Come across a few trains of thoughts recently, I was brought up with the view that your parents are financially responsible for you until 18-21yo then afterwards, if you want to live at home you pay board.
Some of my friends have received lump sum (circa $20k) when they turned 21, they could use it anyway they like.
Others have parents gift them the deposit they need to buy a fancy house
I don’t have kids yet but interested to hear other people’s point of view.
Ski holiday?
I will make sure that my kids take paths in their lives supporting their passion or interest. I never want them to work in some area that they do not enjoy just to be able to meet financial obligations. I have worked hard to be able to provide a safety net for my kids and I will happily provide for them in a structured manner (so that the assets are protected) throughout their lives.
I don't have kids yet but if I did I would like to start saving a small amount each pay so that when they're 18 or older they'll be on their way to a house deposit. Maybe they have to match it with their own savings to get it (so it isn't a freebie). If you buy a house in your early life, assuming a steady income, life would be so much easier. I wouldn't save money just to give them an inheritance though. I've seen the stupid ways some people spend their inheritance, like it is free money.
Great attitude. Most people out there are dead broke, they have no capacity to look after themselves let alone leave something for the kids.
I like this matching principle!
By the time a house is worth $10 million
How much do you expect to earn for a average person to afford it?
You think every China man is filthy rich? You should go visit China and get a reality check
Fact is most of them are mortgaged up to their anus
Trying to get out of the country for a better life
But half of them are also average joe without much financial sense
Now this lot is stuffed with debts they can’t refinance for settlement
@Aceboy884: In talking with some people who seem to know China well, they told me most Chinese (in China that is) do not borrow loan from Banks to buy their house. They borrow from their parents/relatives/friends. I wonder if this is really true?
@jeeg: its true, but I dont think it would be for the whole loan amount just for the deposit.. something like ask 10 or 15 ppl for $5k.. Wife leant money to a distant cousin that lives within the same village in China. Took 5 years to pay back within the promised 1 year.. Hope my wife learnt a lesson from it.
@darkage: I see. So this is just for the deposit. I have been misinformed then (or rather I misunderstood what I was told). If these people still borrow money from the bank for the remaining loan amount, how do these people even afford to pay for the property assuming that the earning income is less than what we do here in oz and knowing that their house prices go up the roof.
@p1723: me too, but culture is very different there. they have to save face in repaying debt but it just takes ages and alot of reminding..
@jeeg: I dont think your misinformed, thats just a story of a average person over there. you have to remember the population of China is big.. everyones not Rich but since there is so many ppl there can be a higher percentage of richer ppl compared to the other parts of the world. Wifes friends father owners a Factory in China.. Currently they are on their 2nd $1 million dollar house here paid by their father. Not sure if they would still have a bank loan here since getting money out of the country would be hard last I heard theres $50k USD yearly export limit, maybe thats where friends and family come in handy for overseas property since everyone can lend you their quota to get your money out of the country and investing in money outside of China is good since China doesnt allow you perpetual ownership on property you just get a 70 year lease and property prices over there make our prices seem cheap even at the $1 million dollar mark..
@darkage: yeah i guess you're right. my parents borrowed money for their flight to australia 30 years ago. they awkwardly never returned the money XD
@darkage: I agree with you. My husband worked with a man married to a Chiinese woman. They have a banking system similar to the Jews. When they wanted to buy another house, her family put money with the “banker” and Chinese banker here used money that had been given to him by people here. This was for full amount of house and they had several houses this way.
I believe there are similar systems operating for anyone wanting to transfer money from one country to another nowadays. The money is put in here. Collected in country of choice. What you receive is money handed by someone who wanted money sent the other way or elsewhere.
Have you never heard of interest?
Clearly he hasnt. Housing is so expensive due to record low interest rates that went down since the 80s at a peak of 20%. We will never see a bull market like what we have seen once the market crashes in Australia. I welcome it, people will be able to work and enjoy life and fully pay off a house after five years of work.
