What a rate rise means for you

With inflation smashing market expectations, economists are tipping a rate rise this year.

The latest Australia Bureau of Statistics data found that the consumer price index for the December quarter was up 3.5% over 12 months. This was above the Reserve Bank of Australia’s (RBA) 2 to 3% inflation target, which they forecasted for 2023 or 2024.

The RBA has stated that a rate rise would be unlikely before 2023, but economists are forecasting a move around the middle of the year.

Should the RBA increase the cash rate, lenders will typically respond by increasing the interest rates on their home loans.

If you own a home or want to get onto the property ladder, a rate rise will have implications.

Homeowners with a variable home loan will see a rise in their repayments, which in turn will affect their household budgets.

Those on a fixed rate home loan may not feel the pinch right away. Their repayments will remain the same until their fixed period ends. But once the loan reverts to a variable rate, they may be shocked by the price increase.

For those looking to buy their first home, a rate rise will make borrowing money more expensive. It may mean buying in a more affordable suburb or opting for an apartment over a house.

The silver lining is that it may take some of the heat out of the property market, which has been mainly fuelled by low interest rates.

While news of a rate rise may come as a shock, it’s important to remember that they will remain at historic low levels for some time.

So, what can you do to prepare for future hikes?

If you’re paying off a home loan, get ahead on your repayments while rates are still low. Ask your lender for a better rate or switch to a different lender.

Consider locking in a fixed rate for a set period. This will give you peace of mind that your loan repayments will remain the same regardless of rate rises.

If you’re planning to buy a home, don’t be complacent but don’t be reckless either. If you’re in a healthy financial position, try to secure a home sooner rather than later. Consider your options, such as first home buyer grants and parental guarantors, to help you enter the market.

Whatever your home loan needs are, get in touch with us today. We will find the right loan for your needs and ensure that you’re well prepared for any future rate rises.

5 best books on mindset and goal setting for 2022

At the start of a new year, you may be wanting to start a clean slate, perhaps create new goals or pick up new habits. To inspire you to live your best life in 2022, check out our five top books on mindset and goal setting.

1. Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones by James Clear

If you find it hard to change your habits, this book is for you. Clear offers a practical guide for making good habits stick, and ditching bad ones. Through a combination of scientific facts and inspiring true stories, you’ll learn strategies and tools you can apply to your own goals.

2. Made to Stick: Why Some Ideas Survive and Others Die by Chip Heath and Dan Heath

Ever wondered why some ideas thrive but others don’t? Made to Stick unpacks six principles that make ideas memorable and successful and teaches you how to make your own amazing ideas stick.

3. Creating Your Best Life: The Ultimate Life List Guide by Caroline Miller and Dr. Michael Frisch

If you need motivation for setting goals, check out Creating Your Best Life. You won’t just read the science behind goal setting, but Miller and Frisch provide interactive and fun exercises to help you work out your needs, ambitions and wants.

4. Thinking, Fast and Slow by Daniel Kahneman

Embark on a tour of your mind and understand the systems that drive the way you think. You’ll find out when you can and can’t trust your intuition and the benefits of embracing slow thinking – great advice for the workplace and your personal life.

5. The Mountain Is You: Transforming Self-Sabotage Into Self-Mastery by Brianna Wiest

The idea that we’re our own worst critic rings true for many of us. In The Mountain Is You, Wiest explains why we self-sabotage, when we do it, and how to stop it. Be prepared for some deep reflection about your habits as you learn how to overcome challenges and reach your potential.

Happy reading, and here’s to making positive change in 2022!

5 easy ways to support small businesses this Christmas

As we rush to finish our Christmas shopping, many of us may turn to the convenience of department stores and big retailers. But this year, consider changing tact by supporting small businesses who have been hit hard by the pandemic and related lockdowns and other interruptions. Here are five easy ways to spread the festive cheer to your local business owners.

