FREQUENTLY ASKED QUESTIONS
Questions by Topic
Budgeting
1Why 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 our budget calculator.
2How do I do a budget?
Start with a budgeting tool like our budget calculator or a free budgeting app. 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.
Credit
1What is a credit report?
A credit report is published by a credit reporting agency and is designed to show how ‘credit worthy’ a person is. Creditors pay to access credit reports and use the information to decide whether you are a good risk for them when you apply for credit. That is whether they should lend to you and if they do what interest rate they may need to charge you to take account of the risk you apparently pose. Credit reports usually provide an overall ‘credit score’ and show things like any applications you have made for credit, late or missed loan repayments and bill payments.
2What does applying for credit mean?
The Law Handbook defines credit as a ‘debt that does not have to be paid until some future time. Being allowed to pay later, in the future, for something you are getting now’. This could include using money or a service now and being able to pay for it later. Examples are buying a phone on a plan, having utilities connected and taking out a secured (e.g. car loan, home loan) or unsecured loan (e.g. credit cards, Buy Now Pay Later products).
3What is a credit score?
Some credit reporting agencies give you a credit score based on the information they have on your use of credit, repayment history and so on. A credit score is a number, usually between 0 and 1000 [sometimes 1200].
Not all credit reporting agencies give you a credit score, but may instead give you a credit rating such as ‘low’, ‘fair’, ‘good’, ‘very good’ or ‘excellent’.
Not all credit reporting agencies give you a credit score, but may instead give you a credit rating such as ‘low’, ‘fair’, ‘good’, ‘very good’ or ‘excellent’.
4Why do I need to understand my credit score?
Businesses use your credit score (or credit rating) to decide what sort of risk you pose if they lend you money or offer you services on credit. Knowing what your credit score is and what it means, can assist you to negotiate better deals or understand why a business may have rejected you or offered you a loan at a higher interest rate than others.
5What happens if I have a low credit score?
A low credit score (or credit rating) may prevent you from having access to affordable credit or getting access to any credit. Credit is likely to be at a higher cost if you can get access.
6Where can I find out more about credit scores?
You can find out more information about credit scores and how this works on our website and by going to Moneysmart Credit Scores/Credit Reports and Credit Smart.
7What are credit reporting agencies?
Credit reporting agencies compile information about debtors (anyone that borrows money or uses credit) and sell that information to creditors in the form of credit reports.
You can read more about credit reporting agencies on the Moneysmart website.
You can read more about credit reporting agencies on the Moneysmart website.
8Does it cost money to get my credit report?
You can get your credit report for free at least once every 3 months from one of the credit reporting agencies. It may take up to 10 days to get your free credit report.
9Do I need to get a credit report?
If you want to understand your credit score, and check that everything is correct, getting your credit report is worthwhile. Please note though that if you are having trouble with debt, there is a risk that when you apply for your credit report, creditors may increase or restart debt collection activity. If you have difficulty with debt you should consider seeking help urgently.
10What happens to my credit report if I default on payments?
When you don’t pay a debt it is called a default. A creditor may report a default to a credit reporting agency if the debt is more than 60 days overdue. The default is listed on your credit file, shows in your credit report and makes getting credit harder.
11What sort of things end up on my credit report if I default?
Things like ordinary bills that you don’t pay e.g. utility and phone bills, loans and credit cards can end up on your credit report if you default. The credit provider has to let you know that they are going to report it so that you have a chance to pay or make a payment arrangement.
12What affects my credit report and credit score?
Your credit report or credit score is affected by things like:
- Multiple credit applications (including phone contracts)
- Regular late and / or non-payment of bills including utilities, phone bills, loans etc.
- Mortgage default
13I thought that if I applied for financial hardship from a creditor, it would not affect my credit score?
Since July 2022, financial hardship is noted on your credit report but creditors (lenders) are not allowed to use this information to discriminate against you when you apply for credit.
14What if there are mistakes in my credit report?
