Category Archives: Blog

Avoid These Top Financial Regrets

As you get older, you realise that mistakes are unavoidable. Many people have regrets about financial decisions that they made earlier in life, wondering just how different their lives could be if they had made better decisions with their money.

With the help of the team at The Farm Protectors, you can avoid these top financial regrets and set yourself up for life.

Not saving enough money

One of the most common regrets people have later in life is not saving enough money. Many people especially wish that they had saved more during their twenties and thirties to help grow their money into the future. Sticking to a budget should be top of the list when you are striving to set yourself up for the future.

Not investing

Many Australians fail to invest their money wisely, or even at all, throughout their lifetime. They severely underestimate the impact that time in compound earnings can have on your money. We know that investing can be intimidating, but it is worthwhile taking the time to learn about investing or get financial advice to determine the best strategies for you to create wealth and have no regrets later in life.

Spending too much on non-essentials

It’s so easy to purchase lots of small, non-essential items when you go shopping. These purchases are often rash, impulsive decisions because of how inexpensive the items are. But this adds up over the years, and many people regret it. This regret often arises when you realise that you have so many ‘things’ accumulated over the years that you understand just how unimportant the item was.

Not setting up an emergency fund

People often regret not setting up an emergency savings fund for when life happens. It is essential to have money saved for unexpected health problems, cars repair or losing your job.

You may find that you have already made some of these mistakes with your finances, but it is never too late to learn from your mistakes and set yourself up for the future. Get in touch with The Farm Protectors today to implement strategies and give yourself a clearer picture of your financial future.

Tips for Talking Money with Your Children

As a parent, you might be worried about talking about money with your children. You can develop good financial habits at an early age to set your kids up for the future and the financial challenges they will face.
We’ve outlined some tips for talking about money with your children.

Start at an early age

It’s never too early to start discussing money with your children, just be sure to keep it age appropriate. There’s a high chance that your children already know more than you think about money but will likely lack context to understand what money truly means.

Discuss money in real life situations

The best way to help your children understand money is to discuss it in real life, practical situations. This will weave money lessons into everyday life and help them to understand where money comes from. For example, when you are at the supermarket, you can explain to your children how items are priced and that there are a variety of different options available for different prices. This can teach them how to shop around for the best price possible.

Keep it positive

It is so important to keep conversations around money positive. While you might be stressed about your finances, you should never talk negatively to your children. Your kids might misinterpret any anxieties you have and develop fears themselves.

Ask Questions

Conversations are far more effective than lectures. If your child asks you about money, you can help their understanding by asking them questions in return. For example, your child will probably ask if you are rich. You can respond by asking them what they think rich is to help them arrive at their own conclusions about money.

Keep the conversation going

Instead of just sitting down with your child and having one discussion about money, it’s best to keep the conversation going. Your discussions will continue to evolve as your child, and their responsibilities and relationship with money grow.

Is A Self-Managed Super Fund Right for Me?

Many Australians choose to invest in Self-Managed Super Funds (SMSFs) for increased control, flexibility and transparency of their investments for retirement. There are many considerations to make when looking to open a SMSF to determine if they are the right choice for you.

1. Are you eligible to become a trustee?

If you are over 18 years old, you are eligible to be a trustee, as long as you are not classified as bankrupt, mentally incapacitated, charged with certain criminal convictions, or disqualified by a court or regulator such as the Australian Tax Office (ATO). If you are under 18, you are eligible to be a member of a SMSF but not a trustee.

2. Do you have an appropriate balance to operate a SMSF?

While there is no minimum balance required by law, you need to have an appropriate amount to invest when you open a SMSF to make it valuable You need to ensure that costs and fees do not absorb any investment returns. There are many costs associated with a SMSF, including establishment costs as well as ongoing tax returns, audits, and fees.

3. Do you have the time?

A SMSF takes a considerable amount of time, especially compared to a regular superannuation fund. With a SMSF you need to:

  • Research investment options
  • Monitor investment strategy
  • Be proactive with your investment strategy to continually adapt your plan when needed
  • Make sure you meet reporting deadlines
  • Keep up to date with superannuation laws and regulations that will affect your fund and your responsibilities

If you fail to comply with rules, you could face personal financial penalties or disqualification as a trustee. It is important to note that many trustees outsource administrative responsibilities to an accountant or SMSF expert. Ultimately, however, you are responsible for the operation and compliance of your SMSF and will be the one held accountable.

