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Lifestyle inflation and what to do about it

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Lifestyle inflation is that phenomenon of any additional income being absorbed, without you even realising.

Maybe you’ve been working hard, climbing that corporate ladder. Or perhaps you’ve just received a massive tax return, or your side hustle is starting to take off.

Your income is healthier than ever, yet it’s not as though you’re saving, investing, or donating more.

Where has it gone?

Think gym memberships that never get used, additional streaming services that aren’t needed, more meals out (ok, takeaway).

The antidote? A budget!

We promise it’s not as boring as it sounds. In fact, what’s boring is having too much month at the end of your money and having to say ‘No’ to your social life.

Get in touch to find out how to better manage your money.

As if keeping track of the property market wasn’t a full-time job in itself! When you buy a property, it’s more than just the advertised price you’ll need to factor into your plans.

Home loan application fees

There’s no such thing as a free lunch, and many lenders charge you a fee for the privilege of applying for a home loan.

Part of their rationale is presumably to cover the costs of processing your application, as well as it acting as a deterrent from applying with multiple lenders (which would impact your credit rating). An application fee covers:

But wait, there’s more!

…And there’s still more!

If you want help applying for finance, get in touch with us today.

Who remembers receiving $20 in a birthday card from a relative? Or maybe it was $5 or $10, depending on how far back we’re talking.

And whether you’d already spent it in the time it takes to receive an extra-long hug from THAT Aunty, or you’d deposited it straight into your savings account with THAT bank, or you’d invested it into your latest and greatest money-making venture – there’s a good chance that those same money habits are with you today. 

If you’re thinking about gifting some cold, hard cash to the little ones in your life, then have a think about how you can help them develop a good relationship with money, because as we all know: old habits die hard.

Giving cash is probably more useful than ever in today’s increasingly cashless society, because it gives kids a more tangible insight into how money works.

Here are five ways to help children think about money:

Note: We’re not saying there’s a right or wrong way when it comes to someone’s money mindset, but we’re big believers that knowledge is power.

1. Money jars

Tell them about the money jar concept, where they’d portion out their money into key categories: save, spend, invest, donate, and then have to decide upfront how much they want to devote to each. Using physical jars helps kids understand an otherwise abstract idea. When they’re making decisions about where to send their money, they can see that they’ve only got their allocated funds to work with, and so it helps them learn to be more disciplined and purposeful with their decision-making.

2. Opportunity cost

Talk about opportunity cost, so when they’re deciding on whether to buy something, highlight what they’d be missing out on. Little Ryan wants to go on that $20 ride again? Remind him he won’t have money left to buy the showbag. Sounds a bit like being Fun Police, doesn’t it? But before long they’ll be pre-empting you and considering the opportunity cost before you’ve had a chance to prompt them.

3. Compound interest

Talk about the difference between good debt (debt that allows you to invest in wealth-building channels like property), and bad debt (debt that costs you). For example, if they ask for a $50 loan, charge them (a nominal amount of) interest. Get them thinking about whether they want to pay compound interest, or earn it.

4. Radical transparency

If you’re living a comfortable life, kids can get the impression that money grows on trees, right? Think about letting your kids know how much money you earn, and what’s involved (i.e. the long hours, years of education and training). Of course, you may want to tell them not to bring it up at Christmas lunch – we’re not necessarily suggesting you become that transparent!

5. Invest in shares

Setting up a very modest portfolio can be an incredible way to introduce children to the concept of trading shares. With the various apps around these days, the barriers to entry are not what they once were, and trading shares certainly isn’t just for trust fund babies. Make sure you speak to your accountant and/or financial adviser for guidance around the capital gains benefits. 

There’s been talk in recent years about the fact Australia will soon face the largest intergenerational wealth transfer in history.

What exactly is an intergenerational wealth transfer? Well, it’s a euphemism for the inheritance you stand to receive when your parents leave this mortal coil. Specifically, it’s the $3.5 trillion that the X & Y Generations will inherit over the next 20 years. According to Griffith University researchers, each recipient will inherit an average of $320,000.⠀⠀⠀⠀⠀

Seems a bit morbid, doesn’t it? But that might be the problem – no one wants to talk about it. Over half of Aussies don’t have a will, yet hope that their children will invest their inheritance wisely.⠀⠀

Building intergenerational wealth isn’t just for the elite. But unfortunately, the average Joe isn’t necessarily setup to maintain and grow any wealth they inherit. In fact, it’s estimated that 70% of families will lose their wealth by the second generation, and 90% will lose it by the third.

So, this week, perhaps broach the subject with your parents. Do they have a plan in place for passing the baton, and what do they hope for their financial legacy?

Get in touch if you’d like our suggestions for ethical, experienced financial advisers or lawyers – we have several in our network we’d be happy to introduce you to.