What can you recall about ’71?

A lot has changed since then and most changes may not have been apparent. A UK survey* compared our lifestyles in 1971 to 2011 – a 40 year gap and this is their findings.

One-parent families nearly tripled in the 40 years from 8% to 22%. And the proportion of adults living alone almost doubled in this time from 9% to 16%. The proportion of one-child families has risen from 18% in 1971 to 26% in 2011. 

The proportion of women aged 18 to 49 who were married has fallen from 74% to fewer than half at 47%, while the number who were cohabiting with a partner but not married tripled in that time from 11% to 34%. The number of women who are single (never married) which has risen from 18% 43% in that time.

The point here is that while “families” have changed and you may not have children or may not be married, the reasons for insurance, savings and financial management don’t change.

The same unfortunate things can happen, property can still be lost due to an inability to service debt and surviving family will still suffer financially. I have clients in all the categories listed.

*UK Office of National Statistics www.ons.gov.uk

Big mortgages mean it’s critical that you have the right insurances

You buy a house for $750,000 with a large mortgage. Your neighbour buys the house next door for the exact same price and with the same sized mortgage.

But while you took out relevant insurances, your neighbour just took out enough life cover to match the exact amount of his mortgage.

Without warning, both of you have severe heart issues on the same day that result in having to take six months off to recuperate.

Your neighbour has his lender agree to relax the repayments while he was off work. You on the other hand kept paying the mortgage and didn’t notice the difference.

The end result is that your neighbour’s mortgage was extended in its repayment years and total interest. Yours actually came down quite substantially due to making a lump sum payment on it from your insurance pay-out. (No, you don’t have to die to collect insurance)

If something goes wrong, the bank will either want their money back or to come to an arrangement that adds years to your mortgage.

It is easy to simply agree with the lender on insuring your mortgage, but it may be that you have the wrong sort of insurances for your personal circumstances. I can review your insurances for free, so why not ask. It could save your house.

Seven common mistakes that busy people often make. You can avoid them – contact us today to find out how. We’re here to help.

1.     Paying for an annually increasing premium for covers you need long term. It is very important that you can afford your covers through the years when you need it the most and are not forced into cancelling early. Level premiums that don’t go up with age are available.

2.     Insuring the last and least likely event to occur before the age of 65 (death), but neglecting to cover the traumatic events that are far more likely to impact your lifestyle.

3.     Neglecting to insure your most valuable asset – your ability to earn an income.

4.     Paying more than you need to for your health insurance. Competitive options are now available that provide affordable protection against the medical costs that really matter – specialist’s fees, surgery and hospital expenses.

5.     Not structuring the ownership of your covers correctly. This can lead to a drawn out probate process, leaving the intended beneficiary waiting for the money they need.

6.     Not reviewing your insurance policies on a regular basis to ensure that they are still relevant and value for money. You can have a no obligation, independent review of your existing insurance free of charge.

7.     Trying to do it yourself, rather than tapping into the expertise and experience of a qualified, independent advisor who can identify the best options to suit your needs.

8.     An adviser stands in for you at claim time and knows the contracts. A good adviser is the most important part of your plan.

When money isn’t real, we spend it!

We’ve all played Monopoly with its instantly recognisable fake money.

It’s fun to throw $500 notes around and pay rents of $1,000 and buy everything we land on. But what if it was real money. Well researcher Adam Carroll did exactly that. He withdrew $10,000 in real notes and gave it to his kids to play monopoly with.

What happened? The kids gave a lot more thought to what they bought, which properties they put houses on and each transaction they made in general.

Carroll concluded that, “Kids today are being raised in a world where money is no longer real. It is an illusion but it has very real consequences.”

Getting credit is too easy and wanting the $700,000 house and not the affordable $500,000 home is how many young ones look at life now.

Payments are now mostly made through EFTPOS, credit cards, Paypal and other electronic methods. Only 4% of money used for transactions today is in coin or notes, so it’s not real.

Dunn and Bradstreet found that “people spend 12-18% more when using credit cards instead of cash.” Educating our kids on how to earn, spend and the true value of money is critical to not having them end up debt-ridden for years.

Go to Youtube.com and search for “When money isn’t real: the $10,000 experiment. Adam Carroll” to watch the full video on the Monopoly experiment using real money. It’s quite a sobering exercise.

All quotes and facts presented in this article are taken from the Youtube video.