Tax-Free Super Death Benefits: Are You Eligible?
Tax-Free Super Death Benefits: Are You Eligible?
Understanding the tax status of superannuation death benefits can surprise many. Find out if you're eligible for tax-free super benefits in Australia.
Many people assume there is no tax payable on super benefits received after someone passes away, but that’s not always the case. This common misconception can lead to unexpected tax bills for beneficiaries. It's crucial to understand the specifics of superannuation tax law.
Whether or not tax is paid on a super death benefit depends on the beneficiary’s relationship with the deceased. Although some beneficiaries receive their money tax-free, others can find themselves paying significant amounts of tax on the funds they receive.
Dependant for Tax Purposes
The key point in understanding who will be required to pay tax on a super death benefit is whether or not the beneficiary is considered a death benefit dependant for tax purposes. This definition is critical for tax planning and can significantly affect the financial outcome for beneficiaries.
A death benefit dependant for tax purposes is limited to the deceased’s spouse, de facto, or former spouse or de facto; their child under age 18; any person with whom they had an interdependency relationship; and any other person financially dependent on them just before their death.
A common trap in this area is nominating financially independent adult children as death benefit beneficiaries, as this is permitted under super law. Under tax law, however, they are not defined as dependants for tax purposes and so are required to pay tax on the taxable component of any death benefit they receive.
Tax on Lump Sum Death Benefits
When it comes to paying a death benefit, your dependants for tax purposes are free to choose whether they want to receive your super death benefit as a lump sum or as an income stream. If a beneficiary decides to take their benefit as a lump sum, the benefit will be free of any tax, provided they are considered a death benefit dependant under tax law.
If they are not considered a death benefit dependant for tax purposes, they must take the benefit as a lump sum. These lump sums are taxed at a maximum rate of 15 per cent plus the Medicare levy on the taxed element (which is super that has already had tax paid on it within the fund).
Beneficiaries not meeting the dependant criteria face a 15% tax, plus the Medicare levy, on taxed elements of the lump sum. In addition, any untaxed elements of the taxable component in the lump sum will be taxed at a maximum rate of 30 per cent plus the Medicare levy.
Death Benefit Income Streams and Tax
Some tax dependants prefer to take their death benefit as an income stream (or pension). Death benefit income streams are tax-free if either the deceased or the beneficiary are aged 60 or older at the time the income stream payments are made. This provision offers a significant tax advantage for older beneficiaries, aligning with retirement planning strategies.
Otherwise, beneficiaries will generally pay some tax on the death benefit income stream until they reach age 60, after which age the payments are tax-free. For beneficiaries under age 60, there is no tax on the tax-free component of the death benefit income stream, but the taxable component is included in their assessable income with a 15 per cent tax offset.
Death Benefits and the Transfer Balance Cap
The transfer balance cap (TBC) rules also come into play when it comes to super death benefits. These rules limit the amount of super savings you can transfer into the retirement or pension phase.
Tax penalties apply if amounts in excess of the beneficiary’s TBC are transferred into the retirement phase as an income stream. The rules governing this area are very complex, so you should always seek professional advice before deciding on a death benefit nomination, as it can make a big difference in how much tax your beneficiaries will pay when they receive their death benefit payment.
Professional guidance can navigate the intricate rules and help ensure the most tax-effective outcome for your superannuation benefits.
If you're navigating the complexities of superannuation and estate planning, our team is here to assist. We offer a complimentary 30-minute consultation aimed at understanding your needs and exploring how we can assist. Feel free to reach out; we'd love to help you optimise your financial legacy.
This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.
The Art of Connection: Networking for Success
The Art of Connection: Networking for Success
Explore the art of connection and its pivotal role in professional success. Discover how to become the linchpin in your network.
We all know them—the people who seem to know everyone and effortlessly make connections within their network. While it’s wonderful to know a ‘connector’, we can also develop those qualities and become a connector ourselves.
