Tag Archives: lifestyle

How well your lifestyle support system works!

Having the ability to earn income can boost your confidence in dreaming and living the lifestyle you have worked for.

As you know, being healthy day in day out, year after year of your working life is a pretty tall order. Lifestyle and IncomeWhat if a severe illness or injury were to prevent you from earning income today for a period of time – weeks, months or even years? How long could you sustain the lifestyle you have worked very hard to create?

Here are 3 simple calculations to find out.
Step 1: Current position
Add up your total monthly expenses (mortgage/rent/, food, clothing, utility bills, child’s education cost, insurance etc).Disregard your main income; add up any other income after tax.

$monthly expenses – $other income = +/- $current position

Step 2: Emergency cash
Calculate your emergency cash fund by adding together any owed weeks of sick leave and annual holiday. Multiply this by your weekly income (after tax) and add that to any accessible savings.

weeks multiply $weekly salary plus $accessible savings=$emergency cash

Step 3: Funding months
To calculate the number of months sustainable without your income, divide emergency cash by current position.

$emergency cash divide $current position = months of self-funding

Did you know? 75% of Australians have had a disease or other health problem that had lasted, or was expected to last, 6 months or more. Source: AIHW 2010

What if you could not work more than your self-funding months and you still had to

  • meet your mortgage repayment
  • cover the cost of your immediate and ongoing health cost
  • pay living expenses
  • fund your children’s education – if you have any

How would you cope with all,beside your efforts to get healthier again?Well, do not stress up! There is a solution to your problem; Before too late, simply get your ability to earn income is insured. How?

Basically, income protection insurance provides up to 75% of your before tax income when you cannot work due to an illness or an accident.The benefit payment would be on a monthly bases like salary/wages.The good thing to know about this type of insurance is that premium payable is tax deductible.

I assume you will agree with me that your income is not just about paying your living expenses. It is also your lifestyle, your future! And insuring of your income is the cheapest option to consider when it comes to making sure you can receive an income in the event of not being able to work because of an unexpected illness or an accident.

Should you want to find out more about income protection plans, and the best possible strategy that suits your need feel free to contact Halle Yilmaz.

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Halle Yilmaz is a financial adviser and business consultant. As a financial adviser, she gives solid advice that can create rapid and lasting results for her clients. Sign up for her free E-Book and download “7 Steps to Healthy Wealth Management.” Follow Halle on Twitter @halleyilmaz

Never sacrifice long-term goals with short-term view

Regardless of where we live, what we do for living, we all want to be in control of our lives. We all want to experience financial freedom, live our desired lifestyle and keep our dignity until we die. This requires not only focusing on our short-term goals, but also medium to long term goals NOW.

Unless you are one of the very fortunate few to be independently wealthy, setting aside money today to see that you have enough for the years down the road is mandatory. For those of you who are at their early ages of 20′s and 30′s the idea of saving for your long-term goal – retirement- might be odd and a far away goal. Especially when you are working on fulfilling your short to medium terms (1 year to 5 years) goals.

retirement savingsNevertheless, it is worth noting that the very fact that you are young gives you a huge edge if you want to have financial freedom in retirement. That is because when you are in your 20s, you can invest relatively little for a long period and wind up with far more money than someone older who saves much more over a short period. It is due to the power of compound interest.

Compound interest means that interest accrues not only on the base payments but also on the interest earned. When individuals embrace saving early for retirement and make it a priority throughout their earning years, they put the power of compound interest to work in their favour. As a result, a steady stream of savings can create exponential growth.

Consider this scenario: If you begin saving for retirement at 25, putting away $2,000 a year for just 40 years, you’ll have around $560,000, assuming earnings grow at 8 percent annually. Now, let’s say you wait until you’re 35 to start saving. You put away the same $2,000 a year, but for 30 years instead, and earnings grow at 8 percent a year. When you are 65, you will wind up with around $245,000 – less than half the money.

Saving for retirement is not facing old age or possibility death. It is about gaining the discipline required to take control of your entire life. To support this, the government in your country might offer great incentives to its people. Those incentives can help you accelerate your long-term savings. All you need to do is to be aware of, and make use of them as much as you can.

For instance in Australia, we have superannuation savings, which is something that employers are forced to pay. The government has imposed on employers to make 9% of each employee’s before tax salary paid as a super guarantee contribution into their superannuation funds. This rate will increase to 12% by 2020.The main aim of compulsory superannuation is to ensure we save and invest our money during our working life so that we can live off the earnings in retirement.