1. Buy from them

Do some of your Christmas shopping at small locally owned businesses. It doesn’t have to be an all-or-nothing approach as simply swapping a few big-name brands for something local can make a difference. While they may not be able to compete with larger retailers on price, the extra cost will go a long way in supporting owners and boosting the local economy.

2. Be a tourist

If you’re going away this Christmas, spend time – and money – at small businesses in the area you’re visiting. Plan a day of enjoying local delicacies at eateries, exploring gift shops, and visiting tourist attractions. If you’re staying at home, be a tourist in your own suburb or city, and explore where you live.

3. Share the love

Shopping local and spending money isn’t the only way to support small businesses. Write a review on Google, like and follow their pages on social media, and tell others about your experience. Word of mouth is a great way to promote a business.

4. Attend neighbourhood events

Connect with local businesses at local events, such as farmers markets, flea markets, and street fairs. They offer a change of scenery from your regular shopping centre and are a great way to meet owners. You might even nab some fresh produce or unique goods that you can’t find anywhere else.

5. Spare a thought for small business owners

Finally, be kind to local business owners who have been doing it tough. Remember that they can’t always do what big retailers can, like offer free shipping. When leaving feedback, consider the impact it can have on a business's reputation.

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As small business owners, we appreciate the support of all our clients, and we look forward to serving you in the new year. Have a wonderful Christmas.

Know your money mindset

We absolutely love that in 2021, personal finance is something that's discussed more openly. However, we know that for a lot of people, this is not an appealing topic of conversation! There are all kinds of attitudes to money, and all kinds of emotions surrounding it — from confidence, gratitude and optimism, to fear, shame and panic.

Whatever your money mindset, it's worth taking a look at where you sit on the spectrum – it's the first step in taking charge of your finances. It could be a matter of reading the right book or speaking with a finance professional who you really click with.

What do we mean by money mindset?

Your money mindset is about your approach to earning, spending, saving and investing. Usually, your money mindset is a subconscious set of beliefs, which could stem from your childhood or previous experiences with money. Understanding your money mindset can help you improve your financial habits. After all, knowledge is power, right?

There are two main attitudes towards money: optimism and abundance, and scarcity and pessimism.

Optimism and abundance

People who feel optimistic about money have confidence they'll have enough and find it easy to save and plan for the future. They probably have goals (that they believe they can achieve) while still appreciating what they already have.

They feel positive about money and generally spend within their means, save for the future and manage their debts well.

Scarcity and pessimism

People with an attitude of scarcity and pessimism generally have negative views about money, which can bring on feelings of anxiety, shame or fear.

They feel undeserving of wealth, or jealous of others with abundant wealth. They prefer to spend their money rather than save for the future, because they never know when they're going to lose.

They can feel unmotivated to take action and often avoid planning for their future, which can lead to inaction and missed opportunities.

How to improve your money mindset

If your money mindset is preventing you from reaching your financial goals, the good news is it's completely possible to change any limiting beliefs.

Start with small steps like setting some financial goals and devoting time to improving your financial literacy. Avoid comparing yourself to others, and remember to celebrate even the little wins.

And don't beat yourself up about it. Money isn't usually something we're taught about at school. It's also not something we generally discuss with friends or even family, so it's no surprise that - for a lot of people - it remains a mystery!

If you have property-related finance goals, get in touch for some straight-talking guidance on how to make it happen.

Are you ready for the ATOs end of financial year crackdown?

Every year the Australian Tax Office (ATO) warns us who they’re targeting in a bid to scare us into submission by June 30. It certainly won’t be flight attendants this year but it really doesn’t matter which group you’re in, there are a set of common mistakes that can cost you dearly.

Tim Loh, Assistant Commissioner at the ATO suggests if you’re doing the right thing and you make a legitimate mistake, you’ll be fine - provided you have the evidence to back each claim. The flip side is that they’ll be cracking down heavily if you’re lazy or downright fraudulent.