4. Do you plan on living overseas for an extended period?

Complex residency rules are in place for SMSF. A SMSF must be established in Australia, with management and control being carried out by trustees that reside in Australia. If you are planning to live overseas for more than two years, you will need to seek professional advice to ensure that you comply with the ATO and do not incur heavy penalties for non-compliance.

If you are unsure if a SMSF is right for you, the team at The Farm Protectors can provide you with guidance to make sure your investment will be worthwhile.

Common Estate Planning Mistakes That You Need to Know About

Did you know that one in two Australians dies without a will in place? Estate planning is considered a very low priority by Australians.

If you want to be in control of your assets and where they go when you die, you need to have an estate plan in place. You need to be wary of these common mistakes that people make with their estate plans.

Leaving it until later

Many people think that estate planning is something to do when you are older. However, anyone over the age of 18 should seriously consider having an estate plan in place as you will likely have several assets that can be passed on to loved ones if you pass away suddenly. Estate plans are especially important for young families as children will be dramatically affected if parents pass away prematurely.

Leaving people out of the will

It is not unheard of for relatives to challenge a will if they do not feel that proper provisions have been made for them. Each state has different laws that outline who can contest a will, and in some cases, it is quite broad. It’s best to get the help of a qualified advisor to structure your estate plan in a way that will benefit the intended beneficiaries and ensure your wishes are met.

Being too specific

Many people make the mistake of being too specific in their estate plans. An example of this is listing relatives by name, such as grandchildren. If your will is not updated and more grandchildren are born, any grandchildren not specifically named will miss out on their inheritance.

Not making power of attorney arrangements

Your estate plan should include more than just your will. Many people forget to include arrangements such as a power of attorney, outlining who can make any financial decisions on your behalf if you are incapacitated at any point in your lifetime.

Ignoring taxes

While Australia does not have an explicit death tax, there are many taxes that can have an impact on a deceased estate. For example, there could be taxes on any capital gains that occur when investment assets are sold to be distributed to beneficiaries. This needs to be taken into consideration when creating your estate plan.

Not updating an estate plan

When people do have their estate planned out, they often forget to update it as their circumstances change. Your will needs to be updated for any situation change, including births, deaths, and divorces, as well as any purchases or sales of assets.

The biggest mistake is not having an estate plan at all. Doing this will result in the state deciding where your assets will go, and it is likely they will have a different idea of who your beneficiaries should be. To organise your estate plan, get in touch with The Farm Protectors today.

5 Small Ways to Be Better with Your Money

Changing your mindset regarding money can have a lasting impact on your wellbeing and financial stability for decades to come. There are five small ways that you can be better with your money to help you reach your financial goals and enjoy life.

1. Choose a lifestyle and stick to it

As your salary increases, it is almost automatic to increase your spending. This is referred to as ‘lifestyle inflation’ and often leads to people looking back and regretting their choices and how they have spent their money. To limit this increased spending, it is essential to choose a modest lifestyle that suits you and stick to it, even when your income rises. This will ensure that you can increase the amount of money being saved and help to meet financial goals.

2. Think in decades, not years

Think back to all that you have done in the past decade, and you’ll get a good idea of what you might realistically be able to achieve in the next decade. You might find it helpful to talk with a professional to get your priorities for goals for the next 10 or 20 years. Setting goals for the decade will result in more achievements to look forward to and be proud of in the future.

3. Start saving straight away

So many people put off saving because they think that the timing isn’t right. People want to wait until they’ve paid loans or travelled, and feel they have the time. It is essential that you commit to start saving straight away, even if it’s only a small amount.

4. Think before investing in property

It is ingrained in our brains that we must invest in property and it is placed at the top of savings and investment goals for most Australians. However, depending on your circumstances, investing in property may not be the best option. It may be worth your while to discuss with a financial planner to understand different investment options that may be more effective in helping you reach your goals.