Sometimes there are mistakes in a credit report. If you find a mistake in your credit report, you can fix them yourself for free by getting in touch with the credit reporting agency and requesting them to remove the incorrect information. Resist the urge to use a fee charging credit repair agent. You can do the same yourself for free!
15Does getting a credit card help me build a good credit rating?
No, this is an urban myth, getting a credit card means you enter into an agreement with a lender for unsecured credit which is relatively expensive and seen as a risk because you have access to the full limit on the card at any time; whether you are in a position to make the necessary payments or not. There are many other ways to improve your credit score which do not involve you applying for more credit. These include simply paying your bills and existing loans on time.
Financial Advice
1Can my accountant give me financial advice?
Your accountant may only give you financial advice on investments if he/she holds an Australian Financial Services (AFS) licence, or is an authorised representative of an AFS licence holder. ASIC's financial advisers register can tell you where a financial adviser has worked, his/her qualifications, training, memberships of professional bodies and what products they may advise on. Before seeking financial advice we recommend that you should watch our video 'Financial Adviser - The Facts and The Fiction'.
2What’s the difference between a financial counsellor and financial adviser?
A financial counsellor can help you if you get into financial difficulty by helping you sort out your finances and putting strategies in place to help you better manage your money. Financial counselling is free.
A financial adviser, or financial planner, can help you with things like wealth creation strategies, choosing investments and retirement planning, for a (often substantial) fee.
3How do I find a good financial adviser?
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.
4What does a financial adviser do?
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.
Investing
1What are the chances of losing my money if I invest in shares?
All investments carry some risk. Ordinary shareholders in a company will often lose their money if the company fails and goes into liquidation. A common method investors use to reduce the risk of losing their money is to ‘diversify’. A simple example is rather than investing all your money in one company; if you were to invest in ten companies the risk of all your investments failing reduces. For further information see our investing guide.
2Is it better to invest in shares or property?
While both are classified as ‘growth’ investment assets, property and shares are very different. A property is a physical asset, a share is part ownership of the company you invest in. Both have historically good long-term returns, however shares require a much smaller up-front investment which are usually 'liquid' (easily sold), and don’t have the high buying and selling costs that a property does. A residential property has the obvious advantage of giving you a roof over your head. You can also invest in either through listed or unlisted managed-style investments, such as managed funds, exchange traded funds (ETFs) and Australian Real Estate Investment Trusts (A-REITs). See our investing guide for more information.
3How can I invest in shares?
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 guide for more information.
4What should I invest in?
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 guide for more information.
5How do I get ready to start investing?
Before you begin investing, think about taking care of these basics:
- Pay off any high-interest debt
- Set aside emergency savings
- Protect your valuable possessions with insurance
- Consider whether you need personal insurance coverage
- Think about why you want to invest (what’s the purpose and timeframe?)
- Read our investing guide
6How do I get started with investing?
You'll need to consider a number of things before investing including:
- Which investment methods may work best for your situation
- Whether you can make regular additional contributions to your investment
- Whether you need or want professional financial advice
- What type of investment account suits your needs
7How long should I plan to keep my money invested?
Consider these factors when deciding your investment timeframe:
- Your financial goals and when you'll need the money
- How comfortable you are with market ups and downs
- Whether your plans might change and you'll need flexibility
8How easily can I access my invested money?
Before investing, find out:
- If there's a minimum period before you can withdraw
- How long it typically takes to get your money out
- Whether you can take out part of your investment
- What costs or losses you might face for early withdrawal
Saving
1What’s the best way to find a good savings account?
Use a comparison website to see what’s available in the market. Check more than one as each website is unlikely to cover the whole market. Read the terms and conditions to make sure an account suits your needs. When you’ve identified a suitable account you can usually apply to open an account online. To find comparison websites, enter ‘compare savings accounts’ into your browser’s search function.
2Why save?
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.
Tax
1How do I reduce my tax?
Besides earning less money (which is a self defeating strategy) there are limited means by which you can legitimately reduce the tax you pay. You can reduce your taxable income by claiming allowable deductions, which will reduce the amount of tax you have to pay. Only claim genuine deductions for expenses you can document. The ATO has a deductions guide specifically for ADF members. You may also find our tax time video useful.
