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.
