You don’t have a choice. Educate or die.
I’m surprised there aren’t more people in financial panic.
I think it probably comes down to financial literacy. Maybe people just don’t realise how dire their situation is.
On the first front, the income side of the equation isn’t too flash.
The average individual full-time salary is $82,000 pa.
That doesn’t sound too bad, but that number hides a lot of ugliness.
First it’s the average. So it means half of Australia’s income is above that line, and half below.
But we’re not interested in income. We’re interested in people. And so when we look at the median salary (where half the people earn more and half the people earn less), that’s just $55,000 pa.
So half the Australians in full-time work are earning less than $55,000 a year.
But wait, it gets worse still. Because that’s looking at full-time work, and we know that full-time work is dying. There’s been a trend shift away from full-time work, towards part-time and particularly temporary employment.
So the actual reality for the majority (51%) of Australians is probably much worse.
I don’t know about you, but those numbers freak me out a little.
Next, consider how much the average Australian has accumulated in their super. The most recent figures on superannuation from the ABS for 2013-14, show that at retirement age, men have an average balance of $322,000 compared to $180,000 for women.
There’s not a lot of fat in those numbers, but again, what we’re saying about average and median applies here too.
The representative Aussie probably has much less than that!
So income is sh!tty, savings is crappy, but at least stuff is getting cheaper, right?
Well, no, actually. Inflation is low and contained, but it still exists. Prices are still rising.
And the low headline figure tends to disguise where the inflation actually is. So while consumer electronics are getting cheaper, housing costs (rent and mortgages) are getting more expensive.
As one economist joked, “The prices on the stuff you need are going up, while the prices on the stuff you don’t need are going down.”
And the net effect of that is that Real Disposable Income is failing to keep pace with the cost of living.
And more and more, as a society, we’re relying on credit to fill the gap.
So put it all together and you have a pretty alarming picture. You have a vision of the majority of society failing to earn enough or save enough to keep pace with the rising cost of living.
The necessarily means growing credit or falling living standards.
And who wants that? And who wants that after 45 years in the workforce?
But with wages stuck in the gutter, there’s no way to earn yourself out of this mess.
Wages are going nowhere, and the increasingly temporary nature of work means that they’re going to stay going nowhere.
To me, the only way out is through leverage. It’s through putting your money to work.
We all do that. Even if you just let your super sit in your industry fund, it’s still working for you.
But could you be getting more out of your money?
This is the question you’ve got to ask yourself and keep asking yourself.
And the key here is knowledge. As the carnage playing out in the financial planning industry shows us, it’s a risky business trusting your fortune and future to someone else.
Far better to skill-up and educate yourself. It’s not that hard. Look at me. I couldn’t even get through high-school on my first crack.
But now I have to knowledge and skills to command my wealth with confidence.
Seriously, do you have another choice?
Because time is running out.