In the Australian Government on Financial Stability, financial literacy has become increasingly important as our economy evolves. More people focus on becoming financially independent. It plays a crucial role in household wealth accumulation as it empowers individuals to make informed financial decisions, manage debt, and plan for long-term financial security.

“People with higher financial literacy are more likely to save, invest in assets that appreciate, and make smart decisions with their money, leading to higher net worth and wealth accumulation over time,” said business funding expert and small business loan provider  Shane Perry of Fund Spot—one of Australia’s trusted businesses funding source for startups. 

A person can learn about efficient money, debt, and wealth-building management by developing various financial competencies and skills. The core concepts of financial literacy should be known and are listed below.

1. Budgeting

The four primary uses of money in budgeting—spending, investing, saving, and giving—determine the size of the budget. People can better utilise their income and achieve financial stability and prosperity by striking the correct balance among the primary uses of money.

2. Investing

People who want to become financially educated should educate themselves on important aspects of investment. Interest rates, price ranges, diversification, risk-reduction techniques, and indexes are a few elements that investors should become knowledgeable about to ensure profitable investments. People can make better financial decisions and boost their income by learning about crucial investment components.

3. Borrowing

In most circumstances, almost everyone needs to borrow money at some point. Understanding interest rates, compound interest, the time value of money, payment terms, and loan structures is essential to ensuring that borrowing is done efficiently. If the criteria mentioned above are fully grasped, a person’s financial literacy will rise, resulting in more helpful borrowing advice and a decrease in long-term financial stress.

Personal financial management, the most crucial factor, combines most of the elements mentioned above. The above economic mix must be balanced to strengthen and increase investments and savings while lowering borrowing and debt. A person’s level of financial literacy will rise as they thoroughly understand the financial elements covered above.

Being financially educated is a skill that offers a variety of advantages that can raise people’s standards of life by increasing their financial security. The variety of advantages of having financial literacy are listed below:

• The capacity to make wiser financial choices
• Effective debt and money management
• More prepared to achieve financial objectives
• Lowering costs through improved regulation
• Less anxiety and stress related to money
• An increase in moral judgment when choosing investments, loans, insurance, and credit cards
• Creating a planned budget with efficiency

Accumulate Your Wealth Effectively With The Help Of Aussem Mortgage Solutions

Financial literacy is critical to the accumulation of household wealth. Individuals who understand the fundamentals of personal finance, investing, and risk management can make more informed financial decisions, resulting in increased savings and investments, improved credit scores, and overall financial stability and security. Individuals must continue to educate themselves about personal finance and make informed decisions to secure their financial future.

Aussem Mortgage Solutions provides service-based options that can aid in your financial independence. We at Aussem are committed to giving you personalised service in a setting that is convenient for you.

Contact us at info@aussem.com.au for more information.

Bad credit rating making it hard to get a home loan?

1. Get your credit report under control

The first thing you should do if you do have credit problems is get a copy of your credit report – to make sure you are aware of all the problem records you might have against your name.
Knowing exactly what’s in your report means you can then make a plan to sort things out. Debts that are overdue will stay on your file for five years, but the good news is that your credit file can be updated if you pay out the balance of a debt. If you have credit issues then potential lenders will want to know what actions you’ve taken to address those problems, so it’s best to get any defaults paid off so they can see you’ve made good progress.
If any information on your file is not accurate, make an immediate request to have it corrected so it doesn’t continue to affect your home-buying plans. If you think there’s been an error speak to the credit reporting agency and the credit provider involved to get it sorted out

2. Shop around more

If your credit file got a no with the first lender you tried, there are others you can approach; each lender has slightly different sets of boxes to tick. So if one lender didn’t look on your situation favourably, don’t give up – another might well take a different view.

EXTRA HOT TIP: Shopping around is a smart thing to do, but it’s important to remember that multiple credit applications in a short time frame can be bad for your credit score. So, it’s best to be cautious and only apply for one type of credit at a time. Working with someone like us will help you avoid these traps.

