High Inflation Tightening Your Purse String? You’re Not Alone…

The best way to combat rising inflation is to return to basics regarding spending vs saving. This is precisely what the policies of the Reserve Bank (and potentially the Government) are trying to get people to do.

Firstly, the cause of inflation in the first place is a result of the spending that has occurred. It’s a simple case of supply and demand. Businesses see increased demand for their products and services alongside less staff available to provide their products and services, and then their prices will rise. They won’t be so inclined to do this if there is less demand.

So, what do we mean by ‘return to basics’?

Budget

As your first step, set a detailed budget.

Work out what spending is not discretionary (fuel, food, electricity, mortgage etc) and what is discretionary (gym, Foxtel, coffees at the coffee shop, movies etc). If you still have money left over, then you should focus on paying down debt rather than spend on things like holidays.

Debt

Pay down bad debt (e.g. credit cards) before things like mortgages. Reducing debt will also ensure that increasing interest rates have less impact on you. If you are currently without debt, it may be a good time to invest more (depending on your circumstances and other factors).

More Income Streams

A second job could also assist with mitigating those increased costs. There is a higher demand for positions to be filled with reasonable rates of pay attached. The gig economy (ridesharing, food delivery, etc.) may be worth looking into, if time is a factor that needs to be considered.

Unfortunately, there is no silver bullet to shield yourself from high inflation. Everyone will find themselves in a different position, with various factors affecting them that may not affect others.

If you feel overwhelmed, it is a good time to seek the advice of a trusted adviser. That is why we are here.

3 Factors To Examine Before Beginning Your Investment Journey

Investing your money is a great way to grow your wealth, but it can be intimidating to someone starting fresh.

Investing is unique to each person because the time and money that everyone is willing to invest is different. Before you begin investing, you should think about what sort of investing style you would like to adopt, how much money you can afford to invest, and  your risk tolerance.

Investing Style 

There are two main investing styles that you can adopt. The style you choose will depend on the time and effort you’re willing to put in, and the sort of output you expect from your investment.

Passive investing:

This is a hands-off approach focusing on long-term returns. The return from these investments will be stable and predictable.

Active Investing:  

This is a lot more hands-on.

It requires you to choose and conduct the investments yourself. This will require much more of your time because you will need to continually research opportunities.

The return from these investments, although risky, can be quite large. As a beginner, the passive style might be more appealing till you can learn and understand the market well enough to invest more actively.

Budget

It isn’t necessary to invest a large sum of money; it is necessary, however, that you are financially prepared to invest the amount of money you choose. You should be able to set an ‘emergency’ fund aside from the money you are prepared to invest. This is because there will always be some you should not rely on quickly selling your investments to fund an emergency.

Risk Tolerance

The risk involved in an investment is usually proportional to the expected returns (higher returns = high risk; low returns = low risk). You need to balance risks and returns that work for you and the amount of money you are willing to lose. This balance might take some time, and at the start, you might choose to only invest in low-risk investments.

It may be intimidating to start your investing journey, but outlining how much time, effort and money you are willing to commit could help put you in a better frame of mind. Speak to a professional adviser or planner for further assistance with your next prospective steps.

Looking To Start Your Financial Journey With The Right Adviser? Our Three Tips Explained…

There are some things that an accountant is not allowed to advise on, which fall in the domain of financial advisers.

A financial adviser can assist you with making financial decisions and planning for your future. Advice from a financial adviser may include advising on budgeting, investing, super, retirement planning, estate planning, insurance and taxation.

Finding and choosing a financial adviser to suit you is made simpler by keeping these essential tips in mind.

Decide What You Want From Financial Advice

It’s crucial to know precisely what you’re looking to get out of a financial advisor if you want financial advice. Depending on your stage of life, how much money you have available and what you’re trying to achieve, your needs must be accommodated appropriately to ensure that you’re receiving the right kind of advice. Think carefully about what you are aiming to get out financial advice.

Choose The Right Financial Advice For You

A financial adviser can give two types of advice. Financial advisers can provide general financial advice that doesn’t consider personal situations or goals or how you may be affected personally. Essentially, it’s not advice that may take into account your best interests.

