Licensee Select is a division of Westpac and provides various financial planning support services to independent financial planning firms across Australia.

Eastwoods Wealth Management has previously won five SA/NT state based awards and has won the “Licensee Select National Practice of the Year” award 2012.

By winning the State award Eastwoods is now eligible for the national title which is announced in April.

The award represents an outstanding team effort dedicated to the provision of quality financial planning advice across Australia. I’m very proud of my team and the service we provide our clients.

John – General Manager Professional Services

The key is getting started. The first step should be creating a budget so you know exactly where your money goes.

Create a budget

Gather your bills and make a list of all debts, including the name of the creditor, your total balance, minimum monthly payment and interest rates. You should also list other necessary expenses, such as groceries, fuel and other transport costs, insurances, rent and school fees.

Add up all the minimum debt repayments and in a separate column document essential expenditure – the total of both columns will be the minimum you need to cover for the month.

This exercise may reveal your income is not enough to meet all your expenses. If that’s the case, you may need to reduce some costs, such as pay TV or your mobile phone.

Prioritise

The next step is to focus on repaying the debt with the highest interest rate first. Put as much towards these repayments as possible – the sooner the debt is cleared, the less interest you will pay over the life of the loan.

It’s important to continue repaying other debts and if possible, repay slightly more than the minimum so the balances can be reduced.

Consider debt consolidation

Depending on the size of the debts and the interest rates charged, it may be worth taking out a Debt Consolidation Loan. Instead of paying multiple creditors a variety of interest rates, you take out one loan to pay off all those accounts and make one single, monthly repayment.

However, be sure that the costs of the new, bundled loan are less than the total of current interest costs, otherwise there will be little to gain.

Assess your credit card debt

For those with a growing credit card debt, it may be beneficial to transfer the balance to a card with a zero per cent interest rate for a fixed period. For this strategy to work, it is vital that the balance is paid off before the no interest period ends.

There is one other important ingredient in a successful debt reduction strategy – discipline. By staying focused on the end goal, you’ll be well on the road to better money management.

Ross – General Manager – Operations

Here are a few tips to help you spot some of the credit card myths:

• Low rate credit cards have a low rate – it’s all relative and still best to shop around. The so-called low rate card from one organisation might still have a higher rate than those from other institutions. Also don’t forget the annual fee in this equation and make sure the low rate is not just an introductory offer.

• Low interest balance transfers are a good deal – they can be but you might find that you’ve switched to an expensive card once the honeymoon is over. Make sure you check how long the low (or no) interest balance period is and which interest rate applies after that period.

• Reward schemes are worth a slightly higher interest rate – reward schemes are great if you pay your card off each month to avoid interest but, if you don’t, the rewards are often negligible relative to the extra interest you have to pay. Also, be careful of the monthly card fee!

• Interest free days apply to all purchases – not true! Generally interest free periods only extend to the next repayment date. This could be up to 55 days for purchases made just after a statement cut-off date but can be as little as 10 days for purchases made just before a cut-off date. Make sure you are aware of the cut-off dates for your cards so you can manage your card activity.

• The higher interest rate on a credit card is not significant because the debt amount is usually small – be careful, it all adds up! Even if you’re carrying forward and paying interest on as little as $1,000 each month you’d be better off drawing down on your home loan, or taking out a personal loan to pay this off, as interest rates on those loans are much lower. Avoid paying interest on your credit card and focus on paying back the higher loan as quickly as possible.

• It’s just too tempting to spend on the credit card – the repayment pain comes later! This is not a myth and is exactly how credit card providers make money. The key is spending discipline. Credit cards are a convenient way to buy but the golden rule is to not spend what you can’t afford to pay in full when the credit card bill arrives.

^Wayne - Chief Financial Officer

Credit cards, ATMs and EFTPOS have made our lives easier in one respect, but spare a thought for the challenge our cashless culture poses to parents. Teaching children the value of money today requires care, persistence and setting a good example.

It all starts from when a child first begins to count. Teach them about the different currency denominations and explain how everything has a price, from the gingerbread man in the bakery to the latest toy.

