Retirement Income

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How social media can make us spend more and save less

<p>Social media has made it easier than ever to stay updated on the lives of your friends and family members, but what many may not realise is that it can also lead you to splurge.</p> <p>Seeing other people’s consumptions – be it a restaurant dinner, a new car or a trip to Bali – can encourage you to fork out some money of your own, <a href="https://www.nber.org/papers/w25566">a study</a> has found.</p> <p>Professors from the University of California and University of Toronto discovered that visibility bias leads people to spend more and save less, because they only see what others are spending.</p> <p>According to one of the study’s co-authors David Hirshleifer, our consumption habits are influenced by the social interactions we are having. Because people talk about what they are doing, he said, they are more likely to share about their consumption than non-consumption.</p> <p>Being aware of other people’s spending can lead us to make incorrect assumptions about their financial position as well as ours, the experts said. The heavy spenders around us may indicate that the future wealth prospects are positive, leading us to share the belief and increase our own consumption.</p> <p>“That signal from my peers about what they think about the future, and any income growth, and their resulting actions kind of give me some kind of clue about my future,” Han Bing, another co-author of the study told the <span><a href="http://www.bbc.com/capital/story/20190320-decoding-the-bias-that-makes-us-spend-and-not-save"><em>BBC</em></a></span>.</p> <p>This bias is exacerbated by social media, as people are more likely to share photographs of their new clothes or boats than their savings.</p> <p>Being aware of the possibility of bias is the first step to prevent overspending, Hirshleifer said. “Psychologists have sometimes found that if one becomes aware of a psychological bias, that can reduce the bias.”</p> <p>It can also be helpful to identify those who regularly share their spending habits on your social media feed and hide or mute their posts for a period. Joining thrift groups on social media can also keep you accountable and counter the excess effect from visibility bias by showing how others are saving rather than lavishing.</p> <p>Have you been spending more since using social media? Let us know in the comments.</p>

Retirement Income

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4 things you should consider before switching credit cards

<p><span>Thinking about changing your credit card? Our lifestyle and how we use our money can change throughout the years, so it’s always good to re-evaluate your spending habits from time to time and check if your card still fits the bill. </span></p> <p><span>Here are the four things you should consider before switching to another credit card.</span></p> <p><strong><span>1. Annual fees</span></strong></p> <p><span>The annual fee is not always a deal-breaker – in general, the higher the annual fee is, the more rewards and features the credit card offers. However, if you don’t use your credit card often, you are unlikely to get value out of it as the annual fee cancels out the benefits.</span></p> <p><span>Some cards will also waive annual fees if you spend a certain amount in a year. But if you are not a big, regular spender, a zero-dollar annual fee card might be what you are looking for. </span></p> <p><strong><span>2. Interest rates</span></strong></p> <p><span>Not everyone can pay their bill in full every month – and this is where interest rates matter. Your ability to repay debts may be significantly influenced by the interest rates of your credit card. You may end up getting stuck in a cycle if your card is charging interest rates faster than you can pay off the bills. </span></p> <p><span>When this occurs, you might want to find a balance transfer credit card with a low or zero per cent interest rate for a limited period. You can then move your debt from the old card to the new one, save on interest and focus on getting on top of your balance. </span></p> <p><strong><span>3. Foreign transaction fees</span></strong></p> <p><span>When you are travelling overseas, having a credit card can give you a peace of mind – it makes transactions possible even if you don’t have cash at hand. This convenience comes at the cost of foreign or international transaction fees.</span></p> <p><span>You don’t even have to be abroad to be hit with these fees – if you are shopping online and the merchant happens to be out of the country, the card can still charge you to cover the currency conversion. Most banks and credit providers generally charge between 2 to 3.5 per cent on any purchases being made under these circumstances.</span></p> <p><span>Frequent travellers and shoppers can cut costs by opting for cards that have no foreign currency exchange fees. Many of these cards will also offer other travel benefits, including low to no ATM withdrawal fees.</span></p> <p><strong><span>4. Rewards</span></strong></p> <p><span>You may be a good customer, with regular spending and on-time payments. However, if the rewards that you were promised upon signing up still turn out to be elusive, it might be time to find a new card.</span></p> <p><span>Rewards might take the form of travel miles, points, cash-back, gift vouchers, special offers and more. While these benefits might sound tempting, you most likely have to spend a significant amount on the card to be able to access them. Rewards credit cards also generally come with higher interest rates.</span></p> <p><span>Are you thinking of finding a new credit card? Let us know in the comments.</span></p>

Retirement Income

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How many healthy years do you have left?

<p>As the old saying goes, the only things certain in life are death and taxes. While death is inevitable, the quality of life you experience until death is often within an individual’s control.</p> <p>This is what our team at the Goldenson Center for Actuarial Research chose to focus on by developing <a href="http://goldensoncenter.uconn.edu/projects/">a rigorous measure of quality of life</a>. How many healthy years of life do you have ahead before you become unhealthy?</p> <p>Everyone understands the benefits of living a long healthy life, but this also has implications for industry and society. Medical costs, financial planning and health support services are directly related to the state of health of an individual or community.</p> <p>We call this measure of quality of life “healthy life expectancy” and its complement “unhealthy life expectancy.” We define entering an unhealthy state as a severe enough state of disablement that there is no recovery, so you remain unhealthy until death.</p> <p>It follows that life expectancy – a measure of the total future years an individual is expected to live – is simply the two added together.</p> <p><strong>Calculating</strong></p> <p>Imagine a healthy 60-year-old male who exercises regularly, has a healthy diet and healthy body mass index and sleeps at least eight hours a night. By our estimate, he could have an additional 13 years of healthy living compared to his unhealthy counterpart. That’s 13 more years of quality living with family and loved ones.</p> <p>This is quite a startling revelation, not only because of the significant difference in healthy life expectancy between these two individuals, but also because this difference is driven by lifestyle choices within the individual’s control.</p> <p>So what factors contribute to a better healthy life expectancy? Two factors that are not lifestyle-related are age and gender. All other things being equal, healthy life expectancy decreases with age. Women have a <a href="http://www.bbc.com/future/story/20151001-why-women-live-longer-than-men">longer healthy life expectancy</a> compared to men.</p> <p>We have already seen that diet, exercise and sufficient sleep positively impact healthy life expectancy. <a href="https://www.cdc.gov/nchs/data/statnt/statnt21.pdf">Other positive factors</a> that we have incorporated in our model include level of education, level of income, perception of one’s own state of health, moderate alcohol intake, not smoking and absence of Type 2 diabetes. The higher the level of education and income, the higher your healthy life expectancy. Having a positive perception of your state of health helps, too.</p> <p><strong>Try it yourself</strong></p> <p>Want to know your own estimate of healthy years ahead? We developed <a href="https://apps.goldensoncenter.uconn.edu/HLEC/">a free online tool</a> that lets you calculate healthy, unhealthy and total life expectancy. This is work in progress.</p> <p>This is the first time such a measurement tool has been developed. While it’s too early to validate the accuracy of our calculations with actual data, we have been careful to ensure that the model assumptions are based on established actuarial sources and the modeling results are logical and consistent.</p> <p>It should be noted that healthy life expectancy is simply an educated prediction. Unforeseen incidents – like being hit by a truck – could render this estimate invalid, no matter how well you manage lifestyle habits. Also, there could be other nonmeasurable factors impacting healthy life expectancy that we have not included in our model, like level of stress, a positive attitude to life or social connections.</p> <p><strong>Putting our model to work</strong></p> <p>Our team plans to explore some of these practical applications of healthy life expectancy in industry.</p> <p>For example, the concept of healthy life expectancy can help with retirement financial planning. Annual retirement spending should not be level across your life expectancy. More discretionary retirement spending should happen during healthy years and less during unhealthy years, while spending on basic expenses increases during unhealthy years.</p> <p>Insurance products can be also designed using healthy life expectancy measures in mind. This can protect an individual against additional basic living expenses during the unhealthy period. One such product could be a deferred long-term care or temporary deferred life annuity, where the deferral period is for healthy life expectancy and the temporary coverage is for the unhealthy period. This can be a significantly cheaper and a more needed product compared to what is available in the marketplace currently.</p> <p>Since healthy life expectancy is also related to quality of life and level of health, a relative index could compare an individual’s results against a benchmark healthy life expectancy for someone with “average” characteristics. This can then be used as an underwriting tool and to predict future health care costs. Our model could also serve as a patient screening tool for medical providers by incorporating more detailed lifestyle and dietary details as well as prior medical history information.</p> <p>We hope that other researchers and practitioners will continue to build on this. Then society could focus on not just prolonging life, but prolonging quality of life using our model. As the saying goes, “In the end, it is not the years in your life that count. It’s the life in your years.”<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/84498/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: http://theconversation.com/republishing-guidelines --></p> <p><em>Written by <span>Jeyaraj Vadiveloo, Director of the Janet and Mark L. Goldenson Center for Actuarial Research, University of Connecticut</span>. Republished with permission of </em><a href="https://theconversation.com/our-calculator-will-guess-how-many-healthy-years-of-life-you-have-left-84498"><em>The Conversation</em></a><em>.</em></p>

Retirement Income

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The fool-proof way of saving for retirement

<p>We know that saving money is important – but what is less known is <em>how</em> to save money, and how much of our income should be allocated to our savings account.</p> <p>Most experts recommend saving at least 20 per cent of your income, but you should complement this rule of thumb with your own goals. In other words, the amount you should save depends on your personal priorities and reasons for saving.</p> <p>According to financial planner Eric Roberge, there are three factors to consider: how much your goals would cost, what kind of expenses your dream lifestyle would entail, and when you would need the savings.</p> <blockquote class="twitter-tweet" data-lang="en"> <p dir="ltr">How much you need to save depends on:<br /><br />How much your goals cost<br />How much it takes to fund your ideal lifestyle<br />The timeline between now &amp; when you need the money<br /><br />As a guideline, save 20-30% of income. But for a better outcome, use a specific plan that addresses these factors.</p> — Eric Roberge, CFP® (@beyondfinances) <a href="https://twitter.com/beyondfinances/status/1100397642683691009?ref_src=twsrc%5Etfw">February 26, 2019</a></blockquote> <p>Setting targets and deadlines for savings can help you prepare for the future and live an enjoyable lifestyle in the present. “If your goals are less expensive, you don’t necessarily need to save huge amounts of money,” Roberge told <span><a href="https://www.businessinsider.com.au/how-to-save-money-2019-2?r=US&amp;IR=T"><em>Business Insider</em></a></span>.</p> <p>“We want to be careful not to overfund goals and end up with money that doesn’t have a purpose; instead of over-saving, you may be able to enjoy that money a little bit more today.”</p> <p>Finding your dream savings to be a little out of reach? There are four options, according to <span><a href="https://www.tiaa.org/public/offer/insights/starting-out/how-much-of-my-income-should-i-save-every-month">personal finance journalist</a></span> Paula Pant: change your goals, reconsider your timeline, earn more (through pay rise, investments, additional jobs and more), or reduce your current spending to save more.</p> <p>Apart from your personal goals, Pant also advised saving up for rainy days.</p> <p>“You should establish an ‘emergency fund’ that can cover 3-9 months of your living expenses,” Pant said.</p> <p>This number might sound daunting, but Pant suggested that it is possible to build a six-month emergency fund within a year. Her method: calculate your monthly cost of living, excluding the non-essentials such as cable TV or unused memberships. If you can save up half this amount every month, you’re already well on your way.</p> <p>Do you have a savings plan that you recommend? Let us know in the comments below.</p>

Retirement Income

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Can money buy happiness?

