Helping Your Adult Kids Be Financially Savvy

Written by Hannah Oliver

It is human nature for parents to want to provide for their children but at some point, the “help” you may be giving them could actually be more of a hindrance to them gaining their own financial independence - stunting their financial literacy and growth.

Your financial future is at stake

The other consideration is your retirement lifestyle. If you are 50 or older, now is the time to be setting yourself up for the future and making the most of every discretionary dollar for the development of your nest egg. If you are operating the “bank of mum and dad” for your kids instead of building your retirement, it could mean you need to work longer or compromise your retirement lifestyle.

Helping them become financially savvy

So, what can you do to help your kids get a grip on their situation and gain financial responsibility?

You can give your children positive encouragement and tangible education on the financial life skills they will need. This doesn’t mean you should suddenly “cut them off”, but it does mean you need to begin a serious discussion with them about the costs of maintaining their lifestyle and determine a timeline for passing over responsibility to them.

Budgeting is the foundation

If you have been putting food on the table and a roof over their head, chances are their income has been directed toward spending on their own entertainment and enjoyment. Giving them an understanding of budgeting is critical for them to gain a broader view of what it takes to survive and prosper financially.

Fortunately, there are plenty of budgeting tools available online or through banks, which you can encourage them to use and help them to complete. This will give them an understanding of the scope and scale of spending required to live independently, as well as an appreciation of the differences between essential living expenses (such as food, utilities, communication, transport, and rent) and discretionary spending (such as eating out, entertainment, gaming, and hobbies).

Developing responsible habits

An extension of the budgeting process is to educate them on the vital importance of saving regularly from their income. Start with a simple rule of saving a set percentage of everything they earn. This can then be developed into goal-oriented saving for various objectives they consider important and worth sacrificing for.

If you do want to provide some form of financial support, rather than giving random handouts toward immediate needs, perhaps you can offer to match their savings dollar for dollar in support of something worthwhile, such as a home deposit, rental bond, or a business venture. This gives real incentive to form solid saving habits that will benefit them throughout their life.

Educating on credit is also essential as it is easy for them to quickly rack up personal debts that can demoralise them and distort their financial priorities. Analysing a month’s spending may point out where their income is being squandered or wasted.

Creating wealth slowly

Your children may view the concept of creating financial independence as something that can only happen through outrageous luck or taking huge risks for quick gain. Therefore, one of the most vital lessons you can pass on is the value and importance of creating wealth slowly.

Real financial independence is not the result of a lottery win or riding the back of an investment boom — rather it is the result of forming sound investment practices such as:

• Allocating a certain proportion of your regular savings toward long-term wealth creation plans
• Utilising available tools that accelerate wealth, such as superannuation tax incentives
• Diversifying investments beyond bank term deposits and into a variety of asset classes that relate to your investment time horizons
• Planning for contingencies (such as sudden loss of income or emergency expenses) by establishing an emergency savings plan and personal insurance protection plans
• Seeking the advice of a financial adviser to coordinate all of the above, and to develop a lifelong plan and strategy for wealth creation.

Start the conversation now

Delaying the steps outlined here may result in an ongoing cycle of dependence that will only become harder to break if it isn’t addressed.

Take the next step

To discuss your financial situation, make an appointment with a Bridges financial planner. We have an established alliance with Bridges, to provide our customers with financial advice. Bridges has been helping Australians with financial advice for 30 years. A Bridges financial planner will develop a plan specifically for you; one that’s tailored to your needs and circumstances to help you achieve your goals. To make an appointment with a Bridges financial planner, call 02 6384 1111. The initial consultation is complimentary and obligation free.

Bridges Financial Services Pty Ltd (Bridges). ABN 60 003 474 977. ASX Participant. AFSL 240837.

This is general advice only and has been prepared without taking into account your particular objectives, financial situation and needs. Before making an investment decision based on this information, you should assess your own circumstances or consult a financial planner or a registered tax agent.

Examples are illustrative only and are subject to the assumptions and qualifications disclosed.

Part of the IOOF group

In referring customers to Bridges, South West Slopes Credit Union Ltd does not accept responsibility for any acts, omissions or advice of Bridges and its authorised representatives.

SWSCU November 2019 Sponsorship

Written by Hannah Oliver

South West Slopes Credit Union is proud to be able to provide sponsorship and support throughout the month of November to the following local community groups and clubs:

Young Mobile Play Activities

West Wyalong High School

Temora Schoolboys Rugby League

Cootamundra Veterans Golf Association

Cootamundra Junior Cricket Inc.

Young Country Education Foundation

West Wyalong Rugby League Football Club Inc.

St Mary’s War Memorial School West Wyalong

Cootamundra Rugby League Football Club Inc.

Cootamundra Rugby Club

OSKO Maintenance

Written by Brady Kenny

SWSCU is excited to be upgrading our OSKO platform. The update will allow us to receive instant payments to our BSB and Account Number (that is the full 9 digit Account Number). The change will take place overnight on Nov 20 and as such our existing OSKO service will be unavailable from midnight to 4am, however the update will mean all our members can enjoy the benefits of instant payments. Please always remember to give your Account Number rather than your Member Number when providing bank details to others as this is the best way to receive money into your account. You can find your Account Number on your statement, online in your internet banking or through the SWSCU app.

Please feel free to contact us on 02 6384 1111 if you would like help finding your Account Number.

Please see some answers to frequently asked questions below

What is OSKO and PayID?