2Will I pay tax on my super pension?
If you have a defined benefit super fund like MSBS, you will pay tax on some of your pension income. You can find more details in the factsheets for your fund, available on the CSC website. If you are an accumulation fund member, for example ADF Super, under current rules which may change your super pension should be tax free from age 60. However, we strongly recommend that before making a decision to receive your superannuation benefits, you should seek financial advice from either the Commonwealth Superannuation Corporation or from a licensed financial adviser of your choice.
3What tax deductions can I claim as an ADF member?
A deductions guide specifically for ADF members is available on the ATO website. Make sure you have documentary evidence of your claims.
4How do I find an accountant?
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.
Consumer Tips
1Can I get a refund for faulty goods?
Under Australian Consumer Law, 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. If the problem is only minor, the business can choose to offer you a repair only. For more information see the Australian Competition and Consumer Commission (ACCC) guide to repair, replacement or refund.
2What basic legal rights do I have when I buy something?
Under the Australian Consumer Law, you have clear protections when you purchase products or services. These include so called ‘consumer guarantees’ which ensure you receive what you paid for and that it works as promised.
3What can I do if something I’ve bought has a problem?
If your purchase meets the definition of having a ‘major’ problem you may be able to:
- Get the item repaired if it can be fixed
- Receive a replacement if repair isn't possible
- Get your money back if the problem is serious
- Cancel your service contract if it's not meeting guarantees
- Receive compensation if you've experienced loss or damage
4How am I protected from unfair business practices?
The Australian Consumer Law protects consumers from:
- Misleading or deceptive conduct
- False or misleading claims about products
- Pressure selling tactics
- Unfair contract terms
5Does the Australian Consumer Law cover purchases made from overseas businesses?
The Australian Consumer Law applies to anyone conducting business within Australia, including overseas businesses. Overseas businesses may need to comply with the consumer protections in their own country and could also have refunds and returns policy with additional rights.
Debt
1What happens when I can’t pay a bill?
Sometimes life happens and we are unable to pay a bill. We may be able to pay the bill in the future, but we can’t pay right now when it’s due. Don’t put your head in the sand, it is important to take action promptly if you are having trouble paying your bills. If you feel capable, promptly contacting the creditor (who you owe money to) and explaining the situation, including that you are in financial difficulty, is often recommended. If you feel unsure or that you need help dealing with the problem, start with our immediate money help page or by calling the National Debt Helpline on 1800 007 007.
2What do I say to a creditor when I can’t pay a bill?
It’s hard to say you can’t pay or that you are in financial difficulty - but when you do, things start to change. The creditor has to make a plan with you about how to assist you. But you have to be prepared. Work out what you can afford before you call and do not make unsustainable arrangements. Get your budget together.
3What if I can’t do this by myself because I am too confused or upset?
If you feel that you need help dealing with the problem, start with our immediate money help page or by calling the National Debt Helpline on 1800 007 007.
4What is an enforcement letter or default notice?
An enforcement letter or default notice informs you that you have not made a required payment in a credit contract and makes a demand for payment. This may be sent to you by a creditor when you have not met your payment requirements for some time and have not contacted the creditor to explain. It is important not to ignore one of these. If you do, you may be taken to court and sued. Your property may be taken to recover the debt owed. You should seek assistance immediately from a financial counsellor.
5What do I do if I am contacted by a debt collector?
If you are contacted by a debt collector, do not ignore the situation, seek assistance immediately from a financial counsellor.
6When do I need to report changes in my financial circumstances to the Australian Government Service Vetting Agency?
Visit AGSVA for a list of Reportable Changes which must be reported by an ADF member to the Australian Government Security Vetting Agency (AGSVA). These include a "Change in financial circumstances, including entering into a mortgage, incurring a significant debt, significant change to household income, receiving a lump sum payment or other financial windfall”:
7Will bankruptcy mean I lose my security clearance?
