Greg McAweeney

Generation Y may appear to have it all – not only are they young with grand aspirations for their budding futures, they are more likely than Gen X and Baby Boomers to claim they are better off financially than last year. This is according to the RaboDirect Financial Health Barometer, which surveyed 2,300 Aussies aged 18-65, and showed that Gen Y were also most likely to say they were saving more than they were in the 12 months prior (33% vs 24% of total respondents), saving on average $943 each month vs $908 of the rest of the population.

And yet, Gen Ys are most likely to say they find dealing with money ‘stressful and overwhelming’ (47% vs 35% of the total respondents).

According to RaboDirect, Gen Y is on the right track in terms of their financial habits; but staying informed about their finances and turning to a professional may help reduce their financial worries further.

Greg McAweeney, Executive General Manager from RaboDirect said: “Young people face challenges that are unique to their generation. Housing has arguably never been more unaffordable, even with historically low interest rates, house price growth is pitted against slowing earnings growth. They have lived through the GFC and the cost of living in Australian capital cities is among the highest in the world. Add to that the pressures of modern life and a want to keep up with the Jones’ and is it any wonder Gen Y are feeling stressed? And yet our research shows that Gen Ys are taking control of their finances and adopting good savings habits from an early age which are important factors for ensuring a comfortable financial future.”

“It’s encouraging to see that Gen Ys are happy to talk to others for financial advice – if you’re finding dealing with your finances stressful, a second opinion can help set you straight and give you some practical steps to take to improve your financial outlook. My only warning would be that relying on friends and family isn’t always the smartest plan. Just as you’d likely trust the diagnosis given by a trained doctor over one from your friend, a trusted financial professional will be able to give you the best advice that is particular to your needs. Why not make 2015 your year for getting your financial house in order? Having even a simple plan can really offer peace of mind – and that goes for every generation.”

Key stats for Gen Y:

Greg McAweeney

Results from the 2014 RaboDirect Financial Health Barometer (FHB) have uncovered a national picture about levels and attitudes to debt amongst Australians. According to the research, 23% of people claim to be more in debt than 12 months ago.

Key points

Greg McAweeney, Group Executive RaboDirect, says the beginning of a New Year is the perfect time for Aussies to take stock and get their financial house in order.

He warns that our attitudes to debt may have seen too many of us starting 2015 in the red, especially after the festive season when personal budgets might have spiralled out of control.

“While debt is a fact of life for most people, the way it is managed can mean the difference of being in financial control or being out of control. There are simple tips for ensuring you get on top of your debt and stay out of the red,” says Mr McAweeney.

To stay in the black, he provides the following top five tips:

Greg McAweeney

The latest RaboDirect Financial Health Barometer (FHB) reveals that women are worse off than their male counterparts when it comes to the size of their savings buffer.

The survey revealed that females would only have a 92 day savings buffer if they were to lose their job tomorrow, compared to men who reported a 120 days savings buffer.

Overall the survey, which reflects the views and behaviours of 2,300 Australians aged 18-65, revealed that on average, Australians have a savings buffer that would only cover them for 3.6 months if they were to lose their job tomorrow, down from 4.7 months last year.

The findings come amid Australia’s rising levels of unemployment which are predicted to continue for the next two years.

According to RaboDirect’s Group Executive, Greg McAweeney, Australians can’t afford to be complacent about their savings: “Our research shows that on average, Aussies have a savings buffer that would last approximately three months. But against that, women are far worse off with just 13 weeks on average. That might not sound scary but the truth of the matter is it’s just not enough, especially when you consider all your expenses and the rising cost of living.

“We never think the worst will happen, but that doesn’t mean we shouldn’t be protecting ourselves against crippling unforeseen circumstances like losing your job. Having a healthy savings buffer isn’t just about having a little extra put aside for indulgences like holidays. It’s also about having protection to continue to fund your mortgage, childcare fees and the like until you get back on your feet. A good rule of thumb is to try and have a buffer of five to six months in a rainy day savings account.”