5. Consider what is important to you

Your goal in life should not be unlimited wealth. Take the time to consider what is important to you and make sure that you are spending on things that matter to you. By doing this, you will be able to make smarter choices regarding how you spend your money and achieve the balance between earning, saving, and enjoying life.

At The Farm Protectors, we are happy to develop an appropriate investment plan to help you reach your goals.

When Should You Start Estate Planning?

We tend to think that we are too young to start estate planning and drawing up wills.

However, this is not the case. Once you’re earning a salary and have superannuation in place, you will likely have assets to pass on if you were to die.

We’ve outlined the significant milestones in your life that you need to look out for to start planning your estate or reviewing any plans you already have in place.

Having children

It’s important to consider who would be the best choice as guardian of your children if something were to happen. You can also outline in an estate plan when you wish for your children to take control of their inheritance. Without a will in place, they will take control when they are 18 years old. For some, this may be more importance that the distribution of assets.

Buying a home

A home is usually the first significant asset that a person owns. For that reason, it is vital to identify who this would be left to in an estate plan.

Setting up a business

Owning a business likely involves owning assets. You need to outline in your estate plan if you wish for the company to continue operating or to make other arrangements for the assets after your death. It’s best to seek professional advice to take care of legal documents.

Getting married or separated

When getting married, it’s a great idea to draw up an estate plan as will likely have several joint assets that you need to agree upon. Similarly, when separating from a partner, the assets will no longer be joined, and you may not wish for the same allocation of assets if you were to die.

A death in the family

People are often motivated to start making their estate plans when other family members die. This is especially the case when there is no will in place, and you understand the stress caused to the family when dealing with their affairs and assets.

It’s best to seek professional advice when planning your estate, but the milestones above are just some of the circumstances that could arise and indicate that you need a plan in order. If you already have an estate plan, it is recommended that you check in every few years. At The Farm Protectors, can assist in creating clear and unambiguous plans that make it easier for your executor.

Tips for Managing Your Family Business

Family businesses account for many small businesses in Australia. However, many family businesses struggle due to emotional conflict between family members. Working with family can be advantageous but relies on effective planning to ensure success across generations. Here are some top tips for managing your family business and succeeding well into the future.

Clarify roles and responsibilities

One of the biggest problems with family businesses is conflict. It is vital to clarify each members’ role and responsibilities within the business. Clear governance structure will formalise what each member is responsible for and create a line between family and business. Consider each person’s skills and knowledge to ensure that everyone is happy with the work required of them. This will help with leaving work at work and home at home.

Document everything formally

Emotions run high in family businesses, as everyone is relying on the business for financial security. This makes it so important to keep formal documentation of everything, including contracts and agreements. Relying solely on verbal communication can cause chaos for the business. If conflict does arise, documentation can be utilised to reach the best outcome for the business.

Communicate

You often assume that family members understand you well, but you need to share all good and bad news within the family business. Communication helps to build trust and transparency and will help to reach everybody’s goals and aspirations within the business.

Start succession planning early

Planning for succession will ensure continuity within the company when management changes hands to another family member. Without succession planning in place, an unexpected illness could pose a significant threat to the financial health of the family and the business. Succession planning can take years, so starting early will ensure that all parties are happy and agree on the transfer of ownership when the time comes. At The Farm Protectors, we believe that succession planning should start the day you commence your business and continue until it no longer exists.

Get external help

It helps to get help from outside advisors, such as financial advisors, for impartial advice regarding the family business. External advice will help ensure that the business continues to thrive into future generations.

Running a family business can be complicated. Through good communication and planning, your business can flourish, eliminating conflict and ensuring harmony within the business. If you are seeking external advice for your business, The Farm Protectors can assist your family business in building an effective governance structure and succession plan for the future.

Stop Making These Money Mistakes

Everyone makes mistakes, and you may feel its unavoidable when it comes to your finances. Financial mistakes can be costly and have lasting effects on your wellbeing and financial stability. Below are some common money mistakes that you should avoid. With the help of a financial planner, it’s easy to avoid these mistakes and develop good financial habits.