Before entering into a Bankruptcy agreement, consider speaking to a financial counsellor who may be able to offer alternatives. Bankruptcy would be a reportable change in financial circumstances and should be reported to AGSVA, it does not necessarily follow that an ADF member would be automatically discharged. The AGSVA will decide whether the reported change impacts the member’s level of security clearance which, depending on their decision, may then impact the person’s current role and/or ongoing employment.
8Are Debt Agreements a solution to avoiding going bankrupt?
There are formal and informal debt agreements. The formal ones are part of the Bankruptcy Act, and the informal ones are not. See our page on Demystifying Debt Agreements for more information.
9Is Debt Consolidation the same thing as a Debt Agreement?
Debt consolidation involves rolling your current debts into a single loan. Be very careful about rolling unsecured debts, like credit cards, into a secured loan, such as a home loan. If you are not disciplined and something goes wrong, your home could be at risk. For more information, see Demystifying Debt Agreements
10Is financial counselling the same thing as debt management or personal budgeting companies?
Simply put, they are not. See this fact sheet from the Financial Rights Legal Centre for more information: Debt negotiation or Personal budgeting companies
Financial Counselling
1How do I know whether I should go to a financial adviser or a financial counsellor?
If you have money and want advice about how best to use it, you need to talk to a financial adviser. A financial adviser will charge a fee.
If you have financial difficulties, problems with debt or can’t manage on your income, a financial counsellor may be able to help. Financial counsellors do not charge a fee.
If you have financial difficulties, problems with debt or can’t manage on your income, a financial counsellor may be able to help. Financial counsellors do not charge a fee.
2What is financial counselling?
Financial counselling is a free service provided to people in financial difficulty. Financial counselling is provided through agencies that must meet specific standards and are funded to employ financial counsellors whose conduct is governed by corporations and credit laws as well as a code of ethical practice.
3What is a financial counsellor?
A financial counsellor is a qualified professional who provides information, advice and advocacy to people in financial difficulty and is not a financial planner or financial adviser. Their services should be non-judgmental, free, independent and confidential.
4What do financial counsellors do?
Financial counsellors provide information, advice, advocacy and support for people in financial difficulty and debt. Their services should be non-judgmental, free, independent and confidential.
5How can a financial counsellor help me?
A Financial counsellor is able to work with you to undertake a full financial assessment of your situation including your income, expenses and liabilities. That way, the financial counsellor can work out whether debts are legally owed and what advocacy and actions may be required to reduce any debt, increase income and assist you to stabilise your financial situation. Financial counsellors provide information about ways to handle financial difficulties and are educated about the application of laws and codes concerning consumer protections and regulation.
6What sort of information will I need to provide to the financial counsellor if I decide I need to see one?
In order to help you, a Financial counsellor will need accurate and up-to-date information about your finances. You will therefore need to be prepared to be open and honest with your financial counsellor about your financial situation. They may ask you to provide them with statements of your income, bank statements, tax returns and other financial documents.
7How do I know that the financial counsellor will keep my information safe?
The financial counsellor is bound by law and a code of ethical practice to protect you and your financial information. Privacy legislation (the Privacy Act) means that the financial counsellor can only disclose information to creditors with your express permission every time this needs to be undertaken and cannot provide information to any other third party, including your superiors at work or your friends and family.
8Can I get someone to come with me to see the financial counsellor?
Yes. You are entitled to bring a support person to any financial counselling appointment, but this person cannot make decisions for you or influence the financial counselling process. Sometimes social workers, mental health support workers or advocates can provide support at financial counselling appointments by arrangement with the financial counsellor.
9How can I find a financial counsellor?
In order to find a financial counsellor first read our page on immediate money help. Then the MoneySmart page on financial counselling which has information about how to find a financial counsellor. You may also call the National Debt Helpline on 1800 007 007 for free from anywhere in Australia.
10Where can I find out more information about financial counselling and ways to manage my debts?
We recommend the following webpages:
Insurance
1What exactly am I paying for with insurance?
When you buy insurance, you're paying for protection against financial loss. Your regular payments (called premiums) go into a pool that the insurance company uses to help policyholders who need to make claims. Think of it as a safety net that's (hopefully) there when you need it.
