Super or the mortgage – what is the best place for your generation to place any spare money?

THPPPT! Spare money? For Generation X? Ho, ho, ho! Surely you jest, dear editor.

Weddings, monster mortgages, hungry midgets’ mouths, education expenses … we’re just trying not to drown.

However, the truth is we do get through. And for Xers striving to get ahead, here’s what you’ve got to weigh up.

In the early years of a mortgage, you need to build a buffer, either by paying extra into the redraw or offset accounts. That’s paying down your mortgage. And it’s important.

But at some point, your mortgage is “under control”. It’s no longer a weekly or monthly struggle to make the repayments.

That’s when you’ve got to start tipping money into super and other investments. It is harder for Generation X to get money into super than it was for previous generations. And we will get to a point where we want to tip more money into super, but where we’re restricted by “concessional contribution limits” (currently $30,000 for the under 50s).

So, direct a portion of spare money into super from your late 30s onwards. Even a few thousand dollars a year ($50 a week is $2600 a year). It might hurt, but it will be worth it.

But you’ve also got to build your non-super investments – that is, shares and property – as governments regulate when you can access super. Xers can’t touch their super, under current rules, until age 60. That will probably increase.

Manage your mortgage, then manage your wealth.

As soon as you’re no longer sweating about the mortgage, split savings between super and building an investment portfolio.

Bruce Brammall is the principal adviser with Castellan Financial Consulting (www.castellanfinancial.com.au) and author of Debt Man Walking.