Ever wanted to know about how self made Aussie Millionaires became wealthy?
I sure did! There’s so much out there about the American experience, but little is known about how Australians reach financial independence.
Let’s face it: Aussies don’t like to talk about finances and getting rich. The tall poppy syndrome is alive and well. And it’s doing us a great disservice.
So, let’s smash through the cultural barriers and spread the knowledge how just about any Australian can become financially independent before retirement age – or a whole lot earlier as in the case of our first guest, Alex from HisHerMoneyGuide.
Name: Alex from www.HisHerMoneyGuide.com
Current age: 34
Marital status: Married
Net worth: $2,400,000
Your spouse and finances: Separate finances, though we’re fully transparent with each other and plan to combine where possible in early retirement.
Current estimated value of your home: $650,000
Town or suburb: Brisbane, Queensland
Car/s: Our car is a 2011 hatchback. It was $18,000 purchased new, and is worth approximately $7,000 now. We’re planning to run it into the ground before we buy a new one.
Debt? We have around $375,000 owing on two investment properties.
Average monthly spending:
Housing: We own our own home now. There are some holding costs like rates, insurance, sporadic maintenance. These are approximately $330 a month.
Food: Our grocery expenses are about $200 combined.
Transport: About $200 a month in fuel, maintenance, registration and insurance for our car. We’re trying to up our walking.
Clothing: About $15 a month combined, and we’re not afraid of wearing it until it has holes.
Our key objective financially is to reach financial independence and retire early by the age of 45 in order to escape the rat race and take back control of our lives.
My wife and I are both vegetarians. It helps to save money and time when we can prepare meals together.
Last year we spent around $18,000 on our living expenses. Compared to Australian averages, couples spend over $60,000 a year (excluding housing costs). We could still live on less, but we’re happy with our current lives before we retire early, despite spending a fraction of what others do.
We have one ragdoll cat. We’ve been very fortunate that my parents adore her and buy her dry food that they swear by with their own ragdoll. Thankfully, she’s been a very healthy cat, despite being 13 years old now, and has never had to go to the vet from illness. She only costs us around $200 year in tuna and kitty litter.
Our sights are currently set on building wealth above all else, and we don’t currently donate money. Is that selfish? Yes, but bear with me. Our end goal is to donate our entire estate when we pass away, together with volunteering our time in early retirement, so hopefully that’ll make up for it in the longer term. The plan in early retirement is volunteering to causes and community interests such as the Rural Fire Service, Landcare, wildlife rehabilitation, and the local charities where we end up moving when we retire early.
My parents fled Soviet rule in Eastern Europe, and arrived in Australia with suitcases and nothing else.
Growing up, life was fairly austere. As a child my parents certainly weren’t rich, though we weren’t impoverished. My parents sacrificed a lot to give me a good education, which has enabled me to get a good job that’s helping my wife and I retire early.
My mother is a very frugal woman, who taught me the value of money. On the other hand my father is reckless with money, and keeping it seems to burn a painful hole in his pocket. Seeing that dichotomy showed me two very different paths you can take with money and wealth. I chose to save it and then learned to use it to my advantage.
I always saved money from as early as I can remember, but I cannot remember what I was saving for. As a child, I only received pocket money under a system where I got specific amounts of money for individual jobs. I was too efficient and would do too many jobs for my parents, costing them too much money. The system broke down when they stopped paying me!
Eleven of my 12 years of school were in public schools – the other year was in a local Catholic school in Grade 1. My highest level of education is a Bachelor of Arts and I currently work in project management. Although, I was a late starter to the job market – at 20 – and that’s something I regret. I don’t think I missed out on too much by not having a private education – you don’t need it to be successful in life.
I only really became interested in personal finance once I met my wife in my late 20s and we charted a joint course towards financial independence. I knew I was generally on the right path, but I wanted to do the right thing by her, so I started looking into money into greater detail once we met.
She taught me about investing in the stock market. Without her I would still be in solid position financially, but I wouldn’t be a millionaire quite yet. She also brought more money to the relationship than me!
As an Adult
We have a budget, but honestly, we barely look at it. We use it to see what our worst-case spending might be over the course of a year. It’s mainly used as a planning tool to estimate wealth generation and calculate what stages we should be at financially at different points in time.
Our expenses are tracked by plugging them into a spreadsheet manually. It’s a way of being more conscious of our spending than if we used an app that tracks our credit card spending, etc. Automation can be great, but it’s also a way that little expenses can add up over time in the background without you really noticing at the time. We use it to stay on top of our expenses and keep ourselves accountable.
We have annual and long term goals. One goal we had was to pay off our home quickly. We expected it would take about 48 months, but we managed to achieve it in 39 months.
We’ve realised that it’s incredibly important that we have shared, mutual goals. It’s not a case of one of us dictating to the other about finances. Money issues are the leading cause of relationship breakdowns, and we’re incredibly glad that we’re on the same page with our goals and how we achieve them.
The plan is to retire early by 45 and have a passive income through shares and investment properties. We’re looking to do what’s called ‘FatFIRE’ and have a pre-tax income of AU$150,000 per annum from passive income to fund a lifestyle where we don’t need to worry about money for the rest of our lives. We’ll be able to simply enjoy ourselves and make the most of the time we have on earth.
We used to update our net worth annually, but since we started our blog we do it quarterly. Just like with our expenses, we track it manually.
Of our current $2.4 million net wealth, approximately $1.1m is in shares, $0.25m is capital in two investment properties, $0.4m is superannuation, and $0.65m is our home. We don’t count smaller tangential things like our home contents and car in our net wealth.
We primarily gain wealth by not spending money. We fundamentally want to reach our goals as soon as possible, so our strategy is to work together as a couple to live a frugal lifestyle that will enable those goals. We earn $150,000 a year after tax from our salaries, but it’s not going to get us anywhere if we spend it all.
Our passive income is growing, but it’s really our salaries that pay for our investments and wealth generation more than anything else. We save around 90% of our total income. That money is directly used to build our investments. However, our dividends are growing, and they’ll soon be at a stage where they’ll earn almost as much as I do as an individual.
When it comes to passive income, we’re currently looking at gross (pre-tax) dividends of approximately $70,000 per annum, which is close to $6,000 a month. This money is directly reinvested into buying more shares. Our income from our investment properties goes towards paying themselves off over time – they’re a set and forget investment.
The only money we’ve been given was $100,000 recently inherited from my wife’s grandparents. We invested all of that money into Listed Investment Companies that generate stable dividends that will help to fund our early retirement.
We used to put extra money into our superannuation years ago before we properly defined our early retirement plans. Now that we plan to retire before we’re 45 years old, it doesn’t make sense for us to have extra money locked away until we’re 60+ years old. Instead, we put that extra money into investments that we can access and control right now.
If I had any advice for people looking to become wealthy, it would be: don’t expect financial independence to happen any time soon, and don’t think that you’re owed it. You need to work long and hard, and be grateful if you do achieve it, because there are incredible numbers of people who work even harder than you and won’t get as far.
Interested In Sharing Your Story?
The goal of sharing the Australian financial story with others is to inspire, educate and challenge other Australians seeking financial wealth.
If you are an Australian with a net worth over $1 million and are interested in being interviewed, I’d love to send you a survey. It contains three sections: Personal Snapshot, Growing Up and As an Adult.
There is no obligation to answer all questions and you do not need to provide your real name for publication.
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No identifying information in any format will be given at any time, unless permitted by yourself.
The knowledge gained from your personal finance story will help others in their own journeys.
If you are interested in sharing your financial story, please leave a message on the Contact Page. All correspondence will be handled with confidentiality.
Thanking you very much.