While it might seem difficult, Mr McAweeney says that increasing the savings buffer isn’t impossible. It requires simple planning and creating regular savings habits: “Pay yourself first when your salary hits your transaction account by direct debiting a regular amount to your savings account before you’re tempted to spend it. Do a stock take of what you’re spending your money on every month. This always surprises people and helps you to identify where you’re wasting money. If you’re funding your lifestyle through expensive credit card debit you’ll never be able to get a savings plan going. And make sure you’re using a savings account with a good ongoing rate and don’t leave your money lying idle in a transaction account that makes your bank rich, not you,” concluded Mr McAweeney.

Key findings:

Greg McAweeney

Everyone wants to be happy. It has been the subject of books, films and in 2014 Pharrell Williams’ tune Happy went to number 1 in more than 30 countries from Slovakia to Spain, causing a wave of joy around the world. But one of the simple secrets to happiness, revealed today in new research, may come as a pleasant surprise to many people.

In one of the most detailed recent investigations into the link between happiness and money, the new research, released to mark the launch of the 2014 RaboDirect Financial Health Barometer (FHB) which surveyed 2,300 Australians aged 18-65, found that people who live within their means and are regular savers are happier, healthier and more optimistic than those whose spending is out of control.

But could it really be this simple? According to RaboDirect’s Group Executive Greg McAweeney, the results are convincing and also raise an interesting question about just how beneficial things such as ‘retail therapy’ and feel-good shopping to boost morale really are.

He explained, “Our research has once again shown a high correlation between financial control, savings habits and our success in the pursuit of happiness. So-called retail therapy is not necessarily bad in itself. However, the high we get from a trip to the shops is likely to be short lived if we are not living within our means. It seems that just having some money in the bank and knowing we can comfortably meet our outgoings makes us happier than actually flashing the cash.”

The RaboDirect FHB research also found that people with good financial habits may even live longer, with the benefits of living within one’s means and being a regular saver also having a profound effect on the way we view our health. People who report to be living within their means are considerably more likely than ‘out of control spenders’ to say they feel healthier than they did two years ago and that they don’t feel satisfied unless they exercise at least three or four times a week.

Mr McAweeney expanded on this. “This halo effect of good money habits extends well beyond happiness and, as extreme as it may sound, this may actually add years to your life. Regular savers are almost twice as likely to say they feel healthier than they did two years ago whilst those who live within their means are more likely to watch what they eat. This research certainly builds a compelling case for people to seize control of their financial habits and we have three years of data to prove that this is a very real phenomenon.

“There are simple steps that each of us can take to make more of our money. You don’t need to be rich to enjoy the health and happiness benefits that being in control of your finances can deliver. In fact, it isn’t about what you have, it’s what you do with it that matters. Financial control is within the grasp of most people – it’s about taking simple steps such as paying down their biggest debt first, starting a simple budget, and importantly – to spend less than you earn and tuck away the difference for a rainy day.

“You should also take a look at the products you are using to house your savings and make sure they are working hard for you – you shouldn’t have to pay fees on a true savings account and you should consider using accounts where you can restrict yourself from accessing the money immediately as it will act as a natural deterrent for over spending on a whim.”

So who are Australia’s happiest people?

The RaboDirect research also uncovered who’s doing it right, analysing the happiness levels across different demographic groups. The happiest Aussies have been found to be Gen Y men, living in NSW in homes where the household income is between $100,000 and $150,000. These happy chappies are most likely to report that they live within their means and are regular savers.

Mr McAweeney concluded by saying, “Clearly the more we earn the easier it is to live within our means but it is interesting to see that people with household earnings of between $100,000 and $150,000 claim to be happier than those earning in excess of $150,000. So there may be a glass ceiling on the ability of money to bring happiness. Our research suggests that the optimal household income for happiness is $125,000. But possibly no more.”

Table 1: The link between regular savings and well being

Table 2: Happiness by demographic groups

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Greg McAweeney

Everyone wants to be happy. It has been the subject of books, films and in 2014 Pharrell Williams’ tune Happy went to number 1 in more than 30 countries from Slovakia to Spain, causing a wave of joy around the world. But one of the simple secrets to happiness, revealed today in new research, may come as a pleasant surprise to many people.

In one of the most detailed recent investigations into the link between happiness and money, the new research, released to mark the launch of the 2014 RaboDirect Financial Health Barometer (FHB) which surveyed 2,300 Australians aged 18-65, found that people who live within their means and are regular savers are happier, healthier and more optimistic than those whose spending is out of control.

