Download Personal Financial Management PDF

TitlePersonal Financial Management
Author
LanguageEnglish
File Size2.4 MB
Total Pages276
Table of Contents
                            Titles page
Contents
Figures
Tables
Preface
Part A Getting started
	Chapter 1 Financial planning
		Financial goals
		Financial life cycle
		Financial planning process
		Financial advisers
		Financial Services Reform Act
	Chapter 2 Cash management
		Spending money
		Saving money
		Budgeting
		Cash management services
Part B Borrowing and credit
	Chapter 3 Borrowing basics
		Deciding to borrow
		Lenders
		Applying for a loan
		Repayment
		Resolving disputes
		Default
	Chapter 4 Consumer credit
		Credit card
		Store charge account
		Time payment and deferred payment
		Personal loan
		National consumer credit laws
	Chapter 5 Finance for cars and homes
		Car loans
		Buy-back plan
		Leasing
		Car loan default
		Home loans
		Choosing a home loan
		Home loan process
		Home loan default
Part C Insurance
	Chapter 6 Insurance principles
		Risk management strategies
		Insurance and the law
		Buying insurance
		Making a claim
		Renewal and cancellation
		Resolving disputes
	Chapter 7 Property and liability insurance
		Home and contents
		Motor vehicles
		Boats
		Liability
		Special policies
		Sum insured
		Indemnity
		Claim provisions
	Chapter 8 Life, disability and health insurance
		Life insurance
		Disability insurance
		Health insurance
Part D Investing
	Chapter 9 Investing fundamentals
		Determining your goals
		Classes of investments
		Investment principles
		Investment style
		Investment strategies
		Evaluation performance
		Periodic adjustments
	Chapter 10 Investing in the stockmarket
		The Australian Stock Exchange
		Choosing a stockbroker
		Trading procedures
		Types of securities
		Investment information
		Fundamental analysis
		Technical analysis
		Managed funds
	Chapter 11 Investing in residential property
		Information and advice
		Your home as an investment
		The legal process
		Income-producing property
		Property syndicates
Part E Taxation
	Chapter 12 The taxation system
		The taxes we pay
		Income tax
		Capital gains tax
		Dividend imputation
		Tax audits
	Chapter 13 Taxation planning
		Reducing assessible income
		Maximising deductions and offsets
		Income splitting
		Capital gains
		Tax-effective investments
		Tax receipts
Part F Retirement planning
	Chapter 14 Essentials of superannuation
		What is superannuation
		Making contributions
		Accessing your benefits
		Retirement benefit products
	Chapter 15 Superannuation planning
		Importance of starting early
		Your current position
		Setting your goal
		Topping up
		Salary sacrifice
		Choosing a retirement product
		Running your own super fund
	Chapter 16 Entering retirement
		Age pension and other benefits
		Basic estate planning
		Retirement living
		Clubs and associations
Index
                        
Document Text Contents
Page 1

PERSONAL FINANCIAL
MANAGEMENT

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Page 138

The policy is usually guaranteed renewable despite any changes to your
health.

The cost of income protection increases with your age. For example,
you can expect to pay twice as much at age 40 as you would pay at age
30. The occupational dangers to which you are exposed also affect the
premium, and people in some occupations may be refused insurance. Other
factors that affect premiums include gender, high-risk sports and smoking.
The premium is waived during any period of disability.

If you make a claim, there is an initial waiting period that is not covered
by the insurance. You can pay a higher premium for a shorter waiting period.
You may be able to reduce your premiums and elect a longer waiting period
if you can rely on accumulated leave entitlements at work. A number of
options are generally offered at extra cost, such as benefits with CPI increases
while you are disabled. If you are self-employed, you can also cover your
business expenses during disablement, such as rent, wages, services and any
other outgoings that must be paid before you can draw a salary from the
business.

HEALTH INSURANCE

What to do about health cover is a complicated question. If you rely on
Medicare, can you get satisfactory health care when you need it? If you
want to insure privately, can you afford it?

Medicare

Medicare is a universal system of health insurance that provides hospital
and medical cover for most people in Australia. It is administered by the
Health Insurance Commission (HIC) through a network of customer service
centres. The Medicare Internet site has a tremendous amount of information,
including Medicare forms that you can download and print. It can be found
at http://www.hic.gov.au.

It is necessary to enrol in Medicare before you can access the health
benefits that it provides. The benefits are based on a Schedule of Fees set by
the Commonwealth Government and there is a schedule fee for each health
service covered by Medicare. Benefits include services such as consultations,
treatment, certain surgical procedures out of hospital, X-rays and other
diagnostic imaging, pathology and other medical tests, examinations and eye
tests. However, not all health and related services are covered by Medicare.
Exclusions include dental examinations and treatment, ambulance services,
home nursing, physiotherapy, occupational therapy, speech and eye therapy,

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INSURANCE

Page 139

chiropractic, podiatry, psychology, acupuncture, glasses and contact lenses,
hearing aids and other appliances, the cost of prostheses and surgery solely
for cosmetic reasons.

