The financial challenges of country living

Living in a large country town is often a lifestyle choice, whether you’re born and bred or a blow-in from elsewhere. Regional living has many upsides, including close-knit communities, sporting infrastructure, environment and landscapes, nature, and, of course, a slower pace than our cities.

The lifestyle is a drawcard; however, moving to or living in a regional centre is not without its financial challenges. From limited access to services to volatile farm incomes, which can be an issue if you have started a business in a regional town, and inflated fuel and other everyday commodity prices, living in the country can test even the savviest budgeter. The good news is that you can overcome these hurdles with some foresight and planning. Let’s explore the key financial issues rural Australians encounter and how to tackle them.

It depends on the town’s size; however, in some regional locations in Australia, people experience limited access to financial institutions such as banks and financial expertise, such as qualified and experienced financial advisors. Our Orange location serves clients across the central tablelands, including Bathurst, Mudgee, Cowra, Lithgow, Dubbo and Parkes, and others spread across New South Wales. In some more isolated areas, it’s not uncommon for the nearest specialist, like a tax accountant or mortgage broker, to be hours away. This can make everyday banking or getting professional advice less convenient.

When distance is an issue, we encourage clients to embrace technology to ensure they receive quality financial advice. Zoom meetings are commonplace. Don’t be afraid to seek a financial planner who understands regional needs. In fact, having a planner who “gets” country living can be a game-changer for your finances.

Many rural Australians have incomes that rise and fall unpredictably. You might be a farmer or agricultural supplier dealing with seasonal earnings that depend on weather and commodity prices. Or you could run a tourism business that booms in some months and dips in others. Even many contractors and self-employed folks in country towns know the feast-or-famine cycle. Irregular income can make it hard to budget, save, and plan for the future.
We advise many clients in this situation and create financial plans that consider:

• Buffer building: When you have a bumper harvest or a profitable month, set aside a healthy emergency fund to carry you through the lean patches. This cushion will reduce stress when income slows down.
• Try to even out expenses where possible. For example, use schemes to average your tax or income over good and bad years. Making extra deposits into a high-interest savings account for later use is an easy and achievable strategy.
• We help clients create a baseline budget: We calculate a minimum “needs” budget for essentials like groceries, bills and fuel based on your expected lowest income. Live on that during normal months. When higher income comes in, you can allocate extra funds to debts, savings, or superannuation rather than regular expenses.
• Insurance: If relevant to your situation, consider products like income protection insurance or crop insurance. These can provide a safety net for unforeseen events like illness or drought.

You can mitigate the financial bumps by planning for the ups and downs. For instance, if you get an unexpectedly high income one year, you might use some of that surplus to reduce debt or top up your super. Making additional super contributions in good years can lower your tax bill and boost your retirement nest egg. The key is to avoid treating good years like a licence to overspend. Instead, they should be viewed as an opportunity to shore up reserves for the future.

Succession planning or estate planning is a sensitive topic in many families. Who will take over the farm or family business when you retire? In city companies, a successor might be chosen from employees or sold to outsiders. But in rural Australia, businesses and farms are often kept in the family for generations, or at least that’s the hope. However, handovers can lead to confusion, conflict between siblings, or even the forced sale of a property without a clear plan. Understandably, many people put off these tough conversations.

These issues can be overcome. Start the succession conversation early and get expert help to formalise a plan. Sit down with family members to discuss everyone’s intentions and expectations. Does your daughter actually want to run the farm, or is she pursuing a career elsewhere? If one child takes over, how will you ensure the others are treated fairly?. Once you have a rough agreement, work with a financial planner and solicitor to document your succession plan. This might include your will, a business succession plan outlining how and when leadership transfers, and even training or mentorship for the next leader. By planning, you’ll clarify issues like ownership structure, the transfer of assets, and tax implications well before the handover.

Not only does this protect the business, but it also helps avoid misunderstandings in the family. Remember, succession planning isn’t about retiring right now; it’s about ensuring that when the time comes, the transition is smooth and your legacy is preserved.

Retirement planning can be challenging no matter where you live, but country Australians often face a few extra wrinkles. For one, many retirees in regional areas are asset-rich but cash-poor. This can make generating enough income to fund your retirement lifestyle tricky. Additionally, rural retirees need to think about things like access to healthcare, potential relocations, whether you plan to move closer to medical facilities or downsize to a smaller place, and whether the next generation will be involved in looking after any remaining property. It’s a lot to consider, and it’s easy to see why some country folks feel unprepared as retirement looms.

The sooner you start planning for retirement, the better. Take stock of your expected sources of income in retirement. Will you rely on super, savings, the Age Pension, or selling a business or farm? A common mistake is assuming “She’ll be right, I’ll just sell the farm when I need to retire.” In reality, selling a large asset can take time, and the market might not always be favourable when you need it. Diversifying your retirement nest egg well before you hang up your boots is smarter. That could mean gradually investing off-farm, for example, into managed funds, shares, or an investment property during your working years, or contributing extra to superannuation when possible. Diversification ensures you’re not counting on one asset to do all the heavy lifting in retirement.

Next, consider your retirement lifestyle and any big-ticket needs. Do you plan to travel? Renovate the house? Or considering moving into town from a remote property later for convenience. Factor those goals into your financial plan. A financial planner can help crunch the numbers to see if you’re on track or need to adjust, like delaying retirement a few years, downsizing your home, or tightening your budget to save more.

We also guide you on optimising your super and accessing any government benefits you’re entitled to. The bottom line is: don’t leave your country retirement to chance. With some planning, you can retire comfortably in your community, knowing you have the funds to support the lifestyle you want.

At AFPG, Orange, we believe you deserve financial security and peace of mind. Our qualified and friendly team are born-and-bred regional Australians who understand your challenges.

If any of these challenges are ringing a bell for you, consider reaching out for personalised advice. Sometimes, a fresh set of expert eyes can spot opportunities and solutions you might have missed. Feel free to contact us for a chat about your situation. We’re here to help you overcome those country living challenges and step up into a brighter financial future. Remember, no question is too simple or too silly. We’re always happy to talk about how to make your money work harder for you.

Contact us today for experienced, compassionate, and professional estate planning advice.