Reduce your bills with these household items

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Reduce your bills with these household items

See what things you might have at home that could deliver you cost savings later on.

We all enjoy the odd bargain and inexpensive label that delivers quality at a fraction of the price; however, sometimes shelling out a bit more up front can mean greater cost savings down the track.

Check out these six things that could provide you with financial benefits over the long term.

1. Energy efficient products

Energy efficient appliances—fridges, washing machines, microwaves and air conditioners, can literally save you hundreds of dollars each year in running costs, with such appliances accounting for up to 33% of people’s home energy use, Australian Government figures show1.

The energy rating label is mandatory for a range of equipment so you can easily assess the energy consumption on the appliances you’re looking at.

Likewise, energy-efficient light bulbs often use about 25% to 80% less energy than traditional incandescent light bulbs and generally last three to 25 times longer2.

2. Water-efficient appliances

The Australian Government estimates by 2021 Australians could save more than $1 billion on their water and energy bills3 by using more water-efficient appliances and fixtures, specifically water-efficient showerheads, washing machines and toilets.

In addition, rain water tanks, which can be just as useful in urban areas as they are in rural zones, can generate cost savings. Tanks range from around $700 to $20004 and rebates may apply.

3. Solar power systems

Solar power systems, which generate free electricity, are becoming increasingly popular, with about 1.63 million roof top systems installed across the country as at 1 January 20175.

While there are upfront costs involved, solar power systems are becoming more affordable. Plus, they require little maintenance and generally last 20 years or more. Rebates here may also apply.

Marcus Dorreen, Director of Retail at energy services company Evergen (co-owned by CSIRO), says pre and post-retirees are showing increasing interest in solar batteries, with 50% of inquiries coming from people over age 55, with owners of solar battery systems reporting electricity-cost savings of up to 80%.

4. Programmable thermostats

On average, 40% of energy used in homes across Australia is for heating and cooling6.

By using thermostats and timers to make sure you’re only heating a room as much as you need (and as required) can save you considerable money, depending on your usage.

5. Vegetable and herb gardens

Data from The Australia Institute shows 52% of all Australian households are growing some of their own food, with a further 13% intending to do so7.

Of the top five reasons to grow food at home, saving money was the second most popular response at 62%. Statistics indicate however that it’s not until people are saving more than $250 a year (which only 16% of people are), that real cost savings are achieved.

6. Beverage supplies

If you’re in the habit of buying a $4 bottle of water, coffee or smoothie every day, then your take-away drink of choice is costing you over $1,400 over a 12-month period.

Investing in a reusable drinking bottle, blender or espresso machine could save you hundreds of dollars per year.

More information

There are big and small investments you can make around the home today that will pay for themselves and help save hundreds, or even thousands of dollars, over the months and years ahead.

An added benefit is that many of these investments can lessen our impact on the environment at the same time!

1 http://www.yourhome.gov.au/energy/appliances
2 http://energy.gov/energysaver/how-energy-efficient-light-bulbs-compare-traditional-incandescents
3 http://yourenergysavings.gov.au/water/water-home-garden/water-efficient-appliances-fixtures
4 https://www.choice.com.au/home-improvement/water/saving-water/buying-guides/rainwater-tanks
5 http://yourenergysavings.gov.au/energy/solar-wind-hydro-power/solar-power
6 http://yourenergysavings.gov.au/energy/heating-cooling/understand-heating-cooling
7 http://www.tai.org.au/content/grow-your-own

What to do when you come into money

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What to do when you come into money

Whether you’re faced with an inheritance, redundancy package or winning lottery ticket, it’s wise to consider your financial situation and future goals.

For most of us, a financial windfall isn’t something that comes around very often. And while the extra cash is welcome, money matters may be the last thing on your mind if you’re also dealing with the emotions of losing a loved one or being made redundant.

But it’s important to be prepared, so that if you do come into a large lump sum of money unexpectedly, you know what to do with it.

Sort out the tax

The first thing to do is work out if there are any tax implications.  A financial adviser can help you work through these and make the most of your money.

  • Inheritance—You may have to pay tax on your inheritance depending on where the money comes from. For example, you may need to pay tax on any super death benefit you receive, unless you’re a tax dependant of the deceased (eg a spouse, child aged under 18, a financial dependant or someone who the deceased had an interdependency with).
  • Redundancy payment—If your role is made redundant, the payments you receive on termination of your employment will generally be taxed concessionally (unless you’re aged over 65). Speak to your employer to confirm how your redundancy will be calculated.
  • Work bonus—You’ll need to decide in advance whether you want any bonus paid into your bank account and taxed at your usual marginal rate or salary sacrificed into your super and taxed at the concessional rate of 15%1. But make sure that you don’t go over your total yearly concessional cap for super of $25,000 —this includes your regular employer payments and any salary sacrifice payments you may be making. Certain conditions must also be met for you to be eligible to salary sacrifice your bonus – please speak to your financial adviser first.
  • Prize or gift—If you’re lucky enough to win lotto or another one-off prize see a financial adviser to discuss the best way to invest it. If you’re receiving a social security benefit, these amounts can impact your entitlements.