But could it really be this simple? According to RaboDirect’s Group Executive Greg McAweeney, the results are convincing and also raise an interesting question about just how beneficial things such as ‘retail therapy’ and feel-good shopping to boost morale really are.

He explained, “Our research has once again shown a high correlation between financial control, savings habits and our success in the pursuit of happiness. So-called retail therapy is not necessarily bad in itself. However, the high we get from a trip to the shops is likely to be short lived if we are not living within our means. It seems that just having some money in the bank and knowing we can comfortably meet our outgoings makes us happier than actually flashing the cash.”

The RaboDirect FHB research also found that people with good financial habits may even live longer, with the benefits of living within one’s means and being a regular saver also having a profound effect on the way we view our health. People who report to be living within their means are considerably more likely than ‘out of control spenders’ to say they feel healthier than they did two years ago and that they don’t feel satisfied unless they exercise at least three or four times a week.

Mr McAweeney expanded on this. “This halo effect of good money habits extends well beyond happiness and, as extreme as it may sound, this may actually add years to your life. Regular savers are almost twice as likely to say they feel healthier than they did two years ago whilst those who live within their means are more likely to watch what they eat. This research certainly builds a compelling case for people to seize control of their financial habits and we have three years of data to prove that this is a very real phenomenon.

“There are simple steps that each of us can take to make more of our money. You don’t need to be rich to enjoy the health and happiness benefits that being in control of your finances can deliver. In fact, it isn’t about what you have, it’s what you do with it that matters. Financial control is within the grasp of most people – it’s about taking simple steps such as paying down their biggest debt first, starting a simple budget, and importantly – to spend less than you earn and tuck away the difference for a rainy day.

“You should also take a look at the products you are using to house your savings and make sure they are working hard for you – you shouldn’t have to pay fees on a true savings account and you should consider using accounts where you can restrict yourself from accessing the money immediately as it will act as a natural deterrent for over spending on a whim.”

So who are Australia’s happiest people?

The RaboDirect research also uncovered who’s doing it right, analysing the happiness levels across different demographic groups. The happiest Aussies have been found to be Gen Y men, living in NSW in homes where the household income is between $100,000 and $150,000. These happy chappies are most likely to report that they live within their means and are regular savers.

Mr McAweeney concluded by saying, “Clearly the more we earn the easier it is to live within our means but it is interesting to see that people with household earnings of between $100,000 and $150,000 claim to be happier than those earning in excess of $150,000. So there may be a glass ceiling on the ability of money to bring happiness. Our research suggests that the optimal household income for happiness is $125,000. But possibly no more.”

Table 1: The link between regular savings and well being

Table 2: Happiness by demographic groups

The post Simple secret to eternal happiness revealed appeared first on AdviserVoice.

SMSFs putting retirees in control of there retirement funds: RaboDirect

When it comes to being ‘super’ happy in the future, having control of their retirement funding is putting those with a Self-Managed Super Fund (SMSF) ahead of the rest.

This is according to the 2013 RaboDirect National Savings and Debt Barometer which shows that respondents with an SMSF were not only happier but were in better health than those with another form of superannuation.

According to Greg McAweeney, Group Executive Manager of RaboDirect, being in control of their financial future is clearly a big driver for respondents with an SMSF. Noting that SMSFs are a rapidly growing segment of Australia’s retirement savings pools; Mr McAweeney said that the health and wellbeing benefits as suggested by the NSDB results are a compelling reason that many are turning to this option.

“While a Self-Managed Super Fund isn’t for everyone – you need a certain level of knowledge, money, time and interest to do it well – there is clearly a keen interest and appetite among Australians for this hands-on control of super and ultimately their retirement. In fact, our research shows that 14% of the nation researched SMSFs online last year.

“Regardless of where people currently have their super invested, we could all take a cue from SMSF investors by taking a more proactive approach to our financial outlook. By actively taking control of our finances, we may get some of the peace of mind and health benefits that SMSF investors enjoy. Whether that means simply starting a budget, or moving your money from a low interest account, to a true savings account, there are steps to take to be more in control of our financial future.”

“When it comes to getting your super under control, start by consolidating any super accounts and tracking down any lost super via the Australian Taxation Office. Then look at your total superannuation balance and how much you are currently contributing. Once you know this, you can also consider how your super is being invested and whether you can contribute more to your account each year. And if you are happy leaving your super to the professionals, you can apply the same suggestions to your savings account and overall savings goals.”

