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FY23 TO HERALD SUPERANNUATION BENEFITS FOR ALL AGES
As we approach the new financial year, superannuation rule changes will see widespread benefits for Australians across all stages of life.
Wealth creation starts with getting our children into good saving habits early and teaching them the value of the compound effect.
A few dollars saved from their pocket money each week plus birthday money from the grandparents adds up over time and helps to form solid financial habits at a young age.
But getting into the property market is hard these days – houses are expensive, big deposits are the norm and demand is extremely high.
Clients often ask me how they can help their children get into their first home and how they can give them a leg up without handing everything to them on a platter.
As a parent, it’s only natural to want the best for our children – but dishing out tens of thousands of dollars in a lump sum to help your children break into the property market can be a bitter and expensive pill to swallow.
The concept of specific saving is a strategy I use with several clients looking for wealth creation advice for their children.
It’s a slow-moving, set and forget savings-based strategy. Setting up an account as a trust for a child or a deliberate account earmarked is essentially a gift for the future.
It involves putting money away – far enough away – so it can’t be used by kids to splurge on things like holidays. Instead, it prepares them for when they choose to take the next step in life, which is typically buying a house.
Then, it’s about growing that bucket of money.
Over time, this money grows, children become more interested as the dollars add up and with higher investment returns the balance increases and you put more money in.
It’s important to find the balance though – ensuring you can still enjoy the lifestyle you want to have while watching that money pot grow.
Our job is to help our clients and often their children to strike that balance, equipping them with the necessary tools to maintain discipline so they can live the life they want to, without sacrificing their end goal.
With children of university age or beyond, our strategy is adapted to consider how we can use a client’s existing assets to help their children break into the property market.
There are a lot of banks out there offering limited guarantees – where mum and dad pledge a part of the equity in one of their properties as security so their children can go and borrow against it. The child then typically pays the smaller component – the equity pledge – down quicker than the majority of the rest of the loan.
This is a popular strategy as it gives our clients the opportunity to help their children without disadvantaging themselves financially. They also take comfort knowing they are helping their children get ahead, while teaching them valuable lifelong financial lessons along the way.
As we approach the new financial year, superannuation rule changes will see widespread benefits for Australians across all stages of life.
As Chris’ Associate Adviser, there’s no such thing as a boring day at the office for Katie Robinson…
Advice you can trust, results you can enjoy.