Teach them how to count their money to see if they have enough to make the purchase. It’s also important to talk to them about ‘needs’ and ‘wants’. Use shopping trips as an opportunity to teach them that everything in a shop costs money and so we must decide what is really needed and what isn’t.

To show that money is a reward for effort, pay pocket money in exchange for children helping around the house.

On ‘pay day’, provide pocket money in denominations that encourage children to save a portion. For example, if a child has earned $5, give them five $1 coins so they can save $1.

Start the saving habit early by opening a savings account for your child and encourage them to make deposits and watch the balance grow and earn interest.

If children are keen on a big ticket item, such as an iPod touch or Nintendo DS, encourage them to save up for it. Show them that by saving a fixed amount of pocket money each week for a certain period, they will have enough to fund their purchase. Once they reach the goal, make a special outing of going to the shop to buy the item.

It’s also important to give them some autonomy to make their own spending decisions so they learn through experience.

If they want to spend all their pocket money at once, explain that this means they won’t have any money until the next pay day to buy anything else they might like.

By educating our children and encouraging them to learn through action, they can grow up with the necessary skills to manage their money.

^CS

Now there is an easier way to fundraise for your local not-for-profit club, group or charity- the Community Reward Account.

This account takes the average annual balance of all Community Reward Accounts nominating your club, group or charity as the beneficiary, and donates up to 1.5% of this balance directly to your registered organisation!

How to benefit:

1. Find out about becoming a recipient for the Community Reward Account*.
2. Register your club, group or charity as a recipient.
3. Encourage all of your members and supporters to open an account to support your club, group or charity.
4. At the end of each financial year the amount raised is deposited straight to your registered organisation.

What your supporters need to do:

1. Open a Community Reward Account.
2. Select your club, group or charity to receive the benefits.
3. Start saving!
4. Be happy knowing they are supporting their favourite club, group or charity.

We know it works:

Over the past few years many clubs, groups and charities have been recipients of this account with great success.  In 2011 approx. $150,000 was donated to registered organisations.

This could easily be your not-for-profit club, group or charity!

Luke – Product & Segment Analyst

It’s that moment in the New Year that so many Australians dread – the credit card statement that clearly spells out how much you’ve spent at Christmas.

Many consumers get caught up in the Christmas spirit and arrive in the New Year with credit card balances they simply can’t pay off.

If you’ve woken up to the holiday debt hangover, you should focus on avoiding high interest charges, which are often much higher on credit cards, by clearing the debt as quickly as possible. If you can, clear the balance completely when due, but if you don’t have savings or the cash flow to do this, then investigate alternatives such as refinancing the debt at a lower interest rate.

Some might have the capacity to redraw on their home loan, where the interest rate is much lower than a credit card, or consider taking out a personal loan. For this strategy to succeed it is vital for consumers to increase loan repayments so the credit card portion of the owed amount is cleared as quickly as possible. Make a mini budget that allows you to repay the holiday debt over a few months, otherwise you wind up stretching a $2000 debt over a 20-year home loan, which will cost more in interest and extend the life of the debt.

While you’re clearing the balance, be careful about how you use your credit card and only spend what you can afford to repay at the end of the month.

If you’re facing back-to-school expenses, then take advantage of any interest-free period on your credit card, provided you can pay the outstanding amount at the end of that period. If you don’t think you can do this, consider cheaper sources of credit, such as the home loan, but like the Christmas debt, you need to increase your repayments.

While clearing the 2011 debt, consumers should also focus on preparing for the 2012 festive season. If you have landed in January with a nasty credit card debt, the important thing is to avoid the same thing happening next year.

So if you know that you usually spend, say, $1500 at Christmas, then set up a Christmas savings account where you make a $30 weekly deposit and are discouraged from withdrawing funds early.

By preparing a plan and sticking to it and spreading the cost over the year you can avoid the pain of a large lump sum cost at Christmas.

Wayne – Chief Financial Officer

Things you should know>

You may have made a certain New Year resolution such as getting out of debt or buying a house, or you simply may want to ensure you are receiving the maximum benefits out of your current situation.  Either way, regular reviews of your bank accounts can provide you with valuable extra savings.

If the New Year has also coincided with a change to your personal and lifestyle circumstances, reviewing your bank accounts is even more important. You may have started a new job, bought or are buying a house, started or plan on starting a family or be retiring from work.  