Medical practitioners, including doctors, specialists and participating
optometrists, must be registered with Medicare before benefits can be
claimed for the services they provide. Medicare allows you to choose the
practitioner who treats you outside of a hospital. When the service is
rendered, you are provided with an itemised account and you are entitled
to claim a benefit equal to 85 per cent of the schedule fee. You are required
to pay the remaining 15 per cent, which is referred to as the gap. The
maximum gap payable in a calendar year is capped, and Medicare benefits
increase to 100 per cent of the schedule fee for any further out-of-hospital
services. This is called the Medicare safety net. Doctors can charge more
than the schedule fee and you pay the difference between the schedule fee
and the amount they charge if this happens. These additional amounts do
not count towards the safety net. There are three ways to pay an account
using Medicare.

• You can pay the amount due, obtain a receipt and claim a benefit from
Medicare.

• You can hold the account and claim the benefit from Medicare. You
will receive a cheque made out to the doctor which you forward with
your payment for the gap.

• Some practitioners have direct billing arrangements with Medicare and
you can assign your benefit to them without the need to make a claim.
The practitioner accepts 85 per cent of the schedule fee as full settle-
ment of the account and you have nothing further to pay.

The cost of medicines is not covered by Medicare but it is subsidised
by the Commonwealth Government’s Pharmaceutical Benefits Scheme
(PBS). Most prescription medicines are covered, and to obtain the subsidy
you are supposed to present your Medicare card. There are concessions for
some people and there are safety net thresholds. Detailed information about
PBS is available on the Internet at http://www.hic.gov.au.

If you require hospitalisation, Medicare provides access to public
hospital accommodation and nursing and to treatment by doctors appointed
by the hospital. You will not be charged for most care and treatments
provided while you are in hospital, including outpatient services. However,
if you are admitted as a private patient in a public hospital or to a private
hospital, Medicare does not meet the cost of accommodation and nursing.
If you are a private patient, you can choose who will treat you in hospital,
but Medicare will only pay a flat rate benefit of 75 per cent of the
schedule fee.

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LIFE, DISABILITY AND HEALTH INSURANCE

Page 275

interest, 24–7, 39, 47, 55, 59–60,
67–8, 74–5
bearing securities, 136–7
offset account, 76
only loan, 75

internet banking, 33–4
investment, 134–78

information, 156–8
performance, 144–5
principles, 138–41
property, 174–8
risk, 135–6
strategy, 142–4
style, 141–2
timing, 139–40

lay-by, 57
lease, 69–70, 201
lender, 40–2
liability insurance, 105–6
life cycle, 7–13
life insurance, 116–22
liquidity, 141
living expenses, 22–4
loan application, 42–6
low start loan, 75
lump sum, 228–9

managed fund, 137, 160–3
Medicare, 124–6, 188–9
mortgage, 46
mortgage insurance, 45
motor vehicle insurance, 103–4

National Information Centre on
Retirement Investments, 241

National Insurance Brokers
Association, 93

negative gearing, 175, 211–12
negotiation, 172
net rental return, 174
no claim bonus, 112
novated lease, 69–70, 201
nursing home, 255–6

option, 155
ordinary share, 153–4

PAYG, 182–6
pension, 229–30, 246–50
personal loan, 58, 66
Pharmaceutical Benefits Scheme,

125, 249
PIN, 55
planning, 13–14
power of attorney, 252
pre-contract disclosure statement,

59–62
preference share, 154–5
principal, 46
private health insurance, 126–9
property, 166–78

information, 166–8
investment, 174–8
management, 176–7
syndicate, 177–8

real estate agent, 16
reasonable benefits limit, 239–40
redraw facility, 76
regulated fund, 242
renting, 168
repayment, 46–7, 64, 67–8, 170–1
residential care facility, 255–6
residual value, 69
retirement, 12–13, 246–57

accommodation, 253–6
advocacy services, 257
benefit product, 228–30, 238–41
clubs and associations, 256–7
village, 255

right sizing, 254–5
rights issue, 155–6
risk management, 84–7

salary packaging, 200–1, 237–8
saving, 24–7, 232–3
savings account, 32
security, 45–6
self-managed superannuation, 241–4
Seniors Card, 250
separation, 13
shares, 137, 153–4
singles, 8–9

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INDEX

Page 276

solicitor, 17
spending, 7, 22–4
stockbroker, 16, 150–3
stockmarket, 148–50
sum insured, 108
superannuation, 218–44

benefits, 225–8
benefits tax, 240–1
choice of fund, 224
contributions, 220–4
contributions surcharge, 223–4
divorce, 227
goal, 235–6
planning, 232–44
spouse, 221–2
statement, 233–5
tax, 205, 219–20, 240–1
topping up, 236–7

Superannuation Complaints Tribunal,
225

Superannuation Guarantee Scheme,
220

taxation, 182–214
assessment, 190
audit, 196–7
capital gains, 191–5, 209
credit, 188
deduction, 185–6, 203–5
discretionary trust, 207–8

income, 186–7
marginal rates, 187
offset, 187–8, 206
partnership, 207
planning, 200–14
private company, 208–9
records, 213–14
return, 184–90
scheme, 212–13
superannuation, 205, 219–20,

240–1
TaxPack, 184, 189
Taxpayers’ Charter, 190–1
technical analysis, 159–60
term life insurance, 118–19
time payment, 57
time value of money, 24–5
trauma insurance, 123

under-insurance, 113
Uniform Consumer Credit Code,

58–62
unit trust, 160–3

valuer, 167
variable interest, 39, 74–5

whole of life insurance, 117–18
Will, 251–2

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PERSONAL FINANCIAL MANAGEMENT

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