3. Explore the world of alternative lending

If your credit history is the only thing holding you back, you might be able to get a mortgage from a non-bank lender with a more flexible lending product.

4. Make sure you are in a situation to afford the repayments

If your credit history is the only thing holding you back, you might be able to get a mortgage from a non-bank lender with a more flexible lending product. The banks tend to have very fixed home loan assessment rules. Once upon a time they were pretty much the only option. Thankfully the world has moved on and now alternative lenders like Pepper Money offer a different approach. They can consider your application on its individual merits and look at a wider range of things not a narrow set

5. Look at alternatives to Lenders’ Mortgage Insurance (LMI)  

If you’re trying to buy a home with a deposit of less than 20 per cent, you’re likely to find you need to pay a fee for something called Lenders Mortgage Insurance (LMI). It covers the lender if you were to miss payments down the line. LMI providers are a separate business and have their own lending rules – so they’ll consider any application as carefully as the main lender. They may turn down a LMI application because of credit history or income source, even when a lender has given an approval.

A different way of doing this is rather than using a third-party mortgage insurer, some lenders – like Pepper Money – can offer a Lender Protection Fee (LPF), which gives them the flexibility to assess your loan without having to get outside approval from LMI providers. If you’d like more information, talk to us today about how we may be able to put you in touch with a lender that can help if the major banks say ‘no’ to your loan application. 0432297651.

How Financial Literacy Affects Your Income, Debt and Wealth Levels

Money management is a personal skill that is useful throughout a person’s life. However, it is not something that everybody easily learns. Why? Because it can be daunting with all the due dates, bills, charges, invoices, investments, etc.

According to a  survey by Household, Income and Labour Dynamics in Australia (HILDA), only 25% of people under 25 years old have a good understanding of inflation, interest, and diversified investments.

Sadly, personal money management isn’t formally taught in schools. You just pick up the lessons through the years and it requires financial literacy and personal responsibility to be able to meet your financial goals.

Karina Wolfin, the consultant for home appliance rentals at DAR, believes that financial literacy is key to a comfortable life for most people. “Financial literacy is what makes the difference between a person earning six digits to someone earning a few hundred a months. No matter how much you earn, you’ll still struggle financially if you don’t know how to handle money correctly. It’s not a promise that you will be rich, but it will help you become more comfortable.”

Let’s explore further how financial literacy affects our income, debt, and wealth levels:

Teaches you how to budget:

To fulfil all financial responsibilities, get rid of debt, and accumulate money, it’s crucial to learn to budget. It all begins with knowing how much you’re earning and how to allocate it effectively.

Once you set a budget, you can track all your expenses and re-evaluate your spending plan from time and again. There are different budget methods; choose what you’re most comfortable with.

Helps you manage debt:

A study showed that 37% of Australians are struggling to get rid of debts, and 50% of millennials state that debt is a personal problem for them.

Australian household debt has consistently increased over the past 30 years, as more of us aspire to continue to depend on loans and credit cards.

If you are financially literate, you’ll be more careful with debts. As much as possible, you’d avoid borrowing money from an institution or an individual. However, many of us will have to loan for long-term purposes, such as house and education. Financially literacy will teach you how to find the lowest charges and best deals.

Encourages you to create an emergency fund:

One of the effective ways to prevent debt accumulation is to prepare an emergency fund. This type of fund should only be touched should unexpected expenses come up. Ideally, an emergency fund should cover at least 3 to 6 months’ worth of expenses—and should be replenished as soon as possible.

Helps you see the need for a retirement plan:

While building a safety net, a retirement fund should be part of your long-term goal. A financially literate person knows how much he/she has to save to live comfortably during retirement years.

Do you need to take a loan for a house, a business, or any other personal endeavour?

Aussem Mortgage Solutions offers service-based services that can help you achieve financial freedom. Contact us now to discuss your needs.