<p><span style="font-weight: 400;">Some of us would go to great lengths to save money, even if it means spending more time and dealing with more inconveniences on the way – be it lining up for coveted bargains or looking for secret tricks to score lower prices. But Ashley Whillans, professor at Harvard Business School believes that another approach is better in bringing us happiness.</span></p> <p><span style="font-weight: 400;">In the </span><em><a href="https://hbr.org/ideacast/2019/01/use-your-money-to-buy-happier-time"><span style="font-weight: 400;">HBR IdeaCast</span></a> </em><span style="font-weight: 400;">podcast, Whillans said that people will gain the most happiness when they use their money to buy time. She believed we should spend our hard-earned cash not only on the things we like, but also to get out of “negative experiences” like doing the dishes or commuting. </span></p> <p><span style="font-weight: 400;">This means paying for goods and services that will reduce the time spent on stressful activities – for example, buying a pricier house that is close to anywhere to avoid getting stuck in traffic.</span></p> <p><span style="font-weight: 400;">Many people might not be comfortable with the idea of paying someone to perform seemingly basic chores like cooking, shopping or driving. However, Whillans argued that we could shift our perspective on time and money. </span></p> <p><span style="font-weight: 400;">“I find in my studies that people feel really guilty about outsourcing even though they’re giving up money to have more time that they’ve earned,” she said.</span></p> <p><span style="font-weight: 400;">But one of her studies found that enlisting the help of “time-saving services” can help reduce stress and improve happiness.</span></p> <p><span style="font-weight: 400;">“Just the simple act of thinking about giving up money to have more free time seems to make people plan their time a little bit better. If I’m going to incur this cost to have this free time, then I’m going to make sure I really enjoy the free time that I have.”</span></p> <p><span style="font-weight: 400;">But this doesn’t mean overhauling your budget and outsourcing every task. Whillans recommended starting small and staying away from drastic changes. “Just sitting down and thinking about whether there’s anything you can outsource that you really don’t like, that stresses you out a lot, that you can afford,” Whillans said.</span></p> <p><span style="font-weight: 400;">Would you spend more money to get quality free time? Share your thoughts in the comments.</span></p>

Retirement Income

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5 tips to improve your financial wellbeing

<p>Have you been thinking about money lately? Wondering where to find more? Thinking you could do a better job of managing the dollars you have? If so, you are in good company.</p> <p>Between figuring out how to pay for bills that added up over December holidays, wishing for warmth or a vacation and looking at the beginning of tax season, this is a time of year when people are often prompted to take a closer look at their finances.</p> <p>Yet the picture we see when we look closer isn’t always good.</p> <p>Our research shows that <a href="https://doi.org/10.1007/s10834-016-9516-1">the more money family caregivers need to spend on the care needs of others, the worse their own personal financial, social and health outcomes are</a>. It also points to the need to consider our own care needs as well as our families’ when we plan our financial futures.</p> <p>The financial crisis of 2008-09 sparked increased interest in financial literacy worldwide. In Canada, <a href="http://publications.gc.ca/collections/collection_2011/fin/F2-198-2011-eng.pdf">the Task Force on Financial Literacy</a> defined financial literacy as having the knowledge, skills and confidence to make responsible financial decisions.</p> <p>Following on the work of the task force, the <a href="https://www.canada.ca/en/financial-consumer-agency/programs/financial-literacy/financial-literacy-strategy.html">Financial Consumer Agency of Canada consulted widely and developed a national strategy for financial literacy</a>.</p> <p>Now researchers are moving beyond the idea of financial literacy, which tends to focus on what we know about finances, to thinking about financial well-being or financial health — the outcome we want to achieve.</p> <p><strong>What is financial well-being?</strong></p> <p>An international authority on consumer finances, Elaine Kempson, defines financial well-being as <a href="https://www.researchgate.net/publication/326847922_Understanding_Financial_Well-Being_and_Capability_-_A_Revised_Model_and_Comprehensive_Analysis">the capacity to meet one’s current obligations comfortably and the resilience to maintain this capacity in the future</a>.</p> <p>That’s challenging for many reasons. We have to make decisions for today that are going to help us in a future with a lot of unknowns.</p> <p>It isn’t just financial knowledge that matters, but also what we are able to do with that knowledge in our economic and social environments.</p> <p>Further, as research in behavioural economics is showing, <a href="https://www.ted.com/talks/dan_ariely_asks_are_we_in_control_of_our_own_decisions/discussion">our brains can get in the way</a>. We think we are making <a href="https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-our-most-irrational-financial-habit-cheaping-out-on-retirement-saving/">perfectly rational, logical decisions when we aren’t</a>.</p> <p>Technological innovation in <a href="https://www.huffingtonpost.com/entry/what-is-fintech_us_58a20d80e4b0cd37efcfebaa">financial services (“fintech”)</a> can be difficult to keep pace with and understand.</p> <p>And, although there are lots of resources, it can be difficult to figure out which are appropriate for our own situation.</p> <p>So if you’ve been finding it difficult to get control of your money and make the changes you want to make to improve your financial well-being, there are some good reasons it might be challenging.</p> <p>While some people respond to a challenge by digging right in, others prefer to look the other way and hope it will all work out in the end.</p> <p>However, when it comes to money, looking the other way can result in big problems — or at the very least, missed opportunities.</p> <p><strong>Tips for increasing financial well-being</strong></p> <p>Whether you feel overwhelmed by your finances and don’t know where to start, or you think things are pretty good but you’d like to make them better, it’s never too late to make a change.</p> <p>Here are some tips and techniques to start improving financial well-being.</p> <p><strong>1. Spend less than you earn</strong></p> <p>Think about three big categories of money: spending for today, saving for the future and giving to the causes and organizations that matter to you and your family. When we spend less than we earn, we create the space to save and to give to others. Note: spending includes debt repayment!</p> <p><strong>2. Do the math</strong></p> <p>No one tool is best, but most of us could use a little help in making a budget, revising it as needed and tracking spending. Use what works for you, whether that’s a spreadsheet, an app, financial software or a pencil and paper. The best tools are the ones you use. </p> <p><strong>3. If possible, don’t do it alone</strong></p> <p>If you have a spouse or partner, work to be sure you are on the same page with financial decisions. Financial stress can be a significant source of tension in relationships. If you’re single, could you have a low-budget finance date or breakfast with a friend to compare notes?</p> <p>And if you have kids, bring them into money conversations in age-appropriate ways. Research is showing parents can be important, positive financial role models for their children.</p> <p><strong>4. Save off the top</strong></p> <p>Arrange to have a set amount come out of your chequing account and go into a savings account each payday. Revise the amount as your pay changes over time. Aim to have three to six months worth of expenses in savings to cover emergencies. </p> <p><strong>5. File that tax return</strong></p> <p>Even if you don’t owe taxes, file that return!</p> <p>Filing is the only way to get refundable tax credits like the GST refund. Federal and provincial governments use the income on tax returns to establish eligibility for benefits and supports.</p> <p>Even if you don’t get a sunshine getaway this year, if you’re responsible and proactive right now, a piece of that serenity will be within reach through your ongoing wellness — and the occasional well-planned splurge.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/111489/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: http://theconversation.com/republishing-guidelines --></p> <p><em>Written by <span>Karen Duncan, Associate Professor, Department of Community Health Sciences, University of Manitoba</span>. Republished with permission of </em><a href="https://theconversation.com/no-vacation-find-serenity-with-these-five-financial-wellness-tips-111489"><em>The Conversation</em></a><em>.</em></p>

Retirement Income

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How shops nudge you into spending more

