Look for help to get into the housing market

Governments across the country are offering incentives for first-home buyers. You just have to know where to look.

Buying your own home is the largest purchase most people will make in their lives.

However, a long run of low interest rates has fuelled spectacular dwelling price growth, record housing debt and phenomenal asset values, particularly in Sydney and Melbourne. According to the Reserve Bank of Australia, housing prices nationally have increased 7.25 per cent a year, on average, over the past 30 years.

In its Perceptions of Housing Affordability Report 2017, financial analysis and advisory firm CoreLogic says it now takes 1.5 years of household income to save for a 20 per cent deposit on a dwelling compared with 0.8 years 15 years ago.

Nevertheless, there are government incentives to help prospective first-home buyers. Last year’s Federal Budget proposed allowing individuals to make voluntary contributions to their superannuation to save for a deposit.

Super contributions and earnings are taxed at 15%, rather than higher marginal rates. Contributions are limited to $30,000 per person in total and $15,000 per year and both members of a couple could take advantage of the scheme.

Currently, the NSW and Victorian governments are offer first-home buyers:

  • no stamp duty on all homes worth up to $650,000 in NSW and $600,000 in Victoria
  • stamp duty relief for homes worth up to $800,000 in NSW and $750,000 in Victoria
  • a $10,000 grant for builders of new homes worth up to $750,000 and purchasers of new homes worth up to $600,000 in NSW
  • no duty on lenders mortgage insurance in NSW

Most states have first-home buyer grants, and some are making it harder for foreign investors by increasing duties and land taxes and introducing other measures to reduce competition for first-home buyers.

SEEK ADVICE

There are many investment options that can help you build a deposit, but you don’t have to make financial decisions by yourself.

Chat with your Adviser today… or I’m more than happy to help!

Money hacks for teens

Help your teens and young adults manage how they spend and save.

So your teenagers and young adults know how to spend, but do they know how to budget for the things they really want? Learning good money management should be an essential life skill.

A reason to save

For many teenagers and young adults with part-time jobs, spending their entire pay each week is easy if they don’t have pressing financial obligations. This is why it’s important to discuss a long-term goal and find a reason to save.

Perhaps this goal will be a car, a holiday with friends, higher education – or even a rental bond if they want to move out. Just make sure you emphasise that they will still need money after the purchase, either for running costs or to enjoy their social lives, so they shouldn’t blow the lot.

Budget benefits

The envelope method is a great way to learn about budgeting. Label real envelopes – or use tags in an app – with categories such as clothes, nights out, transport, phone, food, and university or school supplies. These should cover all their current expenses. Then allocate money to each envelope every pay day.

They can also use MoneySmart’s Budget Planner and apps such as TrackMySPEND to help them work out their goals and how much to allocate to each envelope.

A handy budgeting formula is the simple 50/30/20 rule. Urge them to dedicate 50 per cent of their pay to bills (if they don’t have many, they could reduce this amount), 30 per cent to fun activities and purchases, and 20 per cent to savings. This will get them into the habit of planning their spending and eliminate the habit of living from pay day to pay day.

Learning budgeting and savings skills early will help them build a solid nest egg for their future.

Get advice

Young adults face many big decisions, but helping them get serious about money management early can make life easier as they get older.

A visit to your financial adviser with your child may also help them develop good money management skills from an early age and avoid some of the mistakes we made along the way.

Where to turn for advice?

Time and again, we hear and see headlines on the latest scams and the heart-breaking journeys of those ripped off.  From a dodgy tradie to those cashing in on the bitcoin boom, scams can come in all shapes and sizes and are getting harder to recognise.  Sometimes, it’s easy to sit back and judge when it’s not us involved and it seems ‘glaringly obvious.’  But for those who got ‘done over’ it’s very real and very painful.

The Australian Competition and Consumer Commission (ACCC) report that over $5 million per annum is lost to scams, but seeing that many are too ashamed or embarrassed to admit their error, the number is quite likely much higher than that!

So, where to turn?

When we have serious health problems, we head to the doctor or specialist.  A serious legal issue means we call in the lawyers.  We want someone with training, experience and qualifications to assist…, but Aussies, in particular, seem pretty happy to take financial advice from family and friends… or even the hot tip from the cabbie!

Professional advisers, however, are likely to have years of experience and training and can help size up investments in ways that our loved ones, just cant.  We don’t want to get left behind with the latest buzz, but we also don’t want to be caught in the latest get-rich-quick scam iether.

Devoting years to study and having inside knowledge of investments and markets plus hours of ongoing education and professional development, can mean a bonus for you.  A good adviser is a steady hand at the tiller and the calm voice during the storm that can help you stay on track and naviagate the good and bad times.

Planners develop investment strategies based around your personal timesframs and financial goals and help you assess the risk and the return.  They’re the ones who help guarantee a good night’s sleep instead of staring at the ceiling and worrying.

Advisers now are on an ASIC register so you can check them out: Financial Advisers Register.  You can find who they’re licenced through, what they can advise on , their qualifications and training and if any disciplinary actions have been taken against them.

To find out what others think of your adviser or leave feedback yourself, you can now also head to Adviser Ratings to see feedback from both clients and colleagues.  There’s lots of research you can do before getting advice so ensure you interview a few to find the best fit for you.

Your finances will be glad you did!