Times are more difficult, so this month we explore a few ideas to help with money.
Some say, money (or how we handle it) causes the most stress in any relationship. Perhaps that’s because we all see life and priorities a little differently!
Here’s a few tips that we have found work:
1) Create a plan.
Get a budget in place. A budget isn’t a prison, it’s a guide. A budget can be very liberating (We can help you get a budget started)
2) Find resources and support.
Asking for help can be hard but it pays off!
3) Explore new payment plans.
Owing money to a business or individual can be stressful. Most businesses will work with you if you start a regular payment, even if it’s not a large amount. Discuss it with them.
4) Take a break.
Don’t pretend the problem isn’t there, but don’t focus on it continually. Consider getting emotional support (someone to talk with, who will listen and not just try and “fix” you!)
I trust those few thoughts are of help
Times are tighter there’s no doubt.
The following are thoughts on how to save a few dollars on insurance premiums.
Home and contents
Check what level of excess you have. The excess is the amount you pay toward the cost of the replacement item when you make a claim. The larger the excess, the lower the premium.
If you don’t claim very often on smaller items, consider increasing the excess.
You may think, on a home insurance claim, you could come up with say, $1,000 toward a claim. Especially if you consider your insurance cover is for the major losses. Like the type of claim amounts that the last weather event caused.
People tend to claim more often on contents cover, than home insurance. However, depending on your finances and the way you “look" at insurance, you could consider increasing the excess on your contents cover.
Basically, by having a large excess, you are saying;
“Insurance is for the big things, (the major losses) not so much the day-to-day little things”.
Check with your insurer on the premium reduction, with say a $500 and a $1,000 excess, then “weigh up” if the savings are worthwhile.
Private Health Insurance
You can apply the same principle to Private Health Insurance.
You could pay the first $500, $1,000 or more toward a procedure and the insurer pays the rest. Using this principle, you may not have to cancel your health insurance cover, especially in your older years when the cost increases substantially (and the need is often at its highest).
Get professional advice before proceeding with applying or increasing an excess though. We are always here to help or point you in the right direction.
You can view our disclosure information on our website here : https://www.sinclairinsurance.co.nz/financial-advice-disclosure.html
I read an article by Peter Nichol recently. Interesting to say the least. It is entitled "Recession? Not this year."
Heres the essence, of it;
· There's been a significant drop in energy prices.
E.g. Oil prices in July 2022 were around US$120 a barrel. It’s been trending down, currently around US $80 a barrel
· Container prices falling.
They skyrocketed in 2019 and peaked at around US $10,400. They're currently at around US $2,400
· The return of overseas tourists to NZ has exceeded expectations
· The US share market has risen almost 10% since its trough in October 2022, despite rising interest rates. This doesn’t happen when market participants expect a recession
· US inflation.
In the year to Dec 2022 it was 6.5%. While this is still well above the Feds target of 2%, it’s the lowest annual rate of inflation in the US for over a year. Fed spokespeople have already made statements saying that their next rises in interest rates will now be lower than previously forecast and the peak level of their policy interest rates will be lower too.
This latest picture from the US Fed should be good news for most other countries including NZ.
By reading just the above, it’s a little out of context. He provides much more information, background. See this link for the full article
Peter Nicholl joined the Reserve Bank of NZ where he worked for 22 years. He was chief economist for five years and deputy governor and deputy chief executive from 1990 to 1995.
In 1995, he became an executive director on the World Bank board representing NZ Australia, Korea, Cambodia, Mongolia and seven Pacific Island nations
We are passionate about seeing our clients succeed in every area and endeavour. Finances are an important part.
A “one size fits all” budget doesn’t work for everybody. We are all different in the way we view money, spend money and save/invest money. In a similar way that personality type varies from person to person. Investopedia identifies the following 5 Money Personality Types;
Big spenders : They love new cars, new gadgets, they are fashionable and look for ways to make a statement. They dont look for ways to keep up with the “Jones”, they are the Jones! They dont mind debt and will take risks when investing.
Savers : The opposite of big spenders. They turn off the lights when they leave the room, shut the fridge door quickly (to save power) and look for the bargains when shopping. Generally, have low debt. Not interested in buying the latest toy.
Shoppers: May develop great emotional satisfaction from spending, they can’t resist it. Even items they don’t really need. They may be aware of their addiction. They look for bargains and are happy when they find them (even if they are not needed).
Debtors : Aren’t trying to make a statement with their spending and they don’t shop to cheer themselves up. They simply don’t spend much time thinking about their money and therefore don’t keep tabs on their spending and where they spend.
Investors: Are consciously aware of money. They try and put their money to work. They tend to seek the day when their passive investments will provide enough money to cover all their bills. Can become consumed by the goal.
Of course we can be a complex range of all the above. But it helps to identify the strongest area in our money personality.
What to do?
Make small changes, often. It can yield big returns.
Heres some tips based on your money type:
Spenders : Shop a little less, save a little more. If you love to spend you most likely will keep doing it. But seek long term value and not just short-term satisfaction. Ask yourself: How much will this purchase mean in 12 months?
