AIM UPDATE - MARCH 2014

TIPS ON HEALTH INSURANCE AND FINANCIAL EDUCATION FOR YOUR KIDS

Thinking about health insurance?

                            
There’s no denying that buying health insurance can be daunting. It’s hard to know what type of insurance suits you best, what amount of cover you should get, and what’s just a big waste of money. So here are 10 things to consider when thinking about purchasing health insurance.

1.     Tell the truth: Your insurer can cancel your policies and decline your claims if they discover you've lied in your application. So if you’re a smoker, don’t pretend you’re not!

2.     Consider the big picture: While policies with limited cover are generally cheaper, and thus more attractive, think about what you’d do if you had to front up with $10,000 for knee surgery. Remember, insurance is there to cover the things you can’t.

3.     Disclose everything: When applying for health insurance, tell them everything… whether it’s a symptom, treatment, or medical condition you already have. Otherwise be prepared to fight for your claim.

4.     Type of insurer: There are two types of health insurers in New Zealand – those owned by shareholders and those owned by members. Shareholder-owned insurers have to return profits to their shareholders, so either have to be more efficient or pay out lower claims.

5.     Understand what’s covered: There are some things that won’t be covered under your policy. Make yourself familiar with these.

6.     Keep an emergency stash: Even if you’re insured, you’ll still need some emergency cash with most policies, as you can be up for 20-40 percent of the cost.

7.     Avoid blanket exclusions: Some insurers will try to pressure you to accept blanket exclusions from your policy. For example, if you have a cough while making your application, you might be encouraged to exclude any claims in the near future related to your chest. Don’t!

8.     Switch for lower premiums: Some people constantly switch between insurers in search of the cheapest deals. It may save you money, but if you have an existing condition that you weren't aware of, you could lose your cover.

9.     Constantly review: As you age, your needs change. Buying an ultra-cheap basic policy might not be too much of a risk when you’re 25. But when you’re 50, the risk rises dramatically. It’s highly recommended that you review your health insurance policies at least once every year.

10.   Don’t wait: As you procrastinate, the chances of you developing pre-existing conditions increases. And then it could be too late!

Financial tips for children

Helping your children brush their teeth in the morning and helping them with their homework is the easy part. Teaching them how to manage money is a little more difficult. These days most schools don’t offer much in terms of teaching basic money management skills, so by giving your children a few simple skills on how to save and handle money, they are likely to be more confident and better equipped to handle the temptations of a growing consumer society.

Here are a few financial tips and ideas:
Teach them from a young age. These days children are constantly being bombarded with advertising for new toys and junk food, so it’s never too early to start.

Give them an allowance. In order to learn about money, it’s important they have the opportunities to practice with real money. Even a small allowance of $1 per week teaches the value of saving.

Make them earn it. Instead of just handing your child an allowance, teach them that their money must be earned by giving them responsibilities, such as washing dishes or tidying the backyard. You could also encourage your children to earn above their allowance by babysitting for friends, walking the neighbour’s dog or even getting a job at the local supermarket.

Open a savings account in your child’s name where they can deposit the money they earn. This will teach them about interest and the value of putting money aside each month. You could even give them an incentive by matching their savings.

Help them make a budget. When they grow up and leave home they’ll need to be able to stick to a budget, so teaching them the importance of budgeting early will help them in the long run.

Help your children establish goals. Many bad spenders suffer from an “I need it now” attitude, which can be avoided by creating goals. If there is a new toy they want, help them set up a savings plan so they know exactly how much they’ll need, and how long it’ll be before they've saved enough.

Allow your children to make mistakes. If they spend all their allowance on a frivolous purchase and then come to you looking for money (and they will), don’t just hand it over. Instead, use it as an opportunity to teach them that there are financial consequences that come along with spending decisions.
By consistently reinforcing these financial tips with your children, they will develop a healthy understanding of money management – a great asset for when they grow up.

Welcome to our new blog!

Happy New Year for 2014. Through the Christmas break the newspapers have had regular articles quoting economists, all predicting a great year for property, particularly in Auckland and Christchurch, so let’s hope that proves to be true. The strong demand for properties led to significant price rises  over the last year, and it is hard to see much easing of that demand over the next year. In the longer run, plans for building more new houses will see supply rise to meet that demand and price growth should ease. This won’t be immediate, however, and in my opinion it remains a great time to invest in residential property.

Buying Property  If you’re looking at buying a new home or an investment property this year, please let us assist you in arranging the mortgage. There are numerous lenders in the marketplace now, and we’re able to arrange significant interest rate benefits, contributions towards your legal fees etc.

Reserve Bank lending restrictions In 2013, in an attempt to reign in property prices, the Reserve Bank put restrictions on lenders which removed the ability to borrow more than 80% of purchase price. Those restrictions have now been lifted for new construction, so purchasers are now able to borrow 90% on new houses whether for own occupation or rental investment. In addition, the banks are now looking at 90% lending for selected clients, so if you or someone you know is not buying because they think they won’t get loan approval, please get in touch with us, we may be able to assist. Interest rates   The Reserve Bank reviewed the Official Cash Rate last week, and made no adjustment - however they did warn that the rate was likely to rise in March. It seems inevitable that rates will rise through this year, probably by 1 to 1.5%. It might now be prudent to consider fixing the interest rates on all or part of your mortgage – the banks are still offering good discounts against their standard rates, so if you’d like us to look at fixing your rates, just email me with your account number and I’ll get you a quote.

Insurance A reminder that we offer Insurance services, so if you would like us to review your existing insurances, please email me. New Zealanders are historically under-insured, and therefore at risk financially if ill-health should occur. Please don’t leave it and assume “it can’t happen to me” – insurance is a relatively inexpensive way of protecting your families future. Even if you have existing policies, they may not be appropriate for your current circumstances. We’re happy to review your levels of cover and make suggestions.

Budgeting Service Many of us have trouble keeping a lid on our spending. If you would like some assistance in arranging your financial affairs to ensure you don’t overspend, please don't hesitate to contact us.