2What’s the difference between general and personal insurance?
Think about what you're protecting:
Each type has different renewal terms—personal insurance usually guarantees renewal, while general insurance is generally reviewed annually.
- General insurance covers your possessions (like your car or house)
- Personal insurance protects you and your family (like life or disability insurance)
Each type has different renewal terms—personal insurance usually guarantees renewal, while general insurance is generally reviewed annually.
3What are the main types of car insurance?
The three main types of car insurance are:
- Compulsory Third Party (CTP) - Covers injuries to others in an accident (required by law)
- Third party property - Covers damage to other people’s property, but not your car (may include cover in the event your car is stolen or destroyed by fire)
- Comprehensive - Covers damage to your car and other people's property, plus often additional benefits like roadside assistance
4How do I avoid being underinsured?
Protect yourself properly from being underinsured by:
- Understanding how insurance works
- Understanding the death and invalidity cover provided by the Commonwealth Superannuation Corporation (CSC)
- Using online calculators to work out the true replacement value of your important valuable possessions
- Keeping an updated list of your possessions
- Checking exactly what events your policy covers
- Considering total replacement cover instead of sum-insured
- Reviewing your cover regularly as values change
Scams
1What is a scam?
A scam occurs when someone deliberately tries to mislead you for their gain, usually to get your money or personal information. Scammers are skilled at exploiting both our good qualities (like wanting to help others) and our natural responses (like fear or excitement).
2What should I do if I think I’ve found a scam?
Remember these three simple steps:
- STOP - Take a moment before you act
- THINK - Ask yourself if this could be fake
- PROTECT - If you've already responded to a scam, take action right away to protect yourself
3Where can I report scams or get help?
You can report scams through ScamWatch. They'll help you understand what to do next and provide guidance on protecting yourself in the future.
4How can I tell if contact from the ATO is real?
Keep in mind that the ATO will never:
- Send you emails or texts with links to sign into your account
- Tell you you'll be arrested
- Ask you to pay tax debts using gift cards, bitcoin, or prepaid credit cards
5What should I do if I get a suspicious ‘ATO’ call?
End the call right away. If you're concerned, call the ATO directly on 1800 008 540 to check if they really need to speak with you.
6How can I protect myself from scams?
Your best defence is staying informed. Check out the Little Book of Scams on the ACCC website - it's available in 17 languages and gives you practical tips to spot and avoid scams.
Superannuation
1Where can I find details of my ADF or military superannuation benefits?
If you have served in the military then to find if you have any money in any of the military super schemes, your best bet is to contact the Commonwealth Superannuation Corporation or CSC which is trustee and administrator of all these super schemes. You can find their contact information at this webpage https://www.csc.gov.au/Members/Contact-us/ including information on how to contact them if currently overseas.
2May 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. From 1 November 2021, where a person joins a new employer and the person does not choose a superannuation fund, the employer may have to contribute to the new employee’s previous fund. This change aims to stop new superannuation accounts from being opened every time an employee starts a new job. More details on this on the ATO website.
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. From 1 November 2021, where a person joins a new employer and the person does not choose a superannuation fund, the employer may have to contribute to the new employee’s previous fund. This change aims to stop new superannuation accounts from being opened every time an employee starts a new job. More details on this on the ATO website.
3How do I compare super funds?
This response is not aimed at DFRDB and MSBS members, you should consult the Commonwealth Superannuation Corporation in relation to your entitlements. A comparison website will help you compare funds based on fees, performance and other criteria. Look at fees and long-term average performance, net of fees, and choose a fund that has a range of investment options that suit your needs. There are hundreds of funds available so any fund that is consistently in the top say 20 funds is likely to be okay. Always look at long-term performance, over 5-10 years, as last year’s top performer may not be this year’s. The Australian Tax Office also has a YourSuper Comparison Tool to assist you in assessing and choosing a superfund.
4Should I start a Self-Managed Super Fund (SMSF)?
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 $500,000), 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 for more information on what’s involved.
5What should I do if I’m at my Maximum Benefit Limit (MBL)?
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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