Advice From Your Future Self

*This post may contain affiliate links. This mean if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

Would you like a peek into the future?

If you could hop into a time machine and travel forwards 10-20 years, how much confidence would it give you in the decisions you make today?

At the tender age of 24, I completed university and entered the real world. With significant student debt and awareness that I was well behind most of my school friends, who had entered the workforce after school or graduation 3 years earlier.

I was about to get my first big “doctor paycheque”. In truth, it wasn’t that big. Even Australian 1st-year doctors earn around $70,000, and I was working for the NHS.

Like most trusts of the time, we were working significant unpaid hours. But we were provided free accommodation within hospital grounds that year. In comparison with what I had been living on as a student for years, I was absolutely loaded.

Despite my vague good intentions, I burnt through most of my income that year. I didn’t buy a car or a house. I treated family and friends to lots of meals out and indulged in shopping and evenings out. Most of the money sort of just vanished.

I remember wishing there was a book that told me what to do with that first paycheque. It would have taken some pretty simple advise to get me on a better path.

In 2021 it’s even easier to get a good start to your financial life. But there are also even more temptations. With ever-increasing ways to “buy now, pay later” spending more than you earn seems to be a societal norm.

What advice would I give to that 24-year-old graduate today?

Congratulations from Your Future Self- You Should Celebrate

Look how far you have come! If you have just graduated, and are entering the workforce for the first time, take the time to celebrate.

Don’t underplay your incredible achievements to date. I’m sure there were many times you didn’t think you would complete your qualifications. But you’ve done it!

Attend that graduation ball, party or special meal with family and friends. Plan a modest graduation gift with that first paycheque.

Life is for living. Your future self wants those awesome memories to look back on.

Just don’t get carried away, and make sure you move on quickly to the next step.

Now Get to Work – Assess the Debt Situation

Time to face up to all your debt. I know you would probably rather dig your head in the sand. It’s better you face reality and start dealing with it.

Your financial future depends on it.

List all of your debts along with the interest rate and minimum payments.

You can read more about good, bad and tolerable debt here. You will need to pay all your minimum repayments, and if you have any debt apart from student loans or a mortgage, you will probably want to pay them off as fast as possible, from highest interest to lowest is the cheapest way.

Be ready after you have paid off the consumer dent to redirect those savings to your next goal. Savings account for a home deposit? Your first investment?

Don’t beat yourself up too much if you have managed to collect consumer debt. Most people have made financial mistakes at some point. The important thing is to pay if off, and avoid making the same error again.

From this moment, commit yourself to pay for things with cash. If you don’t have the money, you can’t afford it.

I wouldn’t get a credit card until you have learned to manage your money without it. Only people who don’t need a credit card should have one. The credit card companies trick millions of people into paying them interest every month. Don’t get fooled too.

Credit cards are a tool that can be used by those who are used to spending less than they earn. They must be paid off every month automatically without fail. Then you can start to utilise the little perks that come with credit, taking advantage of the credit company and not getting sucked in.

Minimise Your Expenses

At the beginning of your financial journey is not the time to rent that fancy apartment. You will also need some time earning a regular income before you will be considered for a mortgage.

Assuming you have some debt or financial goals to work towards, now is not the time for living lavishly.

Housing, transport and groceries tend to be the three largest expense categories. Minimize these for maximal gains.

Try not to take on recurring expenses. It’s so easy to start collecting paid subscriptions. If you take one on, try and cancel another. After signing up for a recurring subscription, most people forget about it. It’s why many companies use this business model. Even if they aren’t getting any value from the subscription, customers will often continue paying because they either forget about it or don’t get around to cancelling it.

If you need a car, you will get the best value from a second-hand reliable car, serviced regularly and kept for as long as you can. Cars literally eat money. If you are a car enthusiast, this is an expensive hobby! Buy the model version for now until you have your investments on track to meet your goals.

Most importantly, separate some of your income to put towards savings and/or investments. 20% of your post-tax income is a common rule of thumb but start with anything you can.

Even 5%, you can increase over time. It’s the commitment, automation and review every 6 months or so to increase a little that matters.

Commit to Learning About Investing – Little and Often

Whether you find finance and investing interesting or not, it’s in your best interest to commit to lifelong learning in this area. Get over the fear of investing with knowledge. Even if you’re a finance nerd, it’s best to automate this. Life will inevitably get busy, and it’s easy to neglect your finances for months and then years.

Subscribe to this blog, commit to listening to your favourite finance podcast weekly. If you like a physical magazine, Money will keep you up to date once a month with your coffee.

Don’t See a Financial Advisor Until You Know What You are Doing

Seems like the grown-up thing to do, seeing a financial advisor, right? Unfortunately, in order to select a trustworthy financial advisor and screen their advice for red flags, you need significant financial knowledge yourself.

Completely outsourcing your financials to a professional is often the road to getting ripped off. Plenty of intelligent professionals, particularly doctors, get scammed.

Sort out your Super & Salary Sacrifice for your Future Self

Yes, I know it’s a confusing PITA. If you have chosen a high-income profession, you will pay a LOT OF TAX. If you’ve ever interacted with a government agency, you will know it is not always used as efficiently as it could. Paying lots of tax means you are making lots of money, but there really is no need to pay more than you need to.

By minimising taxation you can invest more for the future with no lifestyle reduction. The ultimate WIN-WIN.

Salary sacrifice your superannuation and maximise your employer superannuation contributions. If you are part of a long-term couple, make sure you are maximising your super as a couple.

Go to your salary sacrifice company website. Download the forms. Do not leave until you have completed and returned. I know I’m being a little forceful, but it’s so easy to put off.

You are literally throwing cash away by not getting this done today.

Don’t Overspend on Housing – For your Future Self

Buying your first home should not be a purely emotional decision. This is a huge part of your financial strategy. The game plan will vary depending on where you want to live, future planned income variations and planned career moves.

Spending money on an area that has good long-term historical growth can be a good strategy. Many choose to buy a wonderful home to enjoy the home itself and take advantage of the capital gains exemption of a principal place of residence. But these homes tend to be very expensive, so can compromise your lifestyle just to meet the mortgage payments each month.

If you are wrong about the future price growth of your home, you have used up most of your borrowing power and will probably struggle to pay the debt down quickly.

Not every home value doubles in 7-10 years, as often quoted. Some home values stay flat for a decade or decrease in value. If you are planning to live in an area without good capital growth potential, consider rent-vesting or buying reasonably cheap.

There is a large opportunity cost to tying up your money and borrowing capacity in a non-performing asset.

“Seriously. Stop Worrying about What Others Think” – Your Future Self

It’s human nature to try and fit in with the cool crowd. Belonging is a basic human instinct.

Going against the grain feels uncomfortable.

Most of us worry about others’ opinions of us too much.

But too much approval-seeking will cause havoc.

The cool kids in high school REALLY don’t look so cool 20 years on.

Do you want to be in the same financial position in another 20 years as your peers that are spending every dollar they earn to show off?

I’m not sure who coined this phrase, but I have found it a really useful way to reframe my worries about what other people think.

“What other people in the world think of you is really none of your business”


You certainly can’t pay the bills with other’s opinions.

This does get easier as you get older and develop more of a sense of self.

“Tread You Own Path”

Scott Pape

Set Annual Written Financial Goals for Your Future Self

I’m certainly not the first to write about the power of writing down goals. Make it a habit each year, to write down goals for the year ahead, and ideally review them mid-year.

The simple act of setting goals, and having them written down results in more success. Plus it’s a lot of fun crossing them off when you reach them (and in fact looking back to goals written 10+ years ago).

A regular routine for goal setting and reviewing also limits the time you spend in “Drift”. Drift is a term used to describe the state most adults are in most of the time. Going to work, paying the bills, doing the things and getting to bed. It’s easy to get so busy with life, we forget to plan the life we want.

Start Investing As Soon as High Interest Debt is Gone

I think there is value in investing before you can afford it.

Nowadays, you can invest tiny amounts in micro-investment accounts. Everyone needs to learn a little about the stock market. Your superannuation, after all, is invested in it.

Hopefully, you have subscribed to a little regular education through a blog, podcast or magazine. That may help you to stay calm during a market crash and keep investing whilst stocks are on sale. Even if you panic and sell as I did in my first foray into investing before I knew what the stock market was, your crystalized loss will be tiny. You will watch the market recover and hopefully know better for next time when you have more cash invested.

Going from saving to investing is another point that can lead to enormous procrastination.

Women, on average, tend to shy away from the stock market. Yet when they do invest, they perform better than men! Give the finger to imposter syndrome, educate yourself and take the plunge. Learn what women do that everyone can learn from to improve returns.

Life is Going to Get Busy – Automate Everything

Everyone thinks they’re busy. I bet life will get busier.

I have started automating everything. From direct debiting bills to google calender reminders for dental check-ups, I’m always on the lookout for ways to make my life easier.

The biggest barrier to creating wealth is you.

Despite planning to invest a certain amount each month, quarter or year, there will always be a more urgent way to use that cash. Direct your savings/investment money automatically each pay into your savings account or investment. Most people’s spending expands to the cash available, consistent with Parkinson’s law.

So whether you choose an investment property or shares, try and automate your investments with direct debits. Take your brain out of the process, your future self will thank you.

Check out my review of Pearler – the new online broker offering automated low cost investing, and sign up for the Aussie Doc Freedom newsletter below to keep up to date with finance investing automatically.

It’s free, what have you got to lose?

Aussie Doc Freedom is not a financial adviser and does need offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

Factors to Consider in Taking a Career Break

*This post may contain affiliate links. This mean if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.

Do you like the idea of taking a break from your career at some point? You may like the idea of mini-retirements, as described by Tim Ferriss in the *Four hour work week? Those wanting to have a family need to plan a career break for childcare. You may want to take a mid-career sabbatical to study or learn.

You may like all of the above ideas. A career break is a great way to beat burn out, after all.

What Type of Career Break(s) Will You Take?

Parental leave

Mum and/or dad may want extended time off from the workplace to focus completely on the hardest job of all-parenting. The upheaval in your life on becoming a parent cannot be understated. This (contrary to what I thought before having my first!) is not really a break. But allowing yourself the financial freedom to take the time off you feel you need will take off the pressure at a time you may well be surviving on 4 hours sleep.