<p>Price is the most delicate element of the marketing mix, and much thought goes into setting prices to nudge us towards spending more.</p> <p>There’s one particularly cunning type of pricing strategy that marketers use to get you to switch your choice from one option to a more expensive or profitable one.</p> <p>It’s called the <a href="https://www.intelligenteconomist.com/decoy-effect/">decoy effect</a>.</p> <p>Imagine you are shopping for a Nutribullet blender. You see two options. The cheaper one, at $89, promotes 900 watts of power and a five-piece accessory kit. The more expensive one, at $149, is 1,200 watts and has 12 accessories.</p> <p><img src="https://images.theconversation.com/files/259209/original/file-20190215-1745-1120dly.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="" /> <span class="caption"></span></p> <p>Which one you choose will depend on some assessment of their relative value for money. It’s not immediately apparent, though, that the more expensive option is better value. It’s slightly less than 35 per cent more powerful but costs nearly 70 per cent more. It does have more than twice as many plastic accessories, but what are they worth?</p> <p>Now consider the two in light of a third option.</p> <p><img src="https://images.theconversation.com/files/259210/original/file-20190215-1751-jgbfa2.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="" /> <span class="caption"></span></p> <p>This one, for $125, offers 1,000 watts and nine accessories. It enables you to make what feels like a more considered comparison. For $36 more than the cheaper option, you get four more accessories and an extra 100 watts of power. But if you spend just $24 extra, you get a further three accessories and 200 watts more power. Bargain!</p> <p>You have just experienced the decoy effect.</p> <p><strong>Asymmetric dominance</strong></p> <p>The decoy effect is defined as the phenomenon whereby consumers change their preference between two options when presented with a third option – the “decoy” – that is “asymmetrically dominated”. It is also referred to as the “attraction effect” or “asymmetric dominance effect”.</p> <p>What asymmetric domination means is the decoy is priced to make one of the other options much more attractive. It is “dominated” in terms of perceived value (quantity, quality, extra features and so on). The decoy is not intended to sell, just to nudge consumers away from the “competitor” and towards the “target” – usually the more expensive or profitable option.</p> <p>The effect was first described by academics Joel Huber, John Payne and Christopher Puto <a href="https://apps.dtic.mil/dtic/tr/fulltext/u2/a101132.pdf">in a paper</a> presented to a conference in 1981 (and later published in the <em><a href="http://dx.doi.org/10.1086/208899">Journal of Consumer Research</a></em> in 1982).</p> <p>They demonstrated the effect through experiments in which participants (university students) were asked to makes choices in scenarios involving beer, cars, restaurants, lottery tickets, films and television sets.</p> <p>In each product scenario participants first had to choose between two options. Then they were given a third option – a decoy designed to nudge them toward picking the target over the competitor. In every case except the lottery tickets the decoy successfully increased the probability of the target being chosen.</p> <p>These findings were, in marketing terms, revolutionary. They challenged established doctrines – known as the “<a href="https://www.researchgate.net/publication/227712025_The_Similarity_Heuristic">similarity heuristic</a>” and the “<a href="https://www.researchgate.net/publication/317954913_Assortment_Optimization_under_the_General_Luce_Model">regularity condition</a>” – that a new product will take away market share from an existing product and cannot increase the probability of a customer choosing the original product.</p> <p><strong>How decoys work</strong></p> <p>When consumers are faced with many alternatives, they often experience choice overload – what psychologist Barry Schwartz has termed the <a href="https://www.scientificamerican.com/article/the-tyranny-of-choice/">tyranny</a> or <a href="https://psmag.com/social-justice/paradox-choice-barry-schwartz-psychology-10-years-later-96706">paradox of choice</a>. Multiple behavioural experiments <a href="https://www.sciencedirect.com/science/article/abs/pii/S1057740814000916">have consistently demonstrated</a> that greater choice complexity increases anxiety and hinders decision-making.</p> <p>In an attempt to reduce this anxiety, consumers tend to simplify the process by selecting only a couple of criteria (say price and quantity) to determine the best value for money.</p> <p>Through manipulating these key choice attributes, a decoy steers you in a particular direction while giving you the feeling you are making a rational, informed choice.</p> <p>The decoy effect is thus a form of “<a href="https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/nudge/">nudging</a>” – defined by Richard Thaler and Cass Sunstein (the pioneers of nudge theory) as “any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options”. Not all nudging is manipulative, and some argue that even manipulative nudging can be <a href="https://blogs.lse.ac.uk/politicsandpolicy/nudges-manipulate-except-when-they-dont/">justified if the ends are noble</a>. It has proven useful in social marketing to encourage people <a href="https://www.researchgate.net/publication/319023957_Nudging_and_Boosting_Steering_or_Empowering_Good_Decisions">to make good decisions</a> such as using less energy, eating healthier or becoming organ donors.</p> <p> </p> <p><strong>In the market</strong></p> <p>We see decoy pricing in many areas.</p> <p>A decade ago behavioural economist Dan Ariely spoke about his fascination with the pricing structure of <a href="https://www.economist.com/democracy-in-america/2009/05/22/the-importance-of-irrelevant-alternatives">The Economist</a> and how he tested the options on 100 of his students.</p> <p><iframe width="440" height="260" src="https://www.youtube.com/embed/xOhb4LwAaJk?wmode=transparent&amp;start=0" frameborder="0" allowfullscreen=""></iframe></p> <p>In one scenario the students had a choice of a web-only subscription or a print-only subscription for twice the price; 68% chose the cheaper web-only option.</p> <p>They were given a third option – a web-and-print subscription for the same price as the print-only option. Now just 16% chose the cheaper option, with 84% opting for the obviously better combined option.</p> <p>In this second scenario the print-only option had become the decoy and the combined option the target. Even The Economist was intrigued by Ariely’s finding, publishing a story about it entitled “<a href="https://www.economist.com/democracy-in-america/2009/05/22/the-importance-of-irrelevant-alternatives">The importance of irrelevant alternatives</a>”.</p> <p>Subscription pricing for <em>The Australian</em> today replicates this “irrelevant alternative”, though in a slightly different way to the pricing architecture Ariely examined.</p> <p><img src="https://images.theconversation.com/files/259378/original/file-20190217-56215-12lo0e8.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="" /> <span class="caption"></span></p> <p>Why would you choose the digital-only subscription when you can get the weekend paper delivered for no extra cost?</p> <p>In this instance, the digital-only option is the decoy and the digital+weekend paper option is the target. The intention appears to be to discourage you from choosing the more expensive six-day paper option. Because that option is not necessarily more profitable for the company. What traditionally made print editions profitable, despite the cost of printing and distribution, was the advertising they carried. That’s <a href="https://home.kpmg/content/dam/kpmg/co/pdf/co-17-01-08-tmt-stop-the-presses.pdf">no longer the case</a>. It makes sense to encourage subscribers to move online.</p> <p>Not all decoys are so conspicuous. In fact the decoy effect may be extremely effective by being quite subtle.</p> <p>Consider the <a href="https://www.aussieprices.com.au/food/boost-juice-menu-prices/">price of drinks</a> at a well-known juice bar: a small (350 ml) size costs $6.10; the medium (450 ml) $7.10; and the large (610 ml) $7.50.</p> <p>Which would you buy?</p> <p>If you’re good at doing maths in your head, or committed enough to use a calculator, you might work out that the medium is slightly better value than the small, and the large better value again.</p> <p>But the pricing of the medium option – $1 more than the small but just 40 cents cheaper than the large – is designed to be asymmetrically dominated, steering you to see the biggest drink as the best value for money.</p> <p>So have you just made the sensible choice, or been manipulated to spend more on a drink larger than you needed?<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/111259/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: http://theconversation.com/republishing-guidelines --></p> <p><em>Written by <span>Gary Mortimer, Associate Professor in Marketing and Consumer Behaviour, Queensland University of Technology</span>. Republished with permission of </em><a href="https://theconversation.com/the-decoy-effect-how-you-are-influenced-to-choose-without-really-knowing-it-111259"><em>The Conversation</em></a><em>. </em></p>

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5 ways to reduce waste and save money on your home renovation

<p>On average, renovating a home generates <a rel="noopener" href="https://ascelibrary.org/doi/10.1061/%28ASCE%290733-9364%281996%29122%3A1%2855%29" target="_blank">far more waste</a> than building a new one from scratch.</p> <p>This waste goes straight to landfill, damaging the environment. It also hurts your budget: first you have to pay for demolition, then the new materials, and then disposal of leftover building products.</p> <p>By keeping waste in mind from the start and following some simple guidelines, you can reduce the waste created by your home renovation.</p> <p><strong>1. It starts with the design</strong></p> <p>Waste is often treated as inevitable, factored into a building budget with no serious attempt to reduce it.</p> <p>By raising the issue early with your architect, designer or builder, they can make decisions at the design stage that reduce waste later. Often the designers and architects don’t see their decisions contributing to waste – or rather, they don’t really think about it.</p> <p>During my research on reducing construction waste, I asked one architect what he thought happens to the waste generated. He laughed with a glint in his eyes and said, “I think it disappears into pixie dust!”</p> <p>One simple early decision that dramatically reduces waste is designing with material sizes in mind. If you have a ceiling height that does not match the plasterboard sheet, you end up with a tiny little strip that has to be cut out of a full sheet. In the case of bricks, not matching the ceiling height is even more wasteful.</p> <p>Obviously not all materials will work together at their standard sizes (and you need to fit your renovation to the existing house). But sensitive design can make intelligent trade-offs, reducing overall waste.</p> <p>When I asked architects why they don’t design zero-waste buildings more often, they said clients don’t ask for it. Make it part of your brief, and ask the architect how they can save money by using the materials efficiently.</p> <p><strong>2. Get your builder involved early</strong></p> <p>If you’re using an architect for your renovation, it’s common to have very little collaboration between them and the builder. Any errors or issues are usually spotted after construction has begun, requiring expensive and wasteful rework.</p> <p>Instead, ask your architect and builder to collaborate on a waste management plan. Such integrated approaches have worked well in <a href="https://www.pwc.com.au/legal/assets/collaborative-contracting-mar18.pdf">Australia and the United States</a>.</p> <p>This means clients, engineers and builders are collaborating, rather than taking adversarial roles. For such contracts to work, it’s important to involve all parties early in the project, and to encourage cooperation.</p> <p>The briefing stage is an opportunity for architects, quantity surveyors and builders to work together to identify a waste minimisation target.</p> <p><strong>3. Whatever you do, don’t change your mind</strong></p> <p>One the biggest contributions to waste on sites is late design changes. Client-led design changes are identified in all literature as having far-reaching implications on waste.</p> <p>These are mostly due to owners changing their mind once something is built. Reworking any part of a building due to design changes can account for as much as <a href="https://www.researchgate.net/publication/283714629_Impacts_Of_Design_Changes_on_Construction_Project_Performance_Insights_From_A_Literature_Review">50 per cent of the cost overrun</a>, as well as causing delays and generating waste.</p> <p>The early work with your design and construction team outlined in the first steps gives you the chance to make sure you’re committed to your original design. Skimping in the planning stage can end up costing you far more in the long run.</p> <p><strong>4. Deconstruction, not demolition</strong></p> <p>Ask your builder not to demolish the building, but to deconstruct it. Deconstruction means taking a building apart and recovering materials for recycling and reuse. This provides opportunities for sorting materials on site.</p> <p>Salvaged materials can be resold to the community or reused in the renovations. It greatly reduces the tip fees which are usually higher for mixed waste (typical from demolition process) and lower for sorted waste.</p> <p>Of course this takes more time and has an additional cost. Therefore you do have to balance the cost of deconstruction against the savings.</p> <p>Denmark, which recycles <a href="http://ec.europa.eu/environment/waste/studies/deliverables/CDW_Denmark_Factsheet_Final.pdf">86 per cent of its construction waste</a>, has made it mandatory for all government buildings to undergo selective demolition and sorting of construction waste.</p> <p><strong>5. Choose materials carefully</strong></p> <p>Good-quality materials last longer, reducing maintenance later. Choosing manufacturers that use minimal packaging also reduces waste (be careful here to check the difference between “minimal” and “inadequate” packaging, as the latter can mean your material breaks).</p> <p>Reusing materials from your renovation may also be an option (you will need to discuss this with architect and builder at the beginning of the project). Finally, using materials with recycled content is a great option, and boosts our recycling industry.</p> <p>If you’re renovating your home, making efficiency and low waste a priority helps cut costs and reduce landfill.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/103942/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: http://theconversation.com/republishing-guidelines --></p> <p><em>Written by <span>Deepika Mathur, researcher in sustainable architecture, Charles Darwin University</span>. Republished with permission of <a href="https://theconversation.com/five-ways-to-reduce-waste-and-save-money-on-your-home-renovation-103942"><span>The Conversation</span></a>. </em></p>

