners operating in
   Australia are required by law to be properly licensed. At the end of
   this document, we have included contact details for a number of
   organisations that can help you determine if a planner is
   appropriately qualified to provide you with advice.




                                                  15
Financially fit at any age

Retirement planning                                                            If you’re looking forward to 20 years or
Did you know that the aged pension and your                                    more of retirement, how enjoyable will it be
employer’s compulsory contribution to your                                     if your money supply retires at the same
superannuation probably won’t be enough                                        time you do?
for you to retire at the same living standard                                  You simply can’t put off planning for
that you currently have?                                                       your retirement.




     How much might you need?
     Many financial professionals estimate that to have the same living standard in retirement that
     you currently have, your annual retirement income will need to be about 60% of your current
     income. The following table gives a basic estimate only of what you might need to set aside in
     order to fund a retirement of 20 years.
                                                                                              Retirement savings required
                                                                                                  to enjoy 20 years of
           Current annual income                         60% of current income
                                                                                               retirement at 60% of your
                                                                                                     current income
                    $30,000                                       $18,000                              $360,000
                    $40,000                                       $24,000                              $480,000
                    $50,000                                       $30,000                              $600,000
                    $60,000                                       $36,000                              $720,000
                    $70,000                                       $42,000                              $840,000
                    $80,000                                       $48,000                              $960,000
                    $90,000                                       $54,000                              $1,080,000
                    $100,000                                      $60,000                              $1,200,000
                    $110,000                                      $66,000                              $1,320,000
                    $120,000                                      $72,000                              $1,440,000


Note: this table is a simple example only. It does not account for the
effects of taxation, inflation, or investment earnings, nor eligibility
for social security benefits.




                                                                          16
Checklist for a financially fit retirement


         Seek the assistance of a qualified                 Make sure you read the fine print and
         financial planner to help you shop                 don’t be afraid to ask questions about
         around for the super arrangement that              your super fund if you are unsure.
         will best suit your requirements and
         determine how much you should be                   Try to consolidate some or all of your
         saving now. Your super investment                  super if you have collected a number of
         might be the most important                        super funds from different employers
         investment you ever make.                          over the years. Not only can it make
                                                            your super investments easier to keep
         Work out how much money you will                   track of, it can also reduce the amount
         need to have a comfortable retirement              you pay in fees.
         with the financial flexibility to allow you
         to live life to the full – budgeting is as         If you’ve had a number of employers
         important during retirement as at any              over the years and you think you might
         other time in your life.                           have lost track of one of your funds –
                                                            track down that unclaimed super and
         Remember that super can be a                       roll it into an existing fund. See the
         tax-effective vehicle, as it is taxed              directory on page 20 for a list of
         at a lower rate than other forms                   services to help you find lost super.
         of investment.

         Make sure you’re aware of the fees you
         are paying on your super fund, as there
         may be other, cheaper funds that suit
         your needs just as well.




    Take action:

    Think about making extra contributions to your superannuation.
    The earlier in life you start making frequent, additional
    contributions to your super, the greater the impact the power
    of compounding will have on your retirement savings.




                                                       17
Health insurance for your finances

Protecting your assets                                  Ask yourself this: how long would your
The most important assets you have are your             money last if you were suddenly unable
health and your income. Just as you insure              to work…even if it was just three months
your house and your car, you also need to               without an income? And how would your
protect your health and ability to earn money,          family or partner cope financially if you
for yourself and your family.                           became disabled, or if you died?

You might think you could live without your             While income protection usually won’t
income for a few weeks, or a few months,                replace 100% of your salary (most policies
but have you considered how much you                    provide cover for up to 75% of your salary),
might stand to lose over the long term if your          insuring your earning power can still mean
ability to earn that income is unexpectedly             financial security if events take an unforeseen
taken away?                                             turn. And, income protection insurance
                                                        premiums may be tax-deductible.

The asset protection checklist


        Keep track of any existing insurance                   understand exactly what you are or are
        policies and check the insurance cover                 not covered for and exactly what it’s
        of your super fund. Some super funds                   costing you. Shop around for a policy
        automatically provide income                           that suits your needs and provides
        protection insurance, or death and                     value for money.
        disability insurance.
                                                               Talk to a solicitor about drawing up a
        Consider the different types of                        will if you don’t have one already, or
        insurance available – from insurance                   purchase a do-it-yourself ‘Will Kit’.
        for your car, your house and its                       Having a valid will is the only way to
        contents, to health insurance, income                  guarantee that your assets will be
        protection insurance and life insurance.               allocated according to your wishes.