3 Biggest Mistakes In Investment

Investment is a game of high stakes. However, knowing what the three biggest mistakes are can help you avoid substantial losses.

1. Procrastination

Probably the biggest mistake is simply not starting to invest sooner. Time is not on your side when choosing an investment strategy. While you can retire later or move deadlines, you can never go back in time to when you should have started investing. And because you can never travel back in time, there is no better time to invest than right now. The reason for this is compound interest.

Compound interest occurs when your gains start earning more profits. This means that you aren’t only relying on your original investment but that your money actually starts working for you. However, this is often the time when investors get greedy and opt for returns that they think might provide greater returns, which brings us to the second biggest mistake in investing.

2. Chasing Greater Returns

The next big mistake is not being satisfied with the returns you are receiving and always chasing that bigger and better bet. When Money Magazine published its “Best 50 Mutual Funds”,  it became difficult for many to resist the temptation to chase larger investments. And although a fund that has made 25% in returns over the past three years may look incredibly attractive, what you aren’t seeing is the difference between fund returns and investor returns.

Buying on advice from publications or family and friends means that you are chasing returns. And when the investment doesn’t deliver, selling and moving on the next hot pick can become a vicious cycle that can have negative results.

For example, a presentation by a well-known research company for financial advisers that went a long way to confirming my thoughts on this. Although I can’t provide the data from the presentation as it is yet to be approved for the public, I can give you the information from an article published by Kiplinger magazine that cites statistics from Morningstar. The article headed “Your Real Total Return” states that “Investors earnings are often far less than the reported gains of the fund, especially when it comes to volatile funds.”. The article does a great job of illustrating this point that many advisers debate with their clients when the markets start getting hot.

The choice of assets that form part of the investment or asset allocation forms the greater part of investment return – upwards of 95%. Gary P. Brinson, L. Randolph Hood and L. Beebower revealed this in an unprecedented paper titled “Determinants of Portfolio Performance” that was published in 1986. Funds that form part of the asset location portion of your investment portfolio should therefore provide decent returns as long as they have low volatility to avoid investor anxiety according to the Klipinger article.

3. Over-Paying

Many investors make the plain error of paying too much for an investment. Greater returns come from reducing expenses. And I am not the only one who believes in the theory. According to John Bogle, founder of Vanguard, the fastest way to the top performance quartile is to be in the bottom of the expense quartile. Of the 57 funds that have been running between 1981 and 2001, the Vanguard 500 Index Fund, has tied as the 7th best performer for that period.

For investors who are chasing returns, their best bet would’ve been to invest in any of the seven funds that beat Vanguard. However, you would need to hold on to that investment for a period of 20 years which may be difficult for the return chaser.

So how can you avoid making one of these three big mistakes in investing?

Lower Your Costs

A business expert Rapid Biz states. “Choosing allocations in low-cost index funds can help reduce your investment costs. Although these will probably never give you the returns related to paper, over time, the reduced expenses will prevent you from ever falling into the bottom quartile. You may not be getting the best returns, but you will certainly have peace of mind about your return on investment”. 

Plan Ahead

An excellent way to avoid procrastinating is to have a plan in place. Research shows that an investment plan laid out in black and white improves your chances of increased funds at retirement. A good program allows you to focus and holds you accountable. You can refer to it as needed and make adjustments as necessary.

Asset Allocation

Trust asset allocation instead of chasing returns. Asset allocation has historically proven returns of over 90% of your investment portfolio. Remember that the odds are against you if you are chasing investment returns. Visit Aussem Mortgage Solutions  find out more about asset allocation.

Cost-Saving Strategies For Employee Benefits

Second only to payroll, a company’s benefits package is the most expensive item on the budget. Any cost-saving measures that can be applied to benefits can, therefore, have a significant impact on your bottom-line.