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6 ways to avoid overspending

<p>Between <a href="https://ideas.repec.org/a/eee/joreco/v21y2014i2p86-97.html">40% and 80%</a> of purchases are impulse buys. Marketers often get blamed for this, but while marketing tactics may be cynical, manipulative, and even deceptive, shoppers are generally wise to their ways.</p> <p>Of greater concern, is the fact that up to <a href="https://academic.oup.com/joc/article-abstract/64/5/915/4086043?redirectedFrom=fulltext">95% of our daily decisions</a> are potentially determined by impulsive, unconscious processes. All too often, consumers are ignorant of the social influences and psychological states that make them vulnerable shoppers. In fact, most people entertain a costly illusion of invulnerability and consider themselves especially shrewd shoppers.</p> <p>You can avoid spending too much by becoming more mindful of the factors that influence your shopping behaviours. Here are six factors which could cause you to overspend, along with some tips about how to counteract them.</p> <p><strong>1. Social pressure</strong></p> <p>Human beings are very susceptible to social pressures. The cooperative and competitive behaviours, which have ensured our survival as a species, also nudge us to spend more than we need.</p> <p>For example, the social norm of reciprocity obligates us to exchange gifts and good deeds at Christmas.</p> <p><iframe width="440" height="260" src="https://www.youtube.com/embed/2H8fXLGPrKk?wmode=transparent&amp;start=0" frameborder="0" allowfullscreen=""></iframe></p> <p>Competition also fuels consumption: sales reinforce a sense of scarcity, and use time constraints to provoke a fear of missing out among shoppers – even when they’re buying online. Flash sales – such as Black Friday – create a herd mentality, which can provoke panic buying, hysteria or worse. Being aware of these pressures will minimise their effects and allow you to maintain a sense of perspective.</p> <p><strong>2. More abstract money</strong></p> <p>The concept of money is a shared myth, powered by the human imagination. Our imagination has been instrumental in the rapid development of the species, allowing people to swap pieces of paper and bits of metal for things they want. From notes and coins, to debit and credit cards, and most recently phones and Fitbits, the human imagination accommodates increasingly abstract forms of money. This is dangerous.</p> <p>These new forms of money ease the “pain of paying”, reducing the level of guilt we feel when parting with money. It temporarily hides the financial repercussions of our purchases (the lower bank balance or lighter wallet). This leads people to splurge without keeping track of the true financial costs of their decisions. Using cash when shopping will increase the pain of paying and make you more sensitive to how much you’re spending. This, in turn, will ensure that you only spend money on the items you really want.</p> <p><strong>3. Decision fatigue</strong></p> <p>Research <a href="https://www.guilford.com/books/Handbook-of-Self-Regulation/Vohs-Baumeister/9781462533824">suggests that</a> people have limited reserves of willpower. As we make decisions throughout the day, this reserve becomes exhausted, resulting in “resource depletion”. Resource depletion causes people to act impulsively. Doing shopping early in the day, and avoiding other sources of stress, such as big crowds, will minimise the risk of resource depletion.</p> <p><strong>4. Mindsets</strong></p> <p>Psychological states known as “mindsets”, which influence perceptions and decision making, can also make people more likely to spend. They occur outside of our conscious awareness, when the thought processes we use in one situation are carried over and used to process information in the next.</p> <p>Thinking positively in one situation can predispose a person to think positively in an unrelated situation – for example, generating supportive thoughts about giving to charity might prime a person to have positive thoughts about the bottle of detergent they see in an ad break a few minutes later. The makes them more likely to buy it.</p> <p>Mindsets also influence shopping goals. People with a “deliberative mindset” are open minded and likely to review all their options, while people with an “implemental mindset” are more close-minded and goal-focused. An implemental mindset reduces procrastination and focuses people to pursue their buying goals. These goals could be explicitly stated in a shopping list or even activated unconsciously.</p> <p>The implemental mindset can be dangerous, because it creates shopping momentum. This is when buying one thing makes you more likely to buy another since your goal-focused mindset remains active even after you bought what you intended. This is one of the reasons why people emerge from shopping centres burdened down with several bags, having gone in to buy one item.</p> <p>Unfortunately, switching between different mindsets can deplete your mental resources and cause you to spend more. Making rules to guide your decisions before you go shopping can counteract the effects of these mindsets and reduce the risk of shopping momentum. For example, telling yourself that if a product is below a certain price, you will buy it, but if it costs more, you will not. Making a list and setting a budget will help you remember the old adage, “it is not a bargain unless you need it”.</p> <p><strong>5. Making comparisons</strong></p> <p>Shopping is essentially a three step process. First you ask yourself, “do I want to buy something?”; then, “which product is the best?”; and finally, “how will I buy the product?”. But when people consider two possible purchases, it induces a “which-to-buy” mindset, which primes them to skip the first question, and makes them more likely to buy something.</p> <p><strong>6. The halo effect</strong></p> <p>Using mental shortcuts help us navigate everyday life more efficiently. Yet these shortcuts can also lead to incorrect assumptions and costly mistakes. In the context of shopping, not all assumptions are bad. Indeed, some assumptions are central to marketing. For example, branding works because we assume that products under the one brand have a similar level of quality.</p> <p>But other assumptions are less reliable. The “halo effect” occurs when we make incorrect assumptions, which lead us to think positively about something. So, the eye catching deals we see in the front window often make us assume that the other in-store deals are equally valid and generous.</p> <p>To counteract the halo effect, you need to come prepared. Knowing the recommended retail price (RRP) of products will ensure that you are not influenced by high anchor prices that give the impression of deep discounts. Remaining sceptical and calm will improve your decision making and reduce the risks of cognitive bias. This will likely be good for society, the environment and your pocket.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/108680/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: http://theconversation.com/republishing-guidelines --></p> <p><em>Written by <span>Brian Harman, Lecturer in Marketing, De Montfort University and Janine Bosak, Associate Professor in Organisational Psychology, Dublin City University</span>. Republished with permission of <span><a href="https://theconversation.com/how-to-avoid-overspending-uncover-the-psychology-behind-why-people-buy-108680">The Conversation</a></span>. </em></p>

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19 savvy tricks to spend less on groceries