These, and similar changes, may alter your day to day banking behaviour and needs.  For example, they  may alter the way you transact on your account, the amount and frequency of deposits and direct credits which you receive, or if withdrawals and direct debits coming from your account.  This could change the amount of fees you are charged and the interest you may earn.

Reviewing your accounts will ensure that you:

• have the right account for your banking needs;
• are not paying any unnecessary bank fees; and
• have the best savings options to maximise the interest which you can earn.

To get started, review your bank statements for the past few months.  This can be easily done by reviewing your transaction history or e-statements within Internet Banking.  Check to see what fees you have been charged at the end of each month.  If you have been charged excess fees and/or don’t understand the fees you have been charged, contact us so we can explain how you can minimise your fees each month and check to ensure the account(s) you have best suits your current needs.

Interested in maximising the interest you earn?  Many people hold large, excess balances in everyday access accounts.  The nature of these accounts means they pay very little, if any, interest.  There are many at call deposit products offering a higher rate of interest and better return for your money.

Speak to us today to see if you can get more out of your everyday banking and maximise the interest you can earn.

Luke -  Product & Segment Analyst

Things you should know>

Over the holiday season many of our members will be thinking about their finances and making New Year’s resolutions to improve them.

We have highlighted the top 10 investment tips to help meet your longer term goals.

Top 10 investment tips

1. Clarify your investment goals – having a clear understanding of your goals will help you select the most appropriate investments to achieve them.
2. Pay yourself first – Set aside some of your pay packet for your longer term goals.  List all your expenses then work out how much you can afford to save each month.  With the surplus put this money aside first so that you don’t spend it on other miscellaneous items.  That way you will be able to meet your longer term goals.
3. Set up an automatic payment – to help you organise your contributions to your investment(s) so you save automatically!
4. Invest your savings to grow – make the most of your savings by investing them.  The type of assets you invest in will depend on your financial needs and objectives.
5. Harness the power of compound interest – each dollar you invest earns a return.  If you reinvest that return, it can earn more dollars, allowing your investment the potential to grow much faster.
6. Diversify your wealth – spread your risk across each of the main investment types (for example shares, property, fixed interest and cash) with an aim to achieve more consistent returns.  In other words, ‘don’t put all your eggs into one basket’.
7. Choose tax advantaged investments (not tax driven investments) – consider sound investments that can also offer you tax benefits.
8. Time in, not timing the market – it’s not timing the market that’s key, but rather the amount of time you’re in the market.
9. Get some advice – speak to an expert who can help assess your needs and goals.
10. Do something now – the sooner you get your investment started the sooner you’ll achieve your goals.

Happy Investing!

Michael – Practice Development Manager

Investment Performance:  Past performance is not a reliable guide to future returns as returns may differ from and be more or less volatile than past returns. The ten tips were sourced from Colonial First State www.colonialfirststate.com.au  Eastwoods Wealth Management Pty Ltd,  ABN  17 008 167 002, AFSL  237853. Things you should know>

The pre-Christmas spending season traditionally sees Australians give their credit cards a solid workout. Last year we collectively spent $3 trillion more on our cards in November and December than in any of the previous ten months.*

Rather than undo all the healthy budgeting efforts made during the year, some simple strategies can help you keep credit under control over the festive season.

Maintain a sense of perspective

Rather than get swept up in a frenzy of festive season spending, aim to maintain your regular financial regime.

Follow Santa’s lead

To avoid overspending, take a tip from the big man in red himself. Make a list. Then check it twice. Allocate a spending limit for each person you plan to buy a gift for.

Shop smart

Hit the stores early to snare the best deals on gifts. Doing your gift shopping online is an easy way to make cost comparisons.

Cash is king

If you’re buying big ticket items this Christmas aim to pay with cash. And don’t be afraid to ask for a discount.

With your finances in good shape and card debt under control, you’re well placed to celebrate the festive season knowing you can take advantage of investment opportunities in 2012.

Happy Holidays everyone! ^Michael, Practice Development Manager

*This publication has been complied for Licensee Select by Securitor Financial Group ABN 48 009 189 495 AFSL 240687.  Things you should know.

