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FREQUENTLY ASKED QUESTIONS

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Popular Questions
 

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Why do I need a budget?

A budget helps you to work out where your money is going. It shows your income versus expenses. You can then make decisions about whether you are spending money on what’s important to you and how much is left over for savings. A great place to start is with a budgeting tool like the MoneySmart budget planner.

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May I choose a super fund?

Most ADF members are members of longstanding compulsory super funds, DFRDB and MSBS. DFRDB was closed to new members some 30 years ago and MSBS was closed to new members on 30 June 2016.

However, if you joined the ADF on or after 1 July 2016, you will be covered by the new military superannuation arrangement in which you may choose to have Defence’s super contribution of 16.4%pa of your remuneration paid into any complying superannuation fund (ADF Super, a retail, industry or self-managed superfund).

Members of MSBS (not DFRDB) may also choose to join the new military arrangement, but before you do, think very carefully about what you’re giving up. Consider getting financial advice before you make such an important decision.

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What happens if I don’t pay my bills or loans on time?

If your bill or loan repayment is late by 14 days or more, the information can be listed on your credit report and is likely to have a negative impact on your credit score. Partial payments are considered missed payments for credit reporting purposes. Credit reporting agencies record the date your credit payments were due, whether or not you made the payments in full by the due date, and the dates you made any missed payment. This information is recorded for any credit products held in the last 2 years.

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How do I find a good financial adviser?

You are more likely to get financial advice that is in your best interests if you choose a genuine fee for service adviser. That is, someone who only gets paid on an hourly basis or a fixed fee for a piece of work and is therefore free from remuneration-based conflicts of interest which may lead to the sale of a product you don’t need or want (for example percentage fees on funds under management, insurance commissions or volume bonuses).

You may wish to use the ADF Financial Advice Referral Program [link to list] to find an adviser. The Program provides a list of advisers who have given undertakings to Defence that they only operate on a genuine fee for service basis to ADF members and their families (and the public in general).

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What should I invest in?

The investments which are appropriate for you depend on a range of factors including what your goals are, your attitude to risk, your investing timeframe and the other investments you already hold. A lot to consider. See our Investing money guide for more information.

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Questions by Topic
 

BUDGETING, SAVING AND GOAL SETTING (3)

A budget helps you to work out where your money is going. It shows your income versus expenses. You can then make decisions about whether you are spending money on what’s important to you and how much is left over for savings. A great place to start is with a budgeting tool like the MoneySmart budget planner

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Start with a budgeting tool like the MoneySmart budget planner. Enter all of your income and expenses for a set period, such as a calendar or financial year. The amount left over is the amount you have available to save. Consider using bank and credit card statements to make sure you capture all expenses, particularly those that are paid less frequently such as utility bills, car rego and insurances.

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Saving protects you from unexpected life events and helps you achieve longer term goals. You are forgoing spending now so you have resources in the future. Having 3-6 months worth of cash in savings is likely to reduce your stress and allow you to focus on what’s important.

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CONSUMER TIPS (1)

Yes, under some circumstances. Under the Australian Consumer Law (ACL), if you buy something from a business in Australia (rather than say from an overseas online trader or in a private sale) you should be able to get either a full refund, a replacement or a repair (it’s your choice) if the goods suffer from what the ACL describes as a ‘major’ problem. For more information see the ACL your shopping rights guide

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BORROWING AND DEBT (2)

Your credit rating, or credit score, is a number allocated to you by a credit reporting agency that expresses your perceived creditworthiness. Your credit score is dynamic, which means it changes constantly as new information about you is received. You can get a free credit score from a number of online providers. The results may vary depending on which credit reporting agency is used.

The following websites offer a free credit rating:

You may need to check with more than one ratings agency to get a consistent and reliable measure of your credit rating.

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If your bill or loan repayment is late by 14 days or more, the information can be listed on your credit report and is likely to have a negative impact on your credit score. Partial payments are considered missed payments for credit reporting purposes. Credit reporting agencies record the date your credit payments were due, whether or not you made the payments in full by the due date, and the dates you made any missed payment. This information is recorded for any credit products held in the last 2 years.

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GETTING FINANCIAL ADVICE (2)

You should only seek financial advice from a licensed financial adviser who has relevant experience and is licensed to give the type of advice you need.  You can find out if the adviser is licensed by searching ASIC’s financial advisers register. You are much more likely to receive advice that is in your best interests where your adviser works on a genuine fee for service basis.

