Financial planning for digital nomads and remote workers
Conventional employees can usually plan for their financial future knowing that certain fundamental parameters will not change: their regular income, their Australian tax residency, their banking arrangements, their superannuation contributions and their insurance needs. But for digital nomads and remote workers, the picture is completely different, and their situation will have implications for how they pay tax, contribute to super, conduct their banking and investments and ensure they are covered for health problems and income protection. Tax residency Remote workers and digital nomads who move around within Australia don’t need to worry about this one, but for those working overseas, especially if changing countries frequently, it’s the single most important issue. The ATO uses several tests to work out whether you’re an Australian or foreign resident for tax purposes: You cannot, therefore, assume that leaving Australia to work overseas automatically makes you a non-resident for tax purposes. If you’re an Australian resident you’ll be taxed on your worldwide income. If you’re a non-resident you’ll still pay tax on income derived in Australia, possibly at a higher marginal rate and without the tax-free threshold. Income structure If you’re an employee working remotely within Australia, your PAYG tax and super contributions will continue, so your compliance will not be significantly different from that of someone reporting daily to a physical workplace. Independent contractors and freelancers have the added burden of setting aside funds for income tax payments, paying their own super contributions, and possibly managing GST, all of which are difficult when income is uneven. Digital nomads with higher earnings may choose a company or trust structure, especially if international contracts are involved. This makes income smoothing easier, but comes with greater compliance costs. Superannuation Even if you’re travelling or residing in different places for most of the year, you’ll still receive superannuation contributions from an Australian employer, or need to pay them yourself if you’re a self-employed Australian tax resident. Personal contributions made from overseas may still remain tax-deductible, depending on your residency and whether you have Australian income against which to claim. For those with uneven incomes, it’s possible to make more substantial personal contributions in higher income years, and also to make strategic use of carry-forward concessional contributions. Banking Anyone working overseas for long periods will need to rethink their approach to banking. It’s a good idea to maintain at least one Australian transaction account, preferably with multi-currency access to minimise foreign exchange fees. Cash flow management For the self-employed, or for overseas workers with Australian taxable income not subject to PAYG, it’s important to keep money earmarked for tax payments separate from cash available for spending. An irregular income will call for a larger emergency fund, ideally 6-12 months of expenses, which should be kept in a stable currency if you’re overseas. Insurance Digital nomads who plan to work overseas may require specialist international health insurance, rather than standard tourist travel insurance. They also need to check that any income protection insurance they may have does not exclude foreign residency. Investing Continue your investment strategy to align with your long-term goals, not with where you happen to be living. You may wish to consider whether to continue with your Australian investments while overseas, and whether you will have difficulty accessing Australian investment and trading platforms. There may be CGT implications if your residency changes. In this situation, it would be a good idea to keep your investments simple, with minimal trading using fewer platforms, and investing in ETFs, which usually require less monitoring. Tailored advice will help Digital nomads and other remote workers can rely on a financial adviser for advice on financial planning issues such as tax residency, optimal income structure, banking and cash flow, insurance and investments.