Malcolm Gladwell coined the phrase in his book “The Tipping Point”, describing connectors as the social equivalent of a computer network hub, who “link us up with the world…people with a special gift for bringing the world together”. Their network is extensive—they tend to be acquainted with over 100 people across many social, professional, and economic circles, and they actively introduce those who move in different circles.
Understanding the Power of Networking
Connectors are pivotal in creating opportunities and fostering business growth. By mastering this skill, professionals can unlock doors to new ventures and collaborations.
The notion that a few influential people make the world go around is not new. In the 1960s, psychologist Stanley Milgram conducted “the small world” experiment, sending letters to 160 people in Nebraska with the details of a Boston stockbroker, instructing them to send the letter to someone who might get the letter one step closer to the stockbroker. Not only did most of the letters reach the stockbroker in six steps (rising to the six degrees of separation theory), just three people were responsible for half of the letters being successfully delivered. Those three, well-connected people would certainly be considered connectors.
Why is connection important?
The saying goes “no man is an island” and that’s never been truer. We live in a world that is growing ever more connected and isolation can be crippling. Our mental well-being and our physical health both benefit from being socially connected with others, while it can also help us achieve success in our endeavours.
The Value of a Strong Network
In the business context, a robust network can mean the difference between stagnation and success. It's not just who you know, but how you engage with them.
Just think about the last time you achieved a significant goal—whether it’s a personal achievement or a business milestone and it’s likely that at some point you drew upon the help of someone else or others.
Ways to foster connections and benefit from them
Networking is quite distinct to connecting. Whereas networking is often viewed as a means to an end, connecting is more altruistic—driven by a genuine interest in purposeful engagement to assist others. In your interactions, don’t just look to what is in it for you or even for mutual benefit—be the hub and actively seek out connections on behalf of others.
The Art of Authentic Connections
True connectors know that genuine relationships are the cornerstone of a strong network. It's about creating mutual value that extends beyond the immediate interaction.
Foster quality connections over quantity. It’s easier to foster many connections, particularly via social media, but be conscious of the quality of those connections. To be able to purposefully connect with others in a way that offers real value, you need to engage with people. That takes time and genuine curiosity: ask questions, find out what makes them tick and then you can meaningfully assist them.
Being open to different things
One of the reasons connectors are so successful is they have contacts in diverse areas within many different communities, often through hobbies and interests. If you’d like to expand your network and horizons the first step might be to follow where your interests lead and explore your passions.
Diversify Your Connections
Engaging with a variety of sectors enriches your network and opens up a wider array of opportunities, especially in a multifaceted market.
Get out of your comfort zone. To be a connector or get the benefit from connections you may have to move out of your comfort zone. That might mean putting yourself in a new environment, being willing to break the ice in a social situation or reach out when you don’t know what the response may be—and risk rejection or embarrassment. Connectors are not all extroverts and they come from all walks of life. You don’t have to be anyone other than yourself and in fact being authentic in your interactions will stand you in good stead.
Embrace New Challenges
Stepping out of your comfort zone is essential for growth. In today's competitive market, it's those who dare to reach out who often reap the greatest rewards.
This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.
Retirement Reversed: Back to Work in Australia
Retirement Reversed: Back to Work in Australia
As the cost of living climbs, more Australian retirees are considering rejoining the workforce. This guide will help you navigate the financial nuances of pensions and superannuation when returning to work.
Employers are desperate for workers and cost of living pressures are making it tough to live on a pension . That’s a perfect mix of conditions to send some retirees back to the workforce . But it’s smart to get good advice before you take the leap.
With unemployment rates at historic lows and employers facing a shortage of skilled workers, an increasing number of retirees are choosing to re-enter the workforce. According to recent data from the Australian Bureau of Statistics (ABS), approximately 45,000 more individuals aged over 65 are actively working compared with a year ago.i
Financial Considerations for Returning to Work
Some retirees may have been forced to return to work to financially support themselves. National Seniors research found 16 per cent of age pensioners re-entered the workforce after initially retiring , while another 20 per cent said they would consider returning to work.ii Declining superannuation returns combined with rising inflation and cost of living pressures may be some of the reasons why retirees could soon be returning to work.