However, approaching the benefits package with only cost-savings in mind can be a disadvantage for your organisation. Benefits are one of the primary means that businesses use to attract top talent. A cost-saving strategy that may be saving you money on the face of it may mean you lose out on the skilled, experienced and qualified employees. At the same time, sacrificing that all-important bottom-line for the ability to attract and retain the best is not always plausible.

It’s all about achieving that perfect balance between offering an attractive benefits package while keeping the budget trimmed.

To find out how to achieve this balance, we asked the benefits experts – our employees – what a company can do to save money on their benefits package and found the following:

1. Re-consider Medical Insurance Plan Designs And The Cover They Offer

There is a wide variety of medical coverage option available that you can offer your employees that will attract and retain the best employees. Simply opting for the most expensive plan is however not necessary and can be costly.

Restructuring the different plan options available can ensure that your employees are not over-insured while offering them competitive benefits. Opting for health insurance through a local PEO (Professional Employer Organisation provides employers with access to a larger pool of plan designs from the top carriers to choose from. This is especially beneficial for small businesses or groups who would normally be subject to a community rating.

2.  Reconsider Employer Contributions

Employers offering medical insurance to their employees are required by law to pay a minimum contribution to their premiums. This is usually 50% of employee-only cover relevant to the lowest cost plan on offer.

Many employers choose to contribute more than this minimum to attract and retain talent. However, percentage-based contributions can become costly. The G&A Benefits Team suggest structuring benefits according to a set dollar amount rather than applying the equal contribution percentage strategy to every plan that is offered to employees. This way, the company will save money on contributions for employees who choose to enrol on the more expensive plans available to them. As long as the dollar amount meets the required minimum for employer contributions percentage, this is a fair and effective benefits cost-saving measure. Every employee receives instead of the same contribution to their medical plan no matter the plan they choose.

Business analysts at Credit Capital say, “no matter what plans your employees choose, the cost-to-company remains the same when you choose a set dollar contribution strategy instead of a percentage. This not only lowers medical contributions costs for the company but also makes the cost associated with the benefit far more predictable.”

3. Educate Employees About The Benefits Offering

It isn’t only employers who find benefits complicated and confusing. According to our Collective Health Poll, over 60% of respondents said that they find the benefits options confusing and that they don’t understand them.

Also, employees often feel pressured or rushed into deciding within the enrollment period which leads to them simply selecting an option that they are familiar and comfortable with. Offering multiple meetings to discuss different plan options that are available in detail throughout the year will keep employees informed and thinking about alternative plan options.

Taking the time to educate your employees on the different benefit options that are available to them will prevent them from choosing the wrong option and then complaining about it at a later date. It will also save your company money in the long run.

4. Tax Reductions

Salary sacrifice strategies, where employees are willing to forego a portion of their salary instead of non-cash benefits can provide huge cost-savings for an employer. These types of benefits often include gym memberships, travel cards, car schemes, childcare and so on.

This also has tax benefits for employers and employees. The lower their salary, the less you need to contribute towards taxes and national insurance on their behalf. You should, however, be aware that the government has introduced a tax on some benefits such as company cars and mobile phone packages. Make sure you choose salary sacrifice schemes that are tax-free to save costs for your company.

Increase your cash flow. Get your business going!

We’ll save you days of confusion and stress!

Aussem Mortgage Solutions offers you faster and easier funding from $5,000- $300,000.

TALK TO US- 0432 297 651

5 Ways To Get Out Of Debt

It can be far too easy to find yourself in debt. Unfortunately, the same can’t be said for getting yourself out of it. It really doesn’t matter what your debt comes from, there is nothing “good” about debt and you have to pay it back either way.

Unfortunately, for many, they can find themselves paying off debt for the majority of their lives. Living with debt can place a lot of unnecessary stress on yourself not only due to the mental but also because of the financial burden.

Recent statistics reveal that there are 14,482,877 credit cards in Australia as of March 2020.

Some believe that you don’t have to simply accept living with debt and it doesn’t have to take you an entire lifetime to pay off.