You may think you will return to work quickly, but keeping your options open with the ability to take extended leave is a good idea. With parenting comes enormous unpredictability. One of the earliest posts to this sites was on preparing ahead of time if you are planning to have kids. It covers details of parental leave within the Australian Healthcare system and government financial support.


The traditional concept of retirement is to work hard for 40 years or so before taking a brief retirement at the age of 65 before dying a few years later!

We are thankfully living longer.

Depending on your genetics, lifestyle and wealth can expect a significantly longer retirement than your grandparents. But nothing is guaranteed, and premature deaths of family, friends and colleagues often bring up feelings of not wanting to leave anything too late.

Retirees also may not have the energy, enthusiasm and fitness to take part in all the activities they would like.

The idea of mini-retirements is to live life in intervals.

Periods of working are interspersed with periods of rest, exploration and reflection. This can be an awesome way of life. Many casual nurses live this lifestyle, working intermittently to fund long trips overseas. A few docs choose this way of life too. Imagine working for 6 months to fund the rest of the year bumming around Bali. I met a young doctor living this reality. It sounds pretty good!

Sabbatical or Fellowship

This is a change from work, with a specific objective.

The traditional “sabbatical” occurs every 7 years. You could job swap with a colleague, take on postgraduate study full-time or immerse yourself in learning a new work-related skill.

Sabbaticals don’t create a gap in the resume to explain but aren’t a real break either. It may even add interest to your resume.

A change can be (almost) as good as a holiday, and if the thought of having the time to focus on learning without having to work sounds like a luxury, this could be ideal for you.

Considerations When Planning a Career Break

1. Money is the Number 1 Barrier to Taking a Career Break

Money can easily become that annoying thing that stops you from doing awesome things.

Thinking about it the other way, money can be the tool that empowers you to do all the awesome things!

Do you want the flexibility to take as much parental leave as you need, have a mini-retirement when you are suffering from burnout or challenge yourself with that fellowship or postgraduate study? Planning ahead, and getting financially ahead of schedule is how to obtain the flexibility to make these choices when opportunities arise.

If having the choice to take career breaks if and when you want appeals, advanced planning is essential. Ideally, if you have plenty of notice you will have made a financial plan, automated your investing and got ahead of schedule.

– Plan your Budget for Your Career Break

When you have decided you want to take a career break, it’s time to work out a budget. How much is it going to cost?

Are there any ways you can make this financially easier? Can you take paid leave from work? Perhaps you could rent out your primary residence to help cash flow the experience? Or sell a car?

How far in advance are you planning? How much would you need to save each pay to fund the planned career break?

– Do You Have Passive Income Streams?

If you have planned far enough in advance, you may have been able to create passive (or semi-passive) income streams that will help support you financially during your career break.

Real estate, passive ETF investing and online businesses are some of the ways people create these passive income streams. Realistically, these create years to produce significant income streams.

If you are planning 5+ years in advance, it may be possible to build a passive income stream.

– Do You Want to Perform Some Paid Work?

A few hours part-time that can be fitted around the primary reason for your leave may help ease the financial burden and give you a change of scene.

For doctors, teaching work at the local university, guideline development or assisting with college exams are options. Performing short term locum jobs can be more challenging, but maybe enough to maintain skills during a long career break without being committed to a regular job and are generally well paid. This could also be used to satisfy specialty college and AHPRA recency of practice rules for those taking over 12-month leave.

– Don’t Forget About Super

Unfortunately, taking a career break results in reduced super. The younger you are when you take that career break, the more substantial the deficit due to missed compounding interest opportunity. Career breaks for maternity leave are a big contributor to the female superannuation deficit.

This is not a reason to avoid taking a career break, but it should be taken into account and extra cash contributed to your super to at least partially compensate.

The good news is, you can now “catch up” with super contributions. If you contribute less than the super concessional cap ($27,500 from July 1, 2021) in 2021-2022, you can contribute the extra over the next 5 years. Without being penalized with extra tax

If you have contributed less than the concessional cap this year, you can contribute over the cap as long as you have contributed $137,500 ($27,500 x 5) in 5 years.

This is really helpful for those able to make up the income, but is only valid for those with a superannuation balance under $500,000. It makes sense to keep a couple’s super balances around equal so that perks like this are less likely to be lost.

The higher income earner should also check out the tax benefits of contributing post-tax income to their spouse’s super account through the spouse contribution and low-income co-contribution. Check out these spouse super hacks here.

2. Coming Back to Work

The transition back to work, and how to make this easier, should be considered before the leave is taken.

Smaller career gaps may be organised with a planned return to work at your original employer (utilising long service leave or parental leave for example).

Longer career gaps often mean missing out on having a guaranteed job to return to and involve challenges with de-skilling.

In the medical world, taking more than 12 months out of the workforce often means having to meet AHPRA and the specialty college’s back to work criteria.

Plenty of people take career breaks of several years, utilise return to work programmes. But if you are considering taking just over a year, it may be a lot easier to make it under 12 months. Or consider short-term contracts to maintain skills and satisfy recency of practice rules.

For those who have given up their job in order to have a career break, or for those with a gap of more than a year, some forward planning will help you find a job and transition back into the workplace as smoothly as possible.

– Maintain a Network

If you will be looking for a new position, you should make sure you maintain your network when you go away. Update your Linkedin page, let your contacts know what you’re up to and attend a conference during your career break.

When it’s time to look for a new job, you are more likely to hear about opportunities, and be thought of when a post becomes vacant.

– Maintain Your Skills

Depending on the length of your break, and the skills required for your type of work you may need to put effort into maintaining the skills you have developed.

Consider attending a course to update yourself, or taking on some short-term freelance/locum work to maintain skills and earn some cash.

– Update Your Curriculum Vitae

Don’t leave an unexplained employment gap on your CV.

If your break was short and so not obvious on your CV, it probably doesn’t need to be pointed out.

Parental leave, taking time off for health or family reasons, postgraduate education and travel all explain an employment gap and may even be interesting enough to be a topic of conversation at your interview.

Unexplained gaps raise questions and suspicion as to what happened. Right or wrong, it’s best not to leave any unanswered questions on your CV.

– On Leaving Your Current Position

Your top priority when leaving your employment for a career break is to leave with good relationships intact, plenty of notice and sufficient handover.

3. When to Take a Career Break

There is no perfect time to take a career break.

But when is the best time for a career break?

A later career break also means you have already got a reasonable start on superannuation. Due to the nature of compounding, a career break earlier is more financially damaging than later (all else being equal). But if salary increases significantly over the years, the difference in financial consequences of taking a career gap early and late lessen.

Having children obviously has certain biological limitations, and these probably need to come above career or income optimization. If having is kids is important, don’t put it off too long.

If you want to take a career break to travel or study, pre-kids is a lot easier. But travelling with kids is also a lot of fun, although hard work. There are many financial demands on a household in the years before they start a family and taking time off paid employment may not be possible.

The timing of your career break(s) is such a personal decision. Weigh up all factors, but don’t let money stop you from taking a career break to enjoy new experiences, develop more skills and take time to reflect. Plan ahead and minimize the financial consequences.

Your wealth accumulation journey begins as soon as you take the first step. Sign up for a weekly email from Aussie doc to increase your finance and investing know-how and prompt you to take action towards your goals. Don’t get left behind!

Aussie Doc Freedom is not a financial adviser and does need offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

Should You Take on a Side Hustle?

*This post may contain affiliate links. This mean if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

Side hustles have taken the world by storm over recent years. The humble concept of a second job has been rebranded. Side hustles are often more than a second job, as they usually have non-financial benefits. You may learn new skills, have more schedule flexibility, open opportunities for networking or be location independent working. A side hustle may provide opportunities to “Try before you buy” a new career or employer. The type of side hustle that will suit you will depend on:

  1. Your objectives
  2. Your skills
  3. What you enjoy

What are Good Side Hustles Ideas?


These side hustles are most appropriate for those wanting to boost cash flow for a specific short-term goal. These side hustlers may want to reduce their dependence on student loans, payback debt or save up a home or 1st investment property deposit.

Extra hours at your usual employer is often the easiest and fastest way to earn extra cash. This may not be available to you, or the non-financial benefits of other side hustles may also appeal.

1. Assistant in Nursing

This is an ideal work experience for healthcare students. The pay is pretty good, and you will pick up skills and experience looking after patients and being to network with staff.

I spent my medical school pre-clinical years working part-time as an assistant in nursing. I picked up practical skills, improved my communication and learned how to not annoy the nursing staff! Getting on with nursing staff is critical to doing well as a junior (and senior) doctor.

Lifting and washing people, or being patient with a confused patient for an 8-hour shift can be hard, physical work. But it gives you a more realistic view of what working in healthcare is like.

2. Tutoring

Tutoring 1st year university or school students is an ideal side hustle for more experienced students. Tutors need to be patient and able to explain tricky concepts well. You can sign up with an existing tutoring platform or produce an advertisement for your local Facebook marketplace or university billboard.

As well as the hourly rate, you will hopefully meet some great students and their parents. If you get on well with students and provide great value, you may get a series of referrals to other students.

3. Cleaning

Sometimes physical hard work is the perfect antidote for too many hours on the books.

You could take a job cleaning your university or sign up with a domestic agency. Once you are familiar with a cleaning routine, very little thinking is needed to get the job done. This time can double as study time if you are organised enough to prepare a list of high-value podcasts. Perfect for those who like to learn by listening and keeping their hands busy. Ironing also lends itself to watching video lectures quite nicely (as long as you don’t get distracted!).

4. ChildCare

Are you good with kids? If you love to play, have first aid qualifications and are happy to apply for a working with children card, this could be the perfect side hustle. Plenty of professional households need a reliable, responsible and fun babysitter they can call. Excluding those who want a full-time nanny, hours are likely to be evenings and weekends, around school or daycare.

Hospitals are full of staff struggling to fill childcare gaps! Having a university student available to work evenings and weekends can be a perfect solution. Again, word spreads quickly amongst staff, and you are likely to end up with more referrals than you can cope with if you are particularly good with kids (and parents).

Advertise locally on FB marketplace, through an agency, or during work placements ask your supervisor if you can display a poster.

5. EBay or Facebook Marketplace

Selling good quality items you no longer need, including your old textbooks can produce cash pretty quickly. Over the longer term, buying undervalued items locally and selling them at a higher price can be a profitable and good use of your Saturday if you enjoy it and need some extra cash.