With the direction of future interest rates uncertain and the continually soaring energy and grocery prices, the Christmas period is the time when families are most likely to under estimate the financial burden.

Often people forget about the myriad of other expenses beyond presents, such as food and drinks and of course any travel expenses such as petrol and accommodation.

The good news is that it’s never too late for those who haven’t yet considered budgeting for the Christmas period and offers the following tips:

• Reflect on last year … consider how much you spent last year and what you could have done without. How much difference will it really make?
• Make a list … make a list of all the expenses you can foresee during that period, including presents, food, alcohol, flights, accommodation and decorations.  
• Draw a line … buying Christmas presents can be the most costly of all, so allocate an overall budget for presents and divide it among your list of friends and family and stick to it.
• Do it differently … as families grow so does the financial outlay for presents. Consider doing a draw whereby you only buy for one immediate family member.
• Plan ahead and do your research … write down who you’re buying presents for and what you’re wanting to buy before you step foot in a shop to avoid buying on impulse.  
• Avoid getting swept up … it’s easy to get swept up in the moment and buy things that were not originally budgeted for or spend a little over the budgeted amount – it all adds up.
• Think outside the square … why not take the opportunity to show your creative side. Often things you make yourself are more personal than something you’ve bought in a store.
• Keep track … hold on to receipts so you know exactly how much you are spending which could assist with budgeting in the future.
• Be a bargain hunter … don’t be afraid to take advantage of the pre Christmas sales, no matter how far out from Christmas they are.
• Avoid credit … avoid using high interest credit cards or store cards unless you know that you will be in a position to pay it off. If in fact you must use credit, choose a personal loan so the amount is fixed and will not blow out as it can with a credit card. It also gives the advantage of shopping with cash and achieving a better discount on a chosen item.
• Start now … start your savings today. Check to see if your credit union or bank offers a high interest Christmas savings account that automatically deducts money from your pay to give you a lump sum in time for Christmas.

To make saving for Christmas a little easier, we have developed an easy-to-use online budgeting calculator, together with a Christmas Club Account designed to help members save for their Christmas related expenses.

The Christmas Club Account features a limited access option, a higher rate of interest, no monthly account keeping fees and the option of having part of your wage deposited directly into your account.

“No one really notices a small amount deducted from their wage each week, and it’s comforting to know that when December comes around you have a lump sum ready to spend without having to rely heavily on credit cards,” Mr Matters said.

“The last thing we want people to do is start 2012 with financial difficulties so we’re advising people to start their planning now.”

One way of minimising risk is to diversify your investments. Put simply, to diversify means not putting all your eggs in one basket! By spreading your investments across a diverse range of assets, your overall risk may be less compared to investing in a single and possibly volatile investment. Diversified investments can help you to manage risk without forgoing returns.

There are various ways in which this can be achieved.

One way of diversifying could be to spread your investments amongst various asset classes such as shares, property, fixed interest and cash. The low correlation to each other – meaning the performance of one class is not affected by the performance of the other – helps reduce volatility in your portfolio because these different assets respond to different market trends at different rates. Therefore, having a portfolio diversified among different assets creates more consistency and can improve overall portfolio performance.

Another way to diversify is within the asset class, for example, if you are looking to buy some shares you could consider buying them in different companies. To eliminate even more risk, it is also important to consider the industries these companies operate in to determine if they are too closely correlated with each other. In other words if you buy shares in three different oil companies, the risk is almost the same as investing in just one of those companies, as the industry factors that affect one oil company are most likely to equally impact all companies within the oil industry. For example, if the price of oil drops, it is probable this will have a negative impact for most oil companies.

It is not advisable to put all your eggs in one basket when it comes to your investments and the financial markets. Diversifying your investments helps you spread your risk, so that a loss on one investment may be balanced out by a gain in another.

Understanding your tolerance to investment risk is a good first step in taking action to diversify your investments. It is recommended before making any investment decisions that you speak with a financial planner who can help determine your risk profile and see what’s right for you.

