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17 June 2013

The Happiest Man in the World

Filed under: Financial Advice - Tags: - @ 3:53 am

MatthieuRicardThe Happiest Man in the World

He is said to be the happiest man in the world. His name is Matthieu Ricard and he is a molecular geneticist turned Buddhist monk who resides at the Shechen Tennyi Dargyeling Monastery in Nepal. Ricard has spent a lifetime exploring the concept of happiness. As Ricard says; “whatever we do, whatever we hope, whatever we dream – somehow is related to a deep, profound desire for well-being or happiness”. If happiness is something that is going to determine the quality of every instant of our life, then it is important that we know what it is. Not knowing what happiness is makes it much harder to find.

Happiness is often defined as pleasure, but pleasure, says Ricard, is contingent on a time, a place and an object. For example, if you eat one piece of chocolate cake you will feel pleasure; eat three and you will feel sick. Rather than a mere pleasure sensation, happiness is well-being. It is a deep sense of serenity and fulfillment that pervades and underlies all emotional states, and all the joys and sorrows that come one’s way.

Very often, people pursue happiness by looking at the outer world and acquiring objects to bring happiness. However, our control of the outer world is limited, temporary and often an illusion. You might have a luxurious apartment on the top floor of a magnificent building, but if you are deeply unhappy within, you may well be looking for a window from which to jump. At the other end of the spectrum, there are people in very difficult circumstances who manage to keep serenity, inner strength and inner freedom. It is wonderful to have external trappings such as a nice place to live, a new car and travel, but these things are not enough. Happiness comes from within.

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27 May 2013

Avoiding Disaster with House Insurance

Filed under: Financial Advice - Tags: , - @ 11:15 pm

HousefireAvoiding Disaster with House Insurance

Over the next year, a major change will occur for most people in how their homes are insured. As a result of the Christchurch earthquake and other disasters around the world, reinsurers are now seeking to quantify and limit the risks they face by insisting that home insurance policies are based on a maximum specified amount, called a sum insured, rather than an unspecified replacement cost. If you specify a sum insured for your home that is less than the replacement cost, you may find you either have to pay for the shortfall yourself in the event of a disaster, or rebuild a smaller or lower quality home. On the other hand, setting the sum insured too high means you will be paying too much in premiums, because the insurer will pay no more than the replacement cost if the house needs to be rebuilt.

Determining a sum insured for your home that accurately reflects the replacement cost is therefore vital to avoid the potential of financial loss. Special features such as decks, swimming pools, fences and retaining walls will also need to be valued. This exercise has the potential to be very complicated or confusing, especially for elderly home owners or owners of high value homes.

Some insurance companies are providing free on-line calculators to help you estimate the replacement cost by answering a small questionnaire about the size and features of your home. While this may give a reasonably close estimate, in some cases it may be best to obtain an estimate from a builder or a registered valuer. All this will take time and is not something that should be left until the last minute. Contact your insurance company before your policy renewal to find out what support they can give you with determining your sum insured.

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20 May 2013

How to be Financially Secure

Filed under: Financial Advice - Tags: - @ 2:21 am

lockHow to be Financially Secure

Achieving financial security is an aim that most people aspire to. Worrying about money causes stress, loss of enjoyment of life, and is often linked to relationship problems. It goes without saying then, that being financially secure can make you happier. The definition of financial security is a very personal thing and depends to some degree on what you consider to be a minimum standard of living. At the very least, everyone needs a place to live, the basic necessities of life such as food, clothing and heating, and sufficient resources to be able to enjoy life. The basic elements of financial security are:

  • Being debt free. This includes owning a home without debt as well as having no credit card or store card debt.
  • Having enough money in reserve to cover unexpected expenses or unexpected loss of income. A basic rule of thumb is to have the equivalent of at least three months living expenses in reserve
  • Having a secure income that is sufficient to maintain your desired standard of living. Securing your income requires keeping your skills up to date, maintaining good health and a good relationship with your partner or finding ways to generate passive income
  • Having sufficient assets and investments to provide for your future needs. This includes your long term goals as well as your retirement needs.
  • Being protected from financial risk through having adequate insurance cover, a diversified investment portfolio, and a means of protecting your assets in the event of business or relationship failure

Achieving financial security is difficult for those on low incomes. However, there are many instances where those on good incomes fail to put in place the basic elements of financial security and suffer badly when they have a sudden in change in their circumstances.