        Talk to a qualified professional who                   If you’ve already got a will, make sure
        can provide advice about your (and                     it’s up to date – circumstances can
        your family’s) insurance requirements.                 change, as can your preferences for
                                                               how you would like to have your assets
        With any insurance policy (whether it’s                distributed upon your death.
        one you’ve had for years or something
        you’re thinking about taking out), read
        the fine print and make sure you




                                                   18
Mastering the tax-time treadmill

Preparing for tax time                                  June 30. A little bit of organisation will go a
Tax time usually catches most people                    long way towards maximising your potential
unprepared, so why not be ready this year?              tax refund.
These basic tips will help you get ready for


        Keep records of your                                   Keep receipts for any potential
        earnings, including:                                   deductions, including:

        income earned from all employers; your                 work-related expenses for which you
        employer(s) should provide you with a                  have not been reimbursed; e.g.
        payment summary at the end of each                     equipment and tools, travel costs,
        financial year                                         subscriptions to trade journals, study
                                                               expenses, etc
        bank interest; as shown on your bank
        statements for the year                                gifts or donations to registered charities;
                                                               these must be of $2 or more in order
        income from investments; such as
                                                               to be deductible and the charity must
        capital gain on shares, or income in
                                                               be registered
        the form of interest or dividends, your
        broker or investment manager should                    health-related expenses; if you incurred
        provide you with statements of these                   expenses such as medical bills, or cost
        transactions                                           of medications etc which, after any
                                                               rebates, may exceed the current
        details of Government benefits and
                                                               Government threshold, you may be
        pensions received
                                                               eligible for a tax offset
        superannuation fund payments (your super
                                                               depreciation; some items used for work
        fund should provide you with a statement)
                                                               purposes may be depreciable, such as
        details of assets you’ve sold, for example a           computer equipment, motor vehicles,
        house, a car or shares.                                and tools of the trade.


        You can complete your tax return                       Remember to keep all the records you
        yourself or seek professional tax advice. A            use in preparing your personal tax
        registered tax agent can prepare your                  return for five years from the date you
        return, explain how the tax rules apply to             lodge your tax return. Check the
        you and ensure any tax you owe or any                  Australian Taxation Office website for
        refund you are due is correct by taking into           details at www.ato.gov.au.
        account all legally available deductions and
        rebates, etc.



                                                   19
The financial fitness information directory

Banking and Financial Services Ombudsman                   Consumer Affairs
A dispute resolution service dealing with disputes         The Ministerial Council on Consumer Affairs
that individuals and small businesses have with            (MCCA) consists of all Commonwealth, State,
their financial service providers.                         Territory and New Zealand Ministers responsible
1300 78 08 08 www.bfso.org.au                              for fair trading, consumer protection laws and
                                                           credit laws. Visit the MCCA’s website for consumer
Australian Securities and                                  news and information, including contacts for
Investments Commission (ASIC)                              consumer affairs and fair trading ministers and
Visit ASIC’s consumer website, FIDO, for financial         agencies around Australia. These agencies can
tips, safety checks on financial products and              provide you with information and assistance in
services and warnings about scams. Get ASIC’s              relation to credit and debt matters.
free brochures on superannuation, ‘Super                   www.consumer.gov.au
decisions’, on financial planning, ‘Don’t kiss your        Or, for detailed information on the Uniform
money goodbye’ on money management, ‘Your                  Consumer Credit Code and your rights as a
Money’ and ‘You can complain’.                             consumer, visit: www.creditcode.gov.au
1300 300 630 www.fido.asic.gov.au
                                                           Australian Consumers’ Association (ACA)
Australian Stock Exchange (ASX)
                                                           The ACA publishes independent consumer news
The ASX provides comprehensive market data                 and information on personal finance matters,
and information. Visit the website for shareholder         including banking, insurance, investing and
information, investor education and free                   borrowing. It also has a website to help you
on-line classes.                                           compare transaction accounts from different
1300 300 279 www.asx.com.au                                financial institutions and switch bank accounts.
Australian Taxation Office                                 (02) 9577 3399 www.choice.com.au and
                                                           www.flickyourbank.com.au
For free information and assistance with tax
matters, call:                                             InfoChoice
Personal Tax Infoline          13 28 61                    InfoChoice provides unbiased information
Business Infoline              13 28 66                    on a range of financial products and services,
Superannuation Infoline        13 10 20                    including tools to help consumers compare
Or, visit the Tax Office website: www.ato.gov.au           products, such as transaction accounts,
                                                           credit cards and home loans.
Centrelink
                                                           (02) 9247 6788 www.infochoice.com.au
Centrelink’s Financial Information Service is an
education and information seminar program –                A Guide to Credit
available to everyone. It assists people to make           An online guide by ANZ, helping you understand
more informed financial decisions for their current        how to manage credit and providing tips on
and future needs and helps people understand               maintaining a good credit history.
the consequences of their financial decisions              www.howcreditworks.com.au
including the possible short, medium and                   Or visit any ANZ branch and pick up a copy of the
long-term effects of those decisions. Contact              brochure ‘How credit cards work’.
Centrelink to book a place at a seminar near you.
13 63 57 www.centrelink.gov.au




