How to welcome a baby into the family and stay on budget

How to welcome a baby into the family and stay on budget

Welcoming a baby into your family is one of the most joyous occasions of your life. But just like anything worth celebrating (such as your wedding day or buying your first property), it’s not without its expenses.

How quickly they grow! The bills, that is.

Did you know it costs roughly $300,000 to raise a child from birth to age 17?

If you break that down, that’s $1470 a month.

This can put a significant strain on your monthly budget and mortgage repayments.

Rest assured, however, there are several steps you can take in advance to minimise the impact on your new family’s bottom line.

  1. Obtain the essentials in advance

The upfront expenses are really going to whack your budget hard. So it’s best to obtain the items you’ll need well in advance to spread the cost.

Of course, you can purchase a brand new bassinet, playpen, clothing, car seat, cot, stroller, toys, high chair and changing table.

But chances are you don’t really need that fancy, brand new $1,000 cot. Focus on your needs instead of your wants, because wanting can quickly add up.

There’s absolutely nothing wrong with obtaining gently-used items second-hand, either at a substantial discount through trading websites or for free from a family member or friend. Remember that bub outgrows everything quickly anyway.

  1. Check into paid paternal leave and corporate leave

If you worked before having your baby and made under $150,000 annually, you could be eligible for the government’s Paid Parental Leave program.

You do have to apply, but you get 18 weeks of minimum wage benefits (amounting to $719.35 per week before taxes).

There’s also a two-week partner and dad pay option available, and take time to check into your company’s leave programs.

  1. Get on childcare waiting lists

Unless you plan to stay home with your children or have family members who will help provide childcare, get your name wait-listed at several childcare facilities.

Availability is a huge issue, so getting on the lists quicker will help in the long run. You can use the Childcare Subsidy Estimate Calculator to figure out if you’re eligible for entitlements.

  1. Update your life insurance

It’s common for Australians to have total and permanent disability and death benefits through their super fund.

However, while the life insurance coverage may have been adequate pre-children, there’s a good chance it won’t be enough for a single parent to comfortably raise a child.

Additionally, you don’t want to fall into the trap of just insuring the breadwinner in your family. Everyone should have coverage in case something happens to one, or both, of the parents. This can be a complicated area to navigate alone though, so be sure to seek financial advice.

  1. Make a will

Even if you don’t have significant assets or debts, you need a will if you have children.

Not only does a will specify what your family does with your belongings (including your super and insurance), but it also specifies who makes decisions if you can’t make them yourself, any wishes you may have, and who will take over raising your child or children if both parents pass.

  1. Prioritise existing debt

If it’s possible before the baby comes, prioritise your existing debt and work on paying it down – or off – before the baby is born.

Once the baby arrives, you may not have a whole lot of spare cash to put toward any existing balances. Consider consolidating your debts or speaking to us about refinancing your loans or mortgages to one with a lower interest rate.

  1. Update your monthly budget

One of the best things you can do is update your monthly budget with your newest family member in mind. It’s also great to start living on this budget before your bundle of joy arrives – start practising living on less.

You can update (or create) your budget using our Budget Planner. Don’t forget to include your quotes for childcare and any new miscellaneous expenses you’re likely to incur.

  1. Start an emergency fund

If you don’t have an emergency fund, start one. You’ll want to have at least three to six months worth of living expenses saved, with the goal of at least a year’s expenses.

This can provide a buffer that you and your family fall back on if you run into unexpected expenses like an accident, the car breaking down, or something in the house needing immediate replacement.

Final word

The last thing you want during this happy time is to worry about your finances. That’s why it’s so important to prepare as early as possible.

If you’d like help with any of the steps above, then please get in touch. We’d love to help make sure that your first few months as a new family are enjoyable ones!

Found an account transaction error?  Don’t foot the bill

Found an account transaction error? Don’t foot the bill

Most of us have found ourselves in a sticky situation where we’ve spotted an unauthorised or mistaken transaction on our bank account or credit card statement. Here’s how to avoid footing the bill.

The average Australian makes about 480 electronic transactions each year – and that number is rising quickly.

Amongst these daily transactions, both mistakes and unauthorised transactions occur.

It’s therefore important that you spend a bit of time each week or month quickly reviewing your transactions for discrepancies.

Because as we’ll explore below, the sooner you inform your bank, the better your chances of getting a refund.

How mistaken and unauthorised transactions occur

Everyone is guilty of making the occasional typo.

The thing is, though, that if you slip up when typing in a BSB or account number, you can end up paying the wrong person or company.