So now you’ve got your money, what to do with it?

While it’s tempting to rush down to the travel agent and book that Pacific cruise, you might like to consider other ways of spending your new-found wealth.

  • Pay off your home loan—If you’re like many Australians, you may have substantial debt in the form of a home loan. So you could use your windfall to pay it off.
  • Pay off your other debt—If you owe money on your credit card or have other loans with high interest rates, now could be a good time to pay them off. Check out how to pay off your debt effectively.
  • Boost your super— From 1 July 2017, you can make up to $100,000 a year (or $300,000 over three years if you’re under age 65) in after tax-contributions. After-tax contributions don’t attract the concessional tax rate but once in super, earnings are only taxed at 15% and withdrawals are tax-free once you’ve reached age 60 (and can access your super). You can also consider pre-tax super contributions.
  • Invest in property, managed funds, direct shares or term deposits – but check what’s right for your personal circumstances.

Want to know more?

Remember, what you do with your money can affect how any earnings or capital gain you make are taxed. So it’s important to plan properly to avoid any unwelcome surprises down the track. And don’t forget to make sure your will and other estate planning matters are up to date, so that your money goes to the people you want it to if anything happens to you.

Speak to us to help you make tax-effective decisions about how to use the money to your advantage.

1 Or 30% if you earn more than $250,000 per annum.

Important information

© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Your options in aged care explained

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Your options in aged care explained

With multiple avenues to explore, thinking about aged care earlier rather than later could provide you or your loved one with greater flexibility.

It’s possible that in the future you, or someone close to you, may need some form of care or daily living assistance.

With lots of information to sift through and the conversation sometimes a tricky one to approach, we’ve pulled together some information to make navigating aged care an easier process.

The current state of affairs

The Australian government has projected that in 40 years the number of people aged over 100 will be 300 times what it was in the mid-1970’s1, with an ageing population shining a light on aged care services.

Meanwhile, industry figures show2:

  • More than 50% of people over age 45 have previously, or are currently, dealing with aged care services for themselves, or on someone else’s behalf
  • The likelihood a woman over age 65 will require residential care in her lifetime is 54%. For men, that figure is slightly lower at 37%
  • The total cost of aged care in Australia is projected to reach around $290 billion by 2055.

Aged care services available

There are several types of aged care services available. Each has an eligibility criteria and an assessment process which can be organised through the government’s My Aged Care initiative.

Options include:

  • Help in your own home – if you are generally able to manage, but require assistance with daily tasks, there are various home-care packages available. You can search for providers online or phone My Aged Care on 1800 200 422 to discuss options.
  • After-hospital (transition) care – if you’ve been in hospital, but need assistance while you recover and additional time to think about the best place to live long-term, this type of service can be provided in your own home or ‘live-in’ setting for 12 to 18 weeks.
  • Respite care – this service provides support for you and your primary carer when your carer has other duties to attend to, or when they’re on holiday.
  • Residential aged care – this is where you live in full service residences and receive ongoing care and support. If it’s the best option for you, it’s a good idea to research and visit several residences to find the right place in terms of location, services and activities. The Aged Care Home Finder can help with this process.
  • Short-term restorative care – this provides a range of services over eight weeks to help prevent or slow down difficulties with completing everyday tasks. It aims to improve wellbeing and independence, and delay or reverse the need to enter long-term care.

The costs

The costs for after-hospital, respite and short-term restorative care depend on the level of care and how long it’s required.

The fees for an at-home-care package or residential aged care can also vary and will depend on income and assets, as assessed by the Department of Human Services or the Department of Veterans’ Affairs.

With a residential aged care facility there may be one-off payments (or deposits), as well as ongoing fees for care, accommodation and daily living expenses.

If you’re a self-funded retiree, it’s a good idea to seek an income assessment before commencing an at-home-care package or entering residential aged care to avoid paying maximum fees and charges.

The government’s Home Care fee estimator and Residential Care fee estimator can help.

Having the discussion

Deciding to have a discussion is the first step. So, if you’re in a situation where you need to approach the topic of aged care, whether it’s for yourself or a loved one, it’s better to do it sooner rather than later.