<div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even">Cut your grocery bill with these strategies for making food last longer, avoiding supermarket gimmicks, making the most of coupons, and more.</div> <div class="field-item even"></div> <div class="field-item even"><strong>1. Walk through aisles you don't use</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Every store has an aisle or two that has no temptations for you (pet food, paper goods, baby supplies, cosmetics, and so forth).</p> <p>Make that aisle your passageway to the departments you need at the back of the store. Why tempt yourself by using the chocolate aisle?</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>2. Buy chicken whole</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Never buy chicken parts (breasts, wings) when you can buy the whole thing and make more meals from it, for pennies on the pound.</p> <p>Forget about fancy butchering: using strong kitchen shears, cut the chicken up the breast bone, up the back bone, and then cut those halves in half again.</p> <p>Cut off wings and legs, and you have the kind of pieces that you'd pay big bucks for.</p> <p>A large whole chicken is amazingly economical. It will give enough meat for about 8 portions, or you can serve 4 people and have<span> </span>plenty of leftovers for sandwiches, salads and other dishes.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>3. Cut the cost of gourmet coffee</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Even coffee made at home can be pricey, if you have expensive taste in beans and roast.</p> <p>Mix pleasure with savings: Combine one part of your favourite gourmet coffee with one part of a much less expensive store brand.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>4. Turn cottage cheese upside down</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>It will last twice as long than when stored right side up.</p> <p>It may not be great for the waistline, but mashed potato enriched with cottage cheese and parmesan and enlivened with garlic and herbs<span> </span>makes a marvellous filling for ravioli. </p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>5. Shop farmers' markets late in the day</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Sellers don't want to bring unsold produce back home, so they often sell their inventory at reduced prices before the market closes.</p> <p>You may find sweet savings of up to 80 percent.</p> <p>If you<span> </span>cut your food cost, reduce your waste and improve your eating habits<span> </span>you could have heaps left over to spend on choice food at the market.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>6. Pass by bottled water</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Instead buy a reusable water bottle. Assuming a store-bought bottle costs $1, you'll recoup your costs after only eight or nine uses of the reusable bottle.</p> <p>Reusable bottles also<span> </span>help you do your part in taking care of the earth.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>7. Read grocery ads before you shop</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Grocery stores constantly have popular products on sale as a way to lure you into the store. And to get the word out, they advertise a lot through mailings to your house, inserts in newspapers and local shopping guides, TV or radio commercials, and sometimes even online.</p> <p>They are worth studying each and every week. That's because what is on sale changes on a weekly basis.</p> <p>Knowing that lettuce is on sale, you might map out menus that focus on that ingredient: a mixed salad one day, as a taco topping the next day, to wrap chicken for a low-carb dish the next.</p> <p>While we can't solve the issue of food waste overnight,<span> </span>getting the most out of every ingredient is a good way to start.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>8. Shop the perimeter of the store</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Food essentials (produce, meats, dairy, and bread) are usually located around the store's perimeter.</p> <p>Middle aisles have the more costly prepared and processed foods.</p> <p>The more you steer clear of the inner aisles, the healthier and cheaper your groceries will be.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>9. Outsmart this "special" sale tactic</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Here’s a well-kept secret: When a grocery store advertises a special – say, buy ten containers of yoghurt for $5 – you don’t have to buy the number of items they're advertising.</p> <p>In this case, you could buy one container for 50 cents. Unless the store specifically states otherwise, you should buy as few as you want.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>10. Do the math</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>One bag of chips is $1.49 and a seemingly same-size bag is $1.79. The cheaper one is the better deal, right?</p> <p>Not necessarily, if the higher-priced bag has a couple more grams of chips.</p> <p>When comparing prices, always compare price per kilo (or gram or litre). It's the only objective way to compare costs.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>11. Study your grocery store’s selling patterns for sales</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Grocery store sales often occur in patterns.</p> <p>For example, there may be a store that puts ice-cream on a "buy one, get one free" sale on the third week of every month. On the first week, it’s only a dollar off.</p> <p>Learn the patterns and hold off buying these items until you know that they'll be at their rock-bottom prices then buy enough to last you until the great sale runs again.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>12. Splurge on extra newspapers</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>If your Sunday newspaper offers a high-value coupon for an item you buy often, it may be worth the cost to buy extra copies of the paper for extra coupons, or to ask neighbours if you can have the coupon inserts from their papers.</p> <p>This is particularly worthwhile if you know that an item you want is a "buy one, get one free" sale; you can then get four for the price of two and have ample supplies in your pantry.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>13. Go online to save</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>More and more websites are offering coupons you can print out.</p> <p>Before you go shopping, log on to the internet and, in your favourite search engine, put in the name of a product on your shopping list, plus the word "coupon".</p> <p>Just be careful – some sites want lots of personal information in exchange for access to coupons or discounts. Read the fine print and be sure it is a reputable website before surrendering personal info.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>14. Layer, layer, layer</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Use a manufacturer’s coupon with items already on sale at the grocery store.</p> <p>Some people call this "layering", others call it "stacking" – but it's really a simple way of saving.</p> <p>Say a $1.99 package of taco shells is on sale for $1.49. If you have a 50-cents-off coupon and the store doubles coupons, you'll pay only 49 cents for it.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>15. Watch the register</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>You've probably seen those investigative shows that uncover just how many errors supermarket scanners make – the numbers are staggering.</p> <p>Knowing this, keep a watchful eye on the cashier’s display as the cashier scans each product. Make sure that discounts for sales and coupons are applied.</p> <p>Make sure that the clerk keys in the proper codes for perishables without price tags (so you're not paying for exotic mushrooms when you're buying green peppers). Then, be sure to keep your receipt. This is a good practice for a few reasons.</p> <p>If the item is on sale but doesn't ring up with the sales price, you can bring the receipt back to the store for a refund.</p> <p>If you get home and one of your items is damaged or has a broken seal, you can easily return it.</p> <p>Finally, many register tapes are printed with valuable coupons on the reverse side.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>16. Don't fall for limits</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Keep your money in your purse when you see signs like "Limit six per customer".</p> <p>Stores know that customers will buy more of an item if they think there’s a shortage – and there generally isn't.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>17. Shop less often</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Try to stretch out the time between grocery-shopping trips. Instead of going once a week, go once every two weeks.</p> <p>You'll be forced to make your current food last longer and use up the food sitting patiently in the pantry and freezer.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>18. Befriend your butcher</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>You know that tougher meats are less expensive than tender meats. But did you know that many butchers will run these cheaper cuts through the tenderiser if you ask?</p> <p>Your tough cut will turn into a tender bite at no cost.</p> </div> </div> </div> </div> </div> </div> </div> </div> <div class="views-field views-field-field-slides"> <div class="field-content"> <div class="field-collection-view clearfix view-mode-full field-collection-view-final"> <div class="entity entity-field-collection-item field-collection-item-field-slides clearfix"> <div class="content"> <div class="field field-name-field-slide-title field-type-text field-label-hidden"> <div class="field-items"> <div class="field-item even"><strong>19. Use kosher salt</strong></div> </div> </div> <div class="field field-name-field-slide-content field-type-text-long field-label-hidden"> <div class="field-items"> <div class="field-item even"> <p>Inexpensive kosher salt is not only tastier than regular table salt, it's also more frugal.</p> <p>Each flake or crystal is far bigger than its table-salt cousin, which means that a single pinch will go a very long way. This saves you money in the long run.</p> <p><em>This article first appeared in </em><span><em><a href="http://www.readersdigest.com.au/money/spend-less-groceries-these-19-tricks-savvy-shoppers-use">Reader’s Digest</a></em></span><em>. For more of what you love from the world’s best-loved magazine, </em><span><em><a href="http://readersdigest.innovations.co.nz/c/readersdigestemailsubscribe?utm_source=over60&amp;utm_medium=articles&amp;utm_campaign=RDSUB&amp;keycode=WRN87V">here’s our best subscription offer.</a></em></span></p> </div> </div> </div> </div> </div> </div> </div> </div> <p><img style="width: 100px !important; height: 100px !important;" src="/media/7820640/1.png" alt="" data-udi="umb://media/f30947086c8e47b89cb076eb5bb9b3e2" /></p>

Retirement Income

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4 steps to get your financial affairs in order

<p>It’s a difficult topic to discuss but getting your financial affairs in order could help your family get through a difficult time and ensure your wealth is distributed as desired. Here are a few things you could to <span><a href="https://www.oversixty.com.au/finance/legal/planning-ahead-checklist-have-you-ticked-all-of-the-boxes">prepare</a></span> ahead.</p> <p><strong>1. List all assets</strong></p> <p>Put together a list of what you own (assets such as property, deeds, bank accounts, superannuation, investments, insurance policies and more), as well as what you owe (liabilities such as mortgages and loans). This will give you and your will executor a better idea on ways to administer your estate.</p> <p>You could also start making arrangements with your banks and insurance providers that would allow your partner and/or family to access your funds after you die.</p> <p><strong>2. Write or update your will</strong></p> <p>A will is a legal document that sets out what will happen to your estate (assets) after your death. Besides distributing your wealth, a will also allows you to donate to charities, name an executor and transfer trust control.</p> <p>You can create your own will by buying kits from a newsagency, a post office or online, but in general it is recommended that you enlist a lawyer or solicitor to make sure your document is signed and witnessed properly. Public Trustees can also help prepare your will for free if you appoint them as the will’s executor.</p> <p>Your will might also need to be updated when there are significant changes in your circumstances. Events that necessitate revisions might include relationship changes (marriage, separation or divorce), death of executor or beneficiaries, the entrance of new family members, and assets purchase or sale.</p> <p><strong>3. Appoint people you trust</strong></p> <p>Tapping a trusted person or party to manage your affairs can help the transition process go smoothly. One of the most important roles to consider is the will’s executor, who will be responsible for collecting and distributing your assets as well as repaying your debts. This role often requires special skillsets and involves making difficult decisions, so you may want to consider nominating a professional third party such as a private or public trustee instead of a friend or family member.</p> <p>It is also important to plan for who would make decisions on your behalf if something unexpected occurred and you could not look after your own personal and financial affairs. General power of attorney could make financial and legal decisions for you for a limited time – for example, if you are overseas. On the other hand, enduring power of attorney could make decisions on your behalf if you no longer have the capacity to do so on your own – for example, if you are mentally incapacitated – until you cancel or change them.</p> <p><strong>4. Organise your paperwork</strong></p> <p>Gather all important documents so that the person(s) managing your affairs will be able to locate them easily. These may include, but are not limited to: birth, citizenship and marriage certificates; bank account details; tax returns; vehicle registrations; Medicare card; life and medical insurance policies; house deeds; sources of assets and debts (including superannuation and investments); any pre-made funeral arrangements, and more.</p> <p>Create both physical and digital copies of these files for safekeeping.</p> <p>When in doubt, talk to a professional to discuss any matter of concern.</p> <p>How have you prepared to get your financial affairs in order? Let us know in the comments.</p>

Retirement Income

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10 ways to find new investment ideas