Sometimes it might not even be your fault. The person you’re paying might have accidentally supplied you with the wrong number.

An ASIC report shows that 83% of mistaken transactions are due to somebody typing in the wrong number, while the other 17% are due to people selecting the wrong payee.

Meanwhile, unauthorised transactions occur when funds are transferred from your account without your knowledge or consent, by someone who has access to your account.

The ePayments Code

Ok, so you’ve found an anomaly in your bank or credit card transactions? Here’s the good news.

Users of electronic payment facilities in Australia are protected by the ePayments Code, which covers electronic payments including ATM, EFTPOS and credit card transactions, online payments, internet and mobile banking.

Most banks, credit unions and building societies in Australia – as well as consumer electronic payment facilities, such as PayPal – subscribe to the code.

How does the code protect you against transaction errors?

The sooner you report a transaction error, the better.

If you report the error within 10 business days the Financial Ombudsman says the funds will be returned to you – so long as your account institution believes the mistake is genuine.

If you report the problem between 10 business days and seven months, you should still get your money back if the funds are still in the recipient’s account.

The recipient will have 10 business days to show they are entitled to the funds. But if they can’t, the funds get returned to you.

If it has been longer than seven months then things start to get a little messy.

Basically, if the money is still in the recipient’s account, you’ll only get the money back if the recipient agrees.

It’s important to note that BPAY payments are not covered by the ePayments Code, as BPAY uses a different process to resolve mistaken payments.

You should still contact your financial institution though, as they may be able to advise you of steps you can take to recover the funds.

Getting your money back after an unauthorised transaction

While the process for resolving an unauthorised transaction is different, once again speed is key. So report it to your bank immediately. After all, you also want to prevent any more unauthorised transactions.

According to ASIC, you are likely to get your money back if:

– a forged, expired, faulty or cancelled PIN or card was used

– the transaction was fraudulently made by an employee of your financial institution

– the transaction took place before you received your card, PIN or password

– a merchant incorrectly debited your account more than once

– the transaction occurred after you told your financial institution that your card was lost or stolen, or that someone else may know your PIN or password

– it’s clear you haven’t contributed to the loss.

Meanwhile, you’re less likely to get your money back from an unauthorised transaction if you acted fraudulently, accidentally left your card in an ATM, didn’t keep your PIN or password secret, or unreasonably delayed telling your financial institution that your card was lost or stolen.

Reporting the issue

Before you report a mistaken or unauthorised transaction, check to see if your bank or payment service provider has subscribed to the ePayments Code by looking here.

If they have, get in touch with them straight away. And don’t forget to request a reference number so that you can verify that you made the report if required at a later date.

If they are not a subscriber, feel free to still raise your concerns with them. They may have an internal policy in place.

Final word

Mistakes happen. To err is human. People make tipos all the time.

The two most important things you can do to protect yourself are to regularly review your accounts, and instantly inform your financial institution of any account anomalies you spot.

Oh, and if you happen to be on the receiving end and find unexpected funds in your account, resist the temptation to spend it as there’s a good chance you’ll have to pay it back.

Instead, get in touch with your bank or financial institution and let them know what’s occurred.

Six ways to ride through life’s tougher times

Six ways to ride through life’s tougher times

Sticking to a financial plan – such as paying off a mortgage – can be a long journey that’s punctuated by high highs and low lows. Here are some tips to get you through the tougher times.

According to Mental Health Australia, 1 in 5 Australians are affected by mental illness, yet many don’t seek help because of stigma.

The thing is, mental health and financial safety are strongly linked, with many studies showing personal finances are one of the main sources of stress.

With that in mind, below we’ve outlined six ways you can help protect your mental health from being eroded by financial concerns.

First, however, we believe it’s important to add that if you’re feeling severely down or depressed, please contact your GP or call Lifeline on 13 11 14.

1. Know the warning signs

Signs that you may not be coping as well as normal include:

– Arguing with the people closest to you about money

– Sleeping difficulties

– Feeling angry, fearful or resentful

– Sudden mood swings

– Loss of appetite

– Not wanting to hang out with family or friends as much as usual.

2. Exercise daily

Exercise releases feel-good chemicals such as endorphins and serotonin. It also gets you out and about, which minimises your feelings of loneliness.

You don’t have to run a marathon or anything either. Just a brisk 30 minute walk each day will deliver both physical and mental health benefits – and help you sleep better at night.

3. Eat well

There’s not much use doing all that exercise if you’re just going to smash a few Big Macs straight after.

Instead, try cooking some new healthy recipes with your loved one, or inviting a friend you haven’t seen for a while to come eat with you.

