by Ben Kemp.
As Australians, we look at things in a unique way. Fortunately, we have the opportunity to access and benefit from a wide array of choice, freedom and nourishments. Unfortunately, most things come at a financial cost to us.
Having the privilege of dealing with many clients on a daily basis, from all stages of life, these are some of the common Australian Dreams and how they come to be, as well as some traps to avoid!
A Man’s Home Is His Castle
Men, women, couples, families, etc. they all dream the dream of home ownership. Fortunately in Australia we have access to an array of mechanisms to make it possible.
Some tips & traps:
- Finance – The banks and financial institutions, will lend funds up to a relatively high proportion of the value of a home, meaning that for as low as 5-10% of a property purchase price, the bank will top up the remainder. Obviously, they will want this back! But if well managed and paid down effectively, can provide a leg up that other countries certainly would not.
- Advice – Buyer’s advocates/property investment companies/financial advisers – Advice is available to help find, finance and purchase the property of your dreams. We have access to Super Savings Schemes, Stamp Duty exemptions and First Home Owners Grants. While some might argue they aren’t the panacea to accessing affordable housing, they are all options to make the most of.
- Identify a property that meets your needs and allows you to enter the market without suffocating your lifestyle and future plans. It is easy for the budget to start at $400,000 and slip up and up progressively. Avoid even looking at properties outside of your range and be patient – just remember, there will always be another one for sale!
“It’s not a house, it’s a home”.
We’re going to Bonnie Doon
The lifestyle property, the escape from the rat race, “A couple of acres up bush” or “some land down by the river”. Wherever it may be, for many of us the escape to the wilderness is close to our heart and a goal for our lifestyle needs. While not always easily achievable, setting ourselves the goal of the lifestyle investment is a great way to motive yourselves to put something aside for the ultimate reward.
Some tips & traps:
- Don’t over expose yourself to an asset that doesn’t produce income – just expenses
- If going into ownership with friends or family – make sure you have an exit plan clearly stated and agreed to by all
Jumping in the car on a Friday arvo and heading down the country road, “how’s the serenity”?
Eh Steve, can you move the Camira? I need to get the Torana out to get the Commodore.
Cars. The financial planners nemesis in many respects, cars, generally speaking are an expense and black hole for income or savings. But for some, cars are the release and lifestyle investment they crave, they are also a necessary evil to meet our daily needs. If you are going to be purchasing a car, for pleasure, purpose or plain necessity, then some tips & traps as follows:
- Explore your funding options – car loans are generally an inefficient way to fund the purchase, so see what cash you have on hand, any equity you might have in a property or if your employer offers novated leasing.
- Do you really need THAT one? Car salesman are crafty, don’t get upsold into a 4×4 when you don’t plan to leave the bitumen! Set yourself a budget and stick to that. We’re all prone to falling in love with shiny things so take the emotion out where possible.
So when the salesman says you can’t go without heated seats, sun roof and a bull bar, “Tell him, he’s dreaming”.
It’s the culture, the place is full of culture. Chockas.
Travelling overseas is a growing desire for Australians of all ages, with cost and opportunity ever increasing it is now a rarity to find someone who hasn’t dabbled in a bargain basement deal for a week in Bali or a Contiki tour to Europe. Balancing the travel goal with the home ownership desire and meeting the general costs of living means that I come across many amongst us who have burnt the candle at both ends.
Trap – Financing for holidays – AVOID AT ALL COSTS. Unfortunately, the joys of a holiday can be years of suffering if paid for by a high interest personal loan or a credit card facility. Please, please avoid this temptation.
Tip – be savvy, be patient and research. Holiday deals arise for amazingly good prices and on a weekly basis I hear from a client about the latest bargain they have found and taken up – tours, safaris, cruises – throughout the world are on offer.
Don’t forget to bring back some souvenirs for the family, they can go “straight to the pool room”.
A reminder of man’s ability to create electricity.
Gadgets, gadgets everywhere! Drones, GoPro’s and phones with more features than most desktop computers. Technology surrounds us and seduces us constantly, whether it’s a new TV that we simply can’t not have or a high-resolution camera to catch our memories on our latest overseas adventure, they all cost our precious hard earned funds. Retail outlets are clever at not only dragging the money we do have from our pockets, but the funds we don’t have yet either. Interest free loans, super sales, instant credit cards, the works. A lot of these offers are full of traps, built to catch people out and make the retailer a nice little bonus on top of the margin already on the product sale.
Some tips & traps:
- Don’t use borrowed funds or “interest-free” terms unless you are 110% certain of the terms – one missed payment and you might find yourself in a world of disappointment and financial pain
- You don’t need the latest and greatest of everything – especially when it means forgoing funds that could be used on other investments or debt reductions. It’s not a competition with friends & family, it just needs to meet your needs.
Be calculated and dollar conscious, but don’t be afraid to upgrade and benefit from useful technology. Nobody wants to have to clear tray 3 in the photocopier again!
Keep living the Australian dream! We are ‘The Lucky Country’ for a reason.
“In summing up, it’s the constitution. It’s Mabo. It’s justice. It’s law. It’s the vibe and ah, no that’s it. It’s the vibe. I rest my case”
This blog contains information that is general in nature. It does not take into account the objectives,
financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
If you decide to purchase or vary a financial product, your financial adviser, AMP and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.
PB Financial Solutions Pty Ltd – trading as Burke Britton Financial Partners & Securelife Financial Solutions ABN 67 097 381 523 is an authorised representative and credit representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee ABN 89 051 208 327. Licence No: 232706