Never heard of it, never had loans, paid all with cash. I came from the magical land where we have magical suitcases full of cash with the face of the chairman on them.
@blaccdong: well there is this called interest. It not only applies to when you loan money but also when you have money they pay you interest. Amazing hey? You can even invest money and get higher interest. Using this amazing technique you can save a deposit on much much less than $1000 per month.
You may understand what interest is, but you clearly don't know how inflation and reserve bank interest works.
@jared444: I was being sarcastic and at the same making a joke, everyone just don't get it or being overly serious. At least people should have understood the chairman part.
one gift glad i was left. own home make life so much easyer.
You'd have to save over 1k per month to have a decent deposit after 18 years, and that's just at today's prices.
Go back to school. That's 216,000 plus 18 years of intetest
$259,740 at 2% interest
But that is a decent deposit. :)
According to https://www.moneysmart.gov.au/tools-and-resources/calculator… if I save $50 per week, with 2% per annum interest compounding each month, I’ll have $56,277 after 18 years so if my child matches it that makes $112,554 total deposit. Plenty for a million dollar property (if that’s the norm in 18 years). If the norm is higher - the child will just have to contribute more. But it is at least a start.
You could do a lot better than 2% interest
True, and something else I thought of was that as time goes by, I could afford to save more (inflation plus career progression).
If I add $5 a week each year (so second year $55/week, 3rd year $60/week etc) and assume interest rates will rise (I made it by .1 each year) I would have $111,283 and with the kid matching that, $222,566 I can't see how they would fail to be able to buy a house, even if normal prices are $2M
What 18yo is going to be in a position to start repaying a $1M home loan? (of even $500k for that matter).
Plus how much is maccas or woolies paying these days that they'll have 112k to match the gift by 18??
Would be a much better gift for uni graduation or wedding gift.
@linton: I meant for them to be only eligible for it at 18, I would stop paying into it and they can claim it as soon as they have saved enough. Whether that's at 20, 25, or 30, that's up to them. I don't like the idea of it being a gift cause then they are likely to not appreciate it and just use it to backpack around Europe or something. Not that going to Europe is a bad thing, but I wouldn't want something that's taken so many years to earn to be frittered away on a few months' holiday.
@Quantumcat:
Completely agree.
I'm actually in this very position, we now have our first child only 2 weeks old.
Heading in to open a savings account on the next couple of weeks. When the account gets to bigger amounts 5yrs in etc. then term deposits may be the better option.
Wether it be for a car when 18 or home deposit further down the track, as long as we've done our job in teaching him to be responsible with money I don't mind gifting him with whatever the final amount works out to be.
I am actively working towards leaving my kids a set of skills. I am teaching them how to rig solar setups, how to grow hydroponically, how to ferment and preserve foods and many other survival skills.
I am actively working towards leaving my kids a set of skills. I am teaching them how to rig solar setups, how to grow hydroponically, how to ferment
Ahh, so you're teaching them how to set up a cannabis growing operation(running off solar so the electricity company doesn't notice) and an illegal moonshine distillery. Nice!
;)
Heisenberg? Is that you?
Can you teach me as well. I have a great desire to be self sufficient. However I lack direction and skill.
Watching Youtube videos is not fun.
What?? No fallout shelter?
Shipping container underground, sorted.
This makes me think that you haven't thought it through very well. Shipping containers don't bury well.
Does that really require any sacrifice from you?
As a single mum, I can assure you, I have sacrificed a lot.
Voted up
Nancy botwin?? Is that you
Getting the tikes on the hydro :)
That will certainly help them when they run away from home at 13.
They are range 16-25 and all good kids.
It's like the only way to buy a house in Sydney these days.
All my friends who have houses in their twenties got help from their parents.
I'm currently saving up for a medium-sized house (4 bedrooms) in the eastern suburbs of Sydney. Won't be having kids until i'm 35 as a result.
Why do you need a 4 bedroom house when you don't have kids?