However, personal advice must be based on a careful review of your financial situation and goals and align with your best interests. It can include:

  • Simple, single-issue advice – Assistance with one financial issue (e.g. how much should you contribute to your super)
  • Comprehensive financial advice – Assistance in developing a financial plan to reach your financial goals
  • Ongoing advice – Regular monitoring and review of your financial plan and affairs

Find A Financial Adviser

Once you have a clear financial goal in mind, it’s time to look into finding someone who can help you achieve it. You can find a licensed financial adviser through:

  • A financial advice professional association
  • Your super fund
  • Your lender or financial institution
  • Recommendations from people you know
  • Speaking with us.

A good adviser will get to know you, keep you informed, and help you achieve your goals. They’ll also discuss how much risk you’re comfortable with. Going on this journey with your financial adviser can assist you in setting up your financial future comfortably. Begin a conversation with us to see if we can assist you in finding one to suit your needs, and send you on this journey.

Invoicing Strategies For Getting Paid Faster…

The easiest way to ensure that your business receives the payments from invoices without delay is to remain transparent with your customers throughout the process. Getting an invoice paid on time starts with making it easier for your customer to pay.

Create Detailed Invoices

Create an invoice for your customers that includes the essential details and information about the job or service you have provided, and any additional information such as expenses that they might want to be included. Anticipating for these potential details may shorten the time it takes for your customers to pay.

Send Prompt Invoices

While it’s fresh in your customer’s mind, send out the invoice as soon as the work is completed to ensure they know what they owe. You can use alternative invoicing methods for your customers, such as electronic invoicing software or in-person with a mobile EFTPOS machine for quick and easy payments.

Invoice In Stages

Consider a phased approach to invoicing, particularly if your work is being conducted over extended periods. Splitting it over multiple payments allows the money to continue to flow in and could offset some of the risks to your business.

Allow Electronic Payments

Taking “pay now” credit card transactions can assist in speeding up payments from your customers. Consider adding a payment-add-on option (such as Stripe or PayPal) if sending your invoices electronically.

Make Payment Terms Shorter

Invoices with shorter payment terms get paid more quickly, with more businesses asking for payment within two weeks instead of the previous norm of thirty days. Discuss payment terms with your customers long before you get started to avoid confusion later on.

Put Systems In Place

Chasing down payments takes up valuable time and can be stressful. Consider employing a bookkeeper or accountant to assist you with following up on those overdue invoices or set up automatic reminders in your accounting software to be sent to customers as an invoice nears its due date.

How To Protect Against Fraudulent Credit Card Transactions

Streaming subscriptions, grocery shopping, click and collect. There’s so many ways now that your card or bank details can be used online to pay for goods and services. Those details may be stored by retailers, and the data that those retailers possess may be in danger of being breached.

That’s an ongoing risk of being an online shopper – the fear that somehow your card details will be leaked, or that a fraudulent transaction will appear on your bank statement. It might seem scary, but most banks and credit card companies have measures in place to ensure that you’ll be protected from breaches like that.

So what if you find yourself facing transactions that you certainly did not make on your bank statement? Here are some important steps that you should take immediately.

Call Your Card Provider Immediately

Most of the time, banks and card providers will notify you if they happen to notice something amiss with your account transactions. However, if the spending is in line with your usual habits, it might slip through the cracks by them. Notify your provider immediately when you discover the fraudulent activity, as this will prompt them to investigate the breach and issue you a new card.

Change Your Passwords

Be sure to review all of your financial accounts and change the passwords and pins for your bank accounts and cards. This should assist in keeping your accounts secure and away from the breach.

Monitor Your Card Statements & Credit Reports

Keep an eye on your transactions and statements for a few months after the fraud or breach occurs – it can take time for the charges to appear. You may then be able to approach the breach and resolve it without it impacting your credit score or your bank account.

Check Your Online Shopping Accounts

If the breach has occurred as a result of fraudulent activity with a card, it can be best to remove the card (and any stored cards) from your online shopping accounts in case they are no longer secure.

While anybody can be a victim of fraudulent transactions, nobody has to have their life or even their day ruined as a result of it. You can also help to keep your accounts safe and secure with strong passwords and regular monitoring.

Maximising The Benefits Of A Refinanced Home Loan

As interest rates drop to historic lows, a growing number of homeowners today are considering refinancing their home loans.

Refinancing is replacing your current loan with a newer one, or with a different lender, based on factors such as lower interest rates. These factors can bring down your monthly repayments and may even offer cashback bonuses, based on the lender.

