The Do One Thing (DOT) approach is a global campaign that aims to empower individuals to create change for the better by recognising small steps can have big impacts. DOT aims to make the world a better place – socially, culturally, economically and environmentally – by empowering individuals to take at least one action towards sustainability.
In my experience, it’s taking a DOT approach that is the key to shaking off the paralysis that mining and resources people often experience when it comes to managing their financial affairs.
As a financial planner with specialised skills in ESS and financial planning for mining and resources, I understand the complexity experienced by those with high income remuneration packages and the major tax implications, personal risk and raft of other financial and legal matters that accompany them.
When it comes to your personal financial affairs, there’s a lot at stake and doing nothing should not be an option.
DOT is about breaking down complexity into doable steps and creating structure so each achievement builds upon the next.
DOT conquers complexity and overcomes that overwhelming feeling of where to begin to achieve well-ordered and logical outcomes.
Your DOT might be to pick up the phone right now and ask for help. If so, I look forward to your call.
Otherwise, here are three DOT points (pardon the pun), that may help you to get started so you can overcome the paralysis that may be preventing you from achieving the best possible financial and lifestyle outcomes that you, and those you love, deserve.
1: Catch-up contributions
Adding a little extra to your superannuation now can have a considerable impact on your super balance at retirement and quality of lifestyle you hope to enjoy.
You can do this by making salary sacrifice contributions. This involves forgoing a portion of your take-home salary and directing it to your super account. This simplest of strategies is beneficial as it boosts your superannuation balance, which in turn creates growth opportunities when those contributions are invested inside your super, while reducing the amount of personal income tax you pay.
There are of course, conditions and limits to how much can be tax effectively contributed to superannuation and the legislation around these types of superannuation contributions can be a minefield as your personal circumstances determines your eligibility. However, it’s worth investigating and taking advantage of ‘catch-up’ contributions. This opportunity allows you to make the most of unused contributions from years prior when your contribution amount didn’t reach the full cap amount.
DOT point: If there is one thing you could do right now, then it is to review your super contributions, consider salary sacrificing to add extra cash to your super account and take advantage of additional tax effective contributions through catch-up contributions.
2: Check the next vesting of your Executive Share Scheme
There’s no doubt about it, Executive Share Schemes (ESS) are complex as there’s no shortage of conditions that need to be met for making the most of the wealth that may be generated through your shareholding. Importantly, there are also considerable and strict tax obligations linked to this opportunity. Being unaware or accidentally missing tax commitments can result in you paying more tax than necessary.
The one thing you can do this year to make the most of your ESS wealth opportunity, is to make yourself aware of when your next grant of shares or options vest, and what this means to you.
Vestings are one of the most crucial actions you need to consider each year with a variety of choices available to you. You’ll likely need advice to make the choice that’s right for you.
DOT point: While there is a myriad of possible outcomes at a vesting, the one thing you can do is to understand: when vesting occurs for you and what that means. In terms of the what, in most cases a vesting is a taxing point for you which creates personal tax implications. (Find out more about vesting here.)
3: Protect yourself
High earning mining and resources personnel naturally become accustomed to a certain lifestyle that is funded by their often-substantial remuneration package. But what happens if one day you can’t meet your expenses because you have an accident or you fall ill and you can’t work?
Take my word for it, more often than you can imagine, we help clients who ‘never thought it would happen to them’, make personal risk insurance claims.
Personal risk insurance can’t be understated, and unfortunately, it’s one of those things that is only ever fully appreciated when you need it.
You may find you already have some Income Protection cover within your superannuation fund. If so, that’s good news, HOWEVER to feel confident it’s appropriate to your needs, there are a few things you’ll need to confirm, including: What is your financial entitlement i.e. how much cover do you have; and how long will benefits be paid to you?
If you find you’re not covered for 70% of your current income, or you have a policy that only pays a benefit for two or five years (rather than the remainder of your working life), then it will be worthwhile to find out what you need to do to make your income protection insurance suitable for your circumstances. (You can read more about income protection here).
DOT point: When it comes to, as they say: ‘protecting your most valuable asset – you’ then the one thing you can do is to get advice about income protection insurance.
For more information, advice and support for taking a DOT approach your financial affairs, please contact James Marshall on (07) 3007 2000 or email contact@resourcesunearthed.com.au
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Resources Unearthed is a solutions hub that provides integrated financial, legal, property and accounting & business advisory services for executives, professionals and business owners in mining and resources.
Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This is general advice only and does not take into account your objectives, financial situation or needs, so you should consider whether the advice is relevant to your personal circumstances. You should also read the relevant Product Disclosure Statements (PDS) before making any financial decision.
Please note: Tax advice and other services not offered under the Fortnum Private Wealth AFSL are referred to appropriately qualified professionals.
