This article is more or less relevant to “thirty-somethings” and is appropriate for anyone with a reasonably stable financial situation. The reason I said that is: at around this age most of us get married, start thinking about children and also thinking of house and settling down. Personal wealth takes a more stable and strategic approach and not as wild as we are at 20’s and when we have more appetite for risk. So should you be – 30-40’s is when most people make most of their personal wealth and after 40’s start to prepare for the retirement etc. and live happily ever after with the financial freedom.
Marriage – make it work in your favor
With marriage change come, new expenses get added to the list as well but it’s not all gloomy after all. If you play it right it comes with opportunities as well. Marriage changes your legal situation and, consequently, your financial options
- You have now two streams of income to play with: manage, invest and contribute to your personal wealth.
- You can now file the tax as a joint tax rather than single tax file – comes with certain tax benefit – you now get higher tax bracket to play with.
- Ownership of the asset is now distributed and get taxed with divisible of two rather than 1.
- Your borrowing power increase as well with the two stream of income so you can now borrow more and leverage more to grow your personal wealth faster.
- A lot of the time you get entitled to more social benefit like a tax break, central link benefit etc.
You just need to make sure you put a reign on your spend at the same time and not blow off on the supersized ring and over the top wedding/honeymoon and rack up the bad debt. After all and most importantly you have two wise person to think about the scenarios before you take a big decision for the family and make it a positive experience.
Your home you asset
House buying usually involves thousands in transaction costs as well as the cost to maintain. This is probably the largest purchase anyone makes in the lifetime. Changing it also come with its own cost. On an average, any change of house comes with around 50-100K cost with it if you consider all the transaction cost and the moving cost. So think twice before you move, the rule of thumb should be around five years before you move from one place to another.
Most importantly when you purchase a house to live in consider the outgoing interest (those are solid expenses) and also the maintenance. Don’t get all dreamy and buy something that you cannot really afford even if your borrowing power allows you. My take on this is – your house that you buys should incur the similar expenses as the one you renting now. And all together it shouldn’t cost you more than 20-30% of your total income.
Your home is the probably the biggest accumulation of your asset so treat it like that. When you buy do not only consider if this the dream place you want to live in, also consider if this is close to work, other amenities you access, the school for your child and most importantly it has growth potential and your investment.
Your children and finances
Children are another popular thirty-something decision. Children are expensive. Even if they don’t eat a lot, they add costs for housing, health insurance. Just the child care alone will cost you 10-15k annually which is like the second biggest expenses on most of the household. If you decide to go with the private schooling that would more than your house at a 20-30K price tag. As a parent, married or not, you must budget for child-support-related costs at least until children reach age 18.
- Get your Centrelink profile update with the details so that you are getting the right benefit for the child care etc. back. And also those expenses are getting considered for your tax.
- Plan ahead – if you want to put them in the private school and foreign university that cost lot of dollars – plan it ahead, invest it slowly soon as they born and when you are planning.
- Their wedding etc. plan ahead – it will be a lot easier to pull off a 50K/100K when the time comes if you started that plan 20 years back rather than 2 years.
Tidy up your superannuation account
A lot of the cost with the superannuation accounts are maintenance fees etc. and they add up over the time. There is no reason you are your wife need to have two separate accounts, and when you change job etc. you need to leave the old super account behind. Consolidate them all into a single account. It will be a lot easier to manage, maintain, and most importantly cheaper and beneficial and will contribute to your personal wealth.
Life insurance and estate planning
Last but not least – when you are alive you are giving your family the financial support they need. If you bring in most of the money home it’s even more important, what if you die tomorrow. Think about what you want to leave for the family, you do not want to give the financial stress and hardship to your family on the time they are already going through a lot with losing you. The reality is – whether you are there are not bills will continue at its own pace.
- Make sure you have a nominee for all your accounts
- You share the details of all your account etc. with your child’s, wife and husbands.
- Make sure they know where all your personal wealth’s are and have access to it.
- Ensure you have a life-insurance of some sort that gives them a lump sum amount to cover at least to pay off the house, other debts and some sort of schooling and education fees.