Before making the switch, try and maximise the benefits you get from refinancing your home loan through these methods.

Negotiate

Before making a decision, consider talking to your current lender about your refinancing plans to see if they discount your interest rates to keep you as a client. Negotiations may be in your favour if you have at least 20% equity. Equity is simply the difference between the value of your property and the amount you owe on the home loan. The quicker you can boost your equity, the stronger your bargaining power will be financially.

Ensure that your loans are of a similar length to your current ones. Some lenders may offer discounts on interest rates for long-term loans, which could mean that you pay more as interest for a longer period of time.

Compare Fees

It can be useful to use online tools to compare home loans or engage a qualified mortgage broker to help you gauge the home loan options available in the market. A broker may be able to offer recommendations that are tailored to your income, expenses and other financial habits.

It is essential to understand your financial capabilities before you decide to switch. If you were on a fixed-rate loan, you may be charged a break fee, which can be very high if the interest rates have dropped since you’ve taken the loan. Termination fees, switching fees and application fees are additional costs that can make refinancing an expensive affair.

Lender’s Mortgage Insurance

You may have paid a higher Lenders Mortgage Insurance (LMI) if you had less than 20% equity in your home. This can drive up switching costs and outweigh any benefits you may get from lower interest rates. Consider asking for a refund of some of this amount from your current lender, if you decide to switch, to offset the loss of hefty LMI costs.

Reduce Your Risk

Finally, it is important to present a persuasive application to the lender of choice. Lenders want clients that are low-risk, who can afford to meet their loan repayments. Ensure that your credit record is a strong predictor of your commitment to paying off the loan. Think about cancelling or at least lowering your credit card limits. Having a high credit limit can shave chunks off your borrowing capacity, as you pose the risk of exceeding a high credit limit that may threaten your home loan repayments.

How To Save Better With Habit-Building Tips

How you spend your money determines how well you can save your money. Spending more than you have or buying unnecessarily can severely impact how efficiently you can save. Sometimes you aren’t even aware of the small habits that limit your savings capabilities. Here are a few bad money habits that are getting in your way.

Not Having A Budget:

Spending substantial money each month on purchases and experiences adds up. Not preparing and sticking to a budget is a common mistake, as many people believe a budget isn’t necessary for their lifestyle and income. Regardless of how much you earn, individuals need budgets to know where their money goes and what needs to be set aside to achieve their goals.

Eating Out:

Dining in restaurants or grabbing takeaway most nights in the week is a good way to deplete your finances. Save money by eating out for one or two nights and cooking the rest of your meals in bulk at home. Food preparation will help on those nights when you don’t want to cook and stop you from ordering food.

Impulse Buying:

Purchasing items without a second thought is an easy way to lose money. An excellent way to avoid this can be to ask yourself if you are buying something because you ‘want’ it rather than if you ‘need’ it. Learn to recognise when you do the action and force yourself to wait. You can then consider if you have the extra money to spend on that item, giving you time to think about your decision properly.

Credit Cards:

A credit card is an easy way to spend money you may not have. Living beyond your means is a fast way to fall into debt and is one of the worst things you can do for your finances. Remember, if you don’t pay the card in full each month, every dollar you put on a card will cost you many times more in interest charges. Avoid this problem by thinking of your credit card as an emergency-only option.

Prevent Becoming A Cryptocurrency Scam Victim

Scams are everywhere, so it’s likely most people have either encountered a scam themselves or know someone who has.

A common scam that has been doing the rounds, for instance, is the ‘Hi Mum’ text, via which the scammer contacts the mark and requests money to get home or fix a phone, etc. In 2022, investment scams were a leading cause of financial loss in Australia.

Identifying A Scam

An investment scam can be identified by promises of big payouts, guaranteed returns or quick and easy money.

If you have been approached with something that sounds too good to be true, such as an investment opportunity that promises high returns for little to no risk, it’s likely to be a scam.

Cryptocurrency scams are the most popular type of investment scams, and the most common contact modes are phone, SMS and email. It is very difficult to identify legitimate cryptocurrency investments from scams. Scammers take advantage of the hype and the less regulated environment to ‘invest’ in Bitcoin or another cryptocurrency on your behalf.