A Smarter Way to Respond to Super Volatility
When markets get bumpy or household budgets feel tighter, it’s common for people to start questioning their super. If your balance has dipped or returns haven’t met expectations, you might wonder whether continuing to contribute is worth it, or whether super is really doing its job. Before making any big decisions, it helps to step back and consider what superannuation is designed to do, and how it can still play a useful role even when conditions feel uncertain. Super isn’t one investment, it’s a structure A common misunderstanding is thinking of super as a single investment that goes up or down on its own. In reality, super is more like a container that holds different types of investments, such as shares, property, cash and fixed interest. This matters because short-term ups and downs are usually linked to what your super is invested in, not to superannuation itself. Many Australians have most of their super invested in growth assets, which can rise strongly over time but also move around in the short term. Because super is designed to support you over many years, often decades, short-term volatility doesn’t automatically mean something is wrong. That said, periods of uncertainty can be a good time to check whether your investment mix still suits your age, goals and risk tolerance. Thinking twice before stopping contributions When money feels tight, it’s natural to look for ways to free up cash. For some people, reducing or stopping super contributions feels like an easy option. While this may help in the short term, it’s worth remembering that super isn’t just about chasing returns. Contributions also help build long-term savings in a tax-effective environment. Taking a break now can mean missing out on benefits that are difficult to make up later. Rather than an all-or-nothing approach, some people choose to review how much they’re contributing or where their money is being invested within super, so it better fits their current situation. Salary sacrifice: still worth considering Salary sacrificing into super can still make sense, even when markets are unsettled. While investment returns can vary from year to year, the tax benefits of concessional contributions remain. By directing part of your pre-tax income into super, you generally pay tax at a lower rate than on ordinary income. Over time, this difference can add up, especially when compounded over the long term. If market movements are making you uneasy, it may help to look at how new contributions are invested rather than stopping salary sacrifice altogether. Many super funds offer a range of options, including more conservative or balanced choices, which can help you stay invested without taking on more risk than you’re comfortable with. Contribution limits and eligibility rules apply, so it’s important to understand how these work before making changes. Using super to help manage insurance costs When reviewing household expenses, insurance premiums are often one of the first things people consider cutting. Unfortunately, dropping coverage can leave families exposed if something unexpected happens. Many super funds allow certain types of insurance, such as life cover and some disability-related cover, to be held within super. Premiums are usually paid from your super balance rather than your take-home pay, which can help ease pressure on day-to-day cash flow. That said, insurance inside super isn’t right for everyone. Eligibility rules apply, and holding insurance this way can affect how your super balance grows over time. It’s important to review cover levels, costs and whether the policy still suits your needs. Staying flexible instead of trying to time the market Trying to jump in and out of super based on how markets are performing can be stressful and hard to get right. A more practical approach for many people is to focus on flexibility rather than perfect timing. Super gives you a number of options that can be adjusted over time, including how much you contribute, how your money is invested and what insurance you hold. Reviewing these settings from time to time, especially when your circumstances change, can help keep your super working in the background while you focus on everyday life. Getting a second opinion Superannuation can be complex, and small decisions today can have a big impact over the long term. What works for one family may not suit another. If you’re unsure about your options, a licensed financial adviser can help you understand whether strategies such as salary sacrifice, investment changes, or insurance inside super are appropriate for your situation. A simple review can provide clarity and confidence, without requiring drastic changes. Instead of giving up on super during uncertain times, take action by reviewing your super settings, consider professional advice, and making any updates needed to keep your retirement plans on track.
Are offset accounts always the best option for home loans?
Mortgage offset accounts have steadily increased in popularity since they were first introduced in Australia in the late 1980s. A recent study by the University of Sydney found that around 40% of Australian mortgage holders use offset accounts. Although they are obviously financially beneficial in many cases, their widespread acceptance does not mean that they are automatically the right choice for everyone. It’s worth taking a close look at the facts. A simple definition of mortgage offset accounts A mortgage offset account is a transaction or savings account linked to a mortgage held with the same financial institution. It allows the balance in the offset account to reduce the interest payable on the mortgage. For example, an $800,000 mortgage with $50,000 in the offset account would mean that interest would be payable on only $750,000. Offset accounts favour the wealthy The university study found that households with higher incomes, bigger mortgages, and more expensive homes are much more likely to