If you receive an Aged Pension and are planning to return to work, you will need to let Centrelink know you are receiving additional income within 14 days. The extra income may mean that your pension is reduced if it exceeds Centrelink’s income threshold. It’s essential for retirees to be aware of these thresholds and how their earnings may affect their pension to plan their finances effectively . Understanding the financial landscape, including the latest tax brackets and investment implications, is crucial for retirees considering a return to work.
Eligible age pensioners should also consider the Work Bonus incentive. This incentive encourages age pensioners to return to work with no or less impact on their age pension. Under the Work Bonus, the first $300 of fortnightly income from work is not assessed as income under the pension income test. Any unused amount of the Work Bonus will accumulate in a Work Bonus income bank, up to a maximum amount. The amount accumulated in the income bank can be used to offset future income from work that would otherwise be assessable under the pension income test.
Superannuation Adjustments for Working Retirees
Returning to work after retirement can have implications for your superannuation, particularly if you’re receiving a pension from your super fund. You can continue taking your pension from super, but you will still have to meet the minimum pension requirements.
So, even though you may not need that pension income, you have to withdraw at least the minimum, which depends on your age and your super balance. This minimum pension rate is set by the government. Failing to meet these requirements can have tax implications and may affect your pension’s tax-free status.
You can convert your super pension phase back into the accumulation phase if you wish to stop taking the minimum pension. This shift can be beneficial for those looking to grow their super while managing their tax liabilities . However, be aware of the tax differences. In the accumulation phase, any income and gains are taxed at 15 per cent , whereas they are tax-free in the pension phase.
Tax Considerations for Retirees with Investments
If you have personal investments outside super and have been receiving a pension, your lower income may mean that you are not paying tax on any gains from them. But extra income from a job may mean you move up a tax bracket , and any investment income and capital gains will then be assessed at the higher rate.
Returning to work after retirement can have far-reaching implications on your finances, particularly with regard to your Aged Pension and superannuation. Seeking professional financial advice is recommended to navigate these complex changes effectively . If you're pondering this significant decision, feel free to get in touch; we'd love to help. We offer a free half-hour consultation aimed at understanding if we can assist you in your financial journey .
i Retirees in demand as employers continue to face tight labour market – ABC News
ii A working retirement – choosing to return to work – National Seniors Australia
This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.
Market movements & review video – November 2023
Market movements & review video – November 2023
Stay up to date with what's happened in markets and the Australian economy over the past month.
October was a volatile month on the global stock markets and in Australia. The local sharemarket finished October down 3.8 per cent, representing a third straight month of losses.
Investor sentiment reflected heightened anxiety regarding inflationary pressures and uncertainty over rate rises, mixed economic data and concerns about the Israel-Hamas conflict.
Investors are continuing to keep a close eye on oil price movements over fears of an escalation of conflict in the Middle East.
Click the video below to view our update.
Please get in touch if you’d like assistance with your personal financial situation.
This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.
Safeguard Your Small Business: Cybersecurity Must-Dos
Safeguard Your Small Business: Cybersecurity Must-Dos
Discover essential cybersecurity practices to shield your Australian small business from cyber threats. Learn to navigate the digital landscape safely and secure your business's future.
Cybersecurity has been in the news a lot lately. Australia recently witnessed large-scale data breaches that affected some of the country’s most prominent corporations. These highlighted that no business is impervious to cyber-attacks, which is why it’s especially important for small business owners to protect their businesses against cyber threats .
The Australian Cyber Security Centre (ACSC) Small Business Survey revealed that a staggering 62 per cent of the small to medium business owners surveyed had been victims of cyber-crimei. And these attacks come at a significant cost to businesses. Companies lost over $300 million last year due to cyber-attacks. Notably, the average cost per cybercrime reported to the ACSC rose to over $39,000 for small businessesii.