Top 3 ATO targets in 2021

The ATO uses complex data analytics and benchmarking tools to identify exceptions and outliers for audit purposes.

This year they’ll be targeting travel costs, work clothing and work from home expenses because there should be a material variance from previous years claims given the Covid lockdowns.

Tim Loh suggests the best and easiest way to avoid the attention of the ATO is to simply make sure you have receipts and evidence to justify your expenses.

Top Apps to help with receipt management

Apps like ReceiptBank, Expensify or Freshbooks allow you to take a photo from your phone of your receipts and store it for tax time. It’s quick, easy and compliant, and your accountant or bookkeeper will love you!

Your calendar is evidence

Diary entries are also evidence. Oftentimes, your diary will be used as evidence to make sure your expenses, location and timing all match up for the audit. So keeping a thorough diary is also important to identify and justify your work-related expenses.

2021 ATO targets

If you have high working-from-home expenses, or high or even similar, motor vehicle expenses compared to previous years, then these will stand out as exceptions in a year where we've all been locked down.

So too, if you've been furloughed and you’re claiming work expenses that have been dragged over from last year’s tax return - this will also stand out as an exception to the ATO. So double-check your tax agent’s entries to make sure your expenses can be proven, and that they make sense in the context of the 2021 tax year.

As a final thought, consider maximising your deductible super contributions, don’t forget your education expenses and make sure you’ve covered your bases if you’re a property investor.

We're not tax agents, of course, but do let us know if you'd like recommendations for exemplary accountants and bookkeepers who are a pleasure to deal with, and most importantly, will protect your interests at tax time.

Great interest rates and best interest duty.

Record low interest rates and a booming property market is lighting a fire under mortgage brokers right now. Our services are in high demand, with 3 in 5 home loans going through a broker these days.

It hasn’t been all rainbows and unicorns, though. Two years ago we weren’t even sure if we'd be allowed to write loans for the major banks following the Royal Commission into financial services, and sweeping changes challenged our very existence.

Why use a broker?

Well, we can think of a couple of thousands reasons, but it's still a common question. Firstly, we have a suite of lending institutions at our fingertips from which you can pick and choose based on the interest rate, fees, terms, and how well you align with the lender. Better still, we're now required by law to act in your best interests. To be fair, we've always done business this way: placing our client's needs front and centre.

What does best interest mean?

It means no matter what benefits we receive, we have to help you with the most appropriate product. If we don't, we risk fines, losing our accreditation, or even jail time. So, it’s pretty serious and it’s designed to help you obtain better financial services and strengthen the overall lending system.

Do the banks have to work in your best interest?

No, they don't And while there are plenty of good bankers out there, they are hamstrung with what they're able to offer their customers. Instead of scouring the market for a solution that meets their customer's needs, they can only choose from a handful of products.

Credit is important for a growing economy

Access to credit is a fundamental catalyst to a growing economy and especially when that economy is recovering from the Covid lockdown. The government wants to encourage use of lending but in a way that protects consumer interests.

Best interest duty is about creating a better more responsible lending environment that’s client-centric and with long-term benefits to strengthening the overall economy. That’s a good thing for you - so now you get access to historically-low interest rates but you'll be protected by the best interest duty. Happy days!

Get in touch for help securing finance that serves your interests.

How to teach your kids about money this Christmas - and beyond.

Who remembers receiving $20 in a Christmas card from a relative? Or maybe it was $5 or $10, depending on how far back we’re talking.

And whether you’d already spent it in the time it takes to receive an extra-long hug from THAT Aunty, or you’d deposited it straight into your savings account with THAT bank, or you’d invested it into your latest and greatest money-making venture – there’s a good chance that those same money habits are with you today.

If you’re thinking about gifting some cold, hard cash to the little ones in your life this Christmas, then have a think about how you can help them develop a good relationship with money, because as we all know: old habits die hard.

Giving cash is probably more useful than ever in today’s increasingly cashless society, because it gives kids a more tangible insight into how money works.