A healthy diet not only improves your physical health, but it’ll make you feel better too.

The best bit? Cooking uses brain power, which will help distract you from any issues that are making you down or anxious. And they’ll make you proud of your gourmet creations, of course!

4. Reach out to support networks

Make an effort to reach out to and catch up with family, friends and other members of your community.

Don’t wait for them to reach out to you – be the one who initiates contact.

It doesn’t have to cost you anything extra, either. Kill two (or three!) birds with one stone and invite them over for a walk, or a home-cooked meal.

5. Positive sense of identity and an optimistic outlook

Always look on the bright side of life.

For example, if you’ve recently become redundant, look at it as an opportunity to launch into a new job, or finally give running your own business a shot.

Also, adopt a positive attitude to seeking support. Rather than feeling down about seeking help, take pride in the fact that you’ve got the initiative to recognise when you’re not feeling up to par.

6. Improve your financial literacy

Sometimes, our finances can feel all too overwhelming, which in turn, gets us feeling down.

If you fall into that category, brushing up on your financial education can help you feel a whole lot better about things – not to mention equip you with the tools you need to improve your budget bottom line.

Our regular blog covers a wide range of topics that can help you improve your financial literacy.

Alternatively, don’t hesitate to give us a call if you’re worried about your finances, such as paying off your mortgage.

We’d be more than happy to workshop some ideas with you to help improve your situation and get you sleeping better at night.

Keen for a sea change? Beat the Millennial rush

Keen for a sea change? Beat the Millennial rush

Buying a house by the sea in a little known coastal town is no longer reserved for retirees. New research shows that those flocking to coastal towns are now predominately young families.

Most of us have dreamt of the days when we’ll one day be able to afford a house nestled down by the sea in our very own Summer Bay (minus the drama!).

However, joint university research shows that young families are turning their backs on the inner-city rat race in droves and pursuing a more affordable lifestyle by the sea.

Really? Show me the data!

The research shows that the sea change phenomenon, once largely the domain of retirees, now mainly involves Millennials, including young families.

Using ABS 2016 Census data, researchers have found the people most likely to move to Tasmania were 25 to 29 years (14.0% of all movers), followed by those aged 20 to 24 (11.8%) and then 30 to 34 (10.3%).

Similarly, relocating to the Sunbelt Coast (the region around Byron Bay in northern New South Wales) was most popular among 25 to 29 year olds (12.9%), 20 to 24 (10.5%) and 30 to 34 (10.2%).

Most people are moving to these areas from Melbourne, regional Queensland, Sydney and regional New South Wales.

So why are people moving?

There actually isn’t a single clear driver.

Better housing affordability, a smaller mortgage debt to pay off, and the desire to avoid stress and being overworked are some of the main reasons.

Other important factors include a perceived risk of living in the city, the desire to bring up children in a simpler environment, shorter commute time and, of course, the obvious reason – living in a beautiful location.

Workforce trends – towards more freelance, remote and consultant roles – may also be playing a part.

In fact, research shows that up to 4.1 million Australians, or 32% of the workforce, freelanced between 2014-15. This means many Aussies can set up shop and work from anywhere they wish – including idyllic little coastal towns.

Keen to make the move?

If so, you might not want to leave it too long.

Real estate experts are already predicting Tasmania’s recent housing boom will shift outside of Hobart and spread to areas such as the north-west coast.

So if you and your family are looking to quit the rat race and find your own little corner of Aussie paradise, get in touch.

We’d love to help you source a great home loan and make your sea change dream become a reality.

Do you shop with Afterpay? Read this

Do you shop with Afterpay? Read this

We all experience times in life when we just can’t wait to get our hands on that shiny new item. But as the old saying goes: good things come to those who wait.

Afterpay is the largest buy now, pay later scheme in Australia.

In fact, Afterpay had more than $1.45 billion pass through its platform in the first three-quarters of last financial year.

It boasts more than 1.8 million customers, who mostly use it for online apparel shopping, and 14,000 retailers under its wing.

The reason for Afterpay’s rapid rise is its interest-free, instant purchase business model.

To qualify, all a customer needs is a debit card, enough money for the first instalment and no proof of income. Customers then pay the final three instalments a fortnight apart.

The risks

Interest-free. Instant. Too good to be true?

Here’s the thing. As you can make many purchases with Afterpay without proof of income, before you know it you could adopt bad spending habits and may fall into debt.

Now, late payment penalties are capped at $17. But if you’ve made multiple purchases and you’re defaulting on all of them, the debt and fees rack up.