                                                      20
                                                                            Financial Counselling Services
    Educate yourself                                                        The following services provide financial counselling
    • Read the money section in your daily                                  for people facing financial hardship or can refer you
      newspaper and also the personal                                       to an appropriate service in your State or Territory.
      finance and investment magazines at                                   These services are free and confidential:
      your local newsagent.
                                                                            Victoria
    • Tune in to finance reports on the                                     Financial and
      radio and television news and to                                      Consumer Rights Council                        (03) 9663 2000
      any personal finance programs.                                        New South Wales
                                                                            Credit Helpline                                  1800 808 488
    • Ask your financial institution for                                    ACT
      information about managing finances
                                                                            Care Financial
      and investments.
                                                                            Counselling Service                            (02) 6257 1788
    • Visit your local library for free access                              South Australia
      to books, magazines and websites and                                  Uniting Wesley
      ask your local council about personal                                 Mission Adelaide                               (08) 8202 5180
      finance classes in your area.                                         Western Australia
                                                                            Financial Counsellors
    • Contact an adult education centre near
                                                                            Resource Project                               (08) 9221 9411
      you (e.g. a TAFE institute or University
                                                                            Tasmania
      of the Third Age) and ask about short
      courses in personal finance,                                          Anglicare Financial
      budgeting, investing, etc.                                            Counselling Service                              1800 243 232
                                                                            Queensland
                                                                            Financial Counselling
                                                                            Association of Queensland                      (07) 3321 3192
                                                                            Northern Territory
Financial Planning Association of Australia (FPA)
                                                                            Anglicare Northern Territory                   (08) 8985 0000
The FPA can help you find a planner in your
area and provide information about your rights.
1800 626 393 www.fpa.asn.au                                                 Lifeline
                                                                            Lifeline delivers a range of training and face-to-
FindMySuper Pty Ltd                                                         face services covering a variety of issues including
If you have lost track of your super money from a                           financial counselling.
past employer, FindMySuper can help you find it.                            13 11 14 www.lifeline.org.au
(02) 9279 1650 www.findmysuper.com
                                                                            National Information Centre on Retirement
Superseeker                                                                 Investments
The Tax Office’s online service, Superseeker,                               For free information about retirement investments
can help you search for lost super.                                         and the financial planning process.
www.ato.gov.au/super                                                        1800 020 110 www.nicri.org.au


*Please note that some of the services listed in this directory may incur fees. If you wish to make use of a particular service,
 check with the relevant organisation if any fees or charges apply.