Australian demographic reports indicate that Australians are living longer. Currently, life expectancy in Australia is over 81 years. This reflects a higher level of health awareness, better health and medical services, better diet and a safe workplace environment. Hence, it is believed that the age pension the government pays to retires would be insufficient.

The Australian government also knows that most of Australian’s would not have the required discipline to save consistently for their long-term goal – retirement savings – from early ages. Therefore, it is made compulsory not to be accessed the money accumulated in the superannuation funds until fund members reach their retirement age (except certain conditions).

Moreover, in order to encourage people to save for their retirement the government sacrifices its tax revenue. The tax, which is levied on superannuation funds based on the limited tax-deductible contributions (currently it is $25,000 in total per year) and the total of taxable earnings of the fund, is at 15% rather than individuals marginal tax rates.

When super fund members reach their retirement age, they can convert their fund balance into tax-free income streams if they wish.

Additional benefit of superannuation in Australia is that any assets or benefits that individuals have in their superannuation are protected from bankruptcy. It means that, generally, your superannuation won’t become part of the property that is divided between creditors in the event of bankruptcy.

Although the money saved and invested in superannuation environment is part of people’s earned income, because it is not seen or touched, many people neglect it easily. This neglect also comes from lack of understanding of related rules, regulations and complex investment options of the funds.

Nonetheless, superannuation is the most attractive investment vehicle in Australia for those who are serious about taking control of their financial life and maximising their wealth for retirement. It is important to point out those investments in super environment requires regular monitoring and control as carefully as the money invested outside of super.

You might use superannuation environment or another investment vehicle to save and invest. They all are there to take you from where you are financially to where you want to be some time in the future, financially. All you need to do is to gain the habit of not only just focusing on short term financial goals , also focusing on long term ones with the mindset of getting the most out of what is available for you now for your future.

Halle Yilmaz is a financial adviser and business consultant. As a financial adviser, she gives solid advice that can create rapid and lasting results for her clients. Sign up for her free E-Book and download “7 Steps to Healthy Wealth Management.” Follow Halle on Twitter @halleyilmaz

NDIS is not replacement of your personal insurance.

Many people get confused with National Disability Insurance Scheme (NDIS) and life insurance or other personal insurance policies.

The disability insurance scheme covers only the basic costs of care for those disabled from birth or as a result of an accident and the condition significantly affects their communication, mobility, self-care or self-management.

It does not cover the cost of daily living expenses and will not provide a support that consists of income replacement. This is not a criticism of Disability Care, which is a massive step forward that will assist many Australians. But it will not provide a substitute income for those left unable to work.

On the other side, Total and Permanent Disability insurance pays a lump sum if you become totally and permanently disabled and cannot work rest of your life again. In 2008, the Australian Institute of Superannuation trustees found that about 71per cent of its superannuation fund members had TPD cover. However, the level of coverage is too low to meet ordinary wage earners’ daily expenses. In general, your employer on behalf of you sets up the insured amount without taking into consideration your personal and financial commitments. Moreover, the total and permanent disability insurance option under your superannuation fund is any occupation not own occupation. Some of the insurance covers under superannuation environment are reduced each year, as you get older.

We all know that an accident, sickness or death of a working age parent will usually have a significant impact on the financial circumstances of the family. Despite this, Rice Warner Actuaries calculate that over 95 per cent of families do not have adequate insurance in Australia. Based on current median levels of cover for total and permanent disability, the level of underinsurance is an extraordinary $8 trillion nationally and, for income protection alone, $600 billion.

Income protection insurance provides a replacement income for those who are temporarily or permanently unable to work due to illness or injury. The replacement income can be up to 75 – 80 percent of your current gross income and can be for short or long periods, generally after a preselected waiting period. And the premiums you pay are tax deductible.

The 2008 Household Income and Labour Dynamics Australia Survey found that more than 235,000 working-age people, living as members of a couple with dependent children, had suffered a serious injury or illness in the previous 12 months. The same survey found that more than 17,000 employed people who were living, as members of a couple with children were unable to continue working due to illness, disability or injury over the previous year.

By taking out income protection, life insurance or other personal insurance covers – total and permanent disability, trauma – you are ensuring that if your income stops, your lifestyle does not. In case you stop working due to illness or accident, or pass away, your family can continue with financial support to live the life you have worked so hard to provide them with.

Let’s be in control of our financial life.