For some, the prospect of the last of your children fleeing the nest is a long-awaited event; for others, it’s the sad end of a chapter. Either way, becoming empty nesters is an important financial life stage and one that is often overlooked. This article written by our professional financial planners in Sydney offers our top tips for making the most of your finances when your kids have left the family home. Even if your child was paying board, it’s likely that not having them at home with you will free up some extra cash. Ensure that you make the most of this income boost as it is a great opportunity to build wealth for the future.

Financial planning tips for empty nesters
After the hard work of raising children to adulthood, it can be very tempting to want to spend any extra money now that they’ve left home on the luxuries of life: holidays, a new car. Of course, money is there to be enjoyed in life as well as preserved. A good idea might be to balance a small splurge with some smart financial strategies for long term financial prosperity.

Here are some of our financial planning top tips on how to manage your extra cash:

> Pay down debt: Try to reduce any debts that you have. Debts that are high-interest such as credit cards should be the first priority to reduce your interest payments. If you have a mortgage anything left over should come next.

> Consider renting: If you have spare room, you may like to consider renting it out to generate some extra income. You should be aware that there are tax implications from this and any rent that you earn will be included as taxable income.

> Downsizing: Many people find that the old family home becomes too large to manage when their kids move out. One option is to sell the family home and buy something smaller to live in. If you still have a mortgage on your home it can help to reduce your mortgage costs. Or if you own in outright it can free up some money to use towards other investments. Remember that the costs involved in downsizing can be expensive (agent fees, legal fees, moving costs, stamp duty on your new home) so be sure to take these into account when
deciding if this is a viable option.

> Contribute to Super: If you’re still working, you may like to consider contributing extra cash into your super fund via salary sacrifice. This can be a good was to give your super an extra boost before retirement in a tax-effective way. However, be sure to check that you don’t exceed your maximum contribution amount!

> Other Investments: Other investments such as investment property or shares can be a good idea if you’re already in a strong financial position.

> Cut costs: After raising your children for so many years, it can be difficult to get used to just having to pay for just you, or just you and your partner again. Make sure that you notify your private health insurer as this may reduce your monthly premiums. Other things to consider are the family car—do you still need a large car or can you downsize to a smaller, more fuel economic model? Also, try to remember that there’s one less person in your household when doing the grocery shopping—it can be a hard habit to break!

Making the most of having the nest to yourself with Financial Planning
Being an empty nester is an important stage of life and a good time to re-evaluate your goals for the future. If you haven’t already retired, it can be a great precursor to retirement and a good time to make sure that your finances are on track for a healthy retirement. A professional financial planner can help. Contact our friendly financial planners in Sydney on 1300 886 018 to arrange your free first appointment to discuss your situation.

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