Given that digital data breaches can have a massive impact on a business, what are the challenges faced by small businesses and what are the best ways to keep yours safe?
Understanding Cybersecurity Insurance Options
Antivirus and malware security is an obvious starting point, but there is more to cybersecurity than signing up to a plan or downloading an app.
It’s important to understand what data your business holds, and in what locations. You might have data stored across numerous devices or services whether they are cloud-based or not, which increases the number of applications you need to keep secure. Multiple and numerous systems can also create more opportunities for a cybercriminal to attack, so streamline where possible.
Identify what information needs to be protected, thinking about legal requirements and confidentiality and security of information as well as what assets are most important to your company, including financial data, customer information, and intellectual property.
Effective Password Management Systems
The next step is protecting that information, which at the company level means encryption and using secure passwords. Consider implementing multifactor authentication for an additional layer of security to let the right people in and keep the wrong people out. This involves adding a secondary factor to your password, for example, a mobile phone number to receive an SMS with an access code.
Once you’ve reviewed your password protection, it’s time to think about how you keep track of them. Most businesses use a lot of applications, so password management tools are the best way to keep track of multiple, unique logins and passwords .
Regular Software Updates: Your Cyber Shield
Backing up data doesn’t just protect against cyber-attacks but also against human error and malicious actions as well as hardware failures and natural disasters. If you are using cloud-based applications, data back-up may seem easier as you are not having to manually back up things like hard drivers and servers. However, a note of caution – while the cloud is extremely secure, some providers still recommend doing regular backups with third-party services.
It’s also important to update software regularly to protect against the latest threats. You should regularly update your operating systems, web browsers, and other software to protect against malicious intent.
Cost-Effective Cybersecurity Strategies
Of course, maintaining a secure environment is also about educating your staff on how to avoid cyber-threats .
As well as having policies that describe how your business manages its infrastructure, it’s important that staff are up to date on how to actively avoid threats. All it takes is one person to click on a link in a dodgy email and your business could be vulnerable. The Australian government provides a useful resource for small businesses at www.cyber.gov.au/learn which includes modules and quizzes to help businesses educate their personnel.
Leverage Australian Government Resources
Finally, despite your best efforts, there is always a chance that your business may experience a cybersecurity incident. In such a scenario, it is important to respond quickly and effectively to minimise the damage and get back up and running as soon as possible. Make sure you have a defined process in place that describes who responds and what happens in the event of a breach so that you can react quickly.
Given the cost and time involved in recovering from a cyberattack , it’s worth putting a bit of thought into preventative measures.
The most common cyberattacks impacting small businesses are:
- Scam emails and phishing attacks designed to elicit passwords or confidential information.
- Business email compromise (BEC) emails impersonating a supplier requesting payment.
- Malicious software including ransomware, viruses, spyware, and trojans.
If you're looking for professional advice on how to better protect your business, we're here to assist. We offer a free half-hour consultation aimed at understanding your needs and exploring how we can support you. Feel free to reach out; we'd love to help .
This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.
Tax-Smart Aussie SMEs: Stay on Track
Tax-Smart Aussie SMEs: Stay on Track
Learn the ATO's top strategies for Australian small businesses to manage taxes and superannuation effectively.
Running a small business in Australia is no small feat, especially when it comes to staying on top of your tax and superannuation responsibilities. With the economic landscape ever-changing, it's crucial to ensure that your business isn't just surviving, but thriving. Here's how you can stay tax-smart and keep your business on the right track.
ATO Compliance: The Foundation of Efficiency
The Australian Taxation Office (ATO) suggests that effective cash flow management and accurate separation of private and business expenses are fundamental to running your business efficiently. On the flip side, a lack of understanding of tax responsibilities and not seeking professional advice are pitfalls of poorly managed small businesses.