4 bedrooms in eastern suburbs? You'll be a while saving.
4 bedrooms in eastern suburbs? You'll be a while saving.
Not really. I'll have it in my early thirties as long as house prices don't shoot up by more than 20%. I have a plan and parents will be helping out.
Job is pretty safe too. As long as we perform, principal engineers will be happy.
There was a huge demand for engineers in the city, and I was lucky enough to train up on software architecture. A lot of big financial institutions pay quite well for people who know how to develop specific software.
Hours are pretty long but I would like to give my future kids the life I never got. Private school, tutoring, lots of sport, holiday every year etc.
@smuggler: do you work for a bank? They often offer 90% no LMI. Might be worth doing that for a bit, get the loan and get out.
They won't turn out like you, but maybe that's what you want?
THat's exactly what I want. I lacked confidence and social skills. I spent most of days doing maths and reading. I want them to be more sporty and sociable. My cousins went to private schools in the eastern suburbs and they turned out great. I want my kids to emulate them not like their father who spends his days building things on computers.
@smuggler: Just because they surround themselves with people who are like that doesn't necessarily mean they will become like that. He/she could very well inherit your type of personality. What you should be doing as a parent is nurturing those skills with them when they're small. For example, despite the whole "stranger danger" movement, I encourage my children to talk to strangers - but obviously when we're around them. Or let them order when you're getting food. Allowing them to develop those skills will give them confidence when they start school and from there, it doesn't matter what type of school they went to, they will just continue to develop further.
You will be sorely disappointed if your aim was just to let the school do all of that for you…
1 bedroom for my brother who works in the city. 1 for my parents when they stay over and a guest bedroom.
You may be able to afford a house sooner if you didn't require guest and additional family bedrooms.
Your first house doesn't need to be your last.
Yes house prices are high but when people aren't willing to compromise on the things they want it becomes unaffordable. I would love a 5 bedroom house on the beach, but rather than waiting for something I can't afford I have purchased a more modest property.
You may be able to afford a house sooner if you didn't require guest and additional family bedrooms.
My parents are paying the majority of the deposit, and they specifically asked for a bedroom for themselves. This is probably the only way I can afford to live where I want to live.
Your first house doesn't need to be your last.
I'd rather live with 1 house on the eastern suburbs than multiple houses in other areas of Sydney. Wealth creation through property isn't really high on my agenda. I make more money investing into companies including my own through the stock purchase program.
@smuggler: Didn't say you needed to buy multiple properties, however if you need your parents to pay the deposit then maybe you need to look at more wealth creation opportunities.
It's great that your parents can help you but plenty of young people do not have that option. These people purchase properties in areas they can afford now, and upgrade in the future when they have paid some of the mortgage down and their wage increases through experience.
Didn't say you needed to buy multiple properties
No, I said I only wanted the 1 for now.
however if you need your parents to pay the deposit then maybe you need to look at more wealth creation opportunities.
I can pay the deposit, but I simply do not have to since I am getting help. I'm just going to dump all my savings in the offset. It's my decision when to buy the house, but I might wait until the interest rate rises (hopefully house prices drop slightly and there's a change of government) and I have a good amount of savings. I estimate I'll have all that by the time I'm 31.
It's great that your parents can help you but plenty of young people do not have that option.
I tell all my friends that if you can get ahead in life, then don't waste the opportunity. It's not important if other kids can't afford a house. That's just the way the world works. Some parents work hard so that their kids can live a comfortable life, which is the case for me.
and their wage increases through experience
I'm not exactly a young person anymore and my wages are more than enough to cover mortgage repayments.
@smuggler:
So your original comment on it being the only way to afford a house these days in Sydney is incorrect. You can afford it all now by yourself but want extra cash from your parents to spend on other things.
I'm currently saving up for a medium-sized house.
What are you saving for if the deposit is being paid for and you can afford the mortgage repayments?
What are you saving for if the deposit is being paid for and you can afford the mortgage repayments?