benefit from offset accounts. Conversely, those with smaller mortgages may be paying fees or higher interest rates without getting any significant benefit. The pricing complexity of mortgage products can make it difficult to work out whether an offset account would be the best solution in your case. Where an offset account can be a good choice An offset account can be valuable when you regularly keep a large, ongoing cash balance in it, such as your salary, emergency fund or savings. Unlike the interest earned in a regular savings account or term deposit, the interest saved by an offset account is tax free. The money in your offset account is always immediately accessible. In contrast to a mortgage redraw facility (which allows you to access any mortgage payments you’ve made over and above the minimum repayments), you will not need to go through any formal application or activation process, or be subject to any restrictions on the amount you can withdraw. This flexibility may be particularly useful for the self-employed or anyone with an irregular income. From a tax viewpoint, an offset account may be preferable to paying down the loan or using a redraw facility if you intend to convert your home to an investment property later. But it’s a complex tax situation, and property flippers in particular need to get financial advice before making a loan decision. Where an offset account may not be ideal Mortgage Choice broker Paul Williams, in a recent interview, said: “Most banks impose a slightly higher interest rate for offset accounts compared to basic home loan packages, along with monthly fees ranging from $10 to $30.” This means that if you’re not regularly depositing a reasonable amount of cash into your offset account and maintaining a balance of about $20,000 to $30,000, you might be better off with a basic variable home loan, which could be about 0.2% p.a. cheaper and be fee-free. Maximising the benefit from your offset account requires a certain amount of financial discipline. The ease of access to cash in an offset account can make it tempting to withdraw it and reduce the balance to below a useful level. A cheaper basic loan with no offset can be more effective if your loan balance is low, such as when you’re close to retirement or you’re zealously paying off more than you need to in order to reduce your loan balance. Think before you act An offset account should not be a default option for everyone. They work best for financially disciplined individuals with large mortgages who can maintain a significant cash buffer or have irregular income. For others, the lower interest rate and fees of a no-offset loan can be a better choice. Consult your financial adviser to find out which one will work best for you.
How much cash should you hold vs invest? What’s the right mix?
There are always two ways for individuals to hold cash, emergency fund cash and investment cash. This needs to be clarified before discussing any investment mix. Emergency cash (not part of your investment portfolio) Life has a habit of delivering the unexpected, so it’s a good idea to keep 3-6 months of living expenses in cash, readily accessible in a savings account or mortgage offset account. Make that 6-9 months if your income is variable and you would like extra peace of mind. Other reasons for setting aside cash might include saving for a particular goal, such as a car purchase, an overseas holiday or a wedding. This emergency or special-purpose cash does not count as part of your investment portfolio. Cash as part of your investment portfolio Once your emergency fund is established, the question becomes how much investment cash – in savings accounts (preferably high-interest savings accounts) or term deposits, to hold as part of your overall investment mix? While cash investments certainly earn their keep as a very low-risk option, the interest rate you earn will usually trail behind the inflation rate over the medium to long term, which means that even if you re-invest all your interest income back into cash, the value of your investment will be constantly eroded. That’s because, generally speaking, the lower the risk, the lower the rate of return. And the converse is also true: the higher the risk, the higher the potential for asset growth, meaning that shares for example, typically offer a higher return than cash over the long term. But this does not mean that cash does not have a place in your portfolio. It’s just a question of balancing your investment mix with your financial goals. Cash equivalents as part of your investment portfolio Fixed interest investments such as government bonds, corporate bonds and debentures are regarded as ‘cash equivalents’. They are riskier and not as liquid as a purely cash investment, since selling listed bonds and debentures usually requires 2-3 business days before settlement, and the proceeds for unlisted products may not be available before their agreed maturity date. However, fixed interest investments will usually offer better rates than savings accounts or term deposits to compensate for the higher risk, thus providing better capital preservation. Match your mix to your investment horizon and financial goals With the question of what is and isn’t cash established, and the role cash plays in your portfolio, it’s time to get serious about the mix in 2026. But the fact is, there’s no ‘one size fits all’ answer: The key to cash investment is to get your emergency fund in place first, and then decide what proportion of your portfolio to allocate to cash, based on a definite strategy rather than either fear or optimism. But don’t over-allocate to cash, because you may miss out on growth opportunities. Find out what’s right for you Actual portfolio mix advice can only be constructed around your personal financial profile and aims, not on generalisations. Seeking guidance from a licensed financial advisor is highly recommended to ensure that your 2026 investment portfolio meets your needs and protects your future.