Mr McAweeney went on to say that with the cash hub being central to any SMSF, there are a number of key considerations that apply to those with an SMSF as well as to everyday consumers looking to make the most of their savings. Not least of which is ensuring you use the right vehicle or product to make the most of your hard earned savings.

“Just as most people have a savings account as a core financial product, the cash hub remains central to any SMSF. When interest rates are historically low, as they are now, it is even more important that investors get the most from that cash hub account. This means doing the adequate research to find a product that will ensure they are maximising returns.”

“A typical SMSF holder is attracted by choice as much as control. They should look for market-leading online savings and term deposit options or other high-interest accounts that offer flexibility and no fees. At the end of the day, being in control often means making decisions – so arm yourself with as much information as possible to ensure you make the right financial decisions.”

Key findings

Australia’s savings on the increase.

Australians have learnt a valuable lesson from recent tough economic times, and have been busy squirrelling away savings in order to protect themselves from any further uncertainty; RaboDirect research shows.

Impressively, almost a third of Australians have a savings safeguard that would last them at least seven months if they had to live off it – up from 19% in 2012 to 29% in 2013. And at a national level, the average savings buffer increased by 43 days last year – giving people at least an extra month to live off in the event they lost their job.

The findings paint a much rosier picture of the nation’s savings habits and outlook compared to just over one year ago when almost half of Australians were living on the brink and had one months’ savings or less worth to live off if they lost their job.

According to RaboDirect’s Group Executive Manager, Greg McAweeney, while it is important to be prepared for the unexpected, it isn’t about focusing on the negatives but about positively planning for the future.

“When viewed on a global economic scale, Australia came out of the financial crisis looking pretty good, particularly compared to parts of Europe and the United States. That being said, we saw the national unemployment rate rise to 5.8% in November 2013 which begs the question, are we out of the woods just yet?

“Our latest national research shows that 17% of Australians said they had felt the effect of an involuntary loss of employment in their household in the previous 12 months. It’s unfortunate that the research also indicates that those who are already struggling are most likely to have felt the impact of the tighter job market.

“While no one can say exactly what the future holds, we should focus on the things we can control such us our individual savings habits. And being in control of this can also provide peace of mind. In fact, at least a third of the population say that they are putting money aside because savings make them feel more comfortable,” Mr McAweeney said.

So what do our current savings habits say about us?

Saving more helps us deal with the dreaded d-word

In the past few years Australians have made a name for themselves as good savers. A fifth of the population is saving between $200 and $500 each month – or $2,400 – $6,000 a year. That equates to a new plasma TV or a round the world trip for two each year! At the same time, we also felt better about dealing with debt, with 23% in 2013 saying they feel very comfortable about paying off debt.

We’re savvy savers but are still falling prey to the wrong savings products

Average savings balances have increased to $1,995 in 2013 up from $1,396 in 2012. However, we’re still falling trap to zero or low-interest accounts that do nothing to boost our savings, and often end up costing us money with fees and fines.

“Unfortunately too many Australians – 85% of the nation in fact – are missing out on millions of dollars in interest by leaving their money laying idle in everyday transaction accounts. We know the average balance sitting in Australians’ accounts is residing in an everyday transaction account, and in 2013 compared to 2012 this has increased by a whopping 42.9%,” Mr McAweeney said.

We’ve all got our reasons for penny pinching

According to RaboDirect, the top three reasons for saving are: to feel more comfortable; to save for a holiday; and to have money in case of emergency.

Additional key findings:

RaboDirect survey finds correlation between savings regularity and happiness.

While money itself may not be enough to buy happiness, regular saving habits can literally see people laugh all the way to the bank according to the 2013 RaboDirect National Saving and Debt Barometer (NSDB).

The research found that regular savers[1] can bank on happiness and good health, uncovering a direct correlation between savings regularity, happiness and health. An estimated 62% of regular savers report that they are completely happy with their life, well above the national average of 48%. Meanwhile, only 19% of ‘unrestrained spenders’[2] say they are completely happy.

And it’s not only mental wellbeing where regular savers lead the way, 56% of regular savers say they are in excellent health, more than double the amount of ‘unrestrained spenders’ who say this (26%).