Items brought and sold can range from books to cars. The larger the investment, the more risk involved. Make sure you know enough about the items you are buying to reliably make a profit. If you have the skills, you can “Upcycle” items (eg cars, furniture) for a larger profit margin.

6. House and Pet Sitting

This is money for jam in my opinion! Imagine being paid just to stay in a home for free and walk a dog daily! An ideal “job” for retirees, students and other location independent people. Small amounts of money are involved, but free accommodation is a massive saving (and is tax-free). This can be an amazing and cheap way to travel. There is probably less demand than usual with the pandemic, but this should improve over time.

This one is probably not for those that don’t like animals, most housesitting jobs involve animal care.

7. Rent a Spare Room

Renting a room can produce some passive side income, but relies on a good tenant screening process to make sure everyone gets along.

8. Rent Out Your Home

Those in an area in demand for short-term rentals can utilise Air BnB to rent out their home whilst they are away on holidays. If you are renting rather than owning your home, this needs to be cleared by your landlord. Both owners and renters need to check their insurance will cover this.

9. Renting Out Your Things

Do you own anything expensive that doesn’t get used very often? Car owners can now rent out their vehicle when it’s not in use. Insurance and terms and conditions need to be examined closely. Make sure you think through the consequences if a renter destroys your car. I have never rented my car and can see the potential for big problems so proceed with caution.

10. Optimise Points and Cash back

Make sure you are taking advantage of your points. Supermarket points can be saved up for air travel or hotels, but not many of us are doing very much of that this year! You could do worse than living on your flybuys for grocery shopping for a week or two to save some cash.

Cashback involves being paid back tiny amounts of money for purchases, as long as you click through the right links. I found it too much hassle and the cash accumulated never reached the payout point before I lost interest. I did like the RAIZ rewards though. Any cashback earned through clicking through their links is automatically invested within a reasonable time period. Probably not worth having a RAIZ account just for this but if you’re looking for a robo-advisor/micro-investment app, this is an added bonus for RAIZ.


You have probably heard that wealthy individuals generally have multiple streams of income. Diversifying the source of income makes sense for most households. Relying on a single high earner with a stay at home spouse with plenty of liabilities puts a family in an extremely vulnerable situation if anything happens to that single high income.

Producing a meaningful income stream to take the pressure of a high-income earner takes time though. In the meantime income protection is a must for those vulnerable families heavily relying on a single income.

1. Utilize Your Professional Skills Outside the Workplace.

Apart from taking on extra hours at work, this is the second-fastest way to produce significant income. It has the advantage of at least diversifying your income away from a single employer. If you have a health catastrophe however and can no longer do this sort of work, freelance or locum work provides no protection.

It can be used to meet short-term goals such as funding that property deposit, or used long term to augment income and produce non-financial benefits. These extra benefits include networking, trying a new employer before you commit and getting a different point of view on problems that you may be able to utilise in your original workplace.

You will need to check that there are no restrictions in your contract on working for others before commencing. Risking your main source of income by breaking the rules is definitely not worthwhile!

Employees also need to make sure they are not damaging long-term career prospects by taking on work that may damage their reputation. You also need to make sure any extra work is not impairing your ability in your primary employment (eg fatigue).

– Doctors Considering Locumwork

For doctors PGY 3 and up, locum work is possible. You definitely need to check with your employer that this is acceptable and ensure your sick leave and fatigue levels are not impacted. Be aware, there is often lower levels of supervision in hospitals requiring locums. You need enough knowledge and experience to work mostly independently.

For those this is appropriate for, this is an easy and reasonably fast way to earn extra cash.

There is lots of paperwork and online handwashing modules to get through before you are allowed to work. The health services are variable in the time taken to pay, but 30 days is quite common. It’s worth checking reviews of the hospitals on this locum doctor facebook page.

2. Invest in Property or Shares

Investing is arguably the ultimate, most profitable side hustle whilst taking up little of your time. A significant passive income stream is very possible with this route but takes years to build.

This is for the patient planners who are willing to put in some work up front, and a little ongoing effort each year to build a side income that you can eventually retire on. The concept of making your money work for you is key to building real wealth.

Don’t expect investing to pay for next year’s holiday, but if you can delay gratification and build an investment portfolio it will produce an income stream forever if managed well.

The Stock market is designed to transfer money from the Active to the Patient

Warren Buffet

I spent a while working out which to invest in, property vs shares. The most important issue with either is to avoid screwing it up. Instead of chasing 0.1% higher returns makes sure you don’t lose all your money. Consider risk first.

3. Start an Online Business

This is a long-term play that has no guarantees of actually producing income but has unlimited potential. It also involves learning a (for some of us a completely novel) set of skills and creating an income stream completely separate from your primary income source.

You have complete autonomy running your own online business, schedule flexibility and location independence. It can also become an obsession, taking over every waking hour available and distracting you from the ones you love if you’re not careful.

Unless you have done this before, and have significant knowledge and skills in website design, SEO and marketing this is not a side hustle that will produce significant income fast.

You can use pre-existing platforms to sell videos such as online lectures on your area of expertise. In this way, you can potentially scale your skills as a tutor. Pre-existing platforms such as Udemy have an audience already so can speed up the production of income significantly, but limit income potential. They make the process far easier than learning how to build a website, attract an audience and market yourself from scratch. But if the platform closes, you have to start from scratch as you have lost your audience.

4. Sell Your Skill

Do you have a special skill? Are you good at drawing, enjoy making jewellery or obsessed with photography? Crafts can be sold on several platforms including Etsy, Facebook marketplace and photography platforms.

Physical products are more difficult to scale but can produce some regular income. These can also be sold locally, to friends and at local craft fairs. If anyone is selling selection boxes of hand-drawn modern birthday cards, send me a message!

This type of work is very schedule flexible, and location independent. There is no guarantee of income though, particularly if this is the first time you have attempted anything like this.

Digital downloads are more scalable, but of course, there is a lot more competition in this space. And some products aren’t well suited to being downloadable (nice quality birthday cards, for instance).

If you want to draw and sell your paintings, go ahead. For high income earners, these kind of side hustles are less financially efficient but may be driven by enjoyment, passion and desire to learn new skills or challenge oneself

5. Scuba diving / Skiing instructor

How awesome does this sound?! You obviously need to spend some money on getting qualified to teach, and I suspect this means you end up earning not a great deal.

It’s basically a working holiday, where hopefully you have a complete blast, meet loads of people interested in the same things as you and get to do lots of your beloved activity.

I recently saw an advertisement for a doctor to work at one of the Australian Ski resorts. It was paid (although not well) and included accommodation, ski passes etc.

Side Hustles & Tax

If you receive income from any source, you have to pay income tax. Whether you rent out a room or start a business, whether you get income paid to a bank account via an ABN or through Paypal. You can, however, claim costs against income once you are clearly carrying on a business aimed at producing a profit.

Side hustles that save money rather than earn it do not attract income tax. So living in free accommodation as a house sitter is a particularly efficient way of “paying” for housing.

– Remember to Save the Tax!

PAYG employees are not used to thinking about tax at any time apart from end of financial year. If you are earning business income, tax will need to be paid.

If side hustle income exceeds $75,000 per year, you will have to register for GST and lodge BAS (business activity statement) and pay tax quarterly.

Most side hustles will earn less than $75,000. There is no need to register for BAS and you can pay your tax bill annually. You must remember to put aside the tax from each pay! It’s easy to have a separate account (ideally offset) for your tax to go into. Round up what you think you will owe in tax and keep it in this account. Watch out for the surprise division 293 and superannuation excess contribution charges that come sometime after your income tax return.

If you have a mortgage your tax to be paid can sit in an offset account for often over a year, saving you significant amounts of interest on your home mortgage.

If you get paid for work in July 2021, for example, you don’t even have to submit your tax return until October 2022. The ATO will give you a due date for paying a tax bill at the time, which could be as late as March 2023. As long as you don’t accidentally spend your tax, this money sitting in is sitting in your offset saving you interest for up to 20 months!

Claiming your home interest for use of your home in producing income can change the capital gains tax exemption eligibility of your home when you sell. Speak to your accountant to clarify your personal situation.

When Side hustles are a Bad Idea

The worst outcome would be for a side hustle to threaten your main source of income, or delay career progression. To avoid this you need to make sure you have your employers blessings and are not exhausting yourself. Knowing the limits of what you can commit to is an important skill.

You also shouldn’t start a side hustle because it seems the thing to do. Life is for living. Side hustles should be taken on short-term if you just need a cash flow boost to fund a property purchase or start an investment, or over the long-term if it is based around an activity you love and want to do more of.

Actively avoid taking on work you don’t enjoy over the long-term just for cash. Try and pivot into things you enjoy more, or give up the cash for more fun.

The benefits of a side hustle need to be weighed carefully against the time commitment. Side hustles can help you save money for a goal, develop new skills, maintain employment flexibility, increase your social group or build an extra long term income stream. Will you take on a side hustle? Which will you choose and why?

Aussie Doc Freedom is not a financial adviser and does need offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

Active vs Passive Investing & Evidence-Based Investing

*This post may contain affiliate links. This mean if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

Source: SPIVA Scorecard 2020

What is Active vs Passive Investing

Active investing involves buying and selling specific stocks, or thematic ETFs.

Passive investing means buying and holding investments meant to match the return of an entire market (National or International).

Evidence-based investing is a rules-based system based on the best investing evidence available, aimed at reducing subjectivity in investing decisions.

The main differences in the two approaches to investing in the stock market are:

  1. The goal
  2. Time
  3. Expertise required
  4. Fees
  5. Results

The Goal of Passive and Active Investing

The goal of passive investing is simply to match the entire market, minus a very small fee. In contrast, active (or evidence-based) investors aim to beat this index.

Time Needed to Passive vs Actively Invest

Active investing is a time-consuming process. The investor or his/her hired help needs to extensively research each purchase and then monitor the company’s ongoing performance to ascertain if and when to sell. On selling, more research is required to find another good company to invest the cash in.

To become an active investor, you need to see digging through company data and reading balance sheets as a fun hobby and have plenty of time to invest in the process. Many who love the process choose a “core and satellite” approach. The majority of their investments are in broad-based index EFTs using a passive strategy. A small proportion of the portfolio is used to indulge in active investing.