Living on Borrowed Money

Credit cards often lead to spending more money than you can pay off. This results in people not being able to make payments, sometimes turning to other credit cards to pay it off and racking up debt. The debt accumulated means that you are unable to save towards your financial goals, and often causes unwanted stress.

Not Having an Emergency Fund

Unexpected expenses can pop up at any moment, often when you least expect them and all at once. Many people live pay check to pay check, and if these expenses arise it can end in disaster. Aim to have a few months’ worth of necessary expenses set aside to cover you for expenses like repairs or medical bills. It is essential to get into the habit of saving, even if you can only save a few dollars at a time.

Not Planning for the Future

Your financial future relies on what you are doing right now. It is important to set aside time each month to look over your finances. Budgeting and planning for retirement now will have you at ease when you’re older.

Not Investing

Many people put off investing, as we tend to prioritise short-term benefits over long-term benefits. The earlier you start the better, as your money has the chance to grow and generate earnings. It’s important to take time to research or talk to a financial planner before jumping into investments, as you could end up investing in the wrong areas or losing money to excessive fees.

Financial stresses can be avoided with a little preparation. If you find yourself making these common mistakes, like many others, you will benefit from working with a qualified financial professional to help you get on track for the future. The Farm Protectors can work with you to develop a strategy to manage your finances and reach your goals.

Power of Attorney: Why You Need One

A will ensures your assets are managed prudently when you die. A Power of Attorney (Power of Attorney) ensures your assets are handled properly by someone else when you are unable to due to legal incapacitation.

Here’s more on what you need to know about having a Power of Attorney including why it’s wise to have one.

Main types of a Power of Attorney’s

There are two types of Power of Attorney’s: Medical or Enduring.

A medical Power of Attorney or guardianship gives another person the power to make medical treatment decisions on your behalf should you be mentally or physically incapable.

An Enduring Power of Attorney gives another person legal authority to manage your finances when you are unable to do so.

Do you need a Power of Attorney?   

The importance of having a Power of Attorney increases with time. When you start earning and having dependents, your finances and health are of utmost importance. Having a Power of Attorney creates a framework in case you are unable to make decisions about your health or finances. It ensures both your personal and financial affairs aren’t affected should eventualities in life incapacitate you.

A car accident that leaves you in a comma can leave you/your family financially vulnerable if you don’t have a Power of Attorney in place. If you travel often or live overseas for extended periods, a Power of Attorney will also come in handy. It can help you manage your finances and assets effectively from a distance especially when managing those finances/assets requires original signed documents.

Nominating someone to handle such matters when you are away is easier than disrupting your engagements with paperwork, phone calls, and even plane rides to/from Australia.

For this reason, Power of Attorney’s aren’t just important for later stages in life like Wills. When preparing your will, get your Power of Attorney organised as well.  In fact, most attorneys bring up Power of Attorney’s when discussing Wills.

Who should act as your Power of Attorney?   

It’s critical to choose someone who is best suited to make prudent decisions or act in your best interests in your absence. It could be a family member (sibling/child/grandchild), close friend or a reputable/trusted professional. It’s vital they are someone you trust.

They should also be experienced in finance and have adequate knowledge of your financial holdings and the consequences of any decisions they make. This, of course, applies to a Power of Attorney meant to manage your finances/assets in your absence.

It’s worth noting that you can have many attorneys in your Power of Attorney, i.e., both parents or more than one sibling or child. In fact, this is advisable since it allows many loved ones to share the responsibility of handling your personal/financial affairs which brings more expertise and passion to seemingly complex problems/decisions.

When should you choose a friend?   

If your family members lack the capacity to act as your attorneys, you don’t have a good relationship with them and/or don’t trust them with your money; you can give the responsibility to a close friend. But most importantly, whoever you choose must understand and accept their role.

Other important considerations   

If you already have a financial planner, it is important to have them meet your attorney/s to enable a smooth transition when/if the time comes for them to act.

Setting up a Power of Attorney arrangement   

Every state/territory in Australia has an agency that offers advice on Power of Attorney arrangements. The arrangements are legal and involve you and your nominee signing documents acting as proof of your nominee’s legal authority to take action/make decisions on your behalf.