Your 10-step personal financial audit checklist
The end of the year is an ideal time to pause and review your finances, but a personal financial audit can be useful at any stage. Just follow this 10-step checklist to guide you through the exercise. Gather your income data for your salary (from your PAYG statement) and any business and investment income. Check your spending in categories such as living expenses, rent or mortgage payments, interest expense and discretionary expenses (e.g. holidays, eating out, entertainment). Your bank transaction account or credit card account statement may help you to sort expenses into categories. Now work out whether any expense headings increased unexpectedly, and whether your total expenses are (ideally) less than your income. Looking forward, are there any expenses you can reduce (such as unused subscriptions)? Work out your likely expenses for the coming year and set discretionary spending limits. Check the interest rates on your credit cards and loans, including your mortgage. You may be able to switch cards or refinance loans at a better rate. Review your usage of credit cards and Buy Now Pay Later if you’re not clearing your debt within interest-free periods. Create a payment plan to reduce these high-interest debts. Aim to build an emergency fund covering 3-6 months of expenses. But don’t let your savings loiter in a low-interest account. You could get a better result from a high-interest savings account, a mortgage offset account, or short-term deposit. Are your superannuation investment settings appropriate for your age and risk tolerance? How does your fund’s performance compare with others? The ATO’s Your Super Comparison Tool can help you assess this. Check that your employer has made the necessary contributions on your behalf. Consider making personal concessional or non-concessional contributions to boost your super balance, and check your eligibility for government co-contributions and spouse contribution offsets. Look at the way your investment portfolio is allocated between, for example, shares, property, cash and bonds. Does your portfolio’s performance align with your financial goals? Check your brokerage fees and fund management fees to make sure you’re getting the best deal. Make sure your CGT records are accurate and up to date. Examine your life, property and health insurance, and also your cover for income protection and disability. Do you have enough coverage given any recent life changes, such as children or buying a home? You may need to get up-to-date valuations to ensure you are not under-insured or over-insured. Ensure you’re not missing out on any legitimate deductions related to work, investments, rental property, super contributions and charity donations. Check that your private health fund tax statements are correct. Consider using the ATO myDeductions tool for the coming year. Significant life events can alter your financial priorities. If you’ve changed jobs or your marital status, welcomed children or bought or sold a property, struggled with your health or are looking forward to retirement, you may need to adjust your savings and investments to align with your financial goals for the foreseeable future. Set some financial goals – such as reducing specific expenses or increasing your emergency fund, for the next 12 months, and review your progress on long-term goals such as home purchase or retirement. Overwhelmed? A financial adviser can help. That’s quite a lot to get your head around, but if you can make a personal financial audit a part of your annual routine, it will pay dividends. You can rely on a qualified financial adviser, who knows all about budgeting, debts and credit, savings, super, investments and financial goals, to guide you through this important task.