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29 April 2013

How to Cut the Cost of Your ACC Premiums

Filed under: Financial Advice - Tags: - @ 3:31 am

ACCHow to Cut the Cost of Your ACC Premiums

Self employed people are burdened with heavy expenses to comply with Government requirements and one of these is the cost of ACC cover. For tradespeople in particular, who have a high risk of injury, the cost can be significant. Many self employed people are unaware they may be eligible for ACC Cover Plus Extra, a product designed to suit the needs of self employed people. With standard ACC CoverPlus and Workplace Cover, your policy will pay out 80% of your previous year’s earnings and you must prove loss of income. If you employ your spouse in your business for income splitting purposes, he or she may have difficulty proving loss of income in the event of a claim. If you return to work part time, your payout is reduced accordingly. By comparison, with ACC Cover Plus Extra, your cover is set at an agreed level, which can be either more or less than your typical earnings. You do not have to prove loss of earnings and you are paid regardless of whether you work part time.

If you choose an agreed level of cover that is lower than your usual earnings, the premium for ACC Cover Plus Extra can be significantly lower than for a standard policy. As an example, a builder earning $64,000 per annum would pay a total premium including all levies of $3,847 on a standard policy. By choosing Cover Plus Extra with agreed cover of $35,000, the total premium reduces to $2,454.

The downside of lowering your cover is that in the event of a claim, you receive less compensation. It is very important to work with your insurance broker to put in place income protection insurance, which can provide top-up cover for accidents as well as cover for illness, based on a percentage of earnings.

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25 February 2013

Start Saving with Two Simple Steps

Filed under: Financial Advice - Tags: - @ 11:12 pm

Start Saving with Two Simple Steps

Kiwis are being urged to “Think, Shrink, Grow’ by the Commission for Financial Literacy and Retirement Income in their campaign to improve our money habits. We’ve heard that ‘Think’ means to set goals and plan ahead and ‘Shrink’ is all about getting rid of debt, especially ‘dumb’ debt. Once you have set your goals and tackled debt, it is time to ‘Grow’ your savings. There are three main purposes for saving; for goals such as a holiday, a new car or the deposit on a house; for emergency purposes such as illness, redundancy or unexpected expenses; and for long term goals such as retirement. There are two simple steps to take to be able to start saving.

Step One: Reduce your fritter factor. Saving more means spending less. The easiest spending to cut back on is spending on low value items such as coffee, lunches, magazines and personal items. Simply cutting out one coffee a day could allow you to save $20 a week, or $1,040 a year. That’s enough for a good holiday. Cut back on things that aren’t important to you so you have the money you need for the things that are really important, such as your goals.

Step Two: Set and forget. The most painless way to save is to set up an automatic payment to transfer money into your savings account every pay day. You will soon adjust to living on a lower amount. If you are worried about how much you can save, start with a small amount. Once you get used to living on slightly less, gradually increase your savings. The reward of seeing your savings grow and being able to achieve your goals will give you the motivation to continue.

For more information on how to ‘Think, Shrink, Grow’ click here.

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17 December 2012

How Retailers Get You to Spend

Filed under: Financial Advice - Tags: - @ 12:28 am

How Retailers Get You to Spend

Going shopping over the holiday period can be a bit like going into battle with retailers who use every sneaky scheme they can think of to get you to buy their goods. It is getting more difficult to win, because marketers are increasingly using neuroscience to trick your brain into parting with your money. It helps to know some of the tricks neuromarketers use so you don’t fall prey to them. Here are just a few of the more common traps for shoppers.

  • A sense of urgency in advertising (the goods are on offer or on sale for a limited time only).
  • Shop assistants who are trained to talk to you. They are not just being polite! Statistics show you are more likely to buy in a shop if the assistant engages you in a conversation.
  • Displaying goods in such a way as to encourage you to pick them up or try them on. The more physical contact you have with the goods, the more likely you are to buy.
  • High margin impulse items located next to the counter which tempt you just as you are about to pay.
  • Shopping baskets or trolleys provided in store for you to fill.
  • Free samples, particularly those which tempt your taste buds or sense of smell.
  • The use of scent, such as the smell of freshly cooked bread in fast food outlets or the smell of perfumes in a cosmetics store.

If you truly want to keep to your budget over the holiday period, then make list of what you want and stick to it. Don’t be tempted by offers, avoid picking up or trying on goods that are not on your list, don’t use baskets and trolleys and avoid engaging in conversation with shop assistants.

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3 December 2012

Four Best Money Tips for Christmas

Filed under: Financial Advice - Tags: - @ 1:39 am

Four Best Money Tips for Christmas

Every Christmas it’s the same story for many families; not enough money to go around, overspending and an aftermath of too much debt, stress and depression. It is ironic that the season of good cheer should leave such disastrous effects in its wake. Here are the four best tips for surviving Christmas with your money intact.