Here are five ways to help children think about money:

Note: We’re not saying there’s a right or wrong way when it comes to someone’s money mindset, but we’re big believers that knowledge is power.

1. Money jars

Tell them about the money jar concept, where they’d portion out their money into key categories: save, spend, invest, donate, and then have to decide upfront how much they want to devote to each. Using physical jars helps kids understand an otherwise abstract idea. When they’re making decisions about where to send their money, they can see that they’ve only got their allocated funds to work with, and so it helps them learn to be more disciplined and purposeful with their decision-making.

2. Opportunity cost

Talk about opportunity cost, so when they’re deciding on whether to buy something, highlight what they’d be missing out on. Little Ryan wants to go on that $20 ride again? Remind him he won’t have money left to buy the showbag. Sounds a bit like being Fun Police, doesn’t it? But before long they’ll be pre-empting you and considering the opportunity cost before you’ve had a chance to prompt them.

3. Compound interest

Talk about the difference between good debt (debt that allows you to invest in wealth-building channels like property), and bad debt (debt that costs you). For example, if they ask for a $50 loan, charge them (a nominal amount of) interest. Get them thinking about whether they want to pay compound interest, or earn it.

4. Radical transparency

If you’re living a comfortable life, kids can get the impression that money grows on trees, right? Think about letting your kids know how much money you earn, and what’s involved (i.e. the long hours, years of education and training). Of course, you may want to tell them not to bring it up at Christmas lunch - we’re not necessarily suggesting you become that transparent!

5. Invest in shares

Setting up a very modest portfolio can be an incredible way to introduce children to the concept of trading shares. With the various apps around these days, the barriers to entry are not what they once were, and trading shares certainly isn’t just for trust fund babies. Make sure you speak to your accountant and/or financial adviser for guidance around the capital gains benefits.

There you have it! Wishing you – and your families – a restful Christmas and New Year holiday and a prosperous and joy-filled 2021!

It's true, in Australia bigger is better (home sizes, that is)

Well it seems all those Netflix series on tiny homes and minimalist living hasn't put a dint in Australia's love of large homes.

According to recent research from CommSec, Australians are building the biggest houses in the world - averaging 235.8 square metres. And we're bucking the trend, with even US average house sizes shrinking in recent years.⠀

And it's not just house sizes, with even the size of the average Australian apartment increasing by 6 percent over the past year, hitting a decade high of 136.8 square metres.

The latest increase in house sizes has been put down to the effects of the pandemic - with us all spending more time at home, and craving our own space more than ever!

We think it could also have something to do with #theblock effect creating demand for butler's pantries, mud rooms and home theatres.⠀

What do you think? Are you dreaming of a bigger home, or could you handle something smaller?

Get in touch today if you want help upgrading.

Why it's time to have that awkward talk with your family

There's been talk in recent years about the fact Australia will soon face the largest intergenerational wealth transfer in history.

What exactly is an intergenerational wealth transfer? Well, it's a euphemism for the inheritance you stand to receive when your parents leave this mortal coil. Specifically, it's the $3.5 trillion that the X & Y Generations will inherit over the next 20 years. According to Griffith University researchers, each recipient will inherit an average of $320,000.⠀⠀⠀⠀⠀

Seems a bit morbid, doesn't it? But that might be the problem - no one wants to talk about it. Over half of Aussies don't have a will, yet hope that their children will invest their inheritance wisely.⠀⠀

Building intergenerational wealth isn't just for the elite. But unfortunately, the average Joe isn't necessarily setup to maintain and grow any wealth they inherit. In fact, it's estimated that 70% of families will lose their wealth by the second generation, and 90% will lose it by the third.

So, this week, perhaps broach the subject with your parents. Do they have a plan in place for passing the baton, and what do they hope for their financial legacy?

Get in touch if you'd like our suggestions for ethical, experienced financial advisers or lawyers - we have several in our network we'd be happy to introduce you to.