Your 30s is the decade when, even if you don’t want to, you join the ranks of mainstream Australia.
With the median national age at 36.9, according to the last census, and women with a median age of 30.8 bearing an astonishing 300,000 something babies a year, the 30s are when the “kidults” finally transform into adults.
Yes, you’ve finished university and left the family home. You may have been lucky enough to save a reasonable sum for a home deposit and you are even luckier if you have paired up with someone who has done the same.
If you have parents, or even two sets of parents, who can help you with this then you’ve hit the jackpot!
And while you might be settling down into a career at this point, there are pressures starting to accumulate.
If you have bought a house, there’s the relentlessness of mortgage payments. If you have a growing family, there are the headache of finding larger but also affordable accommodation.
If there are children, there are also educational choices to make and child care to pay for. It can also reduce the earning capacity of the family as one parent takes time out to look after the kids.
There is a world of financial choices to navigate and you are supposed to understand the difference between fixed-interest loans, interest-only or variable and which one will be best for you.
Not only that, but your superannuation balance will be starting to build up and with that comes new questions.
Should you consolidate all the accounts you accumulated in those part time jobs in your 20s in one account?
Well, you probably should, but which one is best? And should you be looking at self-managed super yet, or is that something to ponder for later, or if you start your own business?
Then there is the issue of insurance. Perhaps you have life and income-protection insurance with your super fund, but perhaps you don’t. Have you made a will, and sorted what will happen to your affairs in the worst case scenario?
The trouble with your 30s is that you are so busy living and working that you hardly have time to plan. Time goes so fast and all of a sudden you are catapulted into your next decade, the children are in high school and your parents are retiring.
Just remember to smell the roses a little and live for the moment every now and then.
Your 30s are all about balancing today with tomorrow, and if you can do that you can have the best of both worlds, and have some fun along the way.
Six-Point Check List
- THINK ABOUT SUPER. You probably have a number of super accounts, accumulated through various casual jobs in your 20s. Best to consolidate them in one account.
- GET A PROPERTY PLAN. It’s harder and harder for first-home buyers in Australia. Get a savings plan and a strategy to get on the property ladder, even if it’s an investment
- START BUDGETING. If you are going to get ahead at all, you need to know where all your money is going and keep it under control.
- CHECK YOUR INSURANCE. Think worst case scenario and make sure you have some appropriate cover.
- DO SOME TAX PLANNING. Understand how much tax you are paying and what you are entitled to do to minimise that.
- GET YOURSELF A WILL. You’ve probably accumulated some assets, you may have a life partner and be starting a family. Having a will makes sure if goes to them, if something happens.
Pausing for thought
Diana Ferguson and her husband Stephane were living the carefree lifestyle of inner-city 30-somethings until Stephane had a workplace accident last year.
A spinal injury has kept him in hospital and off work for nine months or so, and the experience has been a major catalyst in the couple focusing on their finances and their future goals.
“We used to go out and party, and used to spend a lot on eating out and entertainment,” says Diana, 35, who manages a design team for a fashion label.
“But we’ve totally changed the way we live and how we spend our money, and we realise now we were spending money on a lot of things we didn’t need to.”
At the time of his accident, Stephane was not covered by income-protection insurance so the workers’ compensation he has received is only a fraction of his income.
Having rented an inner-city apartment for the last six years, the new financial circumstances made Diana realise that some changes had to be made if the couple was to be able to purchase their own home at some time in the future.
She reached out to adviser Peter Taniane, and with his help created an investment fund on the Asgard platform, choosing a selection of diversified investments and seeking that with a lump sum.
“Because my husband is sick and not working, I didn’t know if I was going to be able to make monthly payments, but I’ve just added a second lump sum and now I’ve actioned a monthly automatic payment,” says Diana.
The plan is to save up the deposit for a property within six years, which they can either live in or use initially as an investment.
At the same time, Diana took her superannuation out of the retail fund it has been in for 15 years or so and put that into an Asgard retail product.
Now her personal savings go into the investment fund to save for a house deposit, while the super fund receives the nine per cent annual contribution from her employer.
“Because I am a Kiwi, I didn’t really know that much about Australian super,” she says. “It was the fund my first employer in Australia set me up with, and when I looked at it I realised it had a lot of different settings to what I want now.”
Part of Diana’s thinking was around life and income-protection insurance for herself and she admits her husband’s injury was a major factor in her “getting focused” on finances.
Also on the agenda is starting a family, which will bring with it its own financial challenges.
“Children are definitely a factor, and we definitely want to have a family one day,” says Diana. “So when we get to that bridge we will probably re-focus and adjust things again, but I am aware that it will have to be in the next few years.”
In your 30s, you should be looking to take advantage of increasing income to make some serious progress getting ahead.
Again cash flow is key to the success of your strategy and you should harness your cash flow to take full advantage of your opportunities.
This is the time when you should be looking seriously about property investing to drive future income, and it’s critical you get your property strategy right from the start so you get the best possible outcomes.
Understanding your options, how much to spend, how much to borrow and how to structure (i.e. owner occupied versus investment) are all areas that will have a huge impact on the future, as well as your cash flow and lifestyle today.
In your 30s, another common issue is planning for marriage and children and the associated expenses, so you should get clear on your money targets to take advantage of opportunities and avoid problems that can hold you back.
In a time for big decisions around property and possibly time out of the workforce for children, this is a time where you will get huge benefit out of some comprehensive planning.
Speak to an adviser who can help you plan out your options so you can make the right decisions and set up a clear path to follow to get the outcomes you want out of your money.
You should also be thinking about strategies to cut your tax bill, because every dollar of tax you save is an extra dollar you can use for your investments or lifestyle today.
If you haven’t already set up personal insurance, do this now while it’s still cheap and think about using fixed premiums to keep the cost of this low in the future.