Having a good action plan when it comes to getting out of debt and following it to a tee can help give you the right track to follow to successfully navigate yourself out of it. There are certain strategies that you will be able to leverage to speed things up. Below are 5 steps to getting yourself out of debt.

 1. Know The Numbers

As your debt continues to pile up, a lot of people look to avoid it entirely. After all, “out of sight, out of mind.” Thus, rather than confronting their debt head-on, they allow it to continue to spiral out of control. If you are looking to get yourself out of debt, the first thing you must do is make a list of everything you owe. Write down the following:

• Who you owe
• How much interest you owe
• The total interest rate
• The total payment amounts

Having a comprehensive list of everything you owe might make things real and scary, it can really help. By having everything written down, you will have all of the information you need to develop a strategy to pay everything off in its entirety.

 2. Track Your Finances

There are two main factors at play when it comes to paying off your debt.

• First, you want to try to leverage the discretionary income you do have into paying off your debts before buying anything else.

• Second, you want to avoid taking on additional debt if at all possible. While it is certainly easier said than done, anything you can put towards paying off your debt can do wonders.

Finance Analysts at Max Funding say,” by having a crystal clear understanding and overview of your finances, you will be able to figure out where you can start to cut down on your debt without negatively impacting other areas of your life. If you don’t currently budget, you can utilise budgeting software which can help you track everything accurately and make the entire process less time consuming and less of a burden.”

 3. Come Up With A Plan

As soon as you have written out all of your debts and once you have come up with a budget, you will be able to sort through which loans should be paid back first.Whether you want to pay off the home loan or auto loan first, there are two distinct strategies that you can consider:

 Debt Avalanche

This is the strategy of paying off all of the debt that you have that accrues the most interest. This is the strategy that is going to end up saving you the most money over the course of time.

Debt Snowball

This pay off strategy is when you focus on paying off your lowest balance first and continue to work your way up the ladder to your highest. This approach is much more likely to be mentally/psychologically rewarding as you will be able to completely cross off loans and debts earlier than you would with the avalanche method.

No matter which you end up choosing, as soon as you pay off a loan, you will want to utilise the money you would have spent on that loan for another debt on your list. You may even decide to mix the two strategies together and tackle some of the smaller debts first prior to paying off your debt that is accruing the highest interest rates.

4. Always Celebrate Your Wins

The entire process of getting out of debt can be long, tedious, and not fun at all. Because of this, keeping yourself motivated towards the end-goal isn’t the easiest task. As a result, you want to look to create smaller and attainable goals that you will be able to celebrate. By creating these smaller and attainable short term goals, you should be able to continue to give yourself the motivation you need to reach your ultimate end goal of being debt-free.

5. Get Out Of Debt

There are all kinds of things that you should be doing when you are looking to get out of debt quickly. Making significant lifestyle changes is one of the best things you can do to make big gains. You should consider implementing some of the following strategies:

Cut Back On Spending

To increase the amount of money you are able to put towards paying off your debt, you will need to spend less or make more money. You can do this by switching up your lifestyle and really finding small cuts you can make here and there.

Always Look For Deals

While you could cut back on your spending by simply spending less, you could also attempt to spend more wisely. Check to see what you are spending the most money on in terms of your necessities and try to score savings on those items that you are already buying. You can use coupons, shop during sales, or even buy in bulk to score deals.

Get Another Income

You can always try to add to your income. Either by finding another job, getting a second job, or even by doing a side hustle. By making more money, you will have a much easier time finding the extra money you can use to pay off your debt.

Refinance Your Debts

 If you have good credit now than you did before the loans, you will mostly be able to refinance to save big.

 Balance Transfers

If you qualify, you can find credit cards with a promotional rate of 0% for balance transfers. These cards can earn you extra time to pay off your debt without having to worry about high-interest rates.

By using the right strategies, you should be able to get out of debt quickly and get started on a better financial track. Use some of the tips above and you should be able to get started on your journey to finally being debt-free.

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Written By: Claire Dawson