Getting Business Habits Right
A well-operating small business nails the basics. According to the ATO's Small Business Random Enquiry Program, successful businesses maintain excellent records and have robust reconciliation processes. They also invest time to understand their tax and super obligations.
Embracing Digital Tools
In today's digital era, technology is a boon for businesses, helping to streamline processes and cut costs. Digital tools can bolster your business systems, product offerings, and customer and employee data management. Remember, some costs associated with digital adoption, like hardware purchases and subscription fees, are tax-deductible.
Strategic Cash Flow Management for Australian SMEs
The ATO has observed that savvy business owners utilise cash flow projection or budgeting tools. With cash flow issues being a common downfall for small businesses, a clear view of your financial status is vital. Effective cash flow management allows you to meet obligations like tax and employee super payments and assess if you're trading profitably or merely covering bills.
Careful Tax Management
A hallmark of a well-run business is the declaration of all income, including cash transactions. Missteps like ommiting income, not declaring cash sales, or incorrect recording of director's fees can lead to ATO scrutiny, especially as they return to a more stringent stance post-COVID.
Lodging Paperwork on Time
Timeliness in lodging tax returns is a good indicator of a business's engagement with the tax system. Currently, there's a tax amnesty for small businesses with overdue returns, applicable to documents originally due between 1 December 2019 and 28 February 2022.
Seeking Trusted Advice
Regular contact with a tax professional often correlates with correct tax reporting. The ATO provides tools and information, but professional advice is invaluable, especially in uncertain times.
10 Tips for Keeping Your Business Records
- Keep comprehensive records for all business stages.
- Document business and personal expenses separately.
- Ensure GST tax invoices are valid.
- Record all transactions, including cash and electronic.
- Maintain unaltered records for five years.
- Separate business from personal records.
- Ensure records support BAS and tax return claims.
- Digitise paper receipts to prevent fading.
- Back up electronic records.
- Ensure accuracy when changing record-keeping software.
Seeking advice from trusted sources like House of Wealth can significantly improve your business operations. Feel free to reach out; we'd love to help. We offer a free half-hour consultation to explore how we can assist you.1
1 This article is intended as an information source only and should not be relied upon as financial or tax advice. All readers should seek advice from a professional adviser regarding their particular situation.
This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.
Navigating Aged Care: Home Support in Australia
Navigating Aged Care: Home Support in Australia
Navigating the aged care system in Australia can be a complex journey, especially when it comes to understanding home care packages and funding . This guide aims to demystify the process, helping you to maximise government subsidies and choose the right services for your needs.
Understanding Home Care Packages
Aged care at home is supported by the Australian Government through the Home Care Packages program. This initiative allows for a range of care and services to assist older Australians who wish to stay in their homes as they age. However, recent changes in policy and a shortage of support workers have introduced new challenges in accessing these funds.
Levels of Home Care Packages
If you are approved for a Home Care Package, you will be assessed at one of four levels, each designed to cater to varying care needs:
- Level 1: Basic care needs
- Level 2: Low-level care
- Level 3: Intermediate care
- Level 4: High-level care
A health professional from the Aged Care Assessment Team (ACAT) will determine your level following an assessment.
Funding and Fees
The current annual funding for Home Care Packages ranges from $10,271.10i for basic care needs to $59,593.55i for high-level care. It's important to note that it can take up to six months for a package to be assigned after the initial assessment. Once assigned, you must choose a provider to design a care plan within the package guidelines.
Providers now have a cap on care and package management fees, recently set at a maximum of 35% of the package funds. Additionally, income tests determine the fees, with part pensioners and self-funded retirees paying capped annual fees, while full pensioners are exempt from income-tested fees.
Applying for a Package
Older Australians can apply for a package directly or through their GP via the government’s My Aged Care gateway. Due to high demand, you may initially receive a lower-level package or access to the Commonwealth Home Support Program for interim support.
