My husband and I are 35. Last year he made quite a lot of money in his hobby of cryptocurrency — $1 million in fact! (Though sadly half of this goes to tax.) Before this we had debt so we’re now happily debt free — and we have both quit our jobs! I am now a stay-at-home mum and he is trying to start a business. But now I’m worried that we have no incoming super contributions. Also, we do not own a home yet. Should we both be paying ourselves super? We need some good advice as I don’t want to mess up this opportunity!
Nicole and Steve
Congratulations — you won the lotto!
That’s the way I want you to think about your win: it wasn’t skill, it wasn’t hard work, it was simply luck.
You got one million luckies.
And you know what studies shows happens to many people who win the lotto?
Eventually, they end up blowing it.
So from now on act like you’ve used up all your luck in life. The smartest thing you can do is to walk away from the table a winner. (Learn the lesson of Sir Isaac Newton — one of the most influential scientists of all time — who made a tidy sum betting on the South Sea Company ‘bubble’ but then got greedy and bought back in … only to lose his entire life savings.)
If I were in your shoes, I’d do the three things:
First, avoid throwing a heap of money into a small business just because you have the cash.
Most businesses fail. Don’t risk your money.
Instead, I’d encourage your husband to get a job working for someone who owns a business like the one he’s thinking of starting. Think of it as a paid education in running the business. Down the track, when he’s ready, he could go out on his own.
Second, buy a modest family home that you can pay off as quickly as possible.
Third, put your long-term savings on autopilot by boosting your superannuation contributions to 15% of your pre-tax income, and get your husband to make a regular spousal contribution on your behalf while you’re looking after the kids.
Good … luck!