Passive investing, on the other hand, can be a simple, lazy process. If you are a sloth-like investor like me you can even direct debit each pay to your chosen investment(s) with Pearler.

Expertise Needed for Passive vs Active Investing

Enough education to institute a reasonable passive investing plan can be gained from a weekend of reading. Passive investors can use this strategy without professional help, and very little time invested.

Active investing requires a significant time commitment. This is a professional sport, even most professionals failing to beat the passive investors a lot of the time.

Even hiring a professional for active investing requires a fair amount of expertise. How do you choose a fund manager? Last years winners are renowned for being next years losers. Picking the next winning fund manager is almost as hard as picking the winning stock itself!


Actively managed funds tend to charge far higher fees than passive funds. Even if the fund manages to beat the index, fees eat into the returns.

Active management means funds are brought and sold more often. Passive funds are generally held for the long term. Trading creates more fees, and this is significant.

As a result of reduced trading, Fidelity found their best-performing investors had actually died or forgotten about their accounts! Increased trading frequency is a predictor of poorer returns.

Minimising fees is critical to improving performance.


Warren Buffett’s won his famous bet in 2007 that a broad index fund would beat the 10-year prospective returns of 5 hedge funds.

Research since has confirmed the damning news for fund managers – passive investing is cheaper, easier and provides better returns most of the time.

The SPIVA score card has been reporting on active vs passive returns for the past 20 years. Here is a quote from their latest report:

“While the turmoil and disruption caused by the pandemic should have offered numerous opportunities for outperformance (by active managers), 57% of domestic equity funds lagged the S&P Composite 1500 index during the one-year period ended Dec. 31, 2020.”

SPIVA Report Card 2020

The Australian stock market is tiny in comparison with the US. It is also known to be highly concentrated in the banking and mining sectors.

With Aussie passive funds being so concentrated in a couple of industries, surely active management could outperform them?

According to SPIVA’s international data for Australia over the past 20 years, ~50% or more of active funds were outperformed by the ASX 200. And these are professionally managed funds, not amateur investors.

Why Do Investors Still Love Active Investing?

Passive investing is about as exciting as watching paint dry! It’s a strategy best suited to those who want the best returns, and are happy not to fiddle with their investments.

Active investing is intellectually challenging and has potentially infinite returns when it works out. Looking back at the 12,000%+ growth of Amazon stock since its Initial Public Offering (IPO) gets investors salivating! Greed and impatience tempt new investors to try and pick the next “amazon”.

The stock market is a device to transfer money from the impatient to the patient.

Warren Buffett

Returning “Alpha” means beating index returns, and it seems so easy. You can even find an investing newsletter to give you tips on which to buy.

Of course, if the newsletter producers could predict the next big thing, they probably wouldn’t be aggressively marketing their newsletter at you.

Similar to how we often feel safer driving our cars than being an airline passenger, active investing can provide a false sense of control.

Evidence Based Investing

This is a term that I am hearing with increasing frequency. Investing decisions are based on a set of predetermined rules, and actions led by results from academic investing research. The idea is to remove the subjectivity from active investing. Sounds great!

Or perhaps too good to be true?

Most non-physicians would assume we follow evidence-based medicine all the time.

The reality is that the evidence behind our management of disease is lacking, patchy, inconsistent, and difficult to interpret.

The evidence we read may or may not be relevant to the patient in front of us, due to an almost infinite number of variables.

Much of this research is funded by the very drug companies that stand to profit from a particular result. And it is well documented that journals rarely publish negative results, introducing more bias.

On reading a research paper providing evidence for a new treatment, the team looking after the patient need to consider all the above factors before deciding whether this new evidence should change practice. This requires skill, experience and involves far more subjectivity than is ideal.

Interpreting and applying investing evidence to investing decisions will also involve skill and plenty of subjectivity. It will be difficult to research whether “evidence-based investing” actually works, given the likely high variability in it’s application.

Active vs Passive Investing

Passive investing is cheap, easy and likely to give you a better return than active investing. It’s hard to argue with that. It is boring though, and that’s what puts people off.

Those with less of an interest in all things financial probably have an advantage here. They can work out a plan, set up a direct debit and forget about their investments.

They will probably do far better than those tempted to always checking their accounts, and looking for investing opportunities.

“By periodically investing in an index fund, for example, the know-nothing investor can actually outperform most investment professionals. Paradoxically, when ‘dumb’ money acknowledges its limitations, it ceases to be dumb.”

Warren Buffett, 1993

Ready to make the next move? Find out how to choose an ETF portfolio

Aussie Doc Freedom is not a financial adviser and does need offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

The Ten Stages of Financial Freedom

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

Financial freedom is a goal many of us aspire to, yet is poorly defined and means different things to different people. Financial freedom can mean anything from being able to pay the bills without worrying to being able to live an extravagant lifestyle, without needing to work.

The usual advice of staying away from bad debt, spending less than you earn, setting goals and forming a written financial plan apply. But there are also non-financial ways to progress up the financial freedom ladder.

What Financial Freedom Means – Ten Stages

There are many stages along your financial journey. You may not want or need to reach step 10. This is an individual journey, you get to choose your own goal:

1. Have Some Savings

As soon as you are an independent adult, you need an emergency fund. Unexpected things happen, good and bad. It’s worth gritting your teeth, digging in and producing a cash flow boost to get ahead on the bills and fund an emergency fund.

A good start is $1000. This will cover a lot of common emergencies (including insurance excess charges).

The less financially free you are, the more of an emergency fund you need. If you are young, a loss of income would be disastrous. Insurance policies can also help you protect against emergencies. Income protection is the most expensive, and most important if you have one main income earner in the household. It does not, however, cover unemployment. Having dependents obviously increases the necessity of a large emergency fund and insurance.

Once you are financially independent, your emergency fund doesn’t need to cover loss of income, only unexpected events requiring cash quickly.

2. Being Able to Pay Bills without Worry.

Receiving a large unanticipated bill is never pleasant. When first starting out as an adult, almost everyone has this challenge. Being unable to afford to pay the latest bill is a sign of overspending or under planning.

Are you spending money faster than you earn it? Because you don’t earn enough money, or that you spend more than you can afford? Options are to cut expenses or increase income. Cutting expenses has an immediate effect and is the most efficient. $1 saved means an extra $1 for your savings. An extra $1 earned means $1 minus tax to add to your savings. Increasing income takes a bit more time but is, in comparison with cutting spending, unlimited.

As well as reducing discretionary spending, there are many low effort ways to save more. Opting for annual payment for a discount, checking whether for discounts and shopping around every year for renewals can save $100’s. Cancel subscriptions you don’t get a lot of value (or really can’t afford).

Sometimes, it’s just a matter of timing. The council rates always seemed to be a nasty surprise in our house, despite the fact they arrive on a predictable schedule!

Dividing the largest bills into direct debit instalments is great for avoiding bill shock. Direct debiting into a separate account for big bills (+/- Christmas) means you can earn the interest rather than giving the company an interest-free loan.

Coles flybys and Woolworths rewards points can be used towards flights in better times, but right now no one is going anywhere. It’s definitely not a reason to shop at these stores if you have a cheaper option you like close by. But if you are shopping at either of these, you are collecting points. Rather than let them expire or claiming them randomly, many save these to reduce cover the Christmas grocery shop.

When you are struggling to pay all the bills before their due dates, having enough income to pay all your bills worry-free seems like the ultimate dream.

Once you have managed to get ahead of the bills and have built a cash cushion, “bill shock” quickly becomes a distant memory. Good riddance! But do reflect on how far you have come, and appreciate the privilege that has allowed you to leave this struggle behind.

This is a huge step towards financial freedom and indicates you are in control of your finances. All the other stages on this list are a possibility once you have achieved this stage.

3. Be Investing and on Track for Retirement

The younger you are when you work out a basic plan for retiring, the easier this is.

$200 per month earning 8% per year builds $300,000 after thirty years.

That’s an extra $12,000 per year after retirement, according to the 4% rule of thumb.

I have talked a fair bit about how overwhelming it is to choose a retirement age in your 20’s or 30’s. I remember being completely stumped by this question! Choosing a retirement age is just a starting point, you can always change your goal later. You will make more progress working towards any goal than not having any.

As you get older, the focus on retirement sharpens into focus all of a sudden. It’s pretty variable when this happens. Hopefully, you have already made a good start before this occurs.

Either way, it’s time to set some goals, make a financial plan, choose your investments and automate as much as you can. Motivation comes and goes. Remove your brain from the process as much as possible!

Most people feel behind when they start. Getting on track with your plan is another huge achievement. Check out the ultimate guide to wealth building to get some ideas.

4. You Can pay for the Lifestyle you Want Without Consumer Debt

The “without the consumer debt” is the important part here. Plenty of people fund their desired lifestyle with debt. Over time, this becomes increasingly stressful as they spiral towards financial destitution.

With patience, a well-paid career and mindful upgrades, one day you realise you can pay for everything you need, and everything (in reason) that you want without worrying.

Wanting less brings this date forward significantly! Here, I think the investors from lower-income families have a big advantage. If you were brought up in a huge house, always had a newish car that never broke down and travelled overseas for holidays these are the standards you accept as normal.

If you grew up “roughing it” a bit at times, making do is a way of life you are familiar with. Very few of my colleagues have furnished their first homes secondhand. Those willing to do without all the little luxuries for a while will progress towards their financial goals faster.

Many stop when they can pay for their lifestyle without consumer debt. It feels like the game is won, and it’s easy to start drifting. But an increase in expenses, such as taking on your mortgage or having kids can set you back for a prolonged period. If you can fund your lifestyle without stress, thank your lucky stars and just keep going a little longer to get to stage 5! Your future self will thank you.

5. Have a Healthy Surplus Income after Everything is Paid For

After paying for all your needs and the lifestyle you desire and are saving on track for retirement, having any surplus income really does mean you are winning. You can choose to spend this income however you like to improve your family’s long-term happiness. You may choose to:

  • Work part-time so you can focus on family, friends and fun. You may even want to take on a side hustle without burning the candle at both ends.
  • Take unpaid (or half pay) leave from work. Long holidays with your kids? Extended travel around the world or to see Australia? Voluntary work that pays in self-fulfilment?
  • Change your job. Saving or investing this surplus instead of just upgrading lifestyle unnecessarily maintains freedom in case things go poorly at your current workplace. Workplaces can change quickly, and a dream job can become a nightmare. Knowing that you’re not tied to your current income will empower you to make the change if and when you need to.

