Family Starters (Age 35-45) - What Should They Consider?
At this stage of your life, you have advanced in your career. Whilst you are earning more, your expenditure may also be increasing if you have to support a partner and potentially children or you just want to improve your lifestyle. Below are some key financial planning points that you should consider:
Focus on finding the balance between wealth accumulation and funding expenses like mortgage repayments and education expenses.
You can achieve this by using a budget to capture your household income and expenses and allocate a fixed amount for investment, no matter how small the amount is. Regular investment is a powerful tool for wealth creation. Remember the budget needs to be realistic and you need discipline to stick with it. You should periodically review and refine your budget to ensure it remains suitable for your needs.
Save up for an emergency fund to provide for 2-3 months of living expenses, mortgage repayments and other essential outgoings. If you are taking on more debt during this life stage, then you should ensure you have the ability to service your debts.
For many people, superannuation remains a tax effective way to save for retirement in Australia and now is the time to boost your superannuation balance if your budget allows. You may allocate a specific amount in your budget to make additional contributions into your superannuation fund. You may also want to salary sacrifice into superannuation contributions. Prior to taking any action, we suggest you consult a financial adviser who can advise you on the appropriateness of your strategy, as well as the tax and other implications of additional contributions.
If you have not already, you should consider life insurance as a means of risk reduction. For those who are already insured, review your policy if your circumstances have changed due to, for example, a material increase in debt or income or additional dependents.
A financial adviser can advise you on the insurance products which will suit your circumstances (such as life, total and permanent disability, trauma, or income protection, etc). A financial adviser can also evaluate the appropriate amount you should insure and find you the right product with the right features that will suit your budget. It is also important to work through the structures that can be used to hold the insurance policies and the associated tax consequences.
GENERAL ADVICE WARNING: The above is general advice only and does not take into account your personal circumstances or objectives. You should seek your own independent financial and tax advice to ascertain whether and how the above applies to your particular situation and whether it is likely to meet your objectives, prior to making any financial and investment decisions.