Important: The power of a legally appointed individual as an attorney in a Power of Attorney can still be questioned. Financial institutions are reluctant to act on Power of Attorney’s given the prevalence of elder abuse cases. These developments have led to a recent government proposal in the 2018/2019 Federal Budget announcement.

The Australian Government is planning to work with all states and territories to establish a national register for Enduring Power of Attorney arrangements. This online register will go a long way in reducing instances of financial abuse resulting from false claims by individuals wanting to act under a Power of Attorney.

The importance of a Power of Attorney can’t be overlooked even in the presence of a Will. In fact, Power of Attorney’s are as important, if not more important than Wills given life’s uncertainties and the effects of those uncertainties on your personal/financial health as well as those of your loved ones.

If your children/siblings/friends are going to manage your money or make important decisions on your behalf in the future, it’s important to start an open conversation with them. The same applies to parents who will rely on you to manage their personal/financial matters in the future in case of anything.

Personal Insurance: Getting the Right Policy

Does the insurance policy you have match your needs?

If you have been following the news, you know how important this question is to Australians today. Only recently, the Australian Securities and Investments Commission (ASIC) expressed concern over the aggressive sales tactics and enticing bonus plans employed by insurance companies.   The commission warned that many Australians may be buying more insurance than they need. As a result of this revelation, many policyholders, especially those with more than one super account, now wonder whether they have too much insurance.

Do You Have Too Much Insurance?

The ASIC revelation focuses only on sales tactics and duplicate policies while overlooking one important point: No single policy can help you weather a financial storm because, if you are like most Australians, you already struggle with debt. According to the Australian Bureau of Statistics, household debt has ballooned by almost 80% within the last twelve years.   And although mortgages are largely to blame for this astronomical growth, credit card debt has also been a major contributor.

With debt weighing them down, most families have no savings to fall back on when the breadwinner loses a job, falls ill, or suffers an accident. But instead of buying an insurance cover to cushion themselves during emergencies, these households do not plan for the worst.

It’s estimated that most Australians cannot maintain their lifestyle or meet their financial obligations for more than 90 days without an income. The shocking truth: Instead of being over insured, many Australians are, in fact, underinsured, despite having some sort of insurance.

How Much Insurance Do You Need?

This brings up the important question of how much cover you need. A recent Rice Warner study sought to answer this very question, starting with how many people have insurance. Because retirement funds demand a life cover for contributors, about 95% of employed Australians have life insurance of nearly $350,000 each. In addition, roughly 80% of them hold a total and permanent disability cover while approximately 33% have an income protection cover.

The study then recommends the following. If you are in your early thirties and married with kids, your life cover should be at least 8 times your income. Likewise, your total permanent disability should be 4 times your income, and your income protection, about 85%.

To know how much insurance you really need, calculate what it takes to maintain your current lifestyle. While you are at it, remember to include household expenses, mortgages, tuition fees, and your financial goals.

How much Insurance Through a Super Account Do You Need?

As the debts and household bills pile up, you may be left with only one way to get a life or a total disability cover, and that is through a super account. Although this arrangement leaves you with more money for your household expenses, it comes at a price. The insurance payments take a bite out of your super balance, leaving you with less retirement money to earn interest.   So before digging into your super balance, ensure the benefits outweigh the costs.

More importantly, make sure that, your payments reduce with time. Remember, as property prices and personal debt rises, you may find yourself still in debt when you are 50 or 60. And the last thing you want is to be burdened by large payouts in your senior years.

How to Get the Most out of Your Insurance

Getting the most out of your insurance is not as hard as you think. You just have to match your insurance needs with the right policy. It’s imperative that you meet your objectives. Instead of going it alone or using online software, it’s recommended that you speak with a certified financial planner. They can objectively analyses your needs and audits your lifestyle.

Despite the questionable sales tactics used by insurance companies, you can still get the right personal insurance for you. All it takes is figuring what you need and then getting a policy to match. But to do so, you need an experienced, certified financial planner to walk you through the process. We are here to help.

Contact The Farm Protectors today.