6. You Have 1-2 Years of Living Expenses Saved Up

Having this amount of money saved means, well before financial independence, you have security and options. If your job changes so much it sucks, you can quit and find another (leisurely). If a family member gets sick, you can take extensive time off without worrying.

You will need to pay down debt before retirement, and this goal will often be met along this debt destroying journey.

7. Be Non-Deductible Debt Free (or Completely Debt Free)

Some people hate debt. Others embrace investment debt.

Either way, we can all agree that becoming non-deductible debt-free is a huge achievement. There is always lots of debate over whether to pay off debt or invest first. The mathematical answer is usually to invest (tax effectively), but the emotional answer is often to get rid of the damn mortgage.

Being non-deductible debt free means you are far less susceptible to interest rate changes. Your cost of living will drop (sometimes dramatically). This move provides a large sense of freedom. There will be ongoing costs associated with owning a home including rates, insurance and maintenance. But being mortgage payment free is an aspiration for many.

What will you do when you get rid of this cumbersome debt? It should definitely be celebrated, but not, I argue, with closing the account and receiving the “deed” from the bank.

The future remains unpredictable, and even if your plans are to stay in this house forever, those plans may have to change. Maintaining flexibility is a wise move where possible. Instead of completely “paying off” your mortgage, fill the offset and then switch to interest only to maintain the ability to withdraw your offset cash if needed.

The offset cash can also be moved over to a new home whilst maintaining the tax dedutibility of the balance of your original home loan if you choose to hold the property and rent it out.

8. Reaching Coast -Financial Independence

Money invested and earning around 7% per annum will double in around 10 years.

If you have saved half of your financial independence number (Annual living expenses post-retirement x 25) at least 10 years before your planned retirement, you are Coast FI.

So for example, if your retirement expenses will be $80,000 you need to accumulate $2 million before retirement. If you can get to $1 million 10 years ahead of retirement you are Coast FI.

This means you could go back to living “paycheck to paycheck” by reducing work income to just cover your lifestyle expenses. Funny how things come full circle!

Of course, some savings are still a good idea so that you maintain the freedoms in the points above. But this provides you with a lot of options, being able to drop your income significantly.

If you are 15 years out from retirement, assuming the same 7% returns, 1/3 of your FI number makes you coast FI. If you are 20 years from retirement under the same assumption, you only need 1/4 invested.

Note if you increase your lifestyle once you reach Coast FI, you will either have to reduce your lifestyle back to the previous level at retirement, save more or work longer.

Coast FI also assumes a set investment return, which of course is not guaranteed. All the same, reaching this point is a massive psychological win. You are unlikely to stop investing completely, but you can take your foot off the accelerator.

9. Lean Financial Independence

This is having enough invested that you could live off your investments if you really had to. So, you would be housed, clothed and fed, but not a lot more.

It may not be a lifestyle you would choose to live, but there are psychological benefits in knowing you wouldn’t be destitute if your job were to disappear.

Depending on your desired retirement income and time frame, this may come before or after stage 8 – Coast FI.

10. The Ultimate Financial Freedom – Complete Financial Independence

Complete financial independence is considered when you have investments worth around 25 x your annual expenses (including discretionary spending).

There is an entire financial movement based on the idea of reaching financial independence as soon as possible.

Complete financial independence gives you all the choices you could wish for. You can work or not, volunteer, start a business, anything money stops everyone else from doing.

Many financially independent bloggers continue to receive income through passion businesses. So in actual fact, if they are now choosing their ideal life they didn’t need complete financial independence to achieve this level of freedom.

Even a small amount of income makes a big difference to the nest egg you need to have invested to live off. Earning $20,000 per year through an enjoyable hobby-job would mean having to save $500,000 less. Each person in a couple earning $20,000 per year means they need $1 million less invested!

The important thing is not to delay living your ideal life waiting for financial independence. Work out what you would do if you were financially independent – and see how much of this ideal life you can build now.

How To Achieve Financial Freedom

With a good income, an incredible amount of progress is possible in 5 years. The White Coat Investor’s famous Live like a Resident suggests a focussed initial 3-5 years of investing on reaching a high income.

The most important steps won’t surprise you

  • Avoid “bad debt
  • Educate yourself about investing
  • Buy less house than you can afford (unless this is part of strategic capital growth plan)
  • Live below your means
  • Set goals and make a financial plan
  • Look after your health – without this, you can’t buy this back
  • Look after your spouse – you can’t protect yourself from the emotional and financially devastating effects of divorce.
  • Consider risk first, be suspicious and don’t get ripped off
  • Automate your investment plans
  • Live your ideal life as much as you can along the journey

What stage of financial freedom are you at? Do you have any tips for readers a stage or two behind? Comment below to share what you’ve learned.

Aussie Doc Freedom is not a financial adviser and does need offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

Buying Property Investment Number 2

*This post may contain affiliate links. This mean if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

Thinking about buying property but worried about getting it wrong? I wish I’d had a role model that would let me learn from their investment decisions and planning. Being that person for younger colleagues is really what has inspired me to start this blog.

A professional financial advisor is ideal to work out a financial strategy, the big issue is finding a trustworthy one.

For those that are looking to integrate buying property for investment along with superannuation, it gets even trickier. Most “financial advisors” cannot advise on property, because they lack the qualifications, or they make no commissions from advising property.

Finance professionals blame an increasing level of compliance tasks, created to protect the consumer. This consumer protection has made financial advise unaffordable to ordinary Australian families, and difficult to justify even for higher earners. That $40,000-$50,000 for the first year of investing advice would make a great investing starter fund!

My experiences so far investing in property with Empower Wealth have interested some readers. I have promised to update regularly.

Buying Property: The Decision to Buy A Second Investment Property

My very post on this site documented my thinking around whether I should invest in property, or keep things simple by sticking to super and shares. Two to Fire is another Aussie Fire blogger who was following my property posts, considering property investing themselves. They decided against it and document their rationale and decision here.

After 3 years of research, I came to the conclusion I needed professional help. We engaged Empower Wealth to assist with property selection for our first investment property. Check out my review of Empower Wealth.

We purchased our first investment in Brisbane 2019. The property value has grown in the first year and been rented without vacancy for the first year. I have taken extended leave from work for babies and travel. I need to do some catching up to meet my goal of being work optional by age 55. My calculations tell me I needed a second property growing at around 6% as well as additional super/share investments.

Empower wealth do have a property advisory service, where they can design a property portfolio to meet your goals. I was literally scraping together every dollar I could find to find the deposit. Two to three thousand extra on a plan seemed too much.

I also really wanted an integrated, holistic plan looking at property, shares and super together. Empower wealth are property centred, and I’d rather hedge my bets with a strong super/shares portfolio as well.

Empower wealth

There was no doubt in my mind that I wanted to utilise the services of Empower Wealth’s buyer’s agent. And I really wanted the same buyer’s agent as the first time around. Empower Wealth offer a significant discount on the $15,000 Empower wealth buyers agent fee for using their mortgage broker. The first time around, these two teams worked really well in synch and made the whole experience very smooth.

In September 2020, I bit the bullet and emailed my favourite buyers agent and mortgage broker. Mid pandemic, Empower wealth, similar to most of us, were scrambling to get used to a new way of working. This time around things have a lot slower, and a little frustrating on the mortgage broking side.

There are likely several reasons for this. One, the pandemic, and working from home, adds new challenges to a previously smoothly operating team. Two, my lending was more complex given I now have an investment property (and a principal place of residence mortgage). Three, my mortgage broker left the business partway through, resulting in an incomplete handover. Four, I suspect this business is getting more and more clients due to the incredible popularity of the Property couch podcast, and word of mouth (or blog) recommendations. There may be growing pains from bringing on more staff and losing some of the efficiency of a small business.

Borrowing and Property Purchase

Once you have a basic financial plan and decided to invest in property, the next step is to work out your borrowing capacity. A chat with a mortgage broker will give you an idea pretty quickly whether your plans are realistic.

Borrowing gets more complex as you add properties, which adds time. Banks also change their lending policies without notice, and I was caught out by this. Commonwealth decided they were not going to waive Lender’s Mortgage Insurance (LMI). I needed a high LVR to retain a good cash cushion but did not want to pay LMI. LMI is insurance you pay if you want an LVR > 80%. It protects the bank’s investment and provides no value to the buyer. Many borrowers will waive the LVR for borrowers from very low default risk occupations.

Getting loan approval was quite a painful process, despite being a strong candidate on paper. After the Commsec debacle, we had to restart the whole process again with ANZ. ANZ are particularly difficult to deal with in my experience, requesting an insane amount of paperwork repetitively. I was pretty frustrated to miss out on buying pre-February 2020 when there would have been minimal buying competition.

Banks are rumoured to be loosening lending criteria, so hopefully, this process will become slightly less painful.

Buying Property Defence: Life Insurance

Boring! But as the main income earner in our household, taking on investment debt meant reviewing my insurances. I reviewed my life insurance and income protection, and topped up income protection (whilst preserving my “agreed value” status”). If the worst were to happen to me, my partner could pay off the mortgages with some to spare. My family could stay in our home and the kids in school.

Using a Buyer’s agent to Purchase Property

I was really thrilled to purchase with my favourite buyer’s agent again. And boy did I need her expertise. By the time I was ready to purchase in February, the market had already turned. Each property attracted multiple bidders. Few homes were being put up for sale. As you have all heard, prices started escalating FAST.

My buyer’s agent knew how to assess vendor motivating factors. She also understood around what price had a chance of securing the property without paying more than I needed to.

We missed out on the 1st property to buyers that were willing to buy without buildings and pest inspections. This was a risk I was unwilling to take. The next property attracted 15 offers, but we bought the home after a tense and lengthy negotiation.

Buying Property for Investment – the Exchange

Things went far more smoothly after the contract was signed. Empower Wealth’s instructions were clearly communicated, and the property was exchanged with minimal hassle.