OSKO is part of the New Payments Platform that allows payments between participating banks instantly. SWSCU was proud to be one of the first banks in Australia to join the new platform back in February 2018. PayID can be a mobile number or email that is linked to your account allowing people to make payments to you without needing your BSB and Account Number. PayID is also more secure and accurate as it allows the payer to verify they are paying the correct person before they complete the payment.

What is being updated?

This update will allow us to receive OSKO payments to our BSB and Account Numbers in addition to PayIDs. This will mean more payments will be instantly received by our members.

My payments are being rejected?

If payments into your account are being rejected by other banks, please check they are using our BSB 802-367 and your Account Number. Remember your Account Number is 9 digits long and is unique to every account. The OSKO or instant payments platform will not allow payments to your Member Number so please ensure you have provided the correct details to people needing to pay into your account.

Should I update regular payers?

If you wish to receive your regular payments like wages or government payments instantly remember to ensure they have your correct banking details, including BSB and Account Number. If payers are still using your Member Number payments into your account may be delayed or even rejected.

When will the change happen?

The new update is being install overnight on Wednesday Nov 20 early hours of Thursday Nov 21. During this time the OSKO will be offline however you can still make regular payments through internet banking and the SWSCU app.

Make your retirement funds go the distance

Written by Tahlia Johnson

You only get one shot at going into retirement, so it is essential that you go in with your eyes wide open. That means being aware of where your income may be coming from, how to plan for living and recreational expenses, and making decisions that are balanced and have an eye on the long term.

The earlier you start preparing, the more options you will have, so here are some top tips to get the ball rolling.

Where do you stand now?
Even if you haven’t been especially concerned about financial planning throughout your working life, it is important to do so as you enter retirement, when you are no longer able to rely on earned income.

The first part of the planning process is to get a clear understanding of where you currently stand financially. What assets do you have and what are they worth? This includes your home, your savings and investments accounts, your superannuation, and your possessions.

Key dates to be aware of
The next step is to establish the key milestones as you transition to retirement. The first milestone is your ‘preservation age‘ — the age at which you can access your super. Provided you have retired from the workforce, the minimum preservation age is 55 years if you were born before July 1960. This age increases on a sliding scale up to age 60 for those born after June 1964.

The second milestone is the age at which you are eligible for the age pension. For those born before July 1952, this will be 65. For those younger than that, it can be as high as age 67, depending on your date of birth. Eligibility also depends on the income and assets tests.

Plan around your lifestyle decisions
Once you know when your super and pension income will kick in, you can start to plan your finances around the lifestyle activities you want to engage in during the potentially long years of retirement ahead. For example, you may want to:

• Travel in the earlier stages of retirement, before settling down
• Make some renovations around the home in the earlier years, so you don’t have to worry about them later
• Make major recreational purchases, such as a boat or motorhome
• Downsize your home or move to a retirement village down the track

Ideally, all of these major lifestyle decisions should be projected early, so that you can allocate funds for them, decide where those funds should be drawn from, and ensure that you have enough left to generate an ongoing income.

Assess your income options
Get a clear picture of where your retirement income may come from. This could include:

• Income from super
• Investments outside super
• Part-time employment
• The age pension
• Home equity release or selling the family home

In assessing these income sources, you need to consider whether one may impact another. For example, selling the family home or working part-time may impact your age pension.

Take full advantage of entitlements
While the age pension on its own may not be enough to fund the lifestyle you want to enjoy, it can certainly be a handy supplement to your ongoing living income. Apart from the pension itself, there may also be other benefits, such as travel concessions, cheaper medicines, and reduced council and water rates, which can translate into a significant amount of savings every year.

Structuring your investments to maximise entitlements is therefore a critical issue and some professional financial advice can make a big difference.

Is work an option?
Not everyone is particularly keen on making a sudden shift from full-time work to full-time leisure, so if you are still interested in continuing to work part-time, it can help you delay drawing down on your super and other assets.

There are incentives within the social security system to encourage this, so seek advice to see how it may be a good option for you financially.

Budgeting is essential
There may be a temptation to splurge a little when you first receive a large lump sum from your super, but make sure you project your living expenses properly before taking the plunge.

More than ever, a simple budget is essential to ensure you don’t outlive your income in retirement, so ask for advice and get things in writing to make it as tangible as possible.

Don’t forget to include emergency funds in your budget to take care of any surprises or spikes in expenses, such as unexpected illness, a house move, or a family crisis.

Get advice early 
As you can see from the factors mentioned here, there are many interconnected elements to planning income and expenses for retirement. Speak to a Bridges financial planner to help put the puzzle together, structure a diversified investment strategy, maximise entitlements, and map out your lifestyle and living expense needs.

Take the next step

To discuss your financial situation, make an appointment with a Bridges financial planner. We have an established alliance with Bridges, to provide our customers with financial advice. Bridges has been helping Australians with financial advice for 30 years. A Bridges financial planner will develop a plan specifically for you; one that’s tailored to your needs and circumstances to help you achieve your goals. To make an appointment with a Bridges financial planner, call 02 6384 1111. The initial consultation is complimentary and obligation free.

Bridges Financial Services Pty Ltd (Bridges). ABN 60 003 474 977. ASX Participant. AFSL 240837.

This is general advice only and has been prepared without taking into account your particular objectives, financial situation and needs. Before making an investment decision based on this information, you should assess your own circumstances or consult a financial planner or a registered tax agent.

Examples are illustrative only and are subject to the assumptions and qualifications disclosed.

Part of the IOOF group