There are lots of things that I am saving up for.
A bigger car, holidays i want to go on, and a small boat. Get it out of the way before I have to settle down.
As I said, I have a plan. Don't feel like describing every single point of it to you just so you can understand.
Buying a house now would mean I'd have to give up a few things.
So your original comment on it being the only way to afford a house these days in Sydney is incorrect.
Yes, it's incorrect. Depends on where you want to buy. In the inner and surrounding suburbs of the Sydney city, it is one of the few ways of getting a house. Or you can just be successful at a young age and buy it outright like those Atlassian guys.
@smuggler: taking money from your folks for a house then spending your savings on luxury items for yourself. Pretty selfish if you ask me, each to their own though.
taking money from your folks for a house then spending your savings on luxury items for yourself.
Call it whatever you like. They offered, I said yes. What the hell is the point in saying no? We only get 1 life and I want to do everything I possibly can while I'm young.
"Some parents work hard so that their kids can live a comfortable life, which is the case for me."
Wow, what a horrible thing to say. A lot of people work their ass off and don't have much money.
My aim is to give my 2 kids a property each and blow the rest of my money on holidays and anything I want to purchase. This dream has long way to go and who knows what will happen.
I bought 1 unit through SMSF and plan to purchase another one in a few years time.However I cannot transfer the units in their name. Once I retire and sell them, I will have enough cash to buy it for them. Worst case give them 50% money atleast.
Is this because you’re worried they won’t be able to afford a place for themselves in the future?
Not really. It is my desire to set them up like my parents set me up. They paid for my university.
my parents set me up. They paid for my university.
The gift that keeps on giving.
lucky. my parents had a sh*tload but never paid for anything. didn't have any pocket money nor the required calculator in my higher math class. always had hand me downs from 2 elder brothers including clothing despite being female.
asians tho
@tomsco:
I did this for my kid's medical degree-now kid earns trillions more than me but my house is paid off and kid knows there is no more funding coming but is grateful that he'll never be out of a job! (Oh! and very appreciative that we did this -not a spoilt kid)
SMSF is there to support you in retirement - possibly for up to 30 years. If you don't plan on dying quick, I'd hold on those assets.
Yeah but I am hoping I have enough to share the love with my kids :)
By artificially boosting house prices thanks to going down the path of investment properties, you're making the house you need to provide for your kids more expensiv. The effects of an individual's actions would be miniscule, but when the masses do it, you see the real problem.
It's one of those "everyone else is doing it, so I have to do it too keep up" type problems. There needs to be either a government incented reduction in investment properties (unlikely to happen) or a large self-driven drop from investors (never happen).
In summary, it's a mess.
@banana365:
I don't know how many investment properties sit empty waiting for capital gains, but our "investments" are costing us money to provide housing for people who can't afford/ don't want to own.
@SlickMick: You may be being completely altruistic and doing it to provide housing to those that can't afford to buy, but then you're not an investor, you're a philanthropist. If it's costing you money, then you'll no doubt be taking advantage of negative gearing and that is one of the major reasons that investment properties are so attractive in Australia.
Pretty much all the financial institutions have said investment properties, and negative gearing in particular, are driving prices up, but everyone's too scared to change the status quo. It's a real vote loser for whichever party eventually abolishes/changes it.
I'm in no way saying you're wrong to have investment properties. If you're in a situation you that you can do it, then you'd be daft not to, but it would be disingenuous to claim it's not part of the problem.
My point is that without property investors, builders go out of business and people live in their cars.
If a government is doing it's job, it will encourage property investment…. or we could go communist and allocate everyone a home I guess.
1/2 our properties are rented at minimum without tax office getting upset to help tenants out, but that's not really the point. I expect that in the long term I'll make my money back because eventually there won't be any land left but there'll still be people wanting to live in cities and ultimately only the rich will own city property. So I see it as setting up my ancestors.
im working towards giving myself another holiday