The secret to making money at any age

Many of us grow up dreaming of living a luxury lifestyle, and whatever stage of life you’re at, it could still be possible…

It’s no secret some of us struggle to save. From a young age, many of us are tempted by new clothes and spending money on travel, and as we get older excess funds can often get sucked up by mortgage repayments and our kids.

TODAY Extra spoke with Matthew Bateman and Luke Harris, co-founders of The Property Mentors, and authors of their new book Let’s Get Real — who believe they may have worked out the secret to making money at any age.

TODAY EXTRA: Guys, you say even kids under 10 can start to build up a fortune. What should we be telling our kids?

HARRIS: Normally at this age you are just finding your way in the world. However, there are a number of really practical things you can invest in at this age. If you are a kid, invest in your education. It is never too early to start to learn about investing and there are many low-cost or free resources both on and off-line that could help to get you started. Start to develop good money habits early. Learn how to create a budget (and stick to it). A valuable skill is to keep a handle on how much you earn vs how much you spend.

When you reach your teens, buy the least expensive car your ego can afford! Cars are generally a depreciating asset, meaning that their value starts dropping as soon as you drive it off the showroom floor. Consider, driving a less expensive (but safe and serviceable) second hand car and allocate those additional funds towards growth assets instead. Also, even at this young age, consider the strategy of ‘rentvesting.’ It may be more advantageous both financially and from a lifestyle perspective to buy an investment property BEFORE buying your own home.

TODAY EXTRA: Well if you didn’t have the foresight to do that when you were in your teens and 20s… you say it’s not too late. Matthew, what’s the secret to making money in your 30s and 40s?

BATEMAN: Even if you’re more focused on raising the kids through this age bracket than thinking about investing for the future, there are options moving forward. One option is by pouring any excess income into your offset account. Having your money readily available via a line of credit, or offset facility means you should have the flexibility to absorb any of life’s unexpected bills whilst continuing to keeping your mortgage costs as low as possible. You should also consider if you can afford an investment property.

TODAY EXTRA: Moving on to those who are about to turn 45. Tell us, what can they do to maximise their wealth?

HARRIS: This is the time to take advantage of all the hard work and sacrifices you have put in over the last 20-30 years. So, what can you do to accelerate your wealth position? The first option is using other people’s money (OPM) to your advantage. This is generally the time when you will be at your peak earnings capacity. It is also often the time where banks and lenders are happiest to partner with you on your wealth journey. Given that you may never have the ability to borrow more easily than now, consider your relationship to debt and decide if safe degrees of leverage can help you get to your wealth goals sooner.

The next is by supercharging your superannuation. If the kids have left the nest, you may now have more disposable income to start accelerating your asset purchases. You might also want to consider salary sacrificing, and/or making voluntary contributions to further boost your superannuation throughout this decade.

TODAY EXTRA: Now, what about those wanting to slow down with work, and perhaps retire. How can they make sure they’ve got enough in the kitty to fund their golden years?

BATEMAN: For those that have seen good gains in equity on their home and/or investment properties now may be a good time to look at consolidating your asset position and/or maximising your cash-flows. Now is the time in life where you might be able to consider downsizing the family home. For example, you might look to sell the 5 bedroom family home on a larger block and move into a low-maintenance smaller property example in an amenity rich location. Perhaps now is also the right time to look at rebalancing your portfolio or reducing your debt levels to provide for the income you will need to fund your ideal lifestyle into retirement. Or at least have plans in place as to how you are going to transition effectively into your retirement years.

9Saver readers can receive their complimentary five chapter preview of Luke and Matthew’s book ‘Let’s Get Real’ here.
Interview and additional text by Luke Worthington.

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