Before you invest, you should ask yourself if you are willing to lose some or all of the money you have invested and know that if you go ahead, you are investing with little or no protections behind you. You should also examine the current market, and determine if the risk is worth the potential returns.

How Do I Prevent Being Scammed? 

The number one way to prevent scams is by raising awareness and discussing them with your family, friends, colleagues and clients. This is because many people who experience a scam never report it to anyone – they feel ashamed they fell for a scam.

Talking about scams removes this stigma and spreads awareness. It can also help people get out of them sooner rather than later if they are already in one. Some other simple steps you can take to protect yourself and your business are:

  • Never give any personal information to someone who has contacted you.
  • Don’t click on hyperlinks in text/social media messages or emails, even if it appears to come from a trusted source.
  • Go directly to a website through your browser. For example, to reach the MyGov website, type ‘my.gov.au’ into your browser
  • Never respond to unsolicited messages and calls that ask for personal or financial details, even if they claim to be from a reputable organisation or government authority — just press delete or hang up
  • Never provide a stranger remote access to your computer, even if they claim to be from a company you use.
  • To verify the legitimacy of contact, find them through an independent source such as an online search or past bill.
  • Hang up and verify the identity of the person contacting you by calling the relevant organisation directly — find them through an independent source such as a phone book, past bill or online search.
  • Search for reviews before purchasing from unfamiliar online traders.
  • Be wary of sellers requesting unusual payment methods such as upfront payment via money order, wire transfer, international funds transfer, preloaded card or electronic currency, like Bitcoin.
  • Verify any request to change bank details by contacting the supplier directly using trusted contact details you have previously used.
  • Consider a multi-factor approval process for transactions over a certain dollar amount.
  • Keep the security on your network and devices up-to-date, and have a good firewall to protect your data.

Don’t Sour Your Relationship: Appropriate Billing Practices To Use On Clients

Good client relationships are crucial to the success of a business. However, the billing practices that are in place can sour a good client relationship if they are outdated. This is applicable to most kinds of business, including but not limited to professional services, trade professionals or the hospitality industry (for example).

Billing systems should be innovative and focus primarily on the needs of the client. For clients, it is not so much about the process as it is the result that they are paying.

Clients expect a total fee estimate of the service being provided. Once the fee is accepted, the client expects to pay this amount. Presenting an invoice that totals much more than what has been quoted without prior warning can trigger the client’s move to someone else who can offer the same service to them. Providing the type of fee and cost information in a quote before you start an engagement can help avoid “client invoice shock”.

Another common complaint is when the client does not understand the bill. Some bills either lack sufficient clarity or contain too much confusing detail. The client must be able to evaluate the work done for the fee charged and the bill must stack up with your original fee quote. If a bill does not match what was stated in the initial proposal, quote or engagement letter, then you have a serious credibility problem on your hands.

Essentially, there should be no surprises when it comes to billing your clients. Clients expect good service and reasonable fees based on sound professional practices. If you have delivered what you promised and your total billings are in line with what your original quote, the client will nearly always pay your bill without question.

New Year Resolutions For Cash Flow Management

Poor cash flow management is one of the main reasons 50% of small businesses fail during their first five years. For small businesses that have faced challenges over the last few years, that might seem like a scary statistic.

But cash flow management doesn’t have to be complicated.

Setting clear targets, promptly invoicing clients and putting the latest technology to good use in the business can be simple but effective means of managing cash flow for small businesses.

Here are three simple methods you can employ in your small business to manage cash flow for your business.

Send Out Invoices Quickly

By promptly sending out invoices to your clients and customers, you are avoiding delaying the payment. There might be roadblocks and delays in receiving payment that can’t be controlled on the client’s end, but avoid adding to them by waiting to send out your invoice. Make time in your week to create and send out invoices to bring in the cash as soon as possible. You may even want to set aside a day in the week or fortnight to action invoice deliveries.

Offer Different Payment Options

Avoid making payment an awkward and time-consuming process for you and your client by giving them plenty of options for paying. Cheques, Eftpos, paying online, or even cash can be valid methods of payment – and some are a lot quicker than others. Work out what works for your business and your customers.

Keep Detailed Records Of The Business’s Cash Flow Situation

Unless you keep maintained and accurate records, it’s unlikely that the cash flow situation of the business will be clear to see. Keep detailed financial records to refer back to, such as how many invoices are currently being processed and what bills need to be paid.