Savers : Use moderation. Don’t let all the fun parts of life pass you by. Tune up your saving efforts - get some professional advice about the best way and where to invest.
Shoppers : Don’t spend money you don’t have. Control credit cards. If spending is making up for some area of lack/pain in your life, consider getting some help in the area of concern.
Debtors : Plan your finances and start investing. You may need help to get your finances in order. Accountability is not a dirty word! It can be a powerful tool to financial freedom.
Investors: Keep up the good work, but don’t let it control your life.
Bottom Line: You may not be able to change your money personality type, but you can address it and make small changes that will make a big difference. Self-awareness is a good starting point.
I trust the above is useful. Don’t hesitate to be in touch if we can be of help with your money management. Its an important part of what we do.
Insurance is a funny old game. A bit like the saying “Everyone wants to go to heaven, but no one
wants to die”. We want the benefits without the cost.
Here's three benefits as I see it, of the latest income insurance scheme the government is proposing.
1) It includes everybody. Not just those who are in good health. That’s one of the difficulties with personal insurance. Those who need it most (those subject to poor health) can’t buy it, have
exclusions, or pay an extra premium cost.
2) There is no reason why it wouldn’t work in well with existing personal income protection. The proposed new scheme will pay for 6 months. Why not put a 6-month stand down (wait period before the claim starts) on your personal income protection. It will cut the cost down considerably.
The two would dovetail.
3) Lower cost in later years. The cost of the proposed scheme is based on income not age. A big problem with personal income protection is when you get to an age of a more likely claim (ages 50 to say 65) the cost is high. The proposed scheme cost is roughly 3% of income, right through, no matter your age (half paid by the employer, half by the employee). On 70k a year that’s roughly $1050 pa each or $20 a week, each (from what I understand, the self-employed will not pay the redundancy cost of the cover, which will roughly half the cost).
I’m sure there will be reasons why the scheme shouldn’t go ahead. Mostly around cost. However, over the years in dealing with claims for people who can’t work because of illness, I’ve never had one say, “I wonder if I was paying too much in premium”.
I started in the insurance industry in 1976. My dad started in 1955 and was the area representative for a large mutual insurance company. He was a very ethical man. I would like to think I followed him, in that way.
One of the things “back in the day” was, there were very few regulations. You could start “selling” insurance with next to no training and no formal qualifications. Not everyone was like my dad - there were “sharks” out there.
Things have come a long way. The Financial Markets Authority (FMA) have a reasonably strong grip on insurance companies and advisers, these days. Sinclair Solutions Ltd has a license provided by the FMA for me to provide Financial Advice. Its specific. There are some areas I can advise you on and some areas I can’t. (Of course, I am also a Qualified Health and Safety Adviser, but that’s a separate area to our FMA license.)
I’ve always liked to keep up with study and qualifications. Not that I enjoy getting up an hour or two earlier to study. But I do enjoy the extra knowledge and understanding, with which I can help people with their finances.
If you think we can be of additional assistance to you and yours, please don’t hesitate to be in touch.
Please this link for required disclosure information.
With school holidays here, you may be going away. Here's some tips for keeping your home safe while away.
Secure all tools
Secure all ladders, axes, hammers and saws - anything that will help thieves break into your house.
Turn off all appliances
Make sure you turn off all appliances at the wall to minimise the risk of electrical fires.
Prevent leaks by turning off your water
Prevent leaks by turning off your water. Alternatively, have someone stay at your house or drop in regularly. They won't be able to stop a pipe leaking or bursting, but they can deal with it sooner.
Lock all doors (seems a bit obvious but worth the reminder)
Lock all doors and windows, set alarms and use deadbolts. Don't forget the garage.
Leave your curtains open
Leave your curtains open and your blinds up.
Clean out your fridge
Minimise the amount of food you keep in the fridge and freezer while you're on holiday. That way, less will be lost if there's a power cut while you're away.
Turn down the ring tone on your landline
Turn down the ring tone on your phone. Long loud unanswered rings are just another way of shouting out, "No-one's here."
Be careful who you tell
Don't advertise your absence on your phone answering machine, sites like Facebook or anywhere else that isn't secure.
Leave a number
Leave an emergency contact number with friends or neighbours.
Cancel your newspapers
Cancel newspapers and other deliveries, so they don't pile up on your doorstep and advertise that you're away.
Keep the garden tidy
If you are away for an extended period, arrange for someone to come and mow your lawns and tend the garden.
Ask a friend to help
If you're going to be away for an extended period, you may want to ask a friend to pop over once a week or a neighbour to park in your drive occasionally.
Ask your neighbours to help
If you know them well enough, ask them to check on your house for litter, branches that have blown down or pot plants that have fallen over - tell-tale signs you've gone away.
Tell neighbours you're going away
Tell trusted neighbours that you are going away and arrange for them to collect your mail. Nothing says, "No-one's home!" like an overflowing mailbox.
Have a great time away!