Remember, it may not be easy and it’s fairly normal for people to resist this type of conversation. For this reason, it’s a good idea to approach the topic as a series of conversations so that you (or your loved one) are in a better position to articulate what you want to happen.

Things worth considering when approaching the topic include:

  • Being deliberate about the time and place for these conversations
  • Thinking about whether other family members should be included
  • Whether relevant paperwork is accessible and in order
  • Whether third parties, like the family doctor, could help by offering their perspective.

More information

As there are complexities and tax implications to work through when it comes to aged care, including for example whether to sell the family home, it’s a good idea to get financial advice.

Other useful resources include:

1 http://www.treasury.gov.au/PublicationsAndMedia/Publications/2015/2015-Intergenerational-Report 2 https://www.superannuation.asn.au/media/media-releases/2015/media-release-26-november-2015

Important information

© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

One in three young people rely on their parents

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One in three young people rely on their parents

Nearly one in three young people that don’t own a home are relying on assistance from parents to help them make the leap, Galaxy Research has revealed.

The research, conducted for non-bank lender State Custodians Home Loans and released on Wednesday (6 September), found that 29 per cent of Australians aged 18–34 who don’t own a home would need a loan or grant from parents to get a foot on the property ladder.

Further, 26 per cent of respondents were looking to some form of parental inheritance for assistance.

“While everyone would agree [that] it’s a good idea for adult children to be as financially independent as possible, the reality is more and more young people are simply not able to get ahead in property without some kind of financial assistance from their parents,” said State Custodians general manager Joanna Pretty.

“Being able to salary sacrifice for a deposit from pre-tax pay and use voluntary superannuation contributions up to $30,000 towards a deposit on a home [as part of the new housing affordability package] will provide some benefit for some buyers. However, across-the-board first home buyer (FHB) grants would be far more helpful as far as a lump sum goes.”

Thirty-seven per cent of young people that do not own property have said that they would need to move back in with parents to save enough for a deposit, while 20 per cent said they would need to postpone plans to have children in order to save a deposit.

However, it’s not just young Australians who look to their parents for financial help, the survey reported. Nearly a quarter (23 per cent) of respondents aged 35–49 would consider moving back in with their parents to save for a deposit, and more than 1 in 5 would “have no hesitation” asking their parents for financial help.

State Custodians said that it’s a “tough challenge” for FHBs to save using wages as Australian wage growth is stagnating. Accumulating savings from their current job was the main way 39 per cent of all respondents aimed to gather a deposit. Twenty-eight per cent of respondents were eyeing a better-paying job to help them save up a deposit.

“It is definitely tough to buy in metro areas these days, especially if you’re struggling to make ends meet on your current wage,” Ms Pretty said.

“The deposit requirements are significant, even if you’re an expert saver. Unfortunately, buying your ‘forever home’ right off the bat is not always a feasible or quick option like it has been in the past.”

Factoring in an average Australian salary of $78,832 and an average FHB loan of $335,000, State Custodians said that FHBs would need to put aside $1,116 of a $4,434 monthly pay packet every month for five years to save a 20 per cent deposit.

State Custodians noted that FHBs often also need to pay rent and living expenses while living in cities where larger loans are a necessity.

The parents’ bill? $65.3 billion

The Galaxy Research report echoes research released by Mozo on 5 September which found that Australian parents have spent $65.3 billion in helping young buyers enter the market.

According to the Mozo research, the “Bank of Mum and Dad” is the fifth-largest lender in the country and has lent more than ING ($42 billion), Suncorp Bank ($40 billion) and Bendigo Bank ($34 billion).

Mozo director Kirsty Lamont said: “It’s getting harder and harder for new buyers to enter the market.

“This has led to the rise of mum and dad as a lender — parents who are helping their kids to purchase a property by contributing to the deposit, helping to meet home loan repayments, or in some cases, even buying the property on their children’s behalf.”

Mozo pointed to a growing divide between the average house price and the average income as an exacerbating factor. The average house price in 1986 of $76,278 was 4.4 times the average income of $17,321. Conversely, in 2016 the average house price had reached $547,714, 6.9 times the average income of $78,832.

Twenty-nine per cent of parents help children buy a home. While the lending averages more than $64,000 per family, 67 per cent of parents don’t expect to be repaid.

Parents in NSW lend the most, around $88,250 per family, and Victorian parents lend around $63,000

Original article: https://www.mortgagebusiness.com.au/breaking-news/11463-1-in-3-fhbs-need-leg-up-from-parents?utm_source=MortgageBusiness&utm_campaign=MBDaily%20bulletin08_09_17&utm_medium=email&utm_content=3