The search for a property, lending, bidding, actual exchange and tenant selection is stressful (at least for me). There were frequent requests for one more piece of paper or bank statement and yet another trip to the bank. Uncertainty about finding a tenant and worry over selecting the correct one still feels uncomfortable.

As you can read in my article asking do I regret investing in property, this settles down once the tenant is in, and inevitable early tenancy repairs dealt with.

With this second property, there were new Victorian tenancy act regulations to follow, and some needed repairs identified by the tenants when they moved in.

Renting the New Property

It was in my interest to use the selling agent to manage the property as a rental after the sale. It meant they were motivated to ask the vendor to allow a rental viewing before exchange. When I hired my first rental manager at the Brisbane property, I didn’t really know what to expect. Harcourt’s solutions send me the rent each fortnight, keep me informed by email of any changes, and seem to have access to reasonably priced, reliable tradespeople. I’ve been happy with their management, but had nothing to compare it with.

I should not have taken for granted reliable communication. The new rental agents went completely silent after being hired. I had to prompt them several times to get information on the search for a tenant.

They organised the safety checks required by the new Victorian tenancy act but didn’t actually feedback that they had identified work needed completing until I chased them. I am clearly going to have to be a pro-active manager of the property manager until I find someone more dependable when my contract ends. I’ve set myself a monthly reminder to check if there are any issues with the property.

Where to From Here?

My excel document tells me I can stop here, investing extra in the stock market before pivoting to pay down debt once the investment properties become positively geared. I am on my journey to financial freedom.

Even with a professional plan, there is no guarantee the anticipated returns will actually occur. I do feel an urge to invest a little more than in my plan to provide a margin of safety.

We have not completely dismissed the idea of a 3rd investment property, but am spending the next year or two filling my offset, investing with Pearler as well as putting extra into superannuation. Given my fairly short investing horizon, I need to avoid being equity rich/ cash poor. So I will likely buy a neutrally geared property if we purchase again. I am learning about commercial property investments but am currently not comfortable with the risks.

Are you considering investing in property or have already taken the plunge? What are you stuck on at the moment? Subscribe to make sure you don’t miss out on the updates when we get our 1st valuation on this new property investment and an updated value on our 1st.

Aussie Doc Freedom is not a financial adviser and does need offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

how to choose a retirement age

*This post may contain affiliate links. This mean if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

Many young professionals, full of enthusiasm for their chosen career fail to see any appeal in planning to retire early. A lot can change in the next 20 years, your 50-year-old self would love you to consider why you may want to retire early. But your health is not guaranteed to last, your workplace may become toxic or you may have developed different priorities. Planning in case you would like an early retirement age gives you options, choice and flexibility.

Choosing a Retirement Age

It’s really difficult being asked to make a financial plan for the rest of your life. Particularly if, you’re 25 and don’t even feel like a genuine adult yet. My view of the future at this stage was pretty hazy, full of possibilities, but no plans set in stone.

Being asked to plan a retirement age at any time under 40 can seem completely overwhelming! But this is kind of an important date to build your financial plans around.

Nothing has to be set in stone, but working towards a goal will give your future self options in whatever situation you are in at the time.

A good place to start is the official retirement age. But what exactly is that? The aged pension can only be received from age 67. Most high-income earners would like the option to retire before then, and would only consider the aged pension as a backup plan.

The preservation age for superannuation is currently set at 60 years old. There are legislative risks with super. It’s a great vehicle for maximising tax efficacy, particularly for high-income earners.

But you should assume the government are going to help themselves to the super cookie jar a few times before you retire. I take advantage of the age gap and put extra super into the older spouse’s super, who is less likely to be affected by changes. I also assume that my preservation age may increase five years before my planned retirement in 2035.

If you would like to retire before your preservation age, you need investments outside superannuation to fill the gap.

Why You May Want to Choose an Earlier Retirement Age

1. A Health Crisis May Cause You to Retire Early

No one knows what health challenges are around the corner. We all hope to be the 90-year-old still running marathons, but it seems prudent to plan for the worst, whilst hoping for the best. Life-threatening illnesses occur without warning and can be devastating to your finances. Reduce the risk of something like this destroying your plans in your 50’s and 60’s. Income protection gets VERY expensive by this age! Chronic disease also involves a lot of time away from work for doctors appointments, tests, rest and recuperation. As a doctor, I sadly see many patients who can’t afford to take the time off to manage their condition properly.

Even without a health crisis, ageing well requires good maintenance and preventative care regimen. Regular exercise (including stretching), a healthy diet and plenty of rest become more critical as we get older. Less (or no) time spent at work allows retirees to focus on these things if they are motivated to do so.

2. You May Crave an Earlier Retirement age as You No Longer Enjoy Your Work

This may not be a reason to retire as much as move jobs, but people often get stuck in the “golden handcuffs”. Having a perfectly good, well-paying job that you hate doesn’t really sound like something you can complain about.

But people who were once passionate about their careers often end up dissatisfied by mid-career. There may be a loss of interest over time, a change in the work to be done, a toxic workplace or a terrible new boss.

Their high-level expertise may seem completely irrelevant outside their current career. To leave the now resented career would therefore involve a drastic pay cut. Many have trapped themselves with an expensive lifestyle that requires their current income.

Hopefully, you enjoy your work right now, but this can change pretty quickly. Perhaps the work you do deviates from the work you intended to do. Doctors spend at least as much time now completing documentation and paperwork as seeing patients.

People change. Think back to 10 years ago. Are you the same person as you were then? It’s hard to imagine what interests and preferences you may have in another 10, 20, 30 years. Keeping options open for change is a big part of managing your finances well.

Getting ahead with your retirement savings, having accessible cash savings and a good surplus of income could enable you to take the leap to a new job or career when your dream job becomes a nightmare.

3. Retire Early Because You Have a New Passion

Perhaps you don’t hate your old job, but find a new purpose in life. You are dying to become a professional writer, want to volunteer overseas providing aid work or want to start that dream business. Planning for an early retirement allows you to take risks, or work for free.

4. Choose an Early Retirement Age Because You Want More Time

Modern life can turn into an endless “to do” list, errands obligations consume your days, leaving little time for fun. Full retirement is the opposite, with acres of hours to do all the things you never had time for. Writing that book, learning an instrument, pottery, surfing. The only limit is your imagination! And your finances, of course.

Perhaps you would like to take extra weeks holiday to spend a holiday where you’re not trying to squeeze everything in. After retirement you can holiday for as long as you like.

5. You Want More 8Freedom

I think what appeals to most people about retirement is the freedom to do whatever you want. No need to get up at a certain time (unless you want to). No need to drive in rush hour or in an office for an arbitrary amount of hours (regardless of the amount of work actually done).

Not needing to be commute to work means you can live anywhere you like. The freedom to travel wherever for however long, with needing leave approval is also appealing (although currently not relevant!)

6. You want to Retire Early to Lead a Simpler Life

Some crave to get back to a simple life, and retirement offers this possibility. No deadlines, or boss to impress. You create your own routine for every day. You have the time to spend on the important things.

7. You Want to Enjoy Spontaneity

Without work commitments, you are free to take advantage of amazing opportunities at late notice. A late travel deal or sudden whim to visit friends?

8. You Want to Retire Early to Sleep and Have a Regular Routine

A regular routine of sleep, exercise and food make a huge difference to how well you feel. As a shift worker, I do sometimes find myself craving a life where I could go to bed at a reasonable hour and wake refreshed every day.

9. You Want More of a Social Life

You only have to observe the grey nomads appreciate what an insane social life these guys have. They meet friends on their travels around the country, seem to instantly form a bond and party late into the night. Rather than appreciating their ability to go to bed at a reasonable hour and wake refreshed, these party animals socialize into the early hours and presumably wake with a hell of a hangover!

Rather than make excuses for every other social event you are invited to due to work commitments, you can travel to see friends and family whenever you like. And if you want to stay up late, there is no work the next morning to interrupt your lie-in.

10. Choose an Early Retirement Age So You Can Help More

You may have friends, family or your favourite charity that you know need your help. Being retired means you can contribute to what you feel is meaningful, despite a potential complete lack of financial compensation.

Why You May Not Want to Retire Early

1. Early Retirement Can Be Bad for Your Health.

Retirement can be good or bad for your health. Some studies have shown a physical deterioration in physical health after retirement, others an improvement. Mental health seems to improve short-term as a result of retirement, but involuntary retirement is often bad for physical and mental health.

It seems likely the effect of retirement on your health is very individual. Stopping work and not replacing it with meaningful busyness and physical activity is a recipe for disaster. Moving on from a stressful work environment to focus on your passions and keeping active, social and motivated sounds highly therapeutic.

2. Running Out of Money

This is the other huge fear that haunts retirees. The problem is, there is never a guarantee that your savings will last.

The earlier you retire, the longer your investments need to fund your lifestyle. Luckily we have in Australia the aged pension as a safety net.

Continuing a little paid work or renting can provide a small amount of ongoing income. Even a small amount reduces the risk significantly of drawing down your super completely, and provides more options to get back into the workforce should financial disaster strike.

Should You Choose an Early Retirement Age?

Taking the leap from full-time work to full retirement is a huge shock to the system. It’s hard to be realistic about retirement expectations, and most people tend to look at it through rose-tinted glasses.

You may think you will exercise every day, cook delicious and healthy meals and actively seek a busy social life. In reality, the days may blur into one as you stare at screens and eat junk.

The loss of purpose seems to be a thing retirees struggle with, and probably why involuntary retirees suffer the worst.

Before jumping ship, retirees should clearly have a plan of what their new life purpose will be. Just because you’re not getting paid doesn’t mean you should do nothing!

A gradual ease into retirement is probably kinder for all involved, although will be easier in some occupations than in others. Gradually reducing working hours whilst increasing hobbies, social activities and exercise seem the healthiest option.

What Retirement Age Will You Choose?

I would urge you to select an earlier theoretical retirement age to work towards. Having the money ready to go gives you lots of options of retiring, changing work or continuing to work in a job you love.

Not having the money can leave you in a miserable situation if you get to your 50’s and want (or need) to retire. Starting early means the sacrifice is actually very small, as you are taking advantage of compound interest.

Aussie Doc is working towards a theoretical retirement age of 55. What is your maybe retirement age?

Aussie Doc Freedom is not a financial adviser and does need offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

how to utilise Capital Gains to optimise your investments

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is how sites like this are funded, but does introduce a conflict of interest.  