<p>Investors now have an unprecedented amount of information available to them to expand their knowledge base, which is especially important to those who are managing their own superannuation money. You can gain investment ideas predominantly from the following 10 sources:</p> <p><strong>1. Media</strong></p> <p>The media provides a wealth of information on individual stocks, market themes and economic trends. </p> <p>Valuable media sources include financial newspapers, radio, television and online newsletters such as Cuffelinks and Livewire. Market data provider Bloomberg, which is universally used by institutional and professional investors, has free daily email alerts and newsletters available on its website.</p> <p><strong>2. Market tables and price movements</strong></p> <p>After the market closes each day, share market tables can be reviewed to identify companies with share prices that have reached 12-month rolling highs and lows. When a price hits a 12-month high, it can indicate a degree of momentum (particularly in a bull market) that will drive it higher. Conversely, if a company hits its 12-month low, this is often a sign of fundamental company issues and the price is likely to fall further.</p> <p><strong>3. Word of mouth</strong></p> <p>While company executives can provide a biased perspective, personal and business contacts with knowledge of a company or industry can be more objective. Some of the most illuminating investing insights can come from personal and professional connections such as family, competitors, sell-side analysts and other fund managers.</p> <p><strong>4. Stock brokers</strong></p> <p>Stock analyst reports provide valuable and well-researched business insights. If a company is covered by sell-side research analysts, analysing their reports and understanding the consensus forecasts could prove valuable. </p> <p><strong>5. Directors buying</strong></p> <p>As a general rule, a company’s directors know more than others in the market. Therefore, directors buying shares is a very strong signal about the business. The announcement of a Change in Director’s Interest Notice revealing a company director has substantially increased their holding may prompt us to examine the company further.</p> <p><strong>6. Observations of a business</strong></p> <p>Everyday observations can also offer insights into a company. Apple’s share price languished for many years until after the release of its portable media player iPod. Around this time, the casual observer would have witnessed thousands lining up to buy the iPod and an increase in foot traffic at Apple stores, however this strong demand was not reflected in Apple’s share price. Apple subsequently sold 55 million iPods, generating US$9 billion in revenue and spurring the share price.</p> <p><strong>7. Life experiences, behaviours and preferences</strong></p> <p>Our own life experiences, behaviours and preferences, and those of the people around us, can also reveal a consumer trend, or structural industry change, that leads us to an investment idea.</p> <p>Some time ago, I tried to buy a tin of infant formula only to find there was a considerable shortage. This experience demonstrated demand for this particular product was vastly outstripping supply. This insight was the catalyst to investigate the company and subsequently invest in it.</p> <p><strong>8. Company meetings and site tours</strong></p> <p>Company meetings and visits offer insights into a business such as the quality of management and its culture. Individual investors can sometimes join site visits arranged by the company. For example, an executive’s remark that a certain competitor is giving them a ‘run for their money’ could prompt us to investigate that competitor business as a potential investment.</p> <p>Any investor can contact a company and ask to meet the CEO or other executives and, while access to executives at larger companies may be limited, micro and small-cap companies should welcome interest from potential shareholders.</p> <p>Retail investors may also have the option of listening to earnings results teleconferences, giving them the opportunity to interpret the executives’ tone, as well as their words. Larger companies often host investor days for shareholders.</p> <p><strong>9. ASX announcements</strong></p> <p>Previously undiscovered investment gems can be found through regular scan of ASX company announcements. Company announcements can be a particularly good source of micro-cap investment ideas during reporting season, and are available to everyone.</p> <p><strong>10. Ask a lot of questions</strong></p> <p>Having a fascination with the market and an inquisitive attitude are indispensable attributes for investors. The most successful investors ask a lot of questions and are driven to gain an in-depth understanding of a company, trend or investment theme.</p> <p>It’s possible to generate a worthwhile investment idea, or a piece of information that leads to one, from a vast range of sources. Constantly gathering insights to develop a broader knowledge base and being alive to potential investment ideas is key.</p> <p>Do you have any other sources for investment ideas? Share them in the comments below.</p> <p><em>Written by Chris Stott. Republished with permission of <span><a href="https://www.wyza.com.au/articles/money/superannuation/10-ways-to-find-new-investment-ideas.aspx">Wyza.com.au</a></span>.</em></p>

Retirement Income

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What are managed funds?

<p>When you think of the ways you can invest, many people first think of buying an investment property or maybe some shares on the stock market. While these methods of direct investment have their own merits, many investors would be better served by using the investment power of a managed fund to achieve the goals of growth, security and diversity.</p> <p>But how do managed funds work and why are they an effective way to invest? Here are the basics about these funds to help you make the right decision.</p> <p><strong class="bigger-text">The concept of pooling funds</strong><br />If you are simply investing by yourself you are naturally limited in how widely you can spread your investment. Your capital will only go so far and your scope is usually limited to assets that are “visible” to you. For example, you can look at what properties are available in the local real estate window or check the financial pages to see what shares can be bought on the local stock market.</p> <p>Managed funds offer a fundamental difference simply through the collective power of pooling your money with other investors. With a much larger capital base, the pool of funds can be invested across a range of assets to help spread risk and to seek a wider selection of opportunities.</p> <p>This collective buying power allows more diversification, so that rather than being confined to just one or a few areas you have a complete portfolio in one neat package.</p> <p><strong class="bigger-text">Understanding types of managed funds</strong><br />There are different types of managed funds to suit different investor profiles and to pursue different investment objectives. In general terms, managed funds can be divided into two categories; single sector funds and multi-sector funds.</p> <p>Single-sector funds will generally focus on one type of asset class, such as cash, fixed interest (eg Government Bonds), property, local shares or international shares.</p> <p>Multi-sector funds will spread across a range of these asset classes and will normally target a certain risk/return profile by having a weighting toward certain types of assets. The weighting will normally be indicated by a term such as “growth funds”, which invest predominantly in shares and property; “conservative funds”, which lean toward less volatile assets like fixed interest; and “balanced funds”, which are somewhere in between.</p> <p>Each managed fund has a statutory requirement to publish documentation, which will detail the fund’s particular objectives and the parameters for how it invests. This allows you to choose the fund that best matches your personal requirements.</p> <p><strong class="bigger-text">Profit from specialised skills</strong><br />Another benefit of pooling your investment through a managed fund is that you gain access to the investing expertise and manpower that they possess. A fund manager will have a range of skilled personnel with skills in researching, analysing and allocating the pool of money to achieve the fund’s stated objective.</p> <p>Personal investors can leverage this expertise to achieve a significant advantage in the quality of assets chosen, in contrast with having to do all the research and asset selection yourself.</p> <p><strong class="bigger-text">Keeping a watchful eye</strong><br />Monitoring and managing a portfolio of investments takes considerable time and skill. By using a managed fund you automatically have the day-to-day operational management taken care of. You can then simply look at periodical statements from the fund to see how it is performing and how it is moving its assets about to achieve its objectives.</p> <p><strong class="bigger-text">But what about the cost?</strong><br />The level of skill, buying power and convenience that managed funds offer will, of course, involve some cost to the investor. Regulation of the industry ensures that such fees and costs are declared in a fund’s promotional material so that they are transparent.</p> <p>While you may think twice about whether such fees are worth it, remember that an investment that you buy into directly, (such as an investment property or company share), will still involve some form of cost – often much greater than what you would pay with a managed fund.</p> <p>Buying an investment property, for example, will involve legal fees, stamp duty and inspection costs. Buying shares directly will incur brokerage costs. When you take this into account, the fees of a managed fund can represent very good value for the level of expertise and diversity they provide.</p> <p><strong class="bigger-text">Choosing a fund to suit you</strong><br />If you are interested in the benefits of a managed fund, then your financial adviser can help you assess the type of fund that suits you by making an assessment of your specific lifestyle objectives, time horizon and risk appetite. They should also have up-to-date research on managed fund performance, which can help you make informed choices on the fund or combination of managed funds that are right for you.</p> <p>What do you see as the main advantage of a managed fund? Share your thoughts below.</p> <p><em>Written by Bridges. Republished with permission of <span><a href="https://www.wyza.com.au/articles/money/financial-planning/what-are-managed-funds.aspx">Wyza.com.au</a></span>.</em></p>

Retirement Income

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Should you save or invest?

<p>It might seem like stating the obvious to say there are fundamental differences between saving and investing, but do you actually know what those differences are and how they can impact your financial planning?</p> <p>By definition, saving refers to the practice of setting money aside, usually on a regular basis, to accumulate toward a specific goal, such as a holiday, a home deposit, a car, or perhaps some other less concrete “rainy day” purpose.</p> <p>Investing, on the other hand, is the practice of putting your money in some type of asset or account with the purpose of growing value through returns or capital growth.</p> <p><strong class="bigger-text">Where do you save or invest?</strong><br />The priority with saving is preservation and accessibility, so the vehicle used is normally one which protects your money until it can be applied to the intended purpose. In years gone by this may have meant hiding cash in your sock drawer or putting it in a safe, but these days most of us use a bank account. It may only be earning minimal interest, but the main purpose is simply to keep it secure and easy to access.</p> <p>Investing is focused more on growth or income generation, so the priority is usually to find a vehicle that can deliver those attributes, such as shares, property, or some kind of deposit product that pays interest. This will usually involve limited accessibility and may also involve increased risk of values fluctuating over time.</p> <p><strong class="bigger-text">Should you be saving or investing?</strong><br />The short answer for most people is “both”, but the degree to which you do either is heavily dependent on your situation.</p> <p>If, for example, you are living from pay packet to pay packet without any fallback funds, or if you have significant debts which are out of control, then saving takes on a much greater priority.</p> <p>As a general rule, if you are in that type of situation, you should first focus on:</p> <ul> <li>Saving to build up an emergency fund amounting to at least three months’ income</li> <li>Directing any other discretionary income toward debt repayment until you have debts under control</li> <li>Ensure that you have contingency plans in place to protect dependents against disasters, such as illness, accident, or premature death. This can be done via personal insurance plans, such as income protection and life insurance.</li> </ul> <p>These actions will provide stability within your financial planning and once they are sufficiently catered for, you can then start to invest.</p> <p>Once you are in a position to invest, the next step is to ensure you have a clear picture of your goals and timeframes. Generally, investment goals can be categorised into short, medium, or long-term, and the way that you invest will be heavily dependent on which of these categories your investment goals fall into.</p> <p><strong class="bigger-text">Matching investment types to your goals</strong><br />Due to the fact that most investing involves some degree of risk, it is important to match the type of investment to the goal you have in mind.</p> <p>Short-term investment goals might include anything that is up to five years away, for example, if you are aiming to build up an education fund for a child or grandchild, and you know they will be going to university in five years’ time, then you need to invest in something that you can confidently liquidate in five years without undue risk of losing capital. This might mean primarily investing in cash-based assets such as term deposits or fixed interest investments.</p> <p>If you were to invest in property or shares for such a short term, there would be a real risk that the market may be depressed at the time you want to withdraw, so these would not be wise investment choices.</p> <p>For medium and long-term goals, however, you have more scope to invest in those more volatile asset classes, because historically, they have a better chance of providing real growth over time.</p> <p>A classic example of this is your superannuation. If you have 10 or more years before you need to access the funds for retirement, then you have a substantial timeframe in which to diversify your investment across a variety of assets, including property, shares, and managed funds. Because you don’t have a need to liquidate those investments early, you can ride out any fluctuations with the objective of capturing growth over the full timeframe of the investment.</p> <p>As you get closer to the end of the timeframe, you can gradually switch your investment out of growth assets and into more secure areas, so that you can lock in any of the gains you have made.</p> <p><strong class="bigger-text">Get help to put your strategy together</strong><br />Most of us have a range of things that we might be saving or investing for. This can often mean we need a sophisticated approach to where we allocate funds to gain maximum effect.</p> <p>A financial planner can be invaluable in helping you identify and rationalise all of your short, medium and long-term goals, and can help you map out a strategy that will allocate, manage, monitor, and adjust your strategy over time.</p> <p>What are your ideas on the best ways to save? Share your thoughts below.</p> <p><em>Written by Bridges. Republished with permission of <span><a href="https://www.wyza.com.au/articles/money/financial-planning/should-you-save-or-invest.aspx">Wyza.com.au</a></span>.</em></p>

