Retirement
The rise of the brown nomads and tips on how to do it
Grey Nomads are a stalwart of the outback campsite, but COVID has seen a surge in younger families hitting the road: the Brown Nomads.
The rise of the brown nomads and tips on how to do it
Grey Nomads are a stalwart of the outback campsite, but COVID has seen a surge in younger families hitting the road: the Brown Nomads.
These are people whose interstate or overseas jaunts have been thwarted by closed borders, or who have been freed from the nine-to-five grind and want to take the “work from anywhere” concept literally. However, while adventuring sounds fun, it doesn’t always generate a secure income. Consider some good financial planning so you can enjoy the nomadic life and still maintain financial security.
Before the trip
The options for how to stretch finances depends on your specific circumstances. It’s important to see a financial planner early on in this process, but there are a few general tips I can offer.
Reduce debt. Pay it down as much as you can and see if consolidation makes sense. Do not carry credit card debt into this adventure.
Plan your income and expenses. Income sources include savings, investment dividends, long service leave, redundancies, ongoing business, or profits from asset sales. Plan expenses, including buying your start-up gear. Many nomads budget for $1,000 per week, but it varies. Once you know how much you’ll need, you can start planning where to take the funds from.
Interrogate your tax and maximising options. If you’ve received a lump sum and want to use it to kick-start your nomadic life, there may be some tax-efficient ways to stretch this amount. Consider various strategies, including a variety of superannuation strategies, consider paying down debt and investing in the name of the partner who didn’t earn an income, or earned less.
Time your trip to suit your finances. Are there are any benefits to going this or next financial year based on your circumstances?
Get your financial foundations in place. There are a few things you’ll need to get right as a basis for any secure financial future. These include having an emergency fund, creating a spending plan, getting the right insurances, optimising all aspects of superannuation including fees and investments inside, and having an up-to-date estate plan.
On the trip
Now you’ve hit the road and money is flying out the door and not so much is flying back in.
Review your tax. With the income changes, there may be tax incentives you are now eligible for. You could make a spousal superannuation contribution, which will reduce your tax bill. You may also be eligible for the Family Tax Benefit.
Manage your income streams. Are you relying on income from dividends, term deposits that pay interest or rental income? Should you be? Any income linked to investments can change. Make sure you have enough money parked somewhere to see you through.
Spend less money. It sounds obvious, but in my experience, people spend what they have. I’ve had clients go from spending $200,000 per year to $40,000 after switching to a nomadic life for a year. When you aren’t in the ‘rat race’, you’ll be surprised how much joy life gives you for free and all the expenses you no longer have.
Use the nomad community. Experienced nomads will tell you their biggest expense is usually fuel. Find the cheapest with apps like Fuel Map Australia. Second to fuel is accommodation. WikiCamps Australia is one of many apps that has information about sites, including where the free ones are.
Packing up and hitting the road does not have to cripple you financially. If you set yourself up right and plan well, you could have the adventure of a lifetime while you’re young, fit and healthy and return to a solid financial foundation.
Helen Baker is a licensed Australian financial adviser and author of two books.
RELATED ARTICLES
Estate planning
Australians encouraged to review their estate plans
Individuals should make sure their current estate plan is up to date. Read more
Estate planning
Why would a person want to set up a trust?
Why would a person want to set up a trust? We list down the reasons that may motivate you to call your attorney today. Read more
Estate planning
Will v trust: Which is best for you?
Should you create a will or a trust? Learn about their differences to know which is the best option for your estate planning. Read more
Estate planning
Executor of will and power of attorney: What’s the difference?
What is the difference between an executor of will and power of attorney? Let’s discuss their roles and why they are both important tools in estate planning. Read more
Estate planning
When is the best time to start estate planning?
One of the biggest misconceptions about estate planning is that you should start developing one only when you’re old. We discuss why you should create one as soon as you can. Read more
Estate planning
Advisers warned on limitations with life expectancy estimates
Jeremy Cooper has highlighted some of the limitations in using average life expectancies when planning retirement income for individual SMSF clients. Read more
Estate planning
Deadly estate planning mistakes and how to overcome them
Estate planning can be a complex process. Here are some of the mistakes you should avoid when getting your affairs in order. Read more
Estate planning
Death benefit rules ‘due for an overhaul’
With the existing legislation around the payment of lump-sum death benefits leading to inadvertent breaches by SMSFs, a technical expert says a more practical approach is needed in this area. Read more
Estate planning
Australians encouraged to review their estate plans
Individuals should make sure their current estate plan is up to date. Read more
Estate planning
Why would a person want to set up a trust?
Why would a person want to set up a trust? We list down the reasons that may motivate you to call your attorney today. Read more
Estate planning
Will v trust: Which is best for you?
Should you create a will or a trust? Learn about their differences to know which is the best option for your estate planning. Read more
Estate planning
Executor of will and power of attorney: What’s the difference?
What is the difference between an executor of will and power of attorney? Let’s discuss their roles and why they are both important tools in estate planning. Read more
Estate planning
When is the best time to start estate planning?
One of the biggest misconceptions about estate planning is that you should start developing one only when you’re old. We discuss why you should create one as soon as you can. Read more
Estate planning
Advisers warned on limitations with life expectancy estimates
Jeremy Cooper has highlighted some of the limitations in using average life expectancies when planning retirement income for individual SMSF clients. Read more
Estate planning
Deadly estate planning mistakes and how to overcome them
Estate planning can be a complex process. Here are some of the mistakes you should avoid when getting your affairs in order. Read more
Estate planning
Death benefit rules ‘due for an overhaul’
With the existing legislation around the payment of lump-sum death benefits leading to inadvertent breaches by SMSFs, a technical expert says a more practical approach is needed in this area. Read more