A similar question would be: "Why do I need Life Insurance?"
My answer is usually, it depends on your circumstances.
For example, if I have a mortgage (or owe money to others) I need to ask these questions.
What will happen if I die prematurely? (I mean, not live to a ripe old age!)
Who will pay that debt and how?
Do I have a family with young children who are dependent on me and my income? What would happen if that income stopped overnight?
Do I have cash reserves that would replace my income? (And for how long)
Obviously if there are no dependents (those who need my income to live), the need for life insurance is far less than a family with young children.
Although even if there are no dependents I should consider: "Do I have enough cash reserves to pay my final expenses"? E.g. Funeral and solicitor's costs to finalise my estate.
THESE ARE NOT TOPICS WE LIKE TO THINK ABOUT, BUT IMPORTANT NEVERTHELESS.
Our objective is to ask our clients once a year to go over these questions. Then, once any adjustments are made, forget about it for another year - knowing it's sorted!
A part of the yearly review is to ensure the amount of Life Insurance you carry is calculated correctly, taking into account your current circumstances. This ensures if claim time comes the correct amount is paid out. It can also save you money on your premiums!
At the end of the day, life insurance is a very personal decision. I'm 71, no mortgage to speak of, kids all left home, some cash reserves, but I still carry a reasonable amount of Life Insurance. Why? In my occupation as a financial adviser, I have seen the benefit time and time again.
Another question I ask our clients every year, (that can sound like a
dripping tap!) "Have you got your will sorted yet!" Something else to think about :)
The above is a general outline only. It should not be considered financial advice. For that, talk with a Financial Adviser who is qualified to advise in this area and registered on the Financial Service Providers Register, found here: https://fsp-register.companiesoffice.govt.nz/
With the borders opening up, I thought it would be an opportune time to talk about travel insurance.
Why do we need travel insurance?
You need travel insurance for many reasons, but most importantly you need it as it can help cover any medical expenses you incur overseas. Travel insurance also can cover you for accidental damage, lost or stolen items. Some insurance policies also cover delayed flights and cancellation.
What type of travel insurance is the best for my holiday?
Finding the right travel insurance involves knowing how long you will be away, how many people will be travelling together, where you are going and what you will be doing. Are you going solo (individual), travelling as a couple, a family, over 65 years old or part of a group? Your answer will determine what you pay for travel insurance.
What does travel insurance usually cover?
Standard travel insurance policies usually provide cover for the following:
* Cancellation and travel delays: This includes pre-departure cancellation's due to illness, delayed flights and delayed luggage
* Medical expenses: the cost of visiting a doctor and/or having medical treatment, and all related medicines
* Personal liability: this is to cover damage you cause to a person and/or property
* Emergency evacuation: if you need medical treatment or aftercare back in New Zealand, this is the cost of flying you home
* Baggage and personal belongings: this covers you if your bags or items are lost, stolen or damaged
TIP: when purchasing a policy, check that the policy covers more than just medical - the difference in cost between policies NOT covering baggage and travel cancellation, delays and those that DO cover them is often very little.
There have been some horror stories around travel insurance. Usually because there has not been full disclosure of previous medical conditions, when applying for the cover. Then when the traveller goes to claim they have found out that because of non disclosure of a reasonably serious medical event there is no cover. BIG THING. Provide all medical info (and any other info) asked for.
Trust thats of help and if you are going overseas have a great time!
This blog is general information only. For specific advice in relation to your circumstances a Licensed Financial Adviser should be consulted
I have always considered Private Health Insurance to be a luxury, as opposed to a necessity. (Life, Trauma, Total Disability, and Income protection being a necessity)
However post Covid (or mid covid, as we are now) I'm beginning to change my thinking.
1) The Public health system is under increasing pressure. Waiting lists are becoming longer. Staff shortages don't help.
2) Elective treatments that were considered as important (as opposed to urgent) are "slipping down the list" and being postponed. Some may not happen at all, as it will be difficult to "catch up"
Statement from "NZ Doctor publication";
Public hospitals prioritise urgent and emergency surgery ahead of elective surgery, which results in elective surgery often getting 'bumped' for emergency cases. The COVID-19 pandemic has further increased the backlog of orthopaedic and other elective surgery throughout the country.
On another note. I'm sometimes asked what is Trauma Insurance and how is it different to Life Insurance?
Trauma insurance is sometimes called Critical Illness insurance and can be added to Life Insurance or indeed set up as a stand-alone policy. This is a benefit which will mean that if you are diagnosed with a defined serious condition like a heart attack, a serious cancer diagnosis or multiple sclerosis - then the insurance pays out a lump sum to give you some
breathing space while you recover.
This costs more than Life Insurance because you are more likely to claim, and many Trauma Insurance policies allow multiple claims too.
Don't hesitate to let me know if you would like more information on Private health Insurance or Trauma Insurance (or anything else for that matter!)
This blog is general information only. For specific advice in relation to your circumstances a Licensed Financial Adviser should be consulted
Bob Sinclair is the owner and director of Sinclair Solutions