  1. Get more cash. Sell your surplus stuff online, have a garage sale, make things to sell at the weekend markets, increase your saving, earn more through working longer hours or additional part time work. If you still don’t have enough, spread the cost over January as well by using a small bank overdraft as a last resort. As soon as you have paid all your debts, start saving for next Christmas.
  2. Get a Pre-NUP (Pre-Christmas No Unnecessary Presents) agreement with your family and friends. They will be as delighted as you are that their Christmas list is shorter. If you share Christmas with a large family group, have a ‘Secret Santa’ party so you each only have to buy one gift. Alternatively, set a limit on the value of gifts.
  3. Do a Christmas budget. Work out how much you have to spend, and put that money aside in a separate bank account. You will then be able to keep track of how much you have spent. Make a list of items to buy and stick to it. Avoid impulse buying by keeping to your list or waiting until the next day before you buy something you have spotted.
  4. Buy online. Use the internet and ‘shopbot’ websites to find the cheapest price for the items on your shopping list.  Keep an eye out for daily deals on the items you want, but don’t get tempted by anything not on your list.

 

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27 August 2012

Couples and Money

Filed under: Financial Advice - Tags: - @ 7:11 am

Money for Two

The changing roles of women in society have led to some interesting trends in how money is managed in relationships. Our mothers and grandmothers came from an era when married women mostly didn’t work, but were given ‘housekeeping’ money. As women began to participate more in the work force, they contributed their income to the running of the household. The soaring cost of houses and mortgages meant that two incomes became essential for a family. Incomes were paid into joint accounts from which household and personal expenses were paid. More recently, a different trend is emerging. The transience of relationships, lower levels of home ownership, and the impact of relationship property legislation have seen an increase in the numbers of couples who manage their money separately. Incomes and savings go into separate accounts and household running costs are covered through a contribution from each partner to a joint account set up for that purpose.

In any relationship there is a balance between doing things as a couple and doing things individually. There is no doubt that having common financial goals strengthens a relationship and makes it is easier to plan ahead. Being accountable to another person for spending and saving can help keep budgets on track. There are good reasons to keep money separate, however. Doubts about the future of the relationship, a partner’s irresponsibility with money, and different money personalities are all good reasons to keep at least some of your money separate. Control of money can be used as a way of gaining power in a relationship and this is another good reason for a degree of financial separation. There is no right or wrong way for couples to manage their money, however the way in which it is managed is something which should be discussed and agreed.

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9 July 2012

Generous to a Fault

Filed under: Financial Advice - Tags: , - @ 1:39 am

Generous to a Fault

People come under financial pressure for many different reasons. For some, it is simply that they don’t earn enough to cover their living expenses. For others it is failure of a relationship or a business. Redundancy and illness can also bring about huge financial pressures. Another common reason why people find themselves struggling financially relates to their own generosity. There are certain groups of people who are prone to being overly generous; that is, they look after the well being of others while sacrificing their own financial security. Among these people are single parents who spoil their children to alleviate guilt or buy their affection, doting grandparents, grandparents raising grandchildren, philanthropists, and the ‘sandwich generation’ with elderly parents and children who are struggling with employment, relationships or early parenthood. That is not to say that all people in these categories are overly generous. What causes people to sacrifice their own well being for others? Sometimes, those who are too generous are simply not aware they are putting their own well being in jeopardy. Perhaps they are aware of their sacrifice, but optimistic that things will be alright for them in the future. More often than not, people who are overly generous have difficulty setting boundaries with others. There is a fine balance between being self-centred and being other-centred. Self-centred people lack empathy for others and act in a selfish manner, while other-centred people give to others to their own detriment. Usually there is a psychological basis, which may relate to such factors as early childhood experiences, self esteem issues, and interpersonal skills. Societal pressures can also play a role. If you are struggling financially despite having a reasonable income, consider whether it would be helpful to talk to a counsellor about setting financial boundaries with other people in your life.

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7 May 2012

Check Your Commission

Filed under: Financial Advice - Tags: , - @ 4:06 am

Check Your Commission

Financial advisers have traditionally received their income from upfront and ongoing trail commissions paid on insurance policies and investment products they have sold. These commissions, while paid by the product provider to the adviser, are funded from the profits made within the products. In effect, the owners of those products therefore pay, albeit indirectly.

If you are not paying a fee for advice, then it is probable that your adviser is receiving a commission. Upfront commission is paid when the product is purchased, and this can be a significant amount. This is usually followed by an ongoing trail commission, paid at regular intervals to your adviser. If you choose to cancel your insurance policy or cash in your investment, there is usually a ‘claw back’ of the upfront commission. Sometimes this is paid by the adviser (which is why they may be very reluctant for you to cancel or withdraw) and sometimes this is paid by the client (for example, as an exit fee if an investment is cashed in). The point of trail commission is to provide financial reward to your adviser for ongoing advice given to you. Find out how much commission you are paying by contacting either your adviser or the supplier of the product. Given that this is being paid by you (indirectly), you need to be sure you are getting the service you are paying for. Advisers often sell their clients to other advisers, and it may be that the person receiving commission from you is someone other than the person who sold you the product; someone who may be a complete stranger to you. If you are not satisfied you are receiving adequate advice, ask your adviser to rebate the commission to you, or alternatively find an adviser who truly earns the income received.

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