Moving On Professional Development Moving OnSlide 1

Welcome Introductions Health and Safety Housekeeping Icebreaker Moving OnSlide 2

Albert Einstein When someone asked Einstein they probably expected an answer to do with physics “What is the most powerful force in the universe?” “Compound Interest” Moving OnSlide 3

Aim To help budget advisers consider longer term planning of financial goals and responsibilities when working with clients, or reviewing their own personal options as they start moving on towards better times and/or expected or unexpected changes in circumstances. Moving OnSlide 4

Objectives 1.Provide reasons to plan for the longer term 2.Match goals and values to the individual 3.Identify barriers to saving 4.Identify options to protect assets (keep what you have) 5.Understand saving and accumulating wealth 6.Know limitations of giving financial advice as a budget adviser 7.Seek further financial advice and information when required Moving OnSlide 5

Principles of good budgeting Live within your income Account for everything Plan ahead Moving OnSlide 6

Moving On Source: Fig1. Last updated December 2014 on RBNZ website Slide 7

Benjamin Disraeli A nineteenth century British politician once said “There are three kinds of lies: lies, damned lies, and statistics” Moving OnSlide 8

Reading statistics and data What factual information does the statistical data give? What issues does this information raise for us as a society? Moving OnSlide 9

Moving On Source: ANZ retirement commission Financial Knowledge and Behaviour Survey(2013) Slide 10

Moving OnSlide 11 Source: ANZ retirement commission Financial Knowledge and Behaviour Survey(2013)

Financial Capability Financial knowledge and understanding Financial skills and competence Financial responsibility Moving OnSlide 12

Financial plan A budget Knowledge of your net worth Financial goals Understanding about the management of debt Understanding about the management of savings Moving OnSlide 13

Moving OnSlide 14 Source: The ANZ Retirement Commission Financial Knowledge and Behaviour Survey (2013)

Saving Through Debt repayment Superannuation Investment – short term deposits – property – bonds – shares – specialist investments Moving OnSlide 15

Moving OnSlide 16 Source: ANZ retirement commission Financial Knowledge and Behaviour Survey(2013)

KiwiSaver Automatic membership on starting a new job with an opt-out period within 2-8 weeks Employer compulsory contribution is 3% for staff over 18 years of age Deductions will be at a minimum rate of 3% of annual earnings (higher rates are 4% and 8%) Money can be accessed before superannuation in the following circumstances: – Death (but this may not be immediately) – Proven financial hardship – 12 months after emigration to anywhere apart from Australia – Towards a first home deposit (conditions apply) Moving OnSlide 17

Compound Interest $20 a week saved from age 25 These figures come from a calculator on the ‘sorted’ website. They are based on a net real rate of return of 2.5% after tax, fees and inflation are taken into account. They use ‘today’s dollars’ meaning that the lump sum you get in the future will have the same buying power as this many dollars today. AgeCapital Investment InterestTotal 35$10,400$1390$11,793 45$20,800$6090$26,890 55$31,200$15,016$46,216 65$46,600$29,354$70,954 Moving OnSlide 18

Moving OnSlide 19 Source: ANZ retirement commission Financial Knowledge and Behaviour Survey (2013)

Recap 1. Provide reasons to plan for the longer term (statistics and data / household debt) 2. Match goals and values to the individual (Financial capability/ Financial planning / SMART goals) 3. Identify barriers to saving (Societal pressures and attitudes) 4. Identify options to protect assets (keep what you have) (Insurance/Wills and Power of attorney) Moving OnSlide 20

Closure 5. Understand saving and accumulating wealth ( Debt repayment/Superannuation/KiwiSaver/Compound Interest ) 6. Know limitations of giving financial advice as a budget adviser ( budgeting advice versus financial advice ) 7. Seek further financial advice and information when required ( How and where to gain the right information ) Evaluations Moving OnSlide 21