Money Tips for Travellers
An overseas holiday is something to look forward to but it can also be stressful when things don’t go according to plan. Losing money, not being able to access it or running out of money can spoil a dream holiday.
Travellers cheques and cash were once the most common forms of taking money overseas, however there are now much easier methods. Travel cards are prepaid multiple currency cards that can be used in ATMs and wherever credit cards are accepted. They are available from travel agents and banks. Examples are the Travelex Cash Passport, Kiwibank’s Loaded to Travel card and the ANZ, National and Westpac Travel Cards. There are a variety of fees that apply for loading the cards, topping them up and making cash withdrawals so it pays to shop around to get a good deal before you buy your card.
Some of the key advantages of travel cards are:
- You can buy your foreign currency in advance at a known exchange rate
- You can hold up to five different currencies on the one card
- You can top up while you are away using online or telephone banking
- If you lose your card you can cancel it
- Your losses are limited to the amount you have loaded onto the card
- Fees are lower than for ATM cards and travellers cheques.
Take a variety of means of payment with you; some cash for immediate needs, a travel card for general use and a credit card for emergencies. Keep them in different places so you don’t lose everything at once. Make a list of all the emergency numbers you need to call in the event you need to cancel your cards. These simple steps should allow you to have a holiday free of money problems.
Property Investment
The property investment bubble that burst following the Global Financial Crisis came about partly due to the huge tax refunds many investors were able to claim from their properties. These refunds enabled investors to borrow heavily and buy more properties. In many cases, the interest on the money borrowed to buy the properties was more than the rent received, and the investors relied on property prices increasing to make the investment worthwhile.
Investors were able to claim the cost of depreciation of the building and chattels as an expense and this resulted in a refund of money that had not actually been spent, which helped to cover the losses on the properties.
Investors who wanted to be able to claim large tax losses on their investments but who also wanted the protection of a limited liability company often owned their investments through a Loss Attributing Qualifying Company or LAQC. One of the benefits of an LAQC was that the losses could be passed through to shareholders in the LAQC who could then offset the losses against personal income. Owning properties through an LAQC became a very popular form of investment.
However, all this is set to change. On 1 April, 2011, LAQC’s will cease to exist and depreciation on buildings will no longer be able to be claimed. Shareholders will be given a window of opportunity for six months following that date to change alter their company structure without adverse tax implications. The LAQC can be converted to a standard company, a sole trader, a limited partnership, or a new kind of entity called a Look Through Company or LTC. Each of these options has advantages and disadvantages for different circumstances of investors and it will be very important to get expert advice so as to make the right decision.
Planning for Baby
One of life’s great experiences is having a baby. The birth or adoption of a first child in particular is a life-changing event and brings with it a mixture of different emotions. Worries about money can offset the happiness a baby brings, so the loss of income and additional expenses need to be carefully planned.
Paid parental leave of up to 14 weeks is available providing certain criteria are met, as well as unpaid leave of up to 52 weeks, and special leave is available for such things as antenatal checks. Confirming your entitlement to paid and/or unpaid leave is the first important step towards planning your finances. Check with your employer and also the Department of Labour. You may also be eligible for Working for Families Tax Credits so check your entitlement with Inland Revenue.
Once you have established what your new income will be, it is important to prepare a budget. If your expenses are more than your income while one partner is not working, you will need savings to help you get by. You might also need to save a lump sum to buy furniture and clothes for your baby. If you have no savings you will need to cut back on your costs to avoid going into debt. A mortgage is often your biggest cost and you can talk to your bank about how to make your payments lower while you are on one income.
When you have worked out your new living costs, the best thing you can do while you are waiting for baby to arrive is to start living on your new budget as soon as possible. That way, you will have a few months to add to your savings, adjust to your new budget and refine it to make it work.
Giving is Good
It feels good to be generous and it’s even better when generosity is rewarded. In recent times, there have been a number of changes and new initiatives that have made it easier and more beneficial for ordinary people to give to others.
In 2007, a number of groups working in the charitable sector got together to form the Generosity Hub. The aim of the Hub is to create better awareness of giving in New Zealand. Giving includes money, time, gifts and acts of kindness. The vision for the Generosity Hub is a society where giving is the norm, where generosity is recognised and celebrated and where giving is supported by government, business and the community.
There are several projects underway, including a project to increase awareness of payroll giving. Payroll giving is a scheme introduced by Inland Revenue which enables employees to make a donation to registered charities and receive the tax benefit from the donation straight away. Employers can choose whether or not they offer this scheme to employees. The advantages of the scheme are:
- Tax benefits are immediate and are 33.33% of money donated with no upper limit
- There is no need for the employee to file a return to IRD
- It is easier on the pocket to donate by small, regular amounts rather than larger lump sums
- All funds go directly to the charity with no ‘middle man’ costs from telemarketers or advertising campaigns
Other projects of the Generosity Hub include encouraging ‘giving circles’ to involve more people in giving time and money and promoting a ‘three money box’ idea for children (one for spending, one for saving and one for charity).
This is the season for giving and a good time to think about how you can be generous to others.
Financial Advisers
Over the next few months, all financial advisers throughout the country will be preparing themselves for the new regulatory regime which will come into force following the introduction of the Financial Advisers Act. The purpose of this Act is ‘to promote the sound and efficient delivery of financial adviser and broking services, and to encourage public confidence in the professionalism and integrity of financial advisers and brokers’. By March 2011, all financial advisers will need to be registered, which in turn will require them to join an independent dispute resolution service. Disgruntled clients will then have access to a free service through which to complain and seek redress for poor advice. This process involves mediation with trained facilitators who can assist the parties reach agreement on how the complaint can be resolved. Advisers will be required to inform clients of their procedure for handling complaints and the name of the dispute resolution service they have subscribed to.
By 1 July 2011, all financial advisers providing advice on investment products will need to be authorised as well as registered. For authorisation, they will need to comply with the Code of Professional Conduct for Authorised Financial Advisers which amongst other key principles sets out the required levels of competency for advisers. Many advisers will be sitting exams and undertaking assessments in order to reach these levels. The effort and expense required for authorisation is likely to see some advisers leave the profession through retirement or selling their businesses. In some cases, such people have been advising for many years and while it is sad to see the loss of those who have learned on the job and provided good service to their clients, change is needed to move the sales oriented financial advice industry to being a client oriented financial advice profession.