1. Review your mortgage – check the interest rate and regular fees on your mortgage and compare it with other providers to determine if now is a good time to refinance to save costs. Keep in mind that refinancing and switching financial institutions can incur fees, so make sure you include this in your calculations.
2. Check your credit card’s interest rate and interest-free period. If you only get 30 days interest-free, look at changing to a card with 55 or 60 days. And if you can’t pay it all off, take advantage of a balance transfer to a lower interest rate credit card.
3. Pay off your debt – know what interest rates you are paying on your loans and work to reduce the balances of those charging the highest rate of interest first.
4. Get insurance quotes from various insurers to see how much you can save on your home and car insurance. Many providers will offer a discount if you take more than one policy with them.
5. Investigate whether bundled services for your home phone, mobile phone and internet might save you money.
6. Switch to compact-fluorescent bulbs, and turn them off when not needed. Turn off TVs, computers and other electrical appliances when not in use.
7. Use shades, blinds and drapes to regulate your home temperature: Keep them open in the winter to let in light and drawn in the summer to block the sun’s rays.  Also, turn up your cooling, or your heating down, a degree or two.
8. Wash only full loads of dishes or clothes.
9. Bring lunches and snacks to work.
10. Organise a car pool to travel to and from work, and try to avoid expensive car parking.

In the event something was to happen to your son or daughter which left their family without any means of support, it would most likely be you who the family turns to for support.

Circumstances such as this could place serious financial pressure on your retirement funds and in turn your overall retirement plans, as it did for David and Susan.

David was 15 when he started an apprenticeship at his local steel works. Forty years later, he was still working at the same factory.

His wife Susan had kept the family ticking along, having raised four children to become independent adults with their own families.

After a company restructure was announced, David took the opportunity to ask for a redundancy and succeeded in getting a healthy redundancy package. This, together with his superannuation and accumulated benefits, meant David and Susan were sitting pretty for an early retirement.

Both David and Susan viewed this as a great opportunity to enjoy time with their grandchildren and to travel around Australia.

On Boxing Day of that year, David’s eldest son Rodney had a massive brain haemorrhage and passed away.

And because he was young and didn’t see the need for any life insurance, Rodney left his wife Erin and their three children without any means of support.

As any parent or grandparent would, David and Susan took in Erin and the kids into the family home.

The unplanned financial impact on David, Susan and their retirement plans was devastating and they were unable to do most of the things that they had hoped 40 years of work would allow them to do.

Whether you are already retired or about to retire, talk to your son or daughter about their financial obligations, and make sure they have a plan in place to protect their family’s financial future.

Establish a plan – how much will you need?

Do some calculations and figure out how long it will take to save your ideal amount.

Break down your goal into monthly or weekly amounts, so you can track your progress. To ensure saving doesn’t seem like a never-ending ordeal, set yourself a time limit to save for a deposit.

Seek as much advice as possible from experts such as financial planners, accountants and your financial institution. Rather than simply saving, you may be able to negatively gear into investments such as managed funds, thereby using the tax advantages to help your savings grow.

First things first – clear those credit cards!

Credit cards can be an expensive means of borrowing, and you should eliminate credit card debt if you are serious about your savings plan.

Cut down those expenses

Set yourself a budget and keep records so you can track exactly where your money is going.

Small sacrifices along the way certainly help. For instance, using public transport, taking your lunch into work and controlling the use of your mobile phone.

Establish a good savings history

Start a separate savings account to the one you use on a daily basis, so you are not tempted to use it for everyday living and transactions. Think of it as a deposit account and choose one that rewards your savings with a high interest rate return, such as a term deposit. Make sure there are no account keeping fees that will eat into your savings.

Getting to know your financial institution

Establish a relationship with your financial institution so that they are aware of your disciplines, repayment capability and employment history.

Borrow within your means

Make sure you borrow within your means. Speak to your financial institution and work out what you can really afford to pay as a monthly repayment. You need to be able to still enjoy your life – purchasing a property is a great achievement, but it is not worth sacrificing your happiness. 

Understand the financial matters within home ownership

The first home owners grant of $7,000 provides a great start for first time borrowers. However, you also need to allow for associated costs such as borrowing fees, conveyancer costs and other adjustments. A good financier should willingly provide you with guidance and advice in planning for these and other ongoing costs of first home ownership.