Quarterly Economic Update: October to December 2025
The December quarter has been defined by unexpected twists. Just as we thought inflation was under control, it kicked back up. Just as rate cuts seemed certain for 2026, we’re now facing the prospect of rate rises. And just as geopolitical tensions appeared to be settling, the US launched a stunning military operation in Venezuela. Through it all, Australian households held their nerve, spending up at Christmas and keeping the economy ticking over. The US Attack on Venezuela and Market Implications On 3 January 2026, the USA conducted Operation Absolute Resolve, a military strike on Venezuela that resulted in the capture of President Nicolás Maduro and his wife. The operation, involving more than 150 aircraft, bombed infrastructure across northern Venezuela and transported Maduro to New York to face narcoterrorism charges. Global reaction was swift and divided. Latin American leaders, including Brazil, Mexico, Colombia and Chile, strongly condemned the action as a violation of sovereignty. European leaders urged restraint and respect for international law. Meanwhile, several US congressional Democrats declared the strikes illegal, citing a lack of congressional authorisation. For markets, the impact has been surprisingly muted. Venezuela currently produces less than 1 million barrels of oil per day, around 1.1% of global output, so the immediate supply disruption is minimal. But what many don’t realise is that Venezuela sits on 18% of the oil in the ground globally, the highest reserves in the world. Oil prices edged up only slightly, with Brent rising about 0.2% as markets reopened. The bigger question is what happens next. If US companies succeed in rebuilding Venezuela’s oil infrastructure, the country’s vast reserves could eventually add 2-3 million barrels per day to global supply, pushing oil prices down in the medium term. For now, investors are taking a wait-and-see approach as political uncertainty clouds the transition. Prospects for Interest Rate Movements in Australia The Reserve Bank held the cash rate steady at 3.60% in December, but the outlook has shifted dramatically. Inflation jumped to 3.8% in October, well above the RBA’s 2-3% target range. That’s forced a rethink of where interest rates are likely to go. Commonwealth Bank and NAB are now forecasting a 25 basis point rate rise in February, while Westpac expects rates to remain on hold throughout 2026. The RBA itself has confirmed it’s considering whether a rate increase might be necessary, though officials want to see Q4 inflation data first. For mortgage holders, this is a significant shift. After three rate cuts through 2025, the prospect of rates heading back up, even modestly, will require careful budget management. Christmas Spending and Consumer Sentiment Despite cost-of-living pressures, Australians spent up bigtime for Christmas. Pre-Christmas retail spending hit $72.4 billion in the six weeks to Christmas Eve, up 4% on 2024. Total gift spending reached $12 billion, with shoppers averaging $757 each. Consumer confidence surged to 103.8 in November, the first reading above 100 since early 2022, meaning optimists outnumber pessimists. Boxing Day spending continued the momentum, with $3.8 billion spent through to the New Year. This has certainly been a godsend for retailers. Evaluations of Equities and Market Performance Australian shares closed the year up 6.8% for 2025, marking three consecutive years of gains. Mining stocks led the charge, benefiting from strong commodity prices and elevated gold prices around US$4,100 per ounce. Banks also performed well, meaning that most super balances should reflect another year of positive returns despite the volatility we saw throughout the year. The Impact of Fuel Prices on Households Petrol prices also fell a bit in December, dropping to an average of around $1.74 per litre in December, down from $1.87 in September. With global oil markets settling and the Australian dollar performing reasonably well, experts expect this to continue into early 2026, provided the Venezuela situation doesn’t escalate. Trump’s Tariffs and Global Trade Uncertainty President Trump’s tariff policies continued to reshape global trade through the quarter. The average US tariff rate climbed to nearly 17%, the highest since the Great Depression, covering everything from furniture to auto parts. These tariffs are generating roughly $30 billion per month for the US Treasury and threatening to ignite the inflation rate again. For Australia, direct impacts remain limited. However, the ripple effects matter, global supply chains are being reshaped, and business investment remains cautious. The US Supreme Court is currently evaluating the legality of Trump’s tariff authority, with a decision expected in early 2026 that could reshape the landscape again. The Weak US Dollar and Currency Markets The US dollar posted its worst annual decline since 2017, falling 9.4% against a basket of major currencies. The weakness stems from multiple factors: concerns about fiscal deficits, policy uncertainty around the Federal Reserve, and expectations of continued US rate cuts. A weaker greenback benefits Australian exporters and tourists heading overseas. Most analysts expect this weakness to persist through 2026, though the dollar could rebound sharply if global tensions escalate and investors seek safe-haven assets. Looking Ahead As 2026 begins, Australia’s economy is holding up reasonably well despite the global uncertainty. The labour market remains resilient, wages continue growing faster than inflation, and household savings have improved. The key wildcards are clear: will the RBA hike rates in February? How will the Venezuela situation unfold? And can global trade tensions be managed without tipping into recession? For investors, the takeaway remains straightforward: stay diversified, focus on quality assets, and avoid overreacting to short-term noise. While volatility will persist, particularly around geopolitical flashpoints, the fundamentals suggest the economy is on steadier ground than headlines might suggest.
