Who do you trust with your money? Money matters top of mind for Australians this week

Financial Planning Week 23-29 May 2011 kicks off today with the CEO of Australia’s peak professional financial planning body, the Financial Planning Association’s (FPA) Mark Rantall, calling for all Australians to spend a moment to take stock of their financial situation and consider the benefit of seeking professional financial advice from a qualified and trusted financial planner.

Now in its 11th year, Financial Planning Week is a national initiative of the FPA with 32 Chapters taking part in their respective regions, giving every Australian the opportunity to access valuable financial advice from qualified FPA members through national and regional initiatives. These include an interactive online advisory service known as ‘Ask an Expert’ providing the opportunity of financial advice to every Australian and at no cost. The public are encouraged to visit www.goodadvice.com.au from today to find a local planner and ask a question.

This year’s Financial Planning Week comes hot on the heels of a recent historic vote by members of the FPA to pursue its vision to transform financial planning into a universally respected profession. The vote approved a landmark new three-year plan to raise professional standards, including by increasing members’ educational requirements, while emphasising the importance to consumers of choosing a qualified financial planner who has signed up to the FPA Code of Professional Conduct.

“With 94 per cent of our members demonstrating a clear commitment to lifting the calibre and standing of their profession at this recent vote, Financial Planning Week provides us with the perfect opportunity to showcase the value FPA members can add to the lives of ordinary Australians who just want to make the most of what they have for now and for the future,” Mr Rantall said.

“Building higher standards to inspire trust and confidence in the community are key parts of what we do. We are looking forward to spending the week meeting a whole range of people of different ages and from different backgrounds and sharing with them some of our expertise.”

As part of the week, the FPA offered the following five top tips to help start Australians on the road to financial security:

1. Manage your debts. Managing debt is a critical part of any financial plan. Don’t hide from it. Assess your current debts and consider consolidating them into a single product with a low interest rate. And then include debt reduction as part of your financial plan.
2. Make a budget – and stick to it. Another financial basic, and just as essential, budgeting helps you see exactly where you spend your money – and therefore where there is room for savings and growth. Write down everything you spend, including the morning coffee, the power bill, the Friday night beer, the Sunday newspapers and the birthday gift for a friend. Compare with your incomings and you will soon get a clearer picture of your financial position.
3. Tap into the power of compounding. Start saving early and consider products that earn compound interest. As your savings grow and you start earning interest on your interest, investment growth accelerates. What it all comes down to is that the greatest asset you have is time, and the sooner you start investing, the better off you will be. But it’s never too late to make a positive difference.
4. Protect yourself. Make sure you have enough insurance. That means enough to properly provide for yourself and your family and for your business too, if relevant, in case of death or disability, as well as having health insurance and general insurance on your home and its contents. Protecting yourself also means having up-to-date wills, enduring powers of attorney and nominated superannuation beneficiaries to ensure that, when the time comes your assets go to whom you want, when you want – and in the most tax effective way.
5. Maximise your super. Superannuation remains the most tax effective long-term retirement planning structure available to Australians. Pre-tax or Concessional Contributions to superannuation such as salary sacrifice, are generally still the most tax effective way to build your wealth within superannuation, assuming that your marginal rate of tax is greater than 15%. There are limits to what you can contribute on an annual basis and you need to also consider contributions made by your employer under the Super Guarantee Contributions type arrangements – so make sure you seek advice on this so you don’t breach the caps.

If you have any questions about how to manage your finances, make use of the free online ‘Ask an Expert’ service or to find a member of the FPA to help you with professional advice, visit www.goodadvice.com.au or call 1300 626 393.