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Seeing a Financial Planner allows you to, and indeed forces you to, think about your short, medium and long term goals and really plan the years ahead. While many people feel that they can’t see a planner unless they have a large sum of savings, or high income, it is often these planning steps that you go through in the Financial Planning process that allow you to have those savings and income capacity in the future, so don’t let a lack of savings stop you from taking this action.
While budgeting sounds like a boring word to many, understanding your income & expenses, and therefore cashflow, is key to any Financial Planning strategy, and is particularly helpful when a family unit is down to one income, so you would no doubt find benefits here in having help to understand where your money is going and how to manage this going forward.
We regularly help couples who have young families and one of the adults has chosen to raise the children rather than being in paid employment. While it does mean there is less surplus cashflow and therefore less ‘investible assets’, interestingly we find it can open up more Financial Planning opportunities, largely because of the disparity of income.
One thing we work on is utilising the Superannuation strategies that will help the non-working spouse like your wife to not fall behind while taking a break from work to raise the family. For example, there are taxation benefits available to the earning spouse for adding up to $3,000 into a non-working spouse’s Superannuation (subject to them not having a large alternative source of income). There are also incentives to add money to the lower income earning spouse’s Super while incomes are low, in the form of the Government co-contribution. Here the government will potentially add $500 to a Super fund when an individual adds up to $1,000 to their own Super. (Note that there is a test here where more than 10% of income is to be from eligible employment, so this would only be in a financial year where the non-working spouse had worked for part of the year – so either at the beginning or the end of their non-working phase of their life, or if they start back in a part-time capacity).
There are caps on how much we can accumulate in Superannuation, so generally we try to equal out Superannuation balances. During this time, only you Jamie, as the earning spouse, are obtaining contributions from your employer, so we would often take advantage of Super splitting, whereby once per year some of those contributions can be split across to your wife’s super in order to end up with similar balances at the end of your working life.
These are just some of the strategies we would look to utilise in a scenario such as yours, so yes, don’t feel you cannot benefit from planning for the future. It should put you in a really nice position when your spouse does return to work, and you can build on your accumulation strategies at that time!
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