How to inflation-proof your household budget in 2026
There’s no escaping the fact that retail prices, utility bills and interest rates remain persistently high. If you’ve managed so far, but feel as if you’re stretched to the limit (or would just like to hold cost increases at bay so that you can add to your savings) here are some strategies to adopt. Lock down your major fixed costs first. Housing Mortgage payments or rent are the biggest expenses for most Australian households. Homeowners should review their mortgage rates annually, not just when interest rates change, to make sure they are getting the best deal. Switching to a new mortgage provider with a better rate, even if the reduction is only one or two basis points (e.g. from 6.00% p.a. to 5.99% or 5.98%) can save thousands of dollars over the life of the loan. Renters still have options, despite the tough market conditions. You may be able to negotiate a longer lease in return for smaller rent increases. Landlords value long-term tenants, and recent legislative changes in most states mean that rents can only be increased every 12 months. Utilities Electricity and gas prices tend to reset every 12 months, so compare plans when this happens to make sure you are on the lowest rates. You can do this online at Victorian Energy Compare or Energy Made Easy for the rest of Australia. Adopt a strategic approach to groceries Grocery prices can seem to rise faster than the CPI suggests. Attack this problem by: Inflation-protect your insurance Review your home and contents insurance to make sure your cover is adequate given recent price increases and property valuation surges. Being under-insured can be a costly mistake. But rein in likely premium increases by increasing your excess and dropping any expensive extra benefits (such as motor burnout or portable items cover) you’re unlikely to need or can accept the risk for. Apply the same scrutiny to any extras cover on your health insurance. Is the cost of cover for items like dental, optical, physio and podiatry greater than your likely benefits if you’re young and healthy? Conversely, if you’re past childbearing age, make sure your premium omits obstetrics. Take an aggressive but selective approach to debt Make the elimination of any credit card and BNPL debt you carry from month-to-month your first priority. Their extortionate interest rates will make mincemeat of your budget. On the home loan front, aim to build a modest repayment buffer in your offset account. And try to avoid committing so much of your income to fixed loan repayments that you have little or no cash buffer left. This may mean borrowing less than the available maximum and choosing a longer loan term, for the sake of increasing your ability to withstand interest rate shocks and inflation. Build a buffer into your budget A budget that’s too rigid will collapse under inflation. Your spending categories (e.g. groceries, utilities, fuel) will need to be in ranges, not fixed numbers. A 3-6 month emergency cash buffer will allow you to absorb price increases without destroying your budget. Adjust your savings strategy Your emergency savings belong in a high-interest savings account. Shop around for the best rates rather than leaving them in a low-interest account with your main banker. Review your interest rates regularly, because banks profit from your inaction. Focus on income as well as outgoings There’s a limit to how much you can cut expenses, so try to negotiate your salary actively, especially if it hasn’t kept pace with the CPI. When you do get a pay rise, immediately siphon it into your emergency savings to avoid lifestyle creep. Also consider creating a secondary income from a side hustle. Take a tactical approach. Inflation-proofing your budget in 2026 isn’t about extreme self-denial. It’s about choosing flexibility, regular reviews and deliberate trade-offs. You can consult your financial adviser for help setting your household budget, and to tap into their inflation-proofing expertise.
