Raise Children and Invest in Australia

How to not end up broke (and broken) – tips for parents

Parenthood feels like you’re walking on tight rope. After caring for your children, it is impossible to even imagine doing anything other than the essentials such as: eat, wash (if you’re lucky), dress and work.

Many parents don’t have time to consider planning their financials let alone funding them. After carers fees, education costs, extra-curricular activities, food, medical and everything else, they certainly don’t feel that they have additional cash to save their money or invest it. So, the idea of
“building an asset base, while raising children”, can sound like an oxymoron.

Nevertheless, global studies confirm that children will cost approximately $1.2m per child, with the most expensive period being between the ages of 10 to 21. So regardless of time and cash constraints, most parents need to build wealth just to afford their children, let alone eventually retire.

One day our children will leave the roost and start to fend for themselves. Too often I see parents starting to build for their retirement at this stage.

The benefit of starting early is well documented in our blog What’s the biggest mistake a property investor can make?

So, losing 20 years of investment opportunity to a blur of dirty nappies and pubescent petulance, will have mammoth negative effects on future wealth. Millions of dollars’ worth in fact. It is critical that parents find a way to start now, both for their children and for themselves.

Luckily, there are strategies for time poor, cash poor parents. The idea is to build wealth, for both your children and yourself, while having little or even zero effect on cashflow.

One strategy that works well is to invest in cash flow neutral property. By purchasing a property that costs little to maintain, provides adequate income and pays significant tax benefits, it is possible for an investment to pay out a small profit, rather than cost money. The idea is to let it fund itself while it grows in value, hence having little effect on your lifestyle. A great example of this strategy put into practice is our client story on Amrit.

Eventually you can draw against this property, instead of your principal place of residence (roof over your head), to pay for the things like school fees.

This is one of our most popular strategies for obvious reasons. No matter what the age or financial circumstance of our clients, most have little cash leftover at the end of the week.

Have any of these happened to you in the last 12 months?

  1. 2 days before payday with virtually nothing left in the bank?
  2. Late to pay your credit card, personal loan or utilities bill?
  3. You had to decline an event or opportunity because you didn’t have enough money?
  4. Been at the register with a full trolley and your credit card was declined?

However, most are also paying significant amounts of tax. This is critical to building a cashflow neutral investment strategy. It is possible to use approved rebates, to fund the out of pocket expenses associated with owning an investment property. Sometimes these rebates will equal more
than your costs.

Do you want to know if you qualify to buy an asset that is cashflow neutral? Please contact our office and we will send you a brief questionnaire to find out more.

By | 2017-11-17T09:36:56+00:00 September 13th, 2017|Advice, Investment, Wealth|