                                                                       21
Financial fitness talk explained – glossary of terms
Budget                 A budget is simply a plan that you can draw up for yourself, stating what
                       your income is and how that income will be used.
Compound interest      Interest paid on your invested capital, as well as on the interest already
                       earned on that capital.
                       For example, an investment of $1000 earns compound interest at 5% per
                       annum for three years. In the first year the $1000 will earn $50 in interest,
                       bringing the investment total to $1050. In the second year, 5% interest is
                       earned on this new balance, which means that the interest earned in the
                       second year is slightly higher ($52.50) than in the first. In the third year,
                       with a new investment balance of $1102.50, the investment will earn
                       approximately $55.13, taking the final balance to $1157.63.
                       This is different from ‘simple interest’, which is only paid on the capital
                       invested and not on any interest earned. If your $1000 investment was to
                       earn simple interest of 5% per annum for three years, the investment
                       would earn exactly $50 for each of the three years. At the end of the three
                       years the final balance would be $1150.
                       While compounding can work wonders on your savings and investments,
                       be aware that it is also applied to most debts. If you do not focus on
                       reducing your debts quickly, compounding will cause your debts to blow-
                       out over the long term, as you will end up paying interest on interest.
Credit                 Credit is a form of loan that allows you to obtain goods before you actually
                       pay for them, but which must be repaid within an agreed time frame and
                       includes an interest payment.
Debt                   A debt is an amount of money that is owed to a person or an organisation.
                       For example, if you have a loan or a credit card, or even a store-plan card
                       from your local department store, the amount still outstanding is the debt
                       you owe.
Deductions (tax)       A tax deduction, or ‘tax-deductible expense’, is an expense that can be
                       offset against your taxable income – that is, when calculating your total
                       earnings for the year, you can ‘deduct’ the full amount of certain types of
                       expenses. This then reduces the amount of income upon which you will be
                       required to pay tax.
Depreciation           The accounting practice where the cost of specific, work-related items is
                       systematically spread over the life of the assets. Depreciation can be
                       offset against your taxable income for taxation purposes.
Diversification        Diversification is an investment strategy that involves investing in a range
                       of different types of assets, rather than investing all your money in just
                       one asset. In other words, ‘don’t put all your eggs in one basket’.
Financial counsellor   Government-funded financial counselling services are free and
                       confidential and aim to assist you to regain control over your finances.
                       A financial counsellor will help you get a clear picture of your overall

                                             22
                 financial situation, explore how you may be able to increase your income
                 or decrease your expenses and will refer you to other appropriate services
                 for additional information and assistance.
                 A financial counsellor is different to a fee-for-service debt counsellor.
                 Many debt counselling services are costly – if at any stage a debt
                 counsellor asks you to sign an agreement which includes paying any costs
                 or fees, check this out carefully and get advice from a Government-funded
                 financial counsellor.
Insurance        Insurance is a way of financially protecting yourself against potential risks
                 and damage. Common types of insurance include car insurance, house
                 and contents insurance, health insurance, income protection insurance
                 and life insurance.
Interest         Interest is the amount a borrower pays to a lender for the use of
                 the lender’s money. For example, if you borrow money from a bank
                 in the form of a loan, the bank will charge you interest for the use
                 of that money. On the other hand, if you invest your money with a bank
                 (e.g. in a term deposit), or in a company (by buying shares), you effectively
                 become the lender and your investment will be rewarded with interest as a
                 payment to you.
Investing        Investing is about building wealth. The aim is to invest money in assets
                 that will grow in value over time so that you end up with more money
                 than you contributed to that investment in the first place. Many
                 investments earn income that can be spent (or reinvested), but the
                 original amount of money is left invested so that it can continue to grow
                 and produce more income.
Long term        Investments that are held over long time frames, such as seven to ten
                 years or more, are generally referred to as ‘long term’. When investment
                 professionals talk about taking a long-term view of investing, they are
                 often referring to time periods of 20 years or more.
Return           The return on an investment is the amount of money your
                 investment earns.
Risk             In investing, risk is the likelihood that your investment may go down in
                 value and that you may lose money as a result.
Saving           Saving is simply setting money aside for a specific purpose. Once you’ve
                 saved the required amount, the savings are then spent and the savings
                 balance returns to zero.
Short term       Investments that are held over short time frames, such as a few months,
                 or one or two years, are referred to as ‘short term’.
Superannuation   Superannuation is a vehicle used for setting aside money during your
                 working life, in order to save money for use once you have retired.


                                       23
If you would like to
get in touch with ANZ
> Visit any ANZ branch during
  business hours
> Call ANZ on 13 13 14, Monday to Friday,
  8 am to 8 pm (Eastern Standard Time)
> Visit www.anz.com
> To make an appointment with an
  ANZ Financial Planner, ask at your
  local branch or visit www.anz.com
www.anz.com
              Item No. 80501 11.2003 W61526

				
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Description: Kick-start your financial fitness