Commenting on the findings, Greg McAweeney, Executive General Manager of RaboDirect, said: “We’ve always had our suspicions that regular savings habits could put a smile on the dial and now we have the proof. And it’s also interesting to note the link between savings and health. Just like you need regular exercise to keep fit and healthy, you can keep your finances in shape by taking steps like setting a savings goal, writing down a budget or moving your savings into a high interest savings account.

“It’s great to see that there are more Australians saving each month than in past years, however there is definitely room for improvement and our barometer research gives people good reason to kick start their savings habit. It’s not about how much money you have, it is what you do with it. So just by controlling the things you can control – such as your own personal saving habits –you could end up happier than ever before.

“For the 76% of Australians who haven’t yet established a regular savings plan and may need some extra help getting financially fit, consider seeking tips from a professional. A CERTIFIED FINANCIAL PLANNER® can act as your personal finance trainer. As our research findings show, a strong saving habit can see you healthy, wealthy and happy.”

Other key findings from the NSDB:

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Saving for Christmas starts early and budgets expected to be lean.

It may be a common gripe that Christmas comes earlier each year but new research has revealed that Christmas budgeting has already been underway in around one in five households since October.

The research comes from the 2013 RaboDirect National Savings and Debt Barometer (NSDB), an extensive study of Australians’ attitudes towards money and savings. The findings of the latest NSDB point to a lean Christmas for many with budgeting, bargain present shopping and agreeing a giving and receiving strategy between family members a key part of the planning process.

The survey found that Gen X were most likely to be planning for Christmas in October (22%), followed by Gen Y (16%) and Baby Boomers (15%).

The most common way of planning for the festive season was to set a budget ahead of time (58%). Additionally, 42% of people who started their planning early have already made a start on their Christmas shopping. For one third of people (32%) already planning Christmas, agreeing the giving and receiving strategy between family members had already been addressed back in October.

With Australians already expected to spend an estimated $42 billion this Christmas[1], planning ahead will be crucial to avoid a last minute impulse overspend during the holidays, says RaboDirect Executive General Manager, Greg McAweeney:

“As a nation, we will be spending upwards of $40 billion this Christmas. That is a vast amount of money – in fact; it would be enough to end world hunger for 12 months if it was instead donated to charity. Or if you break it down further, this estimate amounts to about $1,800 per person – which could buy 20 Christmas turkeys; or an overseas airfare; or 90 trips to the cinema. With that in mind, it is heartening to see that one in five Australians are proactively planning to spend consciously and avoid impulse purchases during the festive season.”

Mr McAweeney commented that this trend reflects a change in sentiment that has been observed through many facets of the RaboDirect NSDB research. “This year we have seen a trend for Australians to be more engaged with their money – whether that means planning a budget or knowing their rates on accounts. A lot of people have been lacking confidence in the economy and as a result, their own financial circumstances. This has led to people taking greater financial control, and having a plan for Christmas is one such example of how people are becoming more engaged with their finances.”

Key findings amongst those who have started planning for Christmas:

• Gen Y was more likely than Gen X or Baby Boomers to set expectations with family members about gift giving (40% versus 28% for Gen Y and Baby Boomers).
• Gen X was most likely to have started their shopping early (46%) compared to Gen Y (40%) and Baby Boomers (38%)

Mr McAweeney concluded, “Having a plan in place helps people to keep their finances on track, whether this is a savings goal or setting spending limits. This is particularly important at a time like Christmas where it is very easy to fall victim to impulse spending. If you haven’t started thinking about your Christmas gift buying yet, it’s never too late to start. The cost of entertainment, presents and hosting Christmas quickly mounts up so establishing spending plan will help ensure that Santa is the only one in the red on Christmas day.”

Few boomers have confidence recent changes will have positive outcomes for super.

Only 19% of Baby Boomers say recent moves to increase super contributions will give them more confidence in their ability to fund their retirement dreams according to the 2013 RaboDirect National Savings and Debt Barometer (NSDB), launched yesterday.

The survey of 2,322 Australians aged 18 to 65 also revealed the extent of the gap between average current superannuation pot ($180,467) for Baby Boomers and what they anticipate they will have at retirement ($316,666). And this latter figure falls worryingly short of the amount people feel that they would need to live 20 years in retirement ($749,824).