Maximising Your Package
To ensure approval, it's adviced to communicate all daily challenges to the assessor. The initial care plan is key, outlining your care needs, goals, and preferences.
A revised manualii by the Department of Health details what the Home Care Package can cover, which is essential for maximising the benefits. Services must meet "ageing related functional decline care needs" and include:
- Nursing, personal care, and food services for wellbeing
- Home maintenance for safety
- Transport and social support for community connection
Exclusions and Inclusions
Understanding what is excluded from your package is just as important as knowing what's included. For instance, gardening services have been restricted, and other exclusions like certain appliances and home modifications can affect how you plan your care.
The Workorce Challenge
With an ageing population, the shortage of support workers is a significant concern. Government initiatives are in place to address this, but having a backup plan for care continuity is advisable.
Conclusion
Remaining independent at home is a common preference for many. If you're looking to discuss your options and need professional advice, we're here to assist. We offer a free half-hour consultation aimed at understanding your needs and exploring how we can assist you. Feel free to get in touch; we'd love to help.
i Home Care Packages Program
ii Home Care Packages Program Inclusions and Exclusions
This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.
Ignite your entrepreneurial spirit
Ignite your entrepreneurial spirit
Entrepreneurs have long been instrumental in changing the way we live and work. Just think about Thomas Edison’s inventions when you switch on a light, the contribution of Henry Ford to the motor industry as you jump behind the wheel of your car, or even the way Steve Jobs transformed computers as you open your laptop.
If you aspire to join the ranks of those that initiate change, whether you want to develop a new ground-breaking business offering or simply employ a bit of lateral thinking to a problem you are mulling over, igniting your entrepreneurial spirit can help you embrace opportunities, seek solutions, and innovate.
While true visionaries tend to follow their own path to achieve what was previously deemed impossible, there are some common traits shared by those who reach for the stars, and you can cultivate those traits.
A positive mindset
“Whether you think you can or think you can’t—you’re right.”- Henry Ford
Entrepreneurship is very much a mindset. Successful entrepreneurs are possessed with a great deal of self-belief. They believe not only in themselves but also in their vision.
Thinking outside the box also comes in handy. Lateral thinking is like a muscle that can be strengthened with use. One of the best ways to flex your creative thinking is to brainstorm and let your imagination run wild. No idea is too crazy and there is no such thing as too many ideas at this stage. If something has ‘always’ been done the same way question, why? Free up your thinking and look for constructive solutions to problems.
Resilience
“I have not failed; I have just found 10,000 ways that won’t work” - Thomas Edison
Being successful does not mean never failing. In fact, the road to success is often littered with failures, and let’s face it, risk taking is an intrinsic part of pursuing innovation. They key is to learn each time something did not work and use the knowledge to rectify what went wrong.
That’s clearly a lot easier said than done. It can be hard to bounce back from repeated failures and to redefine failure as a lesson. Resilience will build with each obstacle you overcome if you frame failure as an opportunity to grow.
Focus on continual improvement
“Have no fear of perfection - you’ll never reach it” - Marie Cure
Creating and maintaining a focus on continual improvement will help you to build a better business, while making you stronger and more successful in all your other pursuits. The way to achieve this personal growth is to make the choice to open yourself up to new opportunities to acquire knowledge.
We are fortunate to live in an age where so much information is available at our fingertips so explore your passions and interests: read, listen to podcasts, watch videos and Ted Talks, and soak up that knowledge. Ask others if they have recommendations for you to try.
Collaboration and teamwork
“Great things in business are never done by one person, they are done by a team of people” - Steve Jobs
Speaking of asking others, one of the most powerful things you can do is to surround yourself with those who can help you, whether that’s building a high calibre team of amazing individuals or nurturing a network of people with relevant skills that you can call upon from time to time. It’s fantastic to have people you can use as a sounding board for ideas, especially when thinking creatively or strategically.
There are a lot of groups you could join including broad-based groups of like-minded businesspeople in your area to industry specific groups, who will have an appreciation of your challenges and objectives. You could even approach someone you look up to, to act as a mentor.