Retirement Income

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How to make good financial decisions

<p>Is it time to spend, save or splurge? Here are the six most basic questions to ask yourself each time you open your wallet.</p> <p><strong>Can I afford it?<span> </span></strong>This should be the first question you ask when reaching for your credit card. If you have to borrow money to make the purchase, then you probably can’t afford it. Another strategy involves calculating how many hours, days or weeks at work it’ll cost to pay it off.</p> <p><strong>Is this a need, or a want?<span> </span></strong>Before making the purchase, create a mental list to see how much use you’ll get out of it and whether this is a need or simply a want.</p> <p><strong>Are there hidden or ongoing costs?<span> </span></strong>Often the spending doesn’t end with the initial purchase. For example, buying a car involves extra costs such as registration, maintenance and repairs. Be aware of how these will add to the total cost.</p> <p><strong>Will this purchase appreciate/depreciate?</strong><span> </span>New gadgets such as mobile phones often depreciate, so sometimes it’s better to wait before grabbing the latest model.</p> <p><strong>Is it good value?<span> </span></strong>While the cheapest option is tempting, it doesn’t always pay off. For example, if you spend less on a dishwasher or washing machine, you may end up paying more in regular repairs.</p> <p><strong>Will it pay itself off?<span> </span></strong>An investment property can create a rental income, which can help to pay off a loan. Consider the big picture when making decisions – sometimes you need to spend money to make money.</p> <p><em>This article first appeared in </em><span><em><a href="http://www.readersdigest.com.au/money/How-To-Make-Good-Financial-Decisions">Reader’s Digest</a></em></span><em>. For more of what you love from the world’s best-loved magazine, </em><span><em><a href="http://readersdigest.innovations.co.nz/c/readersdigestemailsubscribe?utm_source=over60&amp;utm_medium=articles&amp;utm_campaign=RDSUB&amp;keycode=WRN87V">here’s our best subscription offer.</a></em></span></p> <p><img style="width: 100px !important; height: 100px !important;" src="/media/7820640/1.png" alt="" data-udi="umb://media/f30947086c8e47b89cb076eb5bb9b3e2" /></p>

Retirement Income

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Options for boosting income during retirement

<p>Awareness about planning for retirement income these days is perhaps greater than ever. We are constantly reminded by Government and media about the growing burden of the age pension and the increase in life expectancies. The need to self-fund retirement is therefore becoming increasingly important.</p> <p>Of course the ideal situation is to plan ahead for retirement as early as possible and as thoroughly as possible. That means projecting what your spending needs will be in retirement, including:</p> <ul> <li>your everyday expenses, such as food, utilities, transport and clothing</li> <li>your lifestyle costs, such as sports, hobbies and the occasional holiday</li> <li>capital expenses to fund major one-off purchases, such as cars and home repairs, and</li> <li>a contingency fund for emergencies.</li> </ul> <p>The reality, however, is that some of us may leave our run too late or may not be able to put aside as much for retirement as we would like. Even those who do plan carefully and save faithfully for retirement may be hit with unpredictable costs that they did not identify in their planning.</p> <p><strong>What can create extra expenses?</strong><br />Additional expenses in retirement may occur for a variety of reasons. It may be an invitation from some friends to join them on an overseas trip. Or perhaps you decide you want to add an indoor/outdoor room to the house for family entertaining. It could even be a desire to help out children or grandchildren with the purchase or a car, or assistance with a home deposit or school fees. Your budget may not allow for such major expenditure, but there may be other options if such objectives are important to you.</p> <p><strong>A limited return to work</strong><br />It may not be for everybody, but a limited return to some sort of paid employment may be an option to start funding a special goal. This can be an attractive option if you have been missing the mental stimulation and social aspects of the work environment, so perhaps some part time or contract work for an old employer or client may be worth pursuing.</p> <p>Alternately, it could be a completely different field to your previous employment, such as a local retail store, school or club. You may only need to do a short stint or two, or maybe allocate a day or two a week – whatever suits your retired lifestyle.</p> <p><strong>Start a hobby business</strong><br />If you don’t want to return to working for someone else, why not turn one of your personal hobbies or interests into an income earning opportunity? If you enjoy gardening, for example, why not offer your services in the local neighbourhood and earn some ready cash doing something you love. This has the advantage of letting you control the amount of work you take on and when you do it.</p> <p>Local markets and car boot sales may be an option for selling some of your handiwork, such as woodwork, jewellery, garden produce or baked goods. The same venues can also be good places to make some cash from the unused items you have cluttering up the house or garage.</p> <p><strong>Join the sharing economy</strong><br />You can put your assets to work by joining the growing number of people who take part in the sharing economy. Perhaps your home is big enough to start up a bed and breakfast or rent out a room on a more permanent basis. You could also make use of your car by becoming an Uber driver, which allows you to set your own hours and discriminate on which customers you choose.</p> <p><strong>Accessing home equity</strong><br />If earning income doesn’t particularly grab you, the other alternative is to look at ways of accessing some of the value of your home. If your home is actually bigger than what you need, then perhaps down-sizing is an option. You end up with a more manageable residence with lower maintenance costs and you free up some of the capital that has been locked in your home, which you can then use for lifestyle objectives.</p> <p>If selling the home is not desirable, but you still want to access some of your equity, a reverse mortgage may be an option. A reverse mortgage is basically a loan from a financial institution that is made against the value of your home equity. Unlike a normal mortgage, a reverse mortgage gives you the option not to make repayments and let interest accrue instead.</p> <p>While a reverse mortgage may assist cashflow in the short term, you need to bear in mind that the compounding interest may quickly build up and eat into your equity. When you eventually come to sell the home you may end up with a nasty surprise in the amount that the financial institution will need to be paid back out of the sale proceeds.</p> <p>Entering such arrangements needs to be done with caution, a clear goal in mind and a careful analysis of how it will impact your future income and estate plans. You need to determine whether you will be able to pay back interest out of your other income, or alternately whether you are prepared to sacrifice a sizeable chunk of your equity when the home is eventually sold, in order to pay back the loan. A reverse mortgage may also impact your pension entitlements.</p> <p>To help assess the risks and whether a reverse mortgage is suitable for your needs, it is best to get some professional advice to help you weigh up the pros and cons.</p> <p><strong>Pension Loans Scheme</strong><span> </span><br />An alternative to a reverse mortgage, which may be more suitable if your needs are relatively modest, is the Pension Loan Scheme provided through the Department of Human Services and the Department of Veterans' Affairs. This scheme may provide you with a top-up to your basic pension amount in the form of a loan with an economical interest rate.</p> <p><strong>Planning is the key</strong><br />Whether you are still saving for retirement or are already in retirement, planning and seeking competent advice is integral to ensuring you maximise retirement income. A financial planner can help you assess your lifestyle priorities, retirement goals, current financial situation and social security entitlements, so that you can develop a clear strategy that puts it all together.</p> <p>What ideas can you share for boosting retirement income? Let us know below.</p> <p><em>Written by Bridges. Republished with permission of <span><a href="https://www.wyza.com.au/articles/money/financial-planning/options-for-boosting-income-during-retirement.aspx">Wyza.com.au</a></span>. </em></p>

Retirement Income

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How to avoid buyer's remorse in retirement

<p>We have all heard a story about someone who moved to a retirement community and then suffered buyers regret. Another kind of ‘buyer regret’ is not making the move sooner.</p> <p>So, what do you need to know before making such a big decision? Realising this is an issue, two industry insiders, Rachel Lane and Noel Whittaker teamed up to write<span> </span><em><a rel="noopener" href="http://t.dgm-au.com/c/185116/71095/1880?u=http%3A%2F%2Fwww.booktopia.com.au%2Fretirement-living-handbook-rachel-whittaker-noel-lane%2Fprod9780987440464.html" target="_blank"><span>The Retirement Living Handbook</span>.</a></em></p> <p>Both Noel and Rachel have heard these stories again and again. Rachel says, “The biggest problem with both types of regret is that it is too late to do anything about it. You can’t wind back the clock and move into the village sooner and if you are at the point of leaving the village it is too late to negotiate a different financial arrangement.”</p> <p>Noel adds, “What they needed was someone to help identify the village or villages that would meet their lifestyle needs and explain the legal and financial aspects to them well before they chose a village.” Of course, that’s easier said than done as many of the legal and financial arrangements are complicated.</p> <p><strong>How does it work?</strong></p> <p>Retirement communities can be broadly grouped into Retirement Villages and Over 55 Communities (sometimes called Manufactured Home Parks). Retirement Villages operate under the relevant state or territory legislation, often<span> </span><em>The Retirement Villages Act</em>, which set age requirements and deal with some but not all financial arrangements, while a small number operate under residential tenancy laws. Over 55’s on the other hand operate under caravan park or residential tenancies arrangements or a combination of the two. </p> <p><strong>Legal issues</strong></p> <p>The legal contract for a retirement village unit can take a number of forms, from strata title to more common leasehold and licence arrangements through to company share and unit trust arrangements where the right to occupy a unit is granted in exchange for the purchase of shares in a company or units in a trust. The biggest difference between a retirement village and an over 55’s community is that the contract is over the land rather than a unit - the purchaser buys the unit and has a leasehold or lease over the land.</p> <p>Of course there is a very big difference between having a 12 month lease and having a 99 year leasehold arrangement. It also creates the very interesting situation of being a homeowner and a tenant at exactly the same time. The form of legal ownership the person has will dictate their rights and responsibilities in relation to their unit and the costs associated with it while they live in the community and after they leave, so it is important to understand.</p> <p><strong>Be aware of extra costs</strong></p> <p>The costs associated with retirement communities can be summarised as the ingoing, the ongoing and the outgoing. The ingoing is the amount the person pays for their right to occupy their unit together with other costs such as contract preparation fees or stamp duty.</p> <p>The ongoing costs of living in a retirement community will relate to the costs associated with the facilities and management of the community, in a retirement village these are often called general service charges or recurrent charges and in over 55 communities they are known as site fees. Of course you still have your own personal expenses too.</p> <p>In many retirement communities the operator delivers (or engages with external providers to deliver) extra services, such a domestic help, meals and in some cases care. These services are normally offered on a user pays basis and are in addition to the standard charges.</p> <p>Doing a budget that incorporates all of the costs together with your pension entitlement, rent assistance and other income is a good idea. The cost of leaving a retirement community is the aspect that normally causes the greatest confusion. There are many different exit fee models, most are based on either the purchase price or the sale price and are for a percentage multiplied by the number of years you stay in the village.</p> <p>A common model historically has been 3 per cent per year for 10 years based on the sale price. In more recent times, exit fee models have tended to be higher - anywhere between 35 per cent and 50 per cent is not uncommon. What many people fail to appreciate is that there is more to the exit fee calculation than just the percentage based cost, often referred to as the Deferred Management Fee or DMF.</p> <p>There can be sales commissions to the village or to an agent that the resident appoints and refurbishment costs to bring the unit up to the current standard within the village. Understanding all of the fees and charges and putting them into dollar terms is important, although it often involves the imperfect science of predicting how long you will live in the village and what your unit will be worth when it sells.</p> <p><strong>Expert tips</strong></p> <p>To help people navigate the maze and avoid some of the traps, Noel and Rachel wrote<span> </span><span><em>The Retirement Living Handbook</em></span><span> </span>which covers all of the important aspects of moving to a retirement community, from finding the right retirement community to the different forms of legal contract and financial arrangements through to the impacts on pension entitlement and eligibility for rent assistance.</p> <p>There’s more than a dozen case studies from real Australian retirement communities so you can see how the concepts play out in practice, and at the back of the book is a directory of over 1,000 retirement communities broken down by lifestyle with a lexicon of key features to help readers identify the retirement communities that may best suit you.</p> <p>What are the biggest concerns you have about retirement? Join the conversation below.</p> <p><em>Republished with permission of <span><a href="https://www.wyza.com.au/articles/property/insider-tips-for-buying-into-an-aged-care-facility.aspx">Wyza.com.au</a></span>.</em></p>