RaboDirect’s General Manager Greg McAweeney commented, “The retirement shortfall is worsened by the fact that, generally, people aren’t planning for the improvement in life expectancy. For instance people who are now 65 are expected to live until 85 for a man and 87 years for a woman and this equates to 20 years in retirement. And if you are younger than 65 you will live even longer than 20 years in retirement.”

The NSDB also found that almost one third (29%) of the Baby Boomer generation expect to have a mortgage when they retire. A large proportion are banking on super to repay this debt (25%) and for a further 33%, downsizing will hold the key to clearing their current mortgage and allowing them to enjoy their retirement mortgage free.

Levels of concern around mortgage debt post retirement are also high according to the study – more than half of Baby Boomers (54%) report that they are ‘quite’ or ‘very’ concerned about the prospect of retiring with a home loan.

While these findings may paint a seemingly bleak picture for retirees, Mr McAweeney says that awareness is necessary to encourage action and for people to think about how best to address the problems they are facing.

“It’s only with planning ahead, and having a clear understanding of their financial position heading into pre-retirement and retirement, that people can then start to think about solutions. Those who are a number of years away from retirement still have time to consider alternative savings strategies so they can avoid selling their homes or dipping into their super unnecessarily,” he said.

In other findings from the study released today, close to half of Baby Boomers (48%) expect to run out of money during retirement and say they will need the Aged Pension.

“For those who are facing the probability of drawing an Aged Pension later in life it is particularly important to look at ways of making their savings work as hard as possible now and really preparing for their retirement date,” Mr McAweeney commented.

Key findings:

The study found that many Baby Boomers are already living on a tight budget. More than seven in 10 (72%) Baby Boomers are reducing their power usage to save money and 68% are doing their own odd jobs rather than employing a tradesman.
Despite high levels of concern amongst Baby Boomer mortgagees, a significant proportion does not know what the rate is on their mortgage (16%).

In the current study 48% of Baby Boomers said they expected to run out of money during retirement. This is down from 57% last year, indicating an increase in confidence for this group.

Mr McAweeney concluded, “We conduct the National Savings and Debt Barometer to encourage people to become more engaged with their money so they can plan ahead and make the most of what they’ve got. For example, we know that Aussies are losing out on billions of lost interest by leaving their money in low interest accounts – the survey this year found that the average balance sitting in Australians’ transaction accounts has increased by 42.9% (from $1,396 to $1,995). By moving some of this excess money from a transaction account into a true-to-label savings account, Australians can make their money work harder for them and can truly experience the benefits of compound interest. This will give people greater financial freedom and more options in retirement.”

The 2012 RaboDirect National Savings and Debt Barometer reveals Aussies to be a charitable bunch with 20 per cent of Australians across all income brackets giving at least $500 per year to charity.
 
The survey also reveals that Generation Y – who is often given a bad rap for being self-centred, arrogant and financially irresponsible – is in fact ‘Generation Generous’. Of all the generations polled, Gen Y is the most committed to charitable giving. In the low income bracket (<$40k) Gen Y is most likely to donate to charity. They are also the least likely to reduce the amount they give when they suffer from a decline in their income.
 
Greg McAweeney, Executive Manager RaboDirect Australia & NZ said:
“Our survey figures show that Australians have a giving nature and want to help out those in less fortunate situations. While Generation Y can often be subject to negative press, our survey results have proven that they are more giving than Gen X or their Baby Boomer parents, even when they have less to give.
 
“When times are tough, donations are often the first things to suffer. However, there are ways and means to work your charitable giving into a normal savings plan.  Setting aside a small regular amount of money instead of drawing out a large sum is one way to do this. But money isn’t the only way people can help out – donating your time and your skills can be just as much help.
 
“As part of a co-operative bank, it is inbuilt within the RaboDirect culture that we give back to the communities in which we live and work. As well as charitable donations, we believe that there are other opportunities out there to make a difference. For a start, we offer our employees ‘Community Leave’, a program that allows employees to take work days out to volunteer within a charitable organisation of their choice.
 
“We see this as a great opportunity for employers and employees alike to look at putting programs in place within a business that provides people with opportunities to give back to the community and make a difference.”