Knowledge of individual strengths
“You were born an original - don’t become a copy” - Coco Chanel
It’s important to note that everyone is different and brings different qualities to their endeavours. So, make sure you walk your own path: think about what you are good at, what you enjoy doing, as well as what the world needs. Your unique vision will come from developing your entrepreneurial talents.
This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.
Market movements & review video - October 2023
Market movements & review video - October 2023
Stay up to date with what's happened in Australian markets over the past month.
Household wealth has grown for the third quarter in a row, rising by 2.6% in the June quarter, pushed up by rising house prices and increases in super balances.
Click the video below to view our October update.
Please get in touch if you’d like assistance with your personal financial situation.
This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.
The Aussie Financial Paradox: When More is Never Satisfying
The Aussie Financial Paradox: When More is Never Satisfying
Money talks, especially in Australia. But when does the pursuit of wealth become an obsession? Explore the Australian financial landscape and learn how to find the sweet spot between ambition and satisfaction.
Given it is something that has such a strong influence on how we live our lives it’s unsurprising that money, or the pursuit of it, can develop into somewhat of an addiction.
The million-dollar question is how do you know if you are developing an unhealthy relationship with money and what can you do if you, or someone you know, is heading down that path?
The love of the dollar
When John D. Rockefeller, who has been widely considered the wealthiest American in modern history, was asked how much money is enough, he famously stated: “Just a little bit more.”
It’s a common approach to money - that it's not possible to have too much of a good thing. However, we can become addicted to the act of growing our net wealth to the detriment of our daily lives. If you’re only interested in seeing your account balance go up, you might miss opportunities to put your money to work in other ways and enjoying what life has to offer.
If you can relate to the words of Rockefeller, it might be time to do some self-examination and see whether your relationship with your finances could be healthier.
Common feelings about acquiring money
Competitive
“Keeping up with the Joneses” is embedded in our culture. As a society, we’re constantly comparing ourselves to those who earn more or are wealthier than ourselves. The danger is there will always be someone better off than you (unless you are Rockefeller!). Gratitude can serve as an antidote to competition, so try shifting your focus to what you have rather than what others possess.
Of course, for many the focus is not outward but inward. The competition can be an internal struggle to meet and exceed continually shifting self-imposed financial objectives. If this is moving beyond a healthy drive for success, it might be time to celebrate your successes and focus more on enjoying your wealth.
You are what you possess
Compulsive saving can be a need to find self-worth, defining yourself by what you possess and accruing the trappings of wealth to feel whole. Recognising your self-worth goes beyond possessions and how much money you have in the bank is a key step in breaking the hold money may have over you.
Fear of loss
Being afraid of losses can keep you from making smart decisions with your money that could improve your financial situation. For example, you might be so fixated on accruing wealth and so afraid of losing money that you never invest. Having an appreciation of the relationship between risk and reward can help you make healthier decisions.
Scarcity mindset
An extreme focus on your financials can be driven by a fear of not having enough. The underlying cause of anxiety around money might be traced back to a time when you struggled. The key is to review your financial situation and let go the past to manage your finances in a way that is appropriate to your present circumstances.
Breaking money habits
That sounds easy but it can be difficult in practice. Whatever the driver of your approach to money, if you’ve been operating in a certain way for a long time, habits can be hard to break.
If you've been saving furiously for a home deposit it can be hard to step out of the frugal behaviour, take a breather and feel Ok about spending money again. Alternatively, if you've spent a lifetime building your wealth to have a wonderful retirement it can be difficult to flick the switch from saving to spending - especially if you suddenly have no wages coming in.
Recognise that old habits can be hard to break but that it is possible to change.
One thing that can help is having a financial plan, so you know how you are tracking to meet your financial goals. That’s where talking to a third party who is not so emotionally involved can be of benefit.
We are here to assist if you need assistance with any aspect of your financial life.
This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.