Money
Your empty nest budget makeover
When the kids move out, your money moves on too. Here’s how to rethink your spending, reset your goals and make the most of your newfound financial freedom.
By Carolyn Tate
When your last child finally packs their bags and heads out into the world, it can deliver a range of mixed feelings: freedom and relief on one hand, and grief and a sense of loss on the other. You might also find yourself staring at a house that suddenly feels enormous, and a budget that's ripe for a complete overhaul. After years of juggling school fees, sports equipment and endless grocery runs, you've suddenly got a golden opportunity to redirect your spending towards your own financial future.
Alex Jamieson from AJ Financial Planning sees this transition all the time with his clients, and he says that, while it brings exciting possibilities, it's not always as straightforward as you might expect.
"Many people think their costs will automatically drop once the kids move out, but that's often not the case," Jamieson explains. But your utility bills, insurance premiums and grocery habits tend to stick around, even when the bedrooms are empty. But there are some actions you can take to turn the ship and channel your money in the right direction.
1. Recognise where your money's really going
The first step in your budget makeover is taking an honest look at where your money flows each month. You might be surprised to discover you're still buying groceries for a family of five, or that you've been maintaining subscriptions and services your kids used years ago.
"A lot of parents continue to give financial help to adult children – whether it's rent, bills, or even helping with a house deposit," Jamieson says. While this generosity comes from the heart, he warns that "generosity can put pressure on your retirement savings”. The key is being intentional about this support rather than letting it happen by default.
2. Make your biggest asset work harder
For many empty nesters, the family home represents their largest financial asset, but it might not be working as hard as it could. "A lot of couples hold off on downsizing," Jamieson notes. "There's a real hesitation to sell the family home because they're worried the kids might come back if they hit financial trouble."
While this concern is understandable, he points out that "it means they're carrying bigger housing costs – higher maintenance, utilities and rates – than they really need to at this stage of life."
If you've owned your home for more than 10 years and you're over 55, downsizing could unlock significant opportunities. "For people over 55 who've owned their home for more than 10 years, there's the option to put up to $300,000 each into super through the Downsizer Contribution," Jamieson explains. "It's a very effective way to increase retirement savings in a tax-efficient environment."
An alternative strategy: Bank of Mum & Dad: a modern inheritance rethink
3. Supercharge your super strategy
"This is actually one of the best times to make progress financially," Jamieson says. "With fewer expenses tied to children, there's often extra cash flow available. That money can be put to good use by boosting super contributions, paying off the mortgage, or building up investments."
With potentially around 10 years until you retire, this period is important for building your superannuation balance. "A very good idea is to use the last decade before retirement to really focus on super," Jamieson says.
"That might mean topping up with concessional contributions, using carry-forward caps if you qualify, or making a downsizer contribution if you've sold the family home. Small moves in this period can have a big impact by the time you retire."
More on this: How to supercharge your super in your final working years
4. Create a clear financial plan
It can be helpful to create a systematic approach to your newfound financial flexibility, rather than letting extra cash flow disappear into everyday spending. Jamieson suggests a simple process: "Look closely at what you're spending now compared to when the kids were at home. That shows you where the natural savings are."
Next, "decide what's most important for you – retiring earlier, travelling more, helping the kids with a deposit, or just building a buffer," he says. Then you can put that extra money to work strategically. Jamieson’s advice is to "clear any high-interest debt first. Think about adding to super, particularly with the tax benefits available. Build or expand a diversified investment portfolio within super. Keep an emergency fund in place so you've always got a safety net."
Your financial fresh start
The empty nest phase isn't just about adjusting to a quieter house – although that can be pretty great too – it's also your chance for a complete financial refresh. As Jamieson puts it, "It's also the right time to take a step back and check in on retirement goals. How much income will you need? When would you ideally like to stop working? Are your investments set up to support that? Laying the groundwork now can make a real difference in 10 years' time."
But he also says common pitfalls can be your undoing: "It's common for parents to keep supporting adult children financially, but if that comes at the cost of your retirement, it's a mistake. Taking on new debt for discretionary spending is another red flag, as is dipping into super before you really need it. These decisions can undo years of careful planning."
The choices you make in this decade will have a significant impact on your financial comfort in retirement – and those years are getting closer all the time. Take the time to reassess, realign, and make your money work as hard as you have all these years. Your future self will thank you for it.
A few tips to remember
● Review all recurring expenses and subscriptions, and cancel what you no longer need
● Be intentional about ongoing financial support for your adult children
● Consider whether your current home suits your needs for the next decade
● Take advantage of super contribution opportunities while you're still earning
● Seek professional advice to understand the long-term impact of your choices
● Avoid taking on new discretionary debt or dipping into super early if you can
This article contains general information only. It is not financial advice and is not intended to influence readers’ decisions about any financial products or investments. Readers’ personal circumstances have not been taken into account and they should always seek their own professional financial and taxation advice that takes into account their financial circumstances, objectives and needs.
Feature image: iStock/PeopleImages
Tell us in the comments below: How are you finding your empty nest? Bliss or brutal or a bit of both?
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