Income made through capital gains is more tax-efficient than other income.

It can compound tax-free for decades during the accumulation phase and then be taxed at half the rate of other income. The timing of asset sale for a low-income financial year will reduce your tax rate.

Shares are easier to liquidate in tax-efficient lumps each tax year, whilst property investments are well suited to holding forever, or occasionally inside superannuation.

Purchasing a great quality home in a fantastic area is a popular strategy as your home can be sold tax-free. Active assets (ie a business premises) valued up to $500,000 can also be sold capital tax-free on retirement.

What Are Capital Gains?

Capital gains or losses are the difference between your purchase and sale price of an asset. A capital gain is when you make money, a capital loss when you lose money. Capital gains tax is payable on assets such as shares, property, cryptocurrency, foreign currency and collectables worth more than $10,000. You must declare capital gains on your tax return. But capital losses can sometimes be used to offset gains and reduce tax.

You “realize” a capital gain when you sell an asset that has increased in value from the cost base. The cost base includes the purchase price and costs involved in purchasing and holding the asset. These include stamp duty, transfer fees, borrowing expenses (loan application fees, discharge fees), advertising costs to find a buyer.

Renovation costs to improve a property valuation are added to the cost base. Repairs to maintain the property, in contrast, are deducted against income in the same year. Find further details on cost base inclusions on the ATO cost base page.

If you brought a parcel of shares for $100,000 and sold them for $120,000 your capital gain would be $20,000.

All the time you don’t sell an investment, your capital gains are compounding completely “unrealized” and untaxed. It’s a fantastically efficient way to build wealth whilst you are still working.

Does the ATO Consider Capital Gains Income?

Rather than being a separate tax, the ATO taxes capital gains at your individual (or company’s) marginal rate. The capital gains realized are added to your taxable income. As opposed to your PAYG income, you can get a significant tax discount on income from capital gains.

Income is taxed at a flat rate of 30% for companies, and between 0 and 45% for individuals, depending on their taxable income.

What is the Capital Gains Discount?

Assets held for more than 12 months are eligible for a 50% capital gains tax discount.

This means if you had held those $100,000 worth of shares for over 12 months, and sold them for $120,000 you would only have to pay tax on $10,000 of the $20,000 capital gains.

If you could convert all your income to capital gains, you would pay half as much tax! Not only are capital gains a great way to compound earnings untaxed whilst working, but they are also taxed more efficiently than any other income when you do sell.

It seems counterintuitive that you pay less tax on passively earned investment income than income from hard work, but this is part of what makes investing so appealing.

Capital Gains Can be Lumpy

People often think of capital gains tax in relation to property. Selling a property can result in massive capital tax bills, as you have to sell the whole thing at once. Capital gains property can slow your journey towards financial freedom if this isn’t carefully planned out.

A more tax-efficient way to produce income is an even amount each year, ideally shared between two or more individuals.

A $500,000 capital gain from selling your investment property will incur a huge tax bill, pushing even a non-earner into the top tax bracket.

Buying a block of units, or a strip of shops could reduce this lumpiness, as units or shops could be strata-titled and sold off separately. This would be a high-value investment though, with significant concentration risk from investing so heavily in one street. The investment strategy needs to make sense first, the tax strategy should come after.

Shares, on the other hand, can be liquidated in small chunks, allowing capital gains to be evenly spread over years, incurring little capital gains tax.

FIRE stock market investors can take advantage of this. If they invest enough in shares (ETFs or LICs) that produce minimal dividends and withdraw their living expenses every year, they can pay no, or very little tax. Dividends, in contrast, are taxed at the individual’s full marginal rate.

There is an alternative method to adjust how much of your capital gain is taxable, based on adjusting the capital gains for inflation. This is now only relevant to assets purchased before 30th September 1999. Find out more about the indexation method on this ATO page.

Companies and foreign residents purchasing assets after May 2012 are not eligible for the 50% CGT discount.

Capital Gains Tax Exemptions

Your primary residence is usually exempt from Capital gains tax. It has to be on less than 2 hectares of land and you must not have used it to run a business. This is why many people like the strategy of buying the best house they can stretch their budgets to afford. On downsizing, they can sell and make a good profit (if they brought well and could afford to maintain the place). Some of this cash can then be contributed to superannuation.

You need to move into your home as soon as practicable after purchase to be eligible for CGT exemption. If you move into a previous investment property, it will not become eligible for capital gains tax exemption.

Properties purchased before 1985 do not attract any capital gains tax.

“In this world nothing is certain but death and taxes.”

Benjamin Franklin

Temporary Absence Rule

The temporary absence rule means that you can rent out your previous main residence for up to 6 years without losing the CGT exemption. This is a fantastic deal for those that have to move for work but can also be utilised by retirees moving to their final home. If you move back in after six months of renting, it resets as if you never rented out again, so you could rent it for another 6 years.

If you purchase a new home, you do not need to decide which you will treat as your main residence for CGT immediately. There is a 6 month grace period where you can treat both as your main residence. When you sell one of the homes, you will need to decide whether you want to use the CGT exemption for it (and lose it for the other home).

You will need to know the value of the home at the time it ceased to become your main residence in order to claim a partial exemption, so ensure you value the home when you move out in case your new home is the one you end up claiming as your main residence.

What is a Capital Loss

A capital loss is realized when you sell an asset for less than you brought it for. This is obviously exactly the opposite outcome to the one you want. But the capital loss can be used to reduce capital gains tax. Capital loss cannot be used to reduce your taxable income (eg taken off your PAYG income) but can be used to reduce the capital gains tax payable.

If you brought shares for $100,000 but sold them for $90,000, you would have a $10,000 capital loss 🙁

If, during the same or subsequent tax years you sold that investment property for a $500,000 gain you could use the $10,000 capital loss to reduce your capital gains tax obligation. Instead of paying capital gains tax on $500,000, you would pay it on $490,000 (or half of that if eligible for the 50% discount).

You can “Carry forward” a capital loss for an unlimited amount of time. This means, as long as you keep the documentation proving your capital loss, you can use it to reduce capital gains tax when you sell a profitable asset. As long as the rules don’t change in the meantime of course.

You cannot “Carry forward” a capital gain. The tax is payable with your income tax return at the end of the financial year.

This means timing of sale of your dud investments (if you have any) is important.

Capital Loss Harvesting

Capital loss harvesting is timing a sale of a loss-making investment to reduce taxation of a capital gain. You cannot sell an investment (eg your ETF during a market dip) to rebuy a similar one. This is known But if you had a dud investment you were wanting to sell, you can use the opportunity to reduce a capital gain.

Capital Gain Harvesting

Capital gain harvesting is a technique you can use if you plan to switch out of one form of investment to another. An example would be graduating from a micro-investment app to your 1st brokerage account. If the sale of the assets within the micro-investment account was timed in a year of no or low income, little or no CGT would be payable. The new investment can then be purchased, resetting the cost basis.


Sally opened a RAIZ account and invested $500 per pay. Sally has invested $26000 and has benefitted from $5000 in growth. Sally waits until she is on 1-year unpaid maternity leave to sell her RAIZ investments tax-free and purchase ETFs through her new brokerage account. The new cost basis is $31,000, so only gains above this will be taxable when Sally eventually sells.

Wash Sale Rules

A wash sale is a sale of an asset primarily intended to achieve a tax benefit. It counts as tax avoidance, is illegal and land you in hot water with the ATO, a position no one wants to be in! Optimising a capital gain or loss should be a case of timing a move you were planning to make anyway, not purchasing or selling primarily for a tax benefit.

Special Circumstances – Divorce and Inheritance

The tax treatment of your inherited property depends on how the property has been used before and after inheritance. No capital gains tax is incurred on inheritance. If the deceased always lived in the property, it’s cost base will be the value at inheritance. The property will remain CGT exempt if you then move into the home.

If you rent the property, the CGT exemption only applies to the time before it was inherited, so you will need a valuation at the time of inheritance. Get independent advise if you are in this situation to make sure you get it right.

In the other unfortunate situation of divorce, assets can be transferred as part of the settlement. The capital gains are deferred and the transfer inherits the original cost base. So if you divorce and your ex-partner gets the investment property, no tax is payable on the property when transferred and your ex-partner will eventually pay CGT if the property is sold as if they owned it in their own name all along.

Can Capital Gains Tax be Avoided?

Investments decisions should be made based on tax outcomes. But the tax situation should be optimised as much as possible, once an investment strategy is chosen.

In order to completely avoid capital gains tax you could:

  • Not make any profit (But what’s the point of that)
  • Purchase your large lumpy asset inside superannuation and sell in the pension phase so gains are tax-free. The costs and hassle of managing a self-managed super are a major deterrent to this, as well as more expensive and limited options when leveraging inside superannuation. Get professional independent advice if considering an SMSF. Income during accumulation from rent or dividends will be taxed at only 15% and capital gains at a discounted 10%.
  • Sell a little at a time, with no other taxable income, to remain under the tax-free limit of $18,400 per person
  • Never sell. Keeping assets long-term is an ideal situation, receiving small amounts of tax-free income from outside superannuation and the rest from within super (which is tax-free anyway).

How to Reduce Capital Gains Tax

Paying tax means you are making a profit, so it can’t be all bad. It also pays for our schools, hospitals, roads and much more. But it’s not used all that efficiently much of the time, and few people wish to pay more than their fair share. Here are a few ways you could reduce your capital tax liability:

  • Time the sale of assets in a low-income year (eg post-retirement, parental leave etc)
  • Consider carefully the tax implications at the beginning, duration and sale of an investment and choose who should own the asset after weighing all this up (individual, trust, company, super).
  • Consider using the temporary absence rule. Rent your main After moving out of your home (principal place of residence) you can rent it out for up to 6 years before it becomes eligible for capital gains tax. This is ideal for those having to move across the country for work and planning to return. It can also be used to squeeze a few more years of capital gains (and rental income) out of your penultimate home before retirement.
  • “Active assets” eg assets used for a small business are eligible for a 75% discount if owned for more than 12 months. If an active asset is owned for 15 years and you sell it aged over 55 years to retire, up to $500,000 is exempt from CGT. Capital gains can also be deferred on selling an active asset and rolled over into a new asset. See the ATO page on active assets for more details.

