Ask Paul: I'm a single mum, can I afford to buy a home?


Dear Paul,

I'm a 34-year-old single mum with a 15-year-old who attends a private school. I earn $80,000-plus a year and receive child maintenance of $650 a fortnight and a government payment of $135 a fortnight, which will end once my teenager turns 18. I have no credit cards or loans. 

I sold the family home in 2021 and placed my profit from the sale into a savings account.

ask paul clitheroe i'm a single mum - can I afford to buy a home?

My belongings are in storage at a cost of $640 a month and I pay $320 a week in rent. I own two cars, have $540,000 in savings, $23,000 invested in shares and $22,000 in superannuation. 

I'm struggling with deciding on where to invest my money and how to plan for my future.

I'm wondering if I should buy a small property outright or purchase a more expensive home in a more sought-after area with a mortgage. I'm saving around $1000 a fortnight. Any advice would be so helpful. - Pia

Putting that aside, you are doing really well to save $1000 a fortnight - around $26,000 a year - and after you pay school fees, costs for two cars, rent and all the usual lifestyle costs, it is a really significant amount. Along with your savings, it gives you terrific options.

You are young - at age 34 you have many decades in front of you. So, providing your income comes from a secure job or another secure source, I would argue that owning a home is a great move for you.

Add your rent into your saving capacity, plus the $640 a month for furniture storage, and you have the capacity to fund a pretty good-sized mortgage. So, from what you have told me, if I was in your shoes, I'd be buying a good house in a good suburb that was likely to be my long-term home.

But I don't know a lot about you. Obvious questions that pop into my mind are what are your plans once your child finishes school? What might happen in terms of you having a new partner?

In fact, I have a list of questions I would want to ask you to think about before you bought a new home. The good news is you can earn more than 4% on your savings in a safe term deposit while you ensure your plans are reasonably settled.

So, while I think a good home would provide you somewhere to live with your child and be a good long-term asset for you, my advice would be to think about your medium to long-term plans.

My overriding view, though, is that buying a family home, providing you can comfortably afford the mortgage repayments, is the way to go. If you moved away after your child completed school, you could always rent it.

I have a strong bias towards home ownership. While this must fit with your plans, I feel it is an important goal for you.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
Money magazine
May 24, 2023 4.44pm


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Sam P
May 24, 2023 5.24pm

Wow! I'm amazed someone with that level of income and assets receives money from the government