These have become the baby-making years. In 2013, a total of 308,065 babies were born to women with median age of 30.8 years.
Having kids can be stressful. You’re not sure if you’re doing it right, and you’re getting endless advice on how to do it from all sorts of people.
Yes, thanks, Mr. Postman – I will look into signing my one-year-old up to violin lessons. No, Mrs. Neighbour, I wouldn’t ever think of co-sleeping with my baby. There are lots to think about and time absolutely flies.
The 30s seem to be the money trouble times, mainly because we’re stretching every dollar. Time off work to have kids, then day care to go back to work costs so much effectively work for less. Mortgage repayments; savings; education costs; everyday things like food and petrol: the list goes on and on.
This is also the time you’re most likely to be putting that big red SOLD sticker across a sign on the front of a house you just decided to live in. Which coincides with the time you signed up to having a very large weight strapped to your back, otherwise known as mortgage. This is a scary time in people’s lives as they usually have little knowledge of what they should be looking for in a lending provider or even loan itself. Fixed interest? Variable interest? Split loans? Fee or fee-free loans? Getting it wrong can be costly. So much stress. There’s a lot going on and a lot to plan for – and if you don’t stop to look at your life, you may wake one day and wonder where 10 years went.
DO A BUDGET
And stick to it. People hate to hear the word budget, but it doesn’t mean “miss out on things”, it means track your money and be careful.
- SAVE A HOME DEPOSIT
If you’re renting, determine the house you want, the loan you need to get it, then work backwards. If your mortgage payment would be $650 pw and your rent is $400, you should be saving a minimum of $250 per week.
- DON’T PLAN FOR KIDS
You’re never going to be ready, so if you want kids and you are in reasonably good shape, go for it.
- THINK SUPER
By now you may have had a few different jobs and may also have several super accounts. Review what you have and where’s best.
- GET A WILL
If you’ve got kids, getting a will in place is a minimum.
- CHECK INSURANCES
You really need to see a financial planner to get this sorted. Mortgage insurance? It covers the bank, not you.
Brett Kidman, a sales executive with Fuji Xerox, believes in taking one step at a time as far as financial affairs are concerned.
Right now, at 35, his most valuable asset is his house in East Melbourne, which he has just renovated and which will go to auction soon.
He hopes to sell the four-bedroom, two bathroom, single-storey house between $850,000 and $900,000. He spent about $70,000 renovating the house with the help from friends. He bought the property for about $500,000 four years ago and still has a mortgage, as he is making interest-only payments.
Assuming the house will sell for at least $850,000, he will use the proceeds to reduce the mortgage with enough left over to put down a deposit for his next property – a bigger house and backyard to play footy with his two-year-old son.
He employed financial planner Scott Haywood of Haywood Financial Management eight years ago when he was 28. Unlike most 20-somethings more into parties, Kidman was already thinking of his financial affairs.
“I wanted a share portfolio and needed my superannuation to be structured and my income protected. Scott worked in the same building and I’ve known him for many years. As I became comfortable with Scott’s advice, I recommended him to my parents who just sold their house through him.”
Once this house is sold, Kidman will sit down with Scott to work out his next financial move.
“We will discuss my long-term financial goal. I will probably look more seriously about salary sacrifice and putting more money in superannuation. Shares can be volatile and I prefer to build a property portfolio as houses and units are tangible assets and I like property.”
He believes it’s important to get good financial advice as early as possible and to start saving on a regular basis. Many people often leave it too late to plan for the future. Kidman sees his life in stages. As he is in the 30s age bracket, his next financial goal is to upgrade to buy a more comfortable family home, build up superannuation contributions and have a small share portfolio.
Kidman is engaged to his Italian fiancee, Kathrin. They plan to marry next July in Northern Italy and will celebrate the occasion with her family, relatives and close friends.
Kathrin helps Kidman with his bookkeeping and has a small catering business, but spends most of her time looking after their young son.
OUR PANEL’S ADVICE
You’ve got a bit of life experience and know a lot more about what doesn’t make you happy. Chances are you’ll fall in love and have kids in this phase of life. The financial complexities start here. Putting in place a safety net for the family (life, TPD and trauma insurances) is a must and so is having a will. You must get a financial plan. A real one.
If you have young children and can cover the expense, get top family cover health insurance. Young children often have accidents and become ill. If you need hospital care it could erode your ability to meet mortgage costs. Trauma cover and income protection insurance are very important risk management strategies.
People are either getting married or picking a partner, so this is the perfect time to start building your financial plan. Is it time to buy an investment property or a first home? Can we survive if we go to one income if we have children? It’s not time to decide what you really want to do in life and to start making it happen. It’s also time to effect a basic will.
THE REALLY SIMPLE GUIDE TO MONEY | OCTOBER 2015
The information provided in this page is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs. You should seek independent advice from your financial adviser before making any decisions.
AUSTRALIAN MORTGAGE AND FINANCIAL ADVISERS (AMAFA)
Phone: 07 3378 2056
Fax: 07 3378 2069