I read an interesting article in Fairfax media this morning where NAB Wealth of National Australia Bank Ltd. (ASX: NAB), released statistics from the recent NAB-MLC Quarterly Australian Wealth Sentiment Survey.
Some of the statistics quoted in the Fairfax article were alarming:
- ‘Almost half’ the population lives ‘pay cheque to pay cheque’
- One in five respondents who earned over $200,000p.a. felt they were also living ‘pay cheque to pay cheque’
- 48% of respondents believed the government should do more to help middle class families
- The same proportion felt that an income of $150,000p.a. was needed to live ‘comfortably’
- 59% of respondents felt that a personal fortune of $1 million did not make you ‘rich’ by today’s standards
- 85% agreed with the statement that people today live beyond their means
This has profound implications for Australians who want a financially secure retirement – which is, presumably, all of them. When half the population lives from one pay period to the next, it suggests there’s something wrong with our spending priorities – after all, our living standards and wages are among the highest in the world.
Fool.com.au has published a number of articles recently on growing your wealth and retiring:
- How to turn $20,000 into a $1 million share portfolio
- Do retirees really need $640,000 for a comfortable retirement?
- 5 retirement resolutions to make in 2016
- Is your financial advisor delaying your retirement?
But none of these will get you anywhere if you can’t save the money first! One thing I would advise readers do is use a budgeting app for a month – there are several good free ones available – and aim to save $100 per month. If you divide your expenses by type you’ll be surprised what percentage of your wage goes to discretionary things like eating out and alcohol (hint: more than you think) and petrol (hint: less than you think).
As I showed in this article, saving just $100 extra per month can knock 8 years or more off the time it takes you to build a $1 million portfolio, assuming you start with savings of $10,000.
Readers willing to take the next step in growing their wealth can find a number of fairly passive, high quality investment options in listed companies like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), and WAM Capital Limited (ASX: WAM) on the ASX. Alternatively, high-quality businesses like CSL Limited (ASX: CSL) and Cochlear Limited (ASX: COH) are also fairly evergreen.
Better yet, readers could consider a subscription – starting at just $99 for one year – to one of The Motley Fool’s advisory services, each of which has beaten the market since inception.
Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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