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A competent financial adviser can help you to develop realistic financial goals and put strategies in place to achieve them. A financial adviser, also known as a financial planner, can help you to:

  • Identify short, medium and long-term goals
  • Develop strategies to achieve your financial goals
  • Better manage your money
  • Develop an investment plan
  • Choose tax-effective investments
  • Make the most of your superannuation
  • Find out if you’re eligible for any government assistance
  • Work out your insurance needs
  • Plan for your retirement
  • Consider your estate planning needs.
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INSURANCE (1)

You need insurance for anything you cannot not afford to replace if it was damaged, lost or stolen. For example, it is common to take out insurance for your home, contents and motor vehicle.

Personal insurance policies covering events such as death, invalidity and loss of income may also be appropriate if you decide that you need more cover than provided through your ADF entitlements. But be aware of war, warlike and hazardous activity exclusions that may apply to ADF members who buy personal insurance policies from the private sector. Some ADF members have private insurance, or superannuation from previous employment, which includes insurance cover. Check whether these will continue to cover you in ADF service.

Health insurance policies cover health related costs and travel insurance policies cover you for unexpected events before, during, and after you travel (including illness and loss of baggage).

For more information read the Insurance and Personal Insurance money guides.

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INVESTING (2)

History shows that few people are able to make consistently sound decisions about share investing.

There are several ways to invest in shares. If you want to invest directly it may help improve your results if you diversify by choosing shares in a range of companies, across different industries. Don’t forget to do your research on the companies before you invest.

You can also invest in shares through a managed fund or exchange traded fund (ETF). These are where your money is pooled with other investors and a professional fund manager chooses which shares to buy and sell on behalf of all the investors. This gives you access to a broader range of shares. Ongoing management fees vary (and must be disclosed).

Some funds managers are “active”. Generally, these funds attract higher fees due to the regularity of buying/selling and “stock picking” designed to beat the share market index; while others are “passive”, generally with lower fees, that are designed to follow the share market index.

You should be wary of claims by professional fund managers that they always beat the index. No one ever does that.

See our Investing money guide for more information.

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The investments which are appropriate for you depend on a range of factors including your goals, your attitude to risk, your investing timeframe and the other investments you already hold.  There’s a lot to consider. See our Investing money guide [link] for more information.

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SUPERANNUATION (3)

Most ADF members are members of longstanding compulsory super funds, DFRDB and MSBS. DFRDB was closed to new members some 30 years ago and MSBS was closed to new members on 30 June 2016.

However, if you joined the ADF on or after 1 July 2016, you will be covered by the new military superannuation arrangement in which you may choose to have Defence’s super contribution of 16.4%pa of your remuneration paid into any complying superannuation fund (ADF Super, a retail, industry or self-managed superfund).

Members of MSBS (not DFRDB) may also choose to join the new military arrangement, but before you do, think very carefully about what you’re giving up. Consider getting financial advice before you make such an important decision.

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Starting and running a SMSF involves significant time, effort, responsibility and cost. Most people start an SMSF to have greater control over their retirement funds, however, unless you have a lot of money (minimum of $200,000), it can be very expensive. You would also need to be confident about choosing investments or consider paying an expert to help you. Go to the MoneySmart website [link] for more information on what’s involved.

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This is a unique feature of MSBS impacting upon many long serving ADF members. It’s a good problem to have and there are solutions. What to do next depends on your circumstances. There is no simple answer. One sensible way forward is to contact the trustee of MSBS, the Commonwealth Superannuation Corporation, who will outline your options.

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TAX (2)

A deductions guide specifically for ADF members is available on the ATO website. Make sure you have documentary evidence of your claims.

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If your tax and financial affairs are relatively simple, consider preparing your own tax return (by 31 October) or consider using a registered tax agent, rather than an accountant. Accountants are generally more suitable for taxpayers in business or who have more complex tax and financial affairs.

To find a qualified accountant to prepare your annual tax return you could ask for a recommendation from friends or family or you could use the search functions available on the websites of the peak professional bodies, CPA Australia and Chartered Accountants Australia New Zealand. If you want them to complete your tax return for you, make sure they are also a registered tax agent.

Whoever you appoint, understand the fees that you will be paying. Fee arrangements should be put to you in writing before the work starts.

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LIFE EVENTS (1)

Your child support is calculated as a percentage of your gross (rather than taxable) income, including deployment income and allowances. Contact the Child Support Agency for more information. You must notify that Agency of changes to your income if you want to avoid incurring a child support debt.

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