Understanding the tax treatment of investments allows investors to own their assets in the most efficient structure, and time investment moves to minimize tax.

Coming up to tax time fast! What are your tips for getting your tax return organised? Comment below to share your tax hacks.

Aussie Doc Freedom is not a financial adviser and does need offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

10 ways I’m working towards frugality

*This post may contain affiliate links. This mean if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

I recently had the great honour to be interviewed by Serina Bird, on the Joyful Frugalista podcast. Check it out on Apple or Spotify.

Serina is the author of The Joyful Frugalista and interviews a wide range of talented people about frugality, investing, wellbeing and living sustainability.

I confess to feeling a bit of a fraud!

In comparison with most of the finance bloggers, I am certainly not frugal. These guys routinely live on less than $50,000 per year.

When I sat down and worked it out, that would actually be survivable for our family too.

But I spend significantly more.

I am still working along the ten stages of financial freedom.

Yet besides my medical colleagues, I do look pretty frugal.

I have a nice house in a just-OK suburb, and an old car I brought with cash.

I guess frugality can be relative. They say you are the product of the 5 people you spend your time with.

Spending time reading and listening to finance blogs and podcasts like Serina’s has certainly helped me become more financially efficient over time.

Define Frugality –

“The quality of being frugal, or prudent in saving; the lack of wastefulness”

Online Dictionary.

The absence of wastefulness is the essence of frugality.

“Frugality” was long practised by necessity by our parents and grandparents. During wartime, extreme measures were needed to stretch food rations and other finite resources.

Our lives have become more luxurious. With two working adults in most families, a two-car household is often considered a basic necessity. Societal expectations have swollen to include large homes, luxury vehicles, regular meals out and annual overseas holidays.

We are also busier, with two working adults, and little spare time, it’s easy to become wasteful. A fridge full of fresh fruit and vegetables purchased with optimistic good intentions, has to be thrown out a week later after several takeaway dinners.

Rushing out to work, you rarely have time to make a meal to take with you, so pay for an unhealthy (and in my experience, generally disappointing) canteen lunch and drink.

A few decades ago, the lifestyles most professionals lead today would astound (and perhaps horrify) our great grandparents. Such wasteful excess would likely be considered with as much disdain as frugality is often treated today.

The Problems with Wastefulness

I most certainly do not claim to be immune to bloated expectations and waste as a result of busyness (and sometimes laziness). But I do reflect on how different my life is from my grandparent’s lives, and the majority of the world population today. Ideas from these podcasts and blogs on frugality often inspire me with new ways to save time and money, by making small changes to reduce wastefulness.

Around 25% of the water used in agriculture grows food that is eventually wasted. According to, throwing away 1 burger is equivalent in water wastage as a 90-minute shower.

It makes no sense to spend money, utilise water and other resources to buy food that you will eventually throw away. But most of us do, including me.

Wasting food is just one example, but demonstrates perfectly the nonsensical use of our resources for no benefit. It squanders not only our money but the world’s environmental resources too.

Benefits of Frugality

Being frugal with your financial, environmental and time resources brings many benefits. For one, you won’t have to empty the fridge of mouldy food, an unpleasant task. Can’t you think of a better way to spend that time?

Reducing our carbon footprint provides long-term benefit for the planet and our children and grandkids, Reducing waste and excessive consumption is a fairly low effort way to improve our environmental impact.

Consumption can be reduced by buying less and only what we need. Resisting the powerful marketing messages we are bombarded with all day is difficult, but begins with understanding what is going on. Marketing psychology is an entire science-based around tapping into your fears of not being “enough” and leveraging them for profit.

It doesn’t have to be extreme. Frugality is relative. A frugal lifestyle to me would still be an extravagant, bloated lifestyle to most in the world.

Frugality does not Mean Deprivation

Frugality seems to have become misunderstood as deprivation.

A frugal person would whip up an easy bread and butter pudding with the past-it’s-best sour dough bread, rather than throw it in the bin. Ok, probably not good for the waistline, but a perfect treat for a winter’s night! You may just find yourself warmed by fond memories of your grandmother’s cooking.

Saving your money by not spending unnecessarily means it can be spent when it will really make a difference. Being frugal can be the difference when an amazing opportunity comes up between dropping everything to take part, or making excuses. Complaining you can’t because you’re broke (as always) is pretty lame. You need savings.

You’ve heard all the cheesy platitudes, but research backs them up. Spending money on things doesn’t actually make you happy. Using that money to provide choices and opportunities on the other hand, gives you freedom over your life.

It’s fun going out to a restaurant for a lovely meal. Why would you want to miss out on that? Hardcore frugalistas cut eating out almost completely out of their budget. But it doesn’t have to be this extreme. How often have you paid for food at a cafe you didn’t even like, just because you were too disorganised to bring your own? How many rubbish restaurant meals with bad service have you tolerated? Do you even really appreciate the luxury of someone else cooking (and washing up) for you when you do it all the time? Do it a little less often, plan it properly so you choose a really good place and have plenty of time to enjoy the experience.

How to Become More Frugal

1. Stop Throwing Away Groceries

There are several ways you can improve your grocery wastage, depending on your preferences.

  • Meal Planning – Planning what you will eat for the next 3-7 days and purchasing accordingly means you have a plan for every purchase. It does involve a little time in planning upfront, but will save time in extra trips to the shops! Some top performers plan the meals around weekly specials (particularly meat, which tends to be the most expensive). I’m not there yet! Leave “Leftover days” in your meals, to get creative and make a pie, omelette or quiche from those leftover bits and bobs.
  • For the super busy, making a regular meal roster (perhaps 3 or 4 weeks that you rotate) will save planning time. These can be saved with a shopping list of ingredients (plus usual weekly essentials) in word documents that can then be “copy and pasted” into grocery website online orders. Click and collect or grocery delivery means you save a lot of time and avoid impulse purchases in the store.
  • Cooking in bulk saves time and money. You are less likely to have to throw away unused ingredients and can cook 3-4 meals in one go and freeze. On busy nights, instead of the rubbish pizza you always order, you have a ready-made and nutritious meal you just have to reheat. It is also more efficient on power to cook multiple meals at once.
  • Growing vegetables. Again, a little time investment upfront can pay dividends for a long time. Your climate will dictate what will grow easily. We have found growing lettuce easy and means we no longer have to throw out half a bag of limp leaves every week. You can harvest leaves straight from the plant without removing it from the ground, taking only what you intend to eat that day! It’s also extremely convenient to be able to get fresh lettuce within 30 seconds of deciding you need it. The bottom 3cm of spring onion with the roots can be chopped off your next bunch of spring onions and planted and watered. They will regrow, and you can keep snipping the stalks as they grow and you want them. Far more satisfying than throwing 1/2 the bunch away each time! Herbs are expensive and can be grown in a pot on a balcony or kitchen window. Again, highly convenient to be able to pick them when you need them. Many other vegetables and fruit grow in abundance and need to be distributed to colleagues, neighbours and friends to avoid wastage. We usually find our neighbours, friends and colleagues bring in their own excessive produce to share too.
  • Utilise your freezer. Reducing the number of trips to the supermarket will generally save you money. It will definitely save you time. Does anyone really like going to the supermarket? Milk and bread freeze really well. A good supply in the freezer will mean you will never have to interrupt your plans to pop to the shop for these basics. Grated cheese also freezes well, as well as vegetables, meat, and most prepared meals. Keeping your freezer full is more efficient for power costs, so filling empty soft drink bottles with water will reduce costs and be an easy way to carry more water for a long day in the sun. Organising your freezer so you can actually identify and find the food you need reduces frustration and frostbite. I love my 5 drawer freezer, each compartment has its own category.

2. Minimize Driving

Most of us should be getting more exercise anyway. When driving, bunching errands by area can get things done quicker, using less fuel. Get that discount fuel card… it all adds up. Don’t leave filling up until your coasting into the station on fumes… take advantage and top up your tank when prices are reasonable.

3. Insurance

Set a day a year to beat the insurance agents at their own game. Shop around. Don’t be lazy. Invest the money saved or use it to buy something fun. But don’t pay more than you have to on insurance.

4. Separate Discretionary from Essential Spending

Work out what you spend your money on. Separate your essential spending (mortgage, food….) and your discretionary spending (meals out, coffee, holidays….). Work out how much you want to budget from now on for your discretionary spending and use this budget to help you decide which spending really brings you value. Work out your money management system. Spend your discretionary budget on what brings you joy, and don’t waste it on rubbish you regret.

5. Sleep on it before Purchasing

Impulse purchasing is so easy now. You don’t even have to go find your credit card. One minute your spying on your ex’s Facebook page, the next thing you are seduced by an ad, and have brought yet another gadget you won’t use.

Make a rule of introducing a delay between wanting to buy and actually buying. It could be 24 hours, 72 hours or a week (or more). Many of those purchases will simply be forgotten, you can then go ahead and purchase the ones you still want guilt free.

6. Use your Local Library

Use it or lose it. This is a fantastic community resource, although by my observation sadly underutilized by those that need it the most. Borrow books instead of buying when possible can save you quite a bit if you are a total book worm, or have kids.

7. Use Power Efficiently

Work out when it is most efficient to use the washing machine and dishwasher, and make it your usual daily routine to put them on (with a timer if desired) at that time. Turn lights and power sockets off. Use grey water to water the garden (on timed sprinkler, unless you love to water).

8. Mend, Make Do and Borrow

Don’t buy something new at every time. I promise you, at some point in your life you will likely be overwhelmed with belongings you don’t have room to store. Borrow, mend or make do when possible.

9. Don’t tip the tax man!

Check out salary sacrifice, and don’t neglect your superannuation. Maximise your tax return.

10. Build in balance

Don’t forget to spend joyfully along your journey. Ensure you set, and use your fun budget. Life shouldn’t be all about saving money. Like many things, it is easy to get a little obsessed. If you find yourself really uncomfortable about spending a little money, you may have gone too far.

With big purchases and scary decisions, I like to consider whether I would regret not doing this on my deathbed. It helps me take that leap when I really want to do the thing.

Work out ways you can make more value, whilst minimising cost. For example using frequent flyer Australia to fund holidays. Using cash back and shopping around.

What are your frugal tips for readers? Comment and share the ones you use below.

Aussie Doc Freedom is not a financial adviser and does need offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.