Retirement Income

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Financial security vs financial freedom

<p>On the subject of financial planning, terms such as “financial security” and “financial freedom” often get thrown around loosely. On the surface, they may seem like generalised terms that roughly mean the same thing, but when you dig deeper, there is a dramatic difference between them. While both are important and valid financial goals, understanding that difference could have a profound effect on your financial future.</p> <p><strong class="bigger-text">So what is financial security?</strong><br />Essentially, financial security focuses on conservation. If you are employed and earning an income, for example, financial security is all about ensuring that the standard of living you and your family enjoy is not put under threat.</p> <p>For a start, this might mean ensuring that you are dedicated to your work, and take steps to improve your abilities and skills, so that your prospects for retaining your job or business and earning a greater income are strong. Beyond that, it might mean taking steps to provide a fallback position, such as saving three to six months’ of income in an emergency fund to cater for a sudden medical situation, loss of employment, or family crisis.</p> <p>At a broader level, ensuring financial security should also include a personal insurance plan, which can replace your financial value to your family if you were to suddenly die or become permanently disabled. If you suffer an injury or illness that prevents you from earning income for an extended period, income protection insurance can offer extra security for you and your family.</p> <p>Financial security also has relevance for your long-term saving and retirement planning. You might say that financial security in retirement means being able to independently afford the basic lifestyle requirements of shelter, food, clothing, transport, and other general living expenses.</p> <p>At its core, however, financial security is conservatively focused on maintaining what you already have in the event of a crisis, sickness, or retirement. While certainly a worthy and sensible goal, it doesn’t look beyond those needs, or toward more ambitious targets.</p> <p><strong class="bigger-text">Financial freedom is quite different</strong><br />If you are financially secure, you can certainly get by — but what if you want a bit more out of life than just preserving a basic existence? Financial freedom, in essence, means having the resources to make decisions about what you buy, do, or see without having to worry about impacting your basic living standards in the future. It means having the freedom to fulfil dreams of where you live, how you spend your time, which travel destinations you can experience, and how you can support your family.</p> <p>This kind of freedom is something that very few people are able to achieve, but it is not limited to those who are born into money, inherit money, or win the lottery. Financial freedom can be achieved by an ordinary working person if they have the vision — and employ the methods, planning and habits — to get them there.</p> <p><strong class="bigger-text">It starts with an attitude</strong><br />Financial freedom can be a realistic goal for many of us but it won’t happen by accident. The formula for achieving financial freedom involves several key aspects that need your deliberate action and attention:</p> <ul> <li>The fundamental characteristic of those who build their own financial freedom is an attitude and a belief that they can achieve a lifestyle beyond their current circumstances. This means having the confidence to dream big and visualise those specific things that you want to enjoy in life.<br /><br /></li> <li>Being clear about your dreams, and putting them down in black and white is the next step. Really owning your dreams in this way will give you the motivation and impetus to take action toward them.<br /><br /></li> <li>You then need to break down the financial requirements needed to get you to your goals — your financial plan. This is where the nuts and bolts are worked out on issues such as budgeting, saving, and investing. Without a solid financial plan, financial freedom will only ever be wishful thinking.<br /><br /></li> <li>Finally, you need to engage the help of those who have greater expertise than you. It may be hard for some of us to accept that we can’t do everything on our own, but the fact is that those who have really succeeded in any aspect of life have one common characteristic; they surround themselves with people who know more than they do.</li> </ul> <p>In terms of financial freedom, this means engaging financial professionals, such as an accountant and a financial planner, who’s expertise you can draw on to help you articulate and prioritise your goals, construct a sophisticated financial plan, research the best opportunities for investment, balance the need for capital preservation and capital growth, maximise your taxation and social security entitlements and review and adjust plans to adapt to changing needs and situations.</p> <p>If you are not simply satisfied with having financial security and you want true financial freedom, the potential is there for you, but there are no short cuts. Take action on all the steps outlined here and you can make it happen.<br /><br />What does financial freedom mean to you? Share your thoughts below.</p> <p><em>Republished with permission of <a href="https://www.wyza.com.au/articles/money/financial-planning/financial-security-vs-financial-freedom.aspx"><span>Wyza.com.au</span>.</a></em></p>

Retirement Income

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Save Money In Ways You've Never Thought Of Before With These 5 Tips

<p>It can be tricky knowing when to get started, especially when you don't know where to begin. These tips aim to help you get started.</p> <p><strong>1. Find your hidden savings accounts</strong></p> <p>Take your savings wherever you find them, even if they aren't in the bank.</p> <p>"You can definitely start with the change in the middle console of your car," said Sheldon Crow, branch manager at Bellco Credit Union in Arvada, Colorado.</p> <p>"If it works for you, that is a savings account."</p> <p>Guys who toss their pocket change each night into a jar or drawer may be astonished at how much they've piled up in change.</p> <p>Do you have gift cards lingering in your wallet, a pile of tips you haven't bothered to deposit, store credit, a cash-back account you're ignoring, or a reloadable charge card you forgot you reloaded?</p> <p>Maybe you let your PayPal or Venmo account balance increase whenever you sell something on eBay or a friend pays you back for a night out.</p> <p>Honor your cash-stashing habits as creative ways to save money, whatever they are.</p> <p><strong>2. Pick an inconvenient bank</strong></p> <p>It's great to do all your banking in one place, especially if you bank online.</p> <p>But when the money you saved is just a few keystrokes away, even determined savers can give in to the temptation to make a quick transfer to cover a bill, or withdraw savings from the ATM "just this once."</p> <p>So make it a challenge to access that money.</p> <p>Deposit savings in a different institution from your everyday accounts.</p> <p>Shred the ATM card so you have to bank in person.</p> <p>Pick one that's far away from your home or work, with inconvenient hours.</p> <p>Choose a bank that charges big fees for withdrawals or a brokerage that makes you wait 48 hours for a transfer. </p> <p><strong>3. Pay it off—but keep paying in</strong></p> <p>If you're finally making your last car payment, or paying off a credit card or a student loan, avoid the temptation to bump up your spending or accrue new debt.</p> <p>Instead, divert into savings the same amount you've been paying all these months.</p> <p>Such money-saving tips don't change your standard of living, so you won't notice any difference in your budget, but you'll be paying yourself instead of a creditor. </p> <p><strong>4. Set aside a portion of every windfall</strong></p> <p>Congrats, you got a bonus (or a big tax refund or a check from a relative).</p> <p>Good for you! Use this rule of thirds: Put one-third into savings, one-third to reduce debt, and the final third to spend on something wonderful for yourself.</p> <p>Don't save the whole amount, which will make you feel virtuous, but deprived.</p> <p>This plan gives you balance—you allocate some of your unexpected cash to the past (paying off debt), some to the future (saving), and the rest on a present for yourself. </p> <p><strong>5. Open a roundup savings account</strong></p> <p>Understanding that people need encouragement to save, the financial industry came up with a clever and painless way to do it: automatic savings.</p> <p>Every time you use your debit card to make a purchase or pay a bill, these accounts round up the purchase amount to the nearest dollar, transfer the difference from checking to savings, and keep track of how much you're putting away.</p> <p>It's just like your change jar, only virtual.</p> <p>Bank of America calls their product the "Keep the Change" Savings Program, and many banks and credit unions offer something like it.</p> <p><em>Written by Lisa Greim. This article first appeared in <a href="http://www.readersdigest.com.au/money/save-money-ways-youve-never-thought-these-10-tips">Reader’s Digest</a>. For more of what you love from the world’s best-loved magazine, <a href="http://readersdigest.innovations.co.nz/c/readersdigestemailsubscribe?utm_source=over60&amp;utm_medium=articles&amp;utm_campaign=RDSUB&amp;keycode=WRN87V">here’s our best subscription offer</a>.</em></p> <p><img style="width: 100px !important; height: 100px !important;" src="/media/7820640/1.png" alt="" data-udi="umb://media/f30947086c8e47b89cb076eb5bb9b3e2" /></p>

Retirement Income