Here’s the real kicker

Afterpay, and its competitors such as ZipPay, are still credit liabilities and need to be disclosed when applying for a home loan.

And the banks are getting very stringent on who they lend money to these days due to the regulator crackdown.

In the current tightening lending market this could hamper your efforts to obtain a home loan if you’ve racked up quite the Afterpay bill. Especially if it’s obvious that you’re struggling to pay it off.

Additionally, the Terms of Service on the Afterpay website state:

“Afterpay reserves the right to report any negative activity on your Afterpay Account (including late payments, missed payments, defaults or chargebacks) to credit reporting agencies.”

This means that your credit score may be affected if you fail to meet repayments.

And last year alone Afterpay netted $11 million in late payment penalties.

Another way to buy

Financial independence is not about racking up debt for shopping.

It is about saving money for a rainy day, rewarding yourself with purchases when you hit savings targets, and protecting your borrowing capacity for appreciating assets – not depreciating items.

Additionally, you never know when you will need money to pay for an emergency or capitalise on an opportunity.

You or a family member may become sick, or you might want to expand your property portfolio.

For all these things it helps to have extra cash on hand.

So if you can’t afford it, don’t buy it. Sure it’s hard, but short term pain is long term gain.

Need a spotter?

Enforcing good spending habits isn’t something you can just start doing overnight.

Often it takes a guiding hand to help you work out a plan, not to mention someone who can hold you accountable – just like a personal trainer.

If you’d like to know more about how you can start implementing good spending habits that will set you on a path to financial independence, get in touch. We’d love to help out.

5 Common Credit Card Traps

5 Common Credit Card Traps

Credit card providers love to use all kinds of incentives to get you to put that shiny piece of plastic into your wallet, ripe for usage at your weaker moments. Here’s how to avoid getting snared in credit card debt.

Most humans love to spend. It’s a scientific fact. No joke, going shopping tells your body that it should start producing greater amounts of the feel-good neurotransmitter dopamine.

Credit card providers know this well and have plenty of tricks up their sleeve to get you chasing that high with their high-interest credit.

Here’s how to avoid some of their more common traps.

1. Points and bonuses

You know that dopamine rush we were just talking about?

Well, sometimes people end up spending a lot more on their credit cards than they would otherwise because they’re chasing points and bonuses.

If you’re one of those who likes to collect points through your credit card – and can’t be convinced otherwise – remember to set up a system that will ensure you pay it back straight away.

This could include a direct debit, or an e-calendar reminder, to ensure you avoid high interest and fees which can cancel out any bonuses received.

2. Interest-free periods

There are a lot of credit card providers out there that offer interest-free periods, just hoping you won’t check the fine print.

Some retailers will offer 12-50 months with no interest and no repayments, making it possible for you to walk away with a shiny new product without spending a cent.

However, once the interest-free period ends, interest rates can be up to 30%, and the credit provider is under no obligation to remind you when that period ends.

Additionally, if you purchase anything else on that card other than the original purchase, it probably won’t be covered under the initial interest and repayment free conditions.

A couple of final warnings: interest free doesn’t mean fee-free, and the product you’re buying might be more expensive at the store than elsewhere.

3. Cash advances

Almost everyone has, at some stage, reached a point where they’re a little short of cash.

And while cash advances might seem like a good option to tide you over, they actually accrue a much higher rate of interest straight away (up to 30%), not to mention a cash advance fee which is usually a percentage of the amount withdrawn.

If you want to make the most of your credit card and all the benefits it has to offer without ending up stuck in a tough repayment cycle, be sure you understand the post cash advance interest rates, and make sure that the cash withdrawal is really worth it.

And, if you really need to access a bit of cash, try asking a family member or close friend first. As an absolute last resort, you could purchase their groceries, fuel or pay their bill using your credit, then they could immediately reimburse you in cash.

4. Multiple fees

On top of regular annual or monthly fees, many cards have additional fees that will vary depending on how you use your card.

You can be charged extra fees for failing to meet minimum repayments, for exceeding your credit card limit, and for withdrawing money.

Be sure to understand your card fee structure, and use responsibly.

5. Paying only the minimum

When it comes repayment time, be careful about only paying the minimum amount outlined on your bill.

This amount will leave a balance that will continue to accrue interest, and will end up costing you more in the long run.

You should pay back the maximum you can afford, lessening the time it will take you to pay off your card in full.

Final word

Not all debt is bad. We appreciate that better than most. But it’s fair to say that credit card providers don’t have your best financial interests at heart.

If you’re tempted to get a new credit card, get in touch with us first. There’s a whole range of better financing options out there, all of which we’d be happy to run you through.