How to get the balance right in your superannuation investment settings
It can be tempting to treat superannuation as a ‘set and forget’ investment. In most years, your annual statement will show what appears to be a satisfactory growth rate, so why tamper with something that seems to be working reasonably well? However, depending on your age and goals, your superannuation fund account could have a more suitable mix of investments. Put simply, you need an appropriate blend – for your particular circumstances – of growth potential and defensive security. Understanding the difference between growth and security investments The following investment strategies (under varying names) may be available in your super fund: Some super funds automate the asset allocation change as you age, so it’s worth checking if you don’t want this to happen. Factors that should affect your superannuation investment choices One of the above investment strategies may be suitable for you right now, but as your situation changes, so should your superannuation choices in order to maximise either your returns or your security. Your decision will depend on: Possible scenarios Review regularly but don’t switch too often You should review your superannuation options regularly to ensure they remain aligned with your age, years to retirement, and financial circumstances and goals. Although you can change your superannuation options as often as daily, this is definitely not recommended. Switching frequently based on short-term market downturns may mean you miss out on gains when the market recovers. Also, keep an eye on your super fund’s performance and fees compared with other funds. If you feel that your fund is underperforming, you can switch to a new fund by giving your employer a completed Superannuation Standard Choice Form, available from the ATO. Changing your investment settings and switching funds are both serious decisions that should not be undertaken without the benefit of financial knowledge and experience. A licensed financial adviser will be able to give you expert guidance based on your individual situation.
Help Your Kids Buy a Home Without Risking Retirement
It’s understandable, in today’s tough housing market, that you want to give your children a leg up onto the first rung of the homeowning ladder. But before you do, stop to consider how it’s going to affect your own financial situation in your later years. That doesn’t make you selfish, just prudent. And there are ways to give your children the boost they need and still enjoy a comfortable retirement with financial security. Review your own financial situation first Before you open a branch of the Bank of Mum and Dad, make sure your own retirement needs are covered. Calculate your retirement income – superannuation, investments, Age Pension if eligible – and estimate your current and future living costs. Ideally, factor in an emergency financial buffer and plan for an extended life expectancy. A financial adviser can help with these calculations. Five options to help them buy. Once you’re sure you can afford to lend a hand, you can choose one or more of several methods: 1. Hand over cash towards a deposit Saving enough for a house deposit is a tough challenge, and a cash gift will give them a real boost. Make sure, though, that you only part with what you can afford, because you won’t see that money again. 2. Give them a loan If you can’t afford to lose the income from the cash permanently, consider giving them an interest-free or low-interest loan. You’ll need to make it clear that it is a loan and not a gift, and have it legally documented. 3. Become a guarantor Another popular option is for parents to act as guarantors for a part of their child’s mortgage, to enable them to avoid paying for expensive Lenders Mortgage Insurance (usually required when the mortgage amount is more than 80% of the assessed value of the property). The mortgage guarantee will usually be secured against your own home, so be aware of the fact that the lender will pursue you for repayment if your children default on their loan. In the worst-case scenario, you could end up losing your own home. 4. Share the ownership If you have substantial equity in your own home, or own it outright, banks will regard you favourably as a joint borrower with your child. This means that you could share the mortgage and ownership of a property you purchase together, as well as potential capital gains. Once again, it’s vital to have the situation properly documented, so get some legal and financial advice before you commit.\ 5. Provide practical help Even if you can’t give direct financial assistance, there are other ways to help them. You could allow them to live with you rent-free while they save for a deposit, or assist with the formalities of applying for a mortgage or First Home Owner Grant. Know the Centrelink ‘deprived asset’ rules If you receive a full or part Age Pension, you need to be aware that you can only make a gift of $10,000 per year, and a maximum of $30,000 in any 5-year period, if you want to avoid your gift being regarded as a ‘deprived asset’ for five years. This means that any amounts exceeding this will be counted as still being your assets when determining your pension eligibility, and when calculating your income under the deeming rules. A loan to your child can affect your pension too, since it will be counted as an asset for pension eligibility and deeming. Avoid damaging family dynamics Parents who have only one child don’t need to worry about perceived favouritism or unfairness, but where there’s more than one child to consider, tread warily. You may need to make it clear that the same help will be available for all your children, or that appropriate provision will be made in your estate planning. It’s also worth hesitating before you buy your child a house outright, even if you can afford to do so. Handing it to them on a plate could have two detrimental effects. You will deprive them of the sense of achievement that will come from managing most of the cost themselves, and it may also set a dangerous precedent that prevents them from learning financial responsibility. Consulting a financial adviser before you make any decision will help you